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Falconer v. Adams (3/26/99), 974 P 2d 406
<![CDATA[
Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
CHARLIE N. FALCONER, )
) Supreme Court Nos. S-7637/7657
Appellant and )
Cross-Appellee, ) Superior Court No.
) 4FA-94-245 CI
v. )
)
DONALD F. ADAMS, ) O P I N I O N
)
Appellee, ) [No. 5096 - March 26, 1999]
)
and )
)
KARLA TAYLOR-WELCH, )
)
Appellee and )
Cross-Appellant. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, Fourth Judicial District, Fairbanks,
Ralph R. Beistline, Judge.
Appearances: Michael W. Flanigan, Walther &
Flanigan, Anchorage, for Appellant/Cross-Appellee. Clifford W.
Holst, Law Office of Clifford W. Holst, Anchorage, for Appellee
Donald F. Adams. Gary Foster, Law Office of Gary Foster,
Fairbanks, for Appellee/Cross-Appellant Karla Taylor-Welch.
Before: Matthews, Chief Justice, Compton,
Eastaugh, Fabe, and Bryner, Justices.
BRYNER, Justice.
MATTHEWS, Chief Justice, with whom EASTAUGH,
Justice, joins, dissenting, in part.
Karla Taylor-Welch was driving a vehicle that rear-ended
a stopped vehicle driven by Charlie Falconer; Falconer sued Taylor-
Welch and a third driver, Donald Adams, who had allegedly forced
Falconer to stop. A jury, finding Adams not negligent and Taylor-
Welch and Falconer both partially negligent, awarded Falconer
damages against Taylor-Welch. The trial court granted Falconer a
judgment notwithstanding the verdict (JNOV) on the issue of his own
negligence, denied him attorney's fees against Adams, and entered
a final judgment reducing the net award of damages by the amount of
medical payments Falconer had received from his own insurer. These
rulings are now challenged. We conclude: (1) because Taylor-Welch
failed to prove that Falconer received unsubrogated collateral-
source benefits, the jury verdict should not have been reduced; (2)
Falconer failed to establish that he was entitled to prevailing-
party fees against Adams; and (3) Taylor-Welch's cursory discussion
of her challenge to the JNOV amounts to a waiver of the point.
I. FACTS AND PROCEEDINGS
A. The Collision, the Trial, and the Verdict
On February 3, 1992, Falconer was driving north on
Cushman Street in Fairbanks. He began to turn left onto Seventh
Avenue, but stopped abruptly. Taylor-Welch was following Falconer;
she applied her brakes but slid on the icy pavement and collided
with Falconer's car. Falconer claimed that he was forced to stop
because he saw Adams's car on Seventh Avenue facing him in the
wrong lane of traffic. Falconer sued Taylor-Welch and Adams for
personal injuries sustained in the collision, seeking, among other
things, reimbursement of $8038.24 in medical expenses. [Fn. 1]
At trial, Taylor-Welch confirmed Falconer's version of
events. She testified that she saw Falconer signal prior to
turning; when Falconer stopped, she hit her brakes but her car slid
into Falconer's. When she got out of her car and approached
Falconer, she saw that he had been unable to complete his turn
because Adams's car was in the wrong lane and was blocking him.
Adams denied being in the wrong lane of traffic. He
testified that he was stopped in the middle lane -- the designated
left-turn lane -- on Seventh Avenue when the collision occurred.
He did not actually see the collision, but he heard the sound of
impact, looked up, and saw the stopped cars.
Officer Haydon Bartholomew of the Fairbanks Police
Department investigated the collision. At trial, Bartholomew
testified from his original investigation report; he had no
independent recollection of the incident. Bartholomew testified
that neither Taylor-Welch nor Falconer told him that Adams had been
in the wrong lane, but he confirmed that Falconer reported that
"there was an obstacle or a vehicle, something in front of him,
that caused him to brake -- apply his brake." According to
Bartholomew, this was essentially what Taylor-Welch and Adams
reported, also. Bartholomew's understanding was that Falconer had
stopped to avoid something on Seventh Avenue. Bartholomew knew of
no witnesses apart from Falconer, Taylor-Welch, and Adams.
The jury returned a verdict finding Taylor-Welch forty
percent negligent, Falconer sixty percent comparatively negligent,
and Adams not negligent. The jury further determined that
Falconer's total damages were limited to $5054 in past medical
expenses and $510 in past non-economic loss (pain and suffering).
B. The JNOV on Comparative Negligence
During the trial, Falconer moved for a directed verdict
establishing Taylor-Welch's negligence and his own lack of
comparative negligence. Taylor-Welch resisted these motions.
