Opinion
No. WD 63413
July 13, 2004
Appeal from the Circuit Court of Jackson County, Missouri, Honorable Marco Antonio Roldan, Judge.
Michael B. White, Kansas City, MO, Attorney for Appellant.
Andrew J. Gelbach, Warrensburg, MO, Attorney for Respondent.
John E. Turner, Kansas City, MO, Attorney for Respondent.
Before: Robert G. Ulrich, P.J., Harold L. Lowenstein and Edwin H. Smith, JJ.
Charles Shaw appeals the trial court's refusal to credit the sum of $25,000 against the judgment of $200,000 entered against him and in favor of Joshua Smith following jury trial on Mr. Smith's claim of personal injury resulting from an automobile accident. Mr. Shaw was the driver of one of two vehicles involved in the accident. The insurance carrier of the driver of the second vehicle in which Mr. Smith was riding when the accident occurred paid Mr. Smith the sum of $25,000 prior to trial as underinsured motorist benefits. Mr. Shaw also appeals the trial court's refusal to modify the award by eliminating the portion of the judgment granting to Mr. Smith prejudgment interest. Mr. Shaw does not assert any issue relating to the trial; neither does he contest the jury verdict and the judgment amount of $200,000. The judgment is affirmed in part and reversed in part.
Factual Background
Joshua Smith was a passenger in an automobile driven by Joshua Stark when a vehicle driven by Charles Shaw struck Mr. Stark's automobile. Substantial evidence was presented that Mr. Shaw drove his vehicle across the centerline of Highway 40 in Blue Springs, Jackson County, and struck head-on the vehicle in which Mr. Smith was a passenger. Mr. Smith sustained numerous and significant injuries as a direct result of the collision.
Mr. Smith settled his bodily injury claim against Mr. Stark for $25,000. He also received $25,000 in underinsured motorist benefits from Mr. Stark's automobile insurance carrier.
Mr. Smith, through counsel, mailed a certified letter to Mr. Shaw's automobile insurance carrier offering to settle his claims against Mr. Shaw for "$25,000 or the per person liability limit, whichever is greater." The letter expressed that the offer of settlement was left open "for sixty (60) days from the date of this letter." Mr. Shaw's carrier did not accept the offer of settlement within the time expressed in the letter.
Following trial and the jury's $200,000 verdict, Mr. Shaw filed a motion seeking credit against the verdict for Mr. Smith's receipt of the $25,000 from Mr. Stark's carrier as settlement for injuries. Mr. Shaw also sought credit against the verdict for the additional $25,000 paid by Mr. Stark's carrier to Mr. Smith for underinsured benefits. The trial court granted credit against the verdict for the amount paid to Mr. Smith by Mr. Stark's insurance carrier for injuries that he sustained but denied Mr. Shaw's motion seeking credit against the judgment for the additional $25,000 paid as underinsured benefits. The court entered judgment against Mr. Shaw for $216,337.70. The judgment represents the sum of $175,000, which represents the jury award of $200,000 minus $25,000 for the settlement with Mr. Stark for damages resulting from injuries, plus $41,337.70 for prejudgment interest. Mr. Shaw filed his notice of appeal.
Point I
Mr. Shaw asserts as point one that the trial court erred in refusing to credit against the $200,000 judgment the sum of $25,000 paid to Mr. Smith by Mr. Stark's insurance carrier as an underinsured motorist insurance settlement prior to trial of Mr. Smith's claim against Mr. Shaw. The issue presented is whether the $25,000 paid to Mr. Smith as underinsured motorist benefits from Mr. Stark's automobile insurance carrier constitutes a collateral source. If it does, the sum cannot be credited against the judgment. If the settlement payment does not constitute a collateral source, the sum should be credited against the judgment and the judgment would be reduced to $150,000.
Standard of Review
The issue presented is a question of law. Appellate review regarding questions of law is de novo, and the trial court's decision is afforded no deference. Thatcher v. Trans World Airlines , 69 S.W.3d 533, 541 (Mo.App.W.D. 2002). Thus, this court reviews whether the trial court properly applied the law when it determined that the $25,000 received by Mr. Smith from Mr. Stark's insurance carrier should not be credited against the judgment.
Discussion of Point I
The collateral source rule is an exception to the general rule that damages in tort are compensatory only. Washington ex rel. Washington v. Barnes Hosp. , 897 S.W.2d 611, 619 (Mo. banc 1995). "The [collateral source] rule prevents a tortfeasor from reducing its liability to an injured person by proving that payments were made to the person from a collateral source." Duckett v. Troester , 996 S.W.2d 641, 647 (Mo.App. W.D. 1999). The collateral source rule is not a single rule but, rather, a combination of rationales applied to a number of different circumstances to determine whether evidence of mitigation of damages should be precluded from admission. Id. at 648. Citing Washington , the Eastern District stated in Buatte v. Schnuck Markets, Inc. , 98 S.W.3d 569, 573 (Mo.App.E.D. 2002):
Generally, the purpose of the collateral source rule is to prevent a wrongdoer from mitigating damages by proving that payments were made to a person from a collateral source. Specifically, a wrongdoer is not entitled to have the damages to which he is liable reduced by proving that [the] plaintiff has received or will receive compensation or indemnity for the loss from a collateral source, wholly independent of him, or, stated more succinctly, the wrongdoer may not be benefited by collateral payments made to the person he has wronged. (internal citations omitted).