Relying on Officer Bartholomew's conclusion that the major factor
contributing to the collision was an obstruction in the roadway
that precluded Falconer from turning, Taylor-Welch argued that
reasonable jurors could find that she had not been negligent. And
based on the possibility that the jury might find that "Adams was
where he was supposed to be,"Taylor-Welch argued that Falconer's
abrupt stop might itself support a finding of negligence on
Falconer's part. The trial judge, noting a desire "to present as
much to the jury as I can,"declined to direct the verdict but
indicated that he would likely overturn a jury verdict actually
finding Falconer comparatively negligent.
Immediately upon the jury's return of its verdict finding
him sixty percent negligent, Falconer requested a judgment
notwithstanding the verdict, pointing out that the court "already
. . . had reached a tentative decision." The judge deferred the
issue pending a formal motion but indicated "that if the motion[]
come[s] in I will likely grant that motion." Falconer later filed
a formal motion for JNOV against Taylor-Welch on comparative
negligence; Taylor-Welch filed opposition, and the court granted
the motion, without comment, upon entry of the final judgment.
C. Reduction of the Jury Award for Medical Loss
Falconer's trial began on January 18, 1996, and
culminated in a verdict on January 30. On January 18, as the court
addressed legal issues to be resolved before jury selection was
completed, Adams informed the court that Falconer's insurer, State
Farm, had paid Falconer $5000 in medical bills and that Falconer
had admitted receiving the payment in answer to a request for
admissions. Adams claimed that the payment was "not a recoverable
expense in this litigation." Falconer responded that the payment
was "a collateral source"and that State Farm was "subrogated to
our recovery." Falconer further asserted that if the defendants
"wanted to pay State Farm they should have done [that] a long time
ago and under AS 09.16.070, [sic, apparently referring to
AS 09.17.070] . . . the court's suppose[d] to take that up after
the trial and decide whether or not that's a recoverable damage."
Adams disagreed, insisting that Falconer had earlier admitted that
he was not trying to recover the expense. The trial court
dismissed the argument, however, commenting that "all I know is
that's not an issue that we have to resolve before the jury is
instructed."
In the midst of trial, on January 23, Adams returned to
the medical payment issue, supplying the court with a copy of the
request for admission that he had mentioned on January 18 and
arguing that it was "conclusive proof of the plaintiff's position
in this case." Falconer acknowledged the apparent admission but
insisted that in later discovery he had made it clear that he did
in fact intend to seek recovery of all medical expenses, including
those for which he had received payment from his own carrier, State
Farm. This prompted the following comment by Adams:
Now my understanding is State Farm, as
its typical practice is, is inclined and will recover on its own
right, its damages with regard to its $5,000 dollars. I've seen
nothing the plaintiff has provided which says that State Farm
intends to have lien rights so they could attempt to get the money
allocated here. So what we have here is the potential of a double
recovery . . . .
In response, Falconer insisted that "we've already told
the court . . . in open court, that they are subrogated to that
$5,000 and that we have to pay that back. So, so much for the
double recovery, there is no double recovery." Falconer reiterated
his position that "this matter is best handled after the trial
which is specifically what AS 09.16.070 [sic] says the court is
supposed to do." The court moved on to another subject and the
discussion ended.
That same day or the day after, Adams's and Taylor-
Welch's insurers -- Allstate and GEICO -- evidently tendered
payment of $5000 to State Farm as reimbursement for medical
expenses that State Farm had paid for Falconer. State Farm
apparently accepted Allstate's payment as extinguishing State
Farm's "Medical Payments Coverage interest"with regard to the
medical expenses it paid for Falconer.
After trial, Falconer, Taylor-Welch, and Adams all
submitted proposed forms of judgment. Taylor-Welch's proposed
judgment form incorporated a $5000 reduction of the jury award for
"the amount of the subrogated medical payment lien paid by the
defendants." Adams's judgment form included a provision for an
award of prevailing party costs and attorney's fees.
Falconer objected to the defendants' forms of judgment.
As to Taylor-Welch's proposed $5000 reduction, Falconer
acknowledged that the defendants' insurers had paid medical
expenses to State Farm but argued that the defendants had failed to
establish a right of offset under AS 09.17.070. Falconer further
argued that, in any event, the direct payments from defendants'
insurers to State Farm could not reduce the jury's net award; the
payments were at most subject to offset against his full medical
expense claim of $8200, and before any offset was allowed he was
entitled to an award of prejudgment interest on the amount of the
verdict and to reimbursement for his attorney's fees.
As to Adams's request for prevailing-party attorney's
fees, Falconer argued that Adams's $5000 midtrial payment to State
Farm was "a limited admission of liability and damages"that
effectively made Falconer "the prevailing party as to that
payment." Falconer thus demanded prevailing party attorney's fees
against both defendants.
Taylor-Welch and Adams both opposed Falconer's demands.
Taylor-Welch argued that Falconer had not prevailed and that he was
not entitled to prejudgment interest "on the subrogated medical pay
lien amount,"since his bills had been paid by State Farm and he
had never lost the use of the money awarded by the jury. Adams
argued that "[d]uring the course of trial, Allstate and GEICO
extinguished the State Farm subrogation interest that State Farm
attempted to recover directly from them." Adams further argued
that, for purposes of prevailing party attorney's fees, "[t]he fact
[that] Allstate and GEICO extinguished State Farm's interest proves
nothing other than the fact [that] the insurance carriers settled
claims between themselves."
Without explanation, the court entered judgment on the
forms proposed by Taylor-Welch and Adams, reducing the verdict
against Taylor-Welch by $5000 and awarding Adams -- rather than
Falconer -- prevailing party fees and costs. Falconer appeals,
challenging the $5000 reduction of the jury's award and the court's
failure to grant his request for fees and costs against Adams.
Taylor-Welch cross-appeals, contesting the court's entry of a JNOV
against her on the issue of Falconer's negligence.
II. DISCUSSION
A. Falconer's Appeal -- Effect of Allstate's Mid-Trial
Tender of State Farm's Medical Payments on the Jury's Verdict and
on Adams's Prevailing-Party Status
On appeal, Falconer renews the arguments he raised below.
As to Taylor-Welch he claims that no offset for Allstate's payment
to State Farm was justified and, alternatively, that any offset
should be governed by AS 09.17.070. [Fn. 2] As to Adams he claims
that he is entitled to "prorata [sic] attorney's fees, costs and
interest, associated with the $5,000 payment to State Farm."
In response to Falconer, Taylor-Welch takes the position
that Adams's insurer, Allstate, "paid off State Farm medical
payments of $5,000 . . . pursuant to the Interinsurance Company
Agreement on the handling of these types of subrogation claims."
Taylor-Welch thus asserts that "[t]he $5,000 was properly deducted
from [Falconer's] verdict to prevent double recovery or, more
accurately, double payment."[Fn. 3]
With regard to attorney's fees, Adams takes the position
that the trial court properly determined him to be the prevailing
party because he was found not negligent and "is therefore liable
for none of [Falconer's] damages."
1. Reduction of Falconer's verdict
In our view, the issue of Taylor-Welch's right to
reduction of the jury verdict is governed by AS 09.17.070, which
deals with proof of collateral source payments. [Fn. 4] It is
undisputed that State Farm's payments of Falconer's medical
expenses were initially subject to a right of subrogation; hence,
under subsection (a) of AS 09.17.070, Taylor-Welch would not have
been entitled to introduce evidence of those payments to reduce the
jury's damage award.
Nevertheless, in arguing that Allstate "paid off State
Farm medical payments . . . pursuant to the Interinsurance Company
Agreement on the handling of these types of subrogation claims,"
Taylor-Welch implicitly asserts that, by extinguishing State Farm's
right of subrogation, Allstate's mid-trial payment to State Farm
converted the subrogated medical expenses State Farm incurred on
Falconer's behalf into unsubrogated benefits that became subject to
offset under AS 09.17.070(a).
This assertion presents a twofold problem. First,
assuming the validity of Taylor-Welch's theory, Taylor-Welch would
not have been entitled to a reduction of the net jury damage award.
Instead, her right to a deduction would have been governed by
subsections (b) and (c) of AS 09.17.070, which would have entitled
Falconer to be made whole, before any deduction, for all attorney's
fees he had incurred and all amounts he paid or contributed to
secure his right to the State Farm medical payment benefit. [Fn. 5]
Second, under subsection (a) of AS 09.17.070, Taylor-
Welch bore the burden of proving her right to an offset by
"introduc[ing] evidence of amounts received"by Falconer from a
collateral source that "[did] not have a right of subrogation by
law or contract." Thus, she was entitled to no reduction of the
verdict unless she proved that Allstate's payment actually
extinguished State Farm's right of subrogation against Falconer.
[Fn. 6] And in light of AS 09.17.070(d), Taylor-Welch was further
required to prove that Allstate's payment did not result in "a
gratuitous benefit[] . . . to [Falconer]."
Taylor-Welch did not carry this burden. Although it is
undisputed that, during the trial, Allstate paid State Farm $5000
for medical expenses that State Farm had earlier paid on behalf of
Falconer, the trial transcript and post-trial pleadings contain
only passing references to this payment. On appeal, Taylor-Welch
makes only conclusory assertions of an interagency agreement "on
the handling of these types of subrogation claims"; she supplies no
citations to evidence in the record supporting these assertions,
and we have found no evidence of an interagency agreement of the
kind Taylor-Welch asserts. As far as we can ascertain, no evidence
was presented below that would have enabled the court to determine
the basis for or the specific terms of any interagency agreement,
or the legal effect of the Allstate payment to State Farm.
The only concrete sign of payment in the record consists
of unfiled copies of several documents indicating that Allstate,
purportedly acting on behalf of both Taylor-Welch and Adams,
tendered last-minute payment of $5000 to State Farm to extinguish
"State Farm's Medical Payments Coverage interest in the amount of
$5,000 with regard to medical expenses paid on behalf of Charlie
Falconer . . . ."[Fn. 7]
These documents raise more questions than they answer.