The application of the rule prevents an alleged tortfeasor from attempting to introduce evidence at trial that the plaintiff's damages will be covered, in whole or in part, by the plaintiff's insurance. Washington , 897 S.W.2d at 619. The rule expresses the policy that a "wrongdoer should not benefit from the expenditures made by the injured party in procuring the insurance coverage." Duckett , 996 S.W.2d at 648. Where the plaintiff has incurred no expense, obligation, or liability in securing the insurance coverage in question, however, the collateral source rule has no application. Id.
The Missouri Supreme Court in Washington discussed application of the collateral source rule in several types of cases by Missouri's courts. It noted that Missouri's courts have applied the rule when plaintiffs have contracted for and paid for insurance policies that resulted in their being paid for injuries sustained by defendants; when plaintiffs have received benefits from their employers; and when plaintiffs have received some governmental benefit, including Medicare and Medicaid, veterans' benefits, and social security. Washington , 897 S.W.2d at 619-20. It also noted that Missouri's courts have split on whether the collateral source rule applies to evidence of gratuitous services rendered to a plaintiff. Id. The Court, agreeing with the rationale of the Florida Supreme Court in Florida Physician's Insurance Reciprocal v. Stanley , 452 So.2d 514, 515-16 (Fla. 1984), that the collateral source rule would not apply to public school benefits received by a plaintiff, determined that in Missouri the collateral source rule did not apply to exclude evidence in the medical malpractice case where the plaintiff, brain damaged at birth, had access to free public special education after the plaintiff introduced evidence that special private schooling expenses would be required. Id. at 621. The Missouri Supreme Court quoted the Court in Stanley :
In a situation in which the injured party incurs no expense, obligation, or liability, we see no justification for applying the [Collateral Source] rule. We refuse to join those courts which, without consideration of the facts of each case, blindly adhere to "the collateral source rule, permitting the plaintiff to exceed compensatory limits in the interest of insuring an impact upon the defendant."
Washington , 897 S.W.2d at 621.
Mr. Smith claims that Hagedorn v. Adams , 854 S.W.2d 470 (Mo.App.W.D. 1993), instructs that the collateral source rule is applicable to uninsured motorist coverage and that the rationale applying the collateral source rule in uninsured motorist cases is equally applicable to underinsured motorist cases. This court in Hagedorn , however, did not state that the collateral source rule was applicable in all uninsured motorist cases. The court said that the rule is applicable to uninsured motorist cases where the insured has paid a premium to the insured's own insurance carrier for uninsured motorist coverage. Id. at 479. Applying the rationale of Hagedorn to underinsured motorist cases as advocated by Mr. Smith would apply the collateral source rule to those situations where the insured paid a premium to the insured's own insurance carrier for underinsured motorist coverage.
In this case, Mr. Smith received $25,000 as underinsured benefits from Mr. Stark's carrier as a result of the premiums for underinsured motorist coverage within Mr. Stark's insurance policy having been paid. Mr. Smith did not experience expense, obligation, or liability in securing the insurance coverage. The receipt of $25,000 by Mr. Smith as underinsured motorist benefits paid by Mr. Stark's insurance carrier was not received as the result of premiums paid by Mr. Smith, and Mr. Smith incurred no expense, obligation, or liability in Mr. Stark having secured the insurance coverage. The collateral source rule, therefore, does not apply. The trial court erred in failing to reduce the award of $200,000 by an additional $25,000 representing the amount paid by Mr. Stark's insurance carrier as underinsured motorist benefits.
Point II
Mr. Shaw claims as his second point that the trial court erred in overruling his motion to amend the judgment by eliminating the award for prejudgment interest. Mr. Shaw asserts three sub points in support of his position. He claims that Mr. Smith was not entitled to prejudgment interest under section 408.040.2, RSMo 2000, because: (1) Mr. Smith's offer to settle was not made "in a tort action," i.e. not communicated after a law suit was filed alleging a theory in tort; (2) Mr. Smith's offer to settle was not open for sixty days as required by the statute; and (3) his due process rights were violated because he was given neither notice nor opportunity to contest Mr. Smith's delay in prosecuting his case.
Standard of Review
The interpretation of a statute and whether the statute applies to a particular set of facts are questions of law. McKinney v. State Farm Mut. Ins. , 123 S.W.3d 242, 245 (Mo.App.W.D. 2003). Review of questions of law is de novo. Id. Questions of law are reviewed independently, without deference to the trial court's conclusions. Id.