Allstate was Adams's insurer, not Taylor-Welch's. Taylor-Welch
fails to explain what basis she has for claiming credit for a
payment by Adams to Falconer, and the record does not establish a
factual foundation for such a credit. Even assuming that Taylor-
Welch might be entitled to credit for Allstate's payment, she fails
to establish what portion of Allstate's $5000 payment is allocable
to her, and what portion to Adams, Allstate's insured. Moreover,
she fails to show exactly what medical expenses the payment was
meant to reimburse: the jury awarded Falconer less than his total
claim for medical expenses; whether Allstate's check reimbursed
State Farm for the same medical expenses awarded by the jury
remains entirely unclear. And Taylor-Welch has not explained why
she should receive a full $5000 credit against the jury's medical
expenses award, as opposed to either a pro rata reduction, or a
reduction from the gross amount of Falconer's medical expenses
claim.
In sum, the record contains documents reflecting a
payment by Adams's insurer to Falconer's, they are unauthenticated,
their presence in the record is unexplained, and Taylor-Welch fails
even to mention them in her briefing. Given these circumstances,
we decline to hold that these documents establish Falconer's
receipt of collateral-source payments that Taylor-Welch is entitled
deduct from the jury's award against her. On the record presently
before us, we conclude that the trial court lacked a sufficient
evidentiary basis to deduct any collateral source payments from the
jury's award of damages. [Fn. 8]
2. Denial of prevailing-party attorney's fees against
Adams
For much the same reason, we must conclude that
Allstate's mid-trial payment to State Farm does not entitle
Falconer to an award of attorney's fees against Adams. Alaska
Civil Rule 82 allows attorney's fees to be awarded only to "the
prevailing party in a civil case." The jury verdict found Adams
non-negligent and awarded Falconer no damages against him.
Falconer's assertion of prevailing-party status thus depends
entirely upon his characterization of Allstate's payment to State
Farm as a partial "constructive settlement"of Falconer's claim
against Adams. Yet Falconer, like Taylor-Welch, has failed to
establish the surrounding circumstances, contractual terms, and
legal significance of Allstate's payment to State Farm. We
therefore conclude that, on this record, Falconer's claim to
attorney's fees against Adams must fail.
In sum, the superior court erred in reducing Falconer's
verdict to account for payment of his medical expenses but did not
abuse its discretion in awarding costs and fees to Adams, instead
of Falconer.
B. Taylor-Welch's Cross-Appeal -- The Trial Court's Award of
a JNOV as to Falconer's Comparative Negligence.
After the jury found that Falconer was sixty percent
comparatively negligent, Falconer moved for a judgment notwith-
standing the verdict on this point, arguing that there was no
evidence to support a finding that he acted negligently. The trial
court granted Falconer's motion. Taylor-Welch appeals the trial
court's decision, arguing that Falconer's negligence was an issue
of fact that should properly have been left to the jury. [Fn. 9]
Falconer responds that, because none of the witnesses at
trial gave testimony indicating that he had driven negligently, and
because Taylor-Welch herself candidly admitted that Falconer had
done nothing wrong, there was no reasonable basis for a finding of
comparative negligence. [Fn. 10] Falconer alternatively contends
that Taylor-Welch's argument on this point "is scantily contained
in her brief"and should be deemed abandoned for lack of adequate
briefing.
We conclude that Falconer's waiver argument is well
taken. Taylor-Welch's discussion of the issue of Falconer's
negligence consists of a single, cursory paragraph. After setting
out the applicable standard for granting a judgment notwithstanding
the verdict, Taylor-Welch simply asserts that the jury, having
decided that Adams was not in the wrong lane of traffic, was free
to conclude that Falconer's abrupt stop was not adequately
explained and therefore amounted to negligence. [Fn. 11]
Taylor-Welch's argument oversimplifies the issue, for it
presupposes that a rejection of Falconer's claim of negligence
against Adams automatically justifies an assumption of negligence
by Falconer. At heart, this argument is a claim of res ipsa
loquitur: [Fn. 12] Taylor-Welch simply assumes that an unexplained
stop presumptively establishes negligence. Taylor-Welch cites no
authority and provides no meaningful discussion to support this
assertion.
Our own review of the record reveals no affirmative
evidence indicating that Falconer's stop was negligent. Taylor-
Welch and Falconer both testified that Falconer stopped because his
turn was obstructed by an oncoming vehicle in the wrong lane of
traffic; both identified the vehicle as Adams's. Another witness,
Mark Norum, confirmed the presence of an oncoming vehicle but did
not identify it as Adams's. Adams denied being in the wrong lane
of traffic but did not see the accident and apparently did not
claim that the far left-hand lane on Seventh Avenue was
unobstructed. [Fn. 13] Officer Bartholomew, who arrived at the
scene some time after the collision, testified that neither
Falconer nor Taylor-Welch reported Adams's responsibility.
Nevertheless, Bartholomew confirmed that Falconer said he had
stopped for "an obstacle or a vehicle, something in front of him."
And Bartholomew further testified that this was essentially what
Taylor-Welch and Adams told him, too.
Given this evidence, the jury could certainly have
accepted Adams's claim that he was not blocking Falconer and
rejected Falconer's and Taylor-Welch's testimony to the contrary.
However, we find it far from obvious that acceptance of Adams's
version of events could have supported a finding that Falconer's
actions were negligent -- that is, that his abrupt stop was
unnecessary and that he did not reasonably believe it to be
necessary.
Considering Taylor-Welch's cursory discussion of the
evidence, her conclusory assertion that an unexplained, abrupt stop
is in itself sufficient to establish negligence, and her failure to
cite any authority to support this assertion, we conclude that
Taylor-Welch must be deemed to have waived her claim of error as to
the order granting Falconer a judgment notwithstanding the verdict
on comparative negligence. [Fn. 14]
III. CONCLUSION
For the foregoing reasons, we AFFIRM the judgment entered
by the superior court as to Adams. We also AFFIRM the court's
order granting Falconer a judgment notwithstanding the verdict on
the issue of his comparative negligence. However, because we
conclude that the court erred in reducing the jury's award of
damages to Falconer, we VACATE the judgment entered against Taylor-
Welch, and REMAND for entry of an amended judgment conforming with
the views expressed in this opinion.
MATTHEWS, Chief Justice, with whom EASTAUGH, Justice, joins,
dissenting, in part.
Under today's opinion Geico, having with Allstate paid
$5,000 to State Farm on State Farm's subrogated claim, will have to
pay the same amount for the same loss to Falconer. Double payment
here is thus not merely a fear, it is a reality.
Today's opinion acknowledges this but suggests that the
parties can undo the double payment "through negotiations or
separate proceedings." Slip Op. at 15, n.8. If State Farm agrees
to pay the $5,000 back to Allstate and Geico, State Farm will have
an unsatisfied subrogation claim which then could only be satisfied
by obtaining money from Falconer. If he agrees to pay $5,000 to
State Farm, no one will have paid, or recovered, twice for the same
loss. But that is the very result from which Falconer has brought
this appeal and which today's opinion has changed. Given
Falconer's appeal in this case, it seems doubtful that he will
agree to relinquish his hard-won $5,000. And it is by no means
clear that Allstate and Geico will be able to undo their settlement
with State Farm to start the process. Thus, as a result of today's
opinion, either one insurance company must pay twice for the same
loss or expensive and time-consuming negotiations and proceedings
of uncertain efficacy must take place.
This undesirable result is not required by any statute or
principle of common law. Alaska Statute 09.17.070 does not apply,
because that statute only applies to amounts received by a claimant
"from collateral sources that do not have a right of subrogation
. . . ." State Farm obtained the right of subrogation when it paid
$5,000 of Falconer's medical expenses. Since the statute does not
apply, the common law does.
Under the common law, when State Farm paid the $5,000 it
became subrogated to Falconer's claim. State Farm had a variety of
options which it might have exercised in order to collect this
claim. It might have permitted Falconer to include its claim in
his action against Adams and Taylor-Welch, in which case Falconer
would have been required to reimburse State Farm, less pro-rata
costs and attorney's fees for prosecuting the claim. State Farm
might have intervened in Falconer's action and pressed the claim on
its own. Or State Farm might have asserted the claim against the
defendants' insurers and negotiated it privately. See Rice v.
Denley, 944 P.2d 497, 500 n.5 (Alaska 1997).
State Farm evidently chose a combination of the first and
third options. It seems to have permitted, at least tacitly,
Falconer to prosecute its claim until, during trial, it settled the
claim by accepting payment from Allstate/Geico. As the claim was
State Farm's to settle, it had a right to do this. But given the
timing of the settlement, State Farm might be responsible for its
share of pro-rata costs and attorney's fees incurred by Falconer in
the successful prosecution of the claim. [Fn. 1] See Edwards v.
Alaska Pulp Corp., 920 P.2d 751, 754, 755-56 (Alaska 1996); Cooper
v. Argonaut Ins. Cos., 556 P.2d 525 (Alaska 1976).
At common law a plaintiff may not recover for a
subrogated claim that the subrogee has settled. Brinkerhoff v.
Swearingen Aviation Corp., 663 P.2d 937, 942 (Alaska 1983). Thus,
leaving aside for the moment Falconer's claim that the jury award
of $5,054 in medical expenses did not include all the expenses paid
by State Farm, the trial court acted correctly by deducting $5,000
from the verdict. However, the court should have determined
whether the settlement was the product of this litigation. If so,
the court should then have decided the question of who, as between
Falconer and Taylor-Welch, is the prevailing party for purposes of
court-awarded fees and costs. [Fn. 2]
Alaska Statute 09.17.070 does not apply as to amounts
received by a claimant from collateral sources which have a right
of subrogation. It is uncontested that State Farm had a right of
subrogation. It should follow that AS 09.17.070 does not apply and
the common law does. Today's opinion asserts that Taylor-Welch has
implicitly argued that when Allstate/Geico paid State Farm, State
Farm's subrogated payment became unsubrogated and thus subject to
AS 09.17.070. Slip Op. at 11-12. I have read Taylor-Welch's brief
with great care and cannot find that implicit argument. Indeed, I
could find no mention of AS 09.17.070 at all. But if such an
argument had been made, it would lack merit. Accepting such a
position would mean that a plaintiff would regain the right to
claim a subrogated amount when the subrogee settles its claim with
a defendant. Such a result would eliminate the ability of
subrogees to settle their claims independently. This could not
have been contemplated by the legislature in enacting the tort
reform package of which AS 09.17.070 is a part.
A complicating factor in this case is that Falconer
claimed medical expenses resulting from the accident of a little
over $8,000, but the jury awarded medical expenses of only slightly
more than $5,000. Falconer argued before the trial court, and
argues on appeal, that in the absence of evidence that the $5,000
paid by State Farm was the same $5,000 awarded by the jury the
reduction should be made from the whole claim. He notes that after
the jury announced its verdict, but before it was discharged, he
requested that the court direct the jury to specify which expenses
it had not awarded. The defendants objected and the information
was not obtained.
Citing Wood v. Diamond M Drilling Co., 691 F.2d 1165,
1171 (5th Cir. 1982) and cases cited therein, Falconer contends
that the burden is on the party claiming duplication of damages to
show that the damages assessed against it have "been previously
covered." Taylor-Welch has cited nothing to the contrary. I would
accept this rule.
The trial court made no findings as to why it concluded
that the expenses paid by State Farm coincided with the expenses
which the jury found to have been caused by the accident. It is
possible that there is a defensible, but unexpressed, basis for
this conclusion. I would therefore remand this aspect of the case
to the trial court for a determination of whether the expenses
awarded by the jury were the expenses paid by State Farm. The
burden of proof on this question should be on Taylor-Welch, and, if
the burden is not satisfied, the court should conclude that the
overlap is the minimum possible given the amounts of the claimed
and awarded expenses. [Fn. 3] In that event the court should
modify its reduction of the medical expenses award accordingly.
Falconer also contends that the trial court should have
awarded him pre-judgment interest on the expenses paid by State
Farm. This argument lacks merit. State Farm was the owner of the
subrogated claim. It could settle the claim for any amount it and
the defendants might agree to. If that settlement was for less
than full value, (and did not for example include pre-judgment
interest) the difference could not be claimed by Falconer. SeeBrinkerhoff v. Swearingen Aviation Corp., 663 P.2d 937, 942 (Alaska
1983). The rule Falconer advocates would make it impossible for a
subrogee to compromise a claim for discounted value.
Based on the foregoing, I would remand this case to the
superior court with instructions to determine whether the medical
expenses awarded by the jury were the expenses paid by State Farm
and make the appropriate reduction, supported by written findings.
The burden of proof on this question should be on Taylor-Welch.
The court should then consider whether the $5,000 settlement was
the product of the litigation. If it was, the court should
consider this as a factor in determining whether Falconer or
Taylor-Welch is the prevailing party for the purpose of awarding
costs and attorney's fees. Finally, the court should determine
whether Falconer or Taylor-Welch is the prevailing party based on
this and other relevant factors and award costs and attorney's fees
accordingly. [Fn. 4]
FOOTNOTES
Footnote 1:
1 In addition, Falconer sought to recover over $130,000 in
past and future wage losses and to recover for pain and suffering
(his attorney suggested $100,000 would be reasonable). Falconer's
wife brought a claim for loss of consortium but the jury did not
award her anything.
Footnote 2:
In the absence of evidentiary dispute, the existence of an
offset presents a question of law. Cf. Luth v. Rogers & Babler
Constr. Co., 507 P.2d 761, 767-68 (Alaska 1973). This court
reviews "questions of law de novo, adopting the rule of law that is
most persuasive in light of precedent, reason, and policy." Bauman
v. Day, 892 P.2d 817, 824 (Alaska 1995) (citing Langdon v.
Champion, 745 P.2d 1371, 1372 n.2 (Alaska 1987)).
Footnote 3:
More specifically, Taylor-Welch asserts: (1) that Falconer is
not entitled to a set-off against his total medical expense claim
of $8038 because this total claim incorporates a mathematical
error; (2) that Falconer is not entitled to credit for attorney's
fees expended in connection with Allstate's payment because he
admitted in his answer to a request for admission that he was not
attempting to recover medical payments paid by his insurer; and (3)
that he is not entitled to prejudgment interest on the payment
because State Farm paid his medical bills and he did not lose the
use of the money, and because "under the Interinsurance Company
Agreement mentioned above, interest is not charged or collected on
reimbursed subrogated 'medpay' payments."
These arguments lack merit. First, Taylor-Welch's
assertion of a mathematical error in Falconer's claim is itself in
error. Second, Taylor-Welch's argument that Falconer's answer to
Adams's request for admission waived his right to recovery of
medical payments is untenable given the ambiguous nature of the
request and answer, given Falconer's subsequent filing of discovery
materials establishing his intent to recover his medical expenses,
and given the trial court's willingness to allow Falconer to seek
recovery of these damages at trial. Last, the factual
underpinnings of Taylor-Welch's prejudgment interest argument are
unsupported by the record: the record is silent as to whether State
Farm charges or collects prejudgment interest when recovering on
subrogated medical payments claims. See infra note 5.
Footnote 4:
AS 09.17.070 provides in relevant part:
(a) After the fact finder has rendered
an award to a claimant, and after the court has awarded costs and
attorney fees, a defendant may introduce evidence of amounts
received . . . by the claimant as compensation for the same injury
from collateral sources that do not have a right of subrogation by
law or contract.
(b) If the defendant elects to introduce
evidence under (a) of this section, the claimant may introduce
evidence of
(1) the amount that the actual
attorney fees incurred by the claimant in obtaining the award
exceed the amount of attorney fees awarded to the claimant by the
court; and
(2) the amount that the
claimant has paid or contributed to secure the right to an
insurance benefit introduced by the defendant as evidence.
(c) If the total amount of collateral
benefits introduced as evidence under (a) of this section exceeds
the total amount that the claimant introduced as evidence under (b)
of this section, the court shall deduct from the total award the
amount by which the value of the nonsubrogated sum awarded under
(a) of this section exceeds the amount of payments under (b) of
this section.
(d) Notwithstanding (a) of this section,
the defendant may not introduce evidence of
(1) benefits that under federal law
cannot be reduced or offset;
(2) a deceased's life
insurance policy; or
(3) gratuitous benefits
provided to the claimant.
(e) This section does not apply to a
medical malpractice action filed under AS 09.55.
Footnote 5:
Moreover, since prejudgment interest is a form of
consequential damages, see Farnsworth v. Steiner, 638 P.2d 181, 184
(Alaska 1981), an award of prejudgment interest becomes a part of
the judgment proper. Cf. Bohna v. Hughes, Thorsness, Gantz, Powell
& Brundin, 828 P.2d 745, 759 (Alaska 1992); Guin v. Ha, 591 P.2d
1281, 1287 (Alaska 1979); Davis v. Chism, 513 P.2d 475, 481 (Alaska
1973). It follows that any reduction of Falconer's judgment under
AS 09.17.070 would have been appropriate only after adding
prejudgment interest to the jury award.
Footnote 6:
See AS 09.17.070(a). Cf. Phillips v. Liberty Mut. Ins. Co.,
813 F.2d 1173, 1176 (11th Cir. 1987) ("The law has placed the
burden on the defendant to show a definite amount of offset.").
Footnote 7:
The record contains copies of three relevant documents: an
Allstate check to State Farm, a "Facsimile Cover Sheet"from State
Farm to Allstate, and a letter from State Farm to GEICO. The
Allstate check to State Farm is numbered 68757113, appears to be
dated January 23 (presumably 1996), and bears the notation "payment
of subrogation for claim 02-0186-640 in behalf of Karla Welsh and
Don Adams." State Farm's "Facsimile Cover Sheet"indicates on its
face that it was transmitted to Allstate at approximately 4:00 p.m.
January 24, 1996. The cover sheet lists "Falconer/Welsh"as the
"Insured"and refers to claim number 020186640/3321040275. A
handwritten remark on the sheet states: "Upon receipt of Allstate
check # 68757113 in the amount of $5,000, State Farm's Medical
Payments Coverage interest in the amount of $5,000 with regard to
medical expenses paid on behalf of Charlie Falconer will be
extinguished against Allstate's insured, Taylor Welsh, and GEICO's
insd, Don Adams." The State Farm letter to GEICO is dated July 24,
1992, refers to State Farm claim number 02-0186-640, and lists
"Carla T. Welch"as GEICO's insured; it expresses State Farm's
belief that Taylor-Welch "is responsible for our insured's medical
expenses as a result of this [the February 3, 1992] accident,"
states that it is State Farm's practice "to resolve subrogation
issues as amicably and expeditiously as possible,"and requests
GEICO's "agreement at this time to honor our interest by issuing a
separate check to us directly at the time of settlement." The
presence of these documents in the record is unexplained: the
record discloses no information as to the circumstances under which
they were submitted to the superior court and provides no insight
into whether the court considered them before it entered judgment.
None of the parties refer to the documents in their briefs.
Footnote 8:
We recognize that a tort claimant should not be reimbursed
twice for the same injury. See Luth v. Rogers & Babler Constr.
Co., 507 P.2d 761, 766 (Alaska 1973). In providing that an
unsuccessful defendant "may"introduce evidence of amounts received
by the plaintiff from collateral sources, however, AS 09.17.070(a)
permits, but does not require, defendants to assert collateral
source claims as offsets to plaintiff's verdicts. Accordingly,
when, as here, a defendant fails to prove unsubrogated collateral
source payments, the appropriate recourse for the trial court is to
deny reduction of the verdict; on appeal of an unsupported
reduction, the correct remedy is reversal, not a remand for a
second opportunity to prove up the claim. We note that Falconer
has consistently acknowledged that the medical payments he received
from State Farm were subject to a right of subrogation. We find no
reason to presume that the parties and their insurers will be
unable to protect against the possibility of double recovery
through negotiations or separate proceedings.
Footnote 9:
"It is well established that the proper role of this court, on
review of motions for directed verdict or for judgment
notwithstanding the verdict, is not to weigh conflicting evidence
or judge the credibility of witnesses, but is rather to determine
whether the evidence, when viewed in the light most favorable to
the nonmoving party, is such that reasonable men could not differ
in their judgment." Hahn v. Russ, 611 P.2d 66, 67 (Alaska 1980)
(citations omitted).
Footnote 10:
Although Falconer argues that Taylor-Welch's negligence was
firmly established as a matter of law under Green v. Plutt, 790
P.2d 1347, 1349 (Alaska 1990), Grimes v. Haslett, 641 P.2d 813, 819
(Alaska 1982), Hahn, 611 P.2d at 67, and Clabaugh v. Bottcher, 545
P.2d 172, 176 (Alaska 1976), he does not argue that these cases
categorically preclude a finding of negligence by both drivers who
are involved in a rear-end collision; rather, he argues only that
there is insufficient evidence in this case to support a finding
that he did in fact act negligently.
Footnote 11:
The entire argument consists of the following conclusory
discussion:
Clearly, the testimony at trial was
conflicting on why Falconer stopped so abruptly in the course of
his left turn, in the middle of the intersection. The jury could
differ in their assessment of this evidence. After weighing the
evidence and viewing the credibility of the participants, the jury
decided that Adams was not in the wrong lane, and consequently, not
at fault. The jury then determined that Falconer's sudden stop, in
the absence of Adams' truck, was negligence on his part and
assessed his negligence at 60%. It was up to the jury to decide
who it believed and disbelieved and what testimony to discount.
Without Adams to blame, Falconer's very abrupt stop was subject to
the jury's scrutiny and, as indic[a]ted above, the jury found
Falconer had the lion's share of responsibility for the accident
(60%). The trial court erred when it overruled that determination.
[Citation omitted.]
Footnote 12:
The doctrine of res ipsa loquitur "is a bridge, dispensing
with the requirement that a plaintiff specifically prove breach of
duty, once that duty and proximate cause have been established,"
and applies only when an accident ordinarily does not occur in the
absence of negligence. State Farm Fire & Cas. Co. v. Municipality
of Anchorage, 788 P.2d 726, 730 (Alaska 1990) (quoting Widmyer v.
Southeast Skyways, Inc., 584 P.2d 1, 10 (Alaska 1978)).
Footnote 13:
Taylor-Welch did not submit a full trial transcript. Our
review of the record is thus necessarily confined to the limited
portion of Adams's testimony included in the transcript.
Footnote 14:
See Kristich v. State, 550 P.2d 796, 804 (Alaska 1976).
FOOTNOTES (Dissent)
Footnote 1:
State Farm is not a party to this litigation. Until and unless it is joined as a party no
decision as to whether it should pay a share of Falconer's costs and fees can be made.
Footnote 2:
The rationale would be akin to the "catalyst"theory discussed and assumed valid for
the purposes of our decision in State, Dep't of Natural Resources v. Tongass Conservation
Soc'y., 931 P.2d 1016, 1017 (Alaska 1997). Arguably the same rationale might apply to
Adams, but in his case the fact that he prevailed at trial should control, in my opinion.
Footnote 3:
The problem posed here could have been prevented in two ways. The court might
have granted Falconer's request and asked the jury to specify which medical bills were not
incurred as a result of the accident. (It was known that State Farm had paid the first $5,000
claimed.) Or the court might have granted the defendants' request to instruct the jury in
advance of deliberations that it should not award any part of the first $5,000 in medical
expenses because these had been paid by a third party.
Footnote 4:
I agree that Adams's judgment should be affirmed and that the only point on Taylor-
Welch's cross-appeal has been inadequately briefed.
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