Discussion of Point II
Mr. Shaw claims as his first sub point to point two that Mr. Smith is not entitled to prejudgment interest because his offer to settle the case in accordance with section 408.040 was not made "in a tort action," i.e. not communicated after a law suit was filed alleging a theory in tort. Mr. Smith's legal counsel, intending to invoke the provisions of section 408.040.2, mailed a certified letter to Mr. Shaw's automobile insurance carrier offering to settle his claims against Mr. Shaw for "$25,000 or the per person liability limit, whichever is greater." The letter expressed that the offer of settlement was left open "for sixty (60) days from the date of this letter." Mr. Shaw's carrier did not accept the offer of settlement within the time expressed in the letter.
Section 408.040.2, RSMo 2000, provides that prejudgment interest can be awarded to claimants in tort actions provided that stated criteria are satisfied. The statute states:
In tort actions, if a claimant has made a demand for payment of a claim or an offer of settlement of a claim, to the party, parties or their representatives and the amount of the judgment or order exceeds the demand for payment or offer of settlement, prejudgment interest, at the rate specified in subsection 1 of this section [9% per annum], shall be calculated from a date sixty days after the demand or offer was made, or from the date the demand or offer was rejected without counter offer, whichever is earlier. Any such demand or offer shall be made in writing and sent by certified mail and shall be left open for sixty days unless rejected earlier. Nothing contained herein shall limit the right of a claimant, in actions other than tort actions, to recover prejudgment interest as otherwise provided by law or contract.
§ 408.040.2. The requirements set out in section 408.040.2 for an award of pre-judgment interest are that: (1) the claimant made a demand for payment or an offer of settlement, and this demand or offer was left open for sixty days; and (2) the amount of the later judgment exceeded the claimant's demand or offer of settlement. Anderson v. Shelter Mut. Ins. Co. , 127 S.W.3d 698, 702 (Mo.App.E.D. 2004); McHaffie by and through Wieland v. Bunch , 951 S.W.2d 340, 342 (Mo.App.S.D. 1997); Hurst v. Jenkins , 908 S.W.2d 783, 786 (Mo.App.W.D. 1995).
The explicit language of the section 408.040.2 limits its application to tort actions. Mr. Shaw claims the court's award of prejudgment interest of $41,337.70 was erroneous because the settlement offer was not made in a tort action. Mr. Shaw asserts that the word "action" as used in the statute implies that a petition commencing a lawsuit in tort must have been filed before the provisions of section 408.040.2 authorizing prejudgment interest are applicable. He notes that Mr. Smith's section 408.040 certified letter was sent eight months before his legal counsel filed the petition commencing the lawsuit. He contends, therefore, that because the certified letter offering to settle the case sent by Mr. Smith's attorney was not made after suit was filed ("during a tort action"), section 408.040.2 was not "triggered" to permit the court's award of prejudgment interest.
The Missouri Supreme Court in Lester v. Sayles , 850 S.W.2d 858, 873 (Mo. banc 1993), stated that because the General Assembly did not designate when an offer of settlement under section 408.040.2 must be communicated by certified letter that "[t]he statute, by its plain language, requires no more than that plaintiff make `a demand for payment of a claim or an offer of settlement.' By placing no limitation on when the plaintiff may make this offer, the legislature has answered the question." Mr. Shaw recognizes that because the settlement offer in Lester was made a year after suit was filed that the Court's statement was obiter dictum. He cites Judge Beam's dissenting opinion in Harrison v. Purdy Brothers Trucking Co. , 312 F.3d 346 (8th Cir. 2002), as authority for his position that the statute contemplates suit first being filed before the offer of settlement is made. The Court's expressed reasoning in Lester is applicable to this case, however. Thus, the transmittal of a certified letter offering to settle a tort claim before the filing of a law suit for the alleged tortuous conduct referenced in the letter is sufficient to "trigger" the provisions of section 408.040.2 provided the necessary requirements of the statute are satisfied. In this case, Mr. Smith's attorney's section 408.040.2 letter to Mr. Shaw's insurance carrier before the law suit for the tortious conduct claimed in the letter was filed in court was sufficient to "trigger" the provisions of section 408.040.2 permitting the trial court to award prejudgment interest.
As his second sub point to Point II, Mr. Shaw contends that Mr. Smith is not entitled to an award for prejudgment interest because the settlement offer was not left open for sixty days as required to invoke the provisions of the prejudgment interest statute. § 408.040.2. Mr. Smith's counsel communicated Mr. Smith's settlement offer to GEICO, Mr. Shaw's insurance carrier, on July 14, 2000, by certified letter as instructed by section 408.040.2. The letter stated, in pertinent part:
This letter is to advise that I have been retained by Joshua Smith in regard to injuries he suffered in the motor vehicle accident of April 14, 2000, involving your insured, Charles Guy Shaw. In accordance with Missouri Revised Statute 408.040, this letter is a formal offer to settle Joshua Smith's personal injury claim for $25,000 or the per person liability limit, whichever is greater. In accordance with that statute, this offer to settle is open for sixty (60) days from the date of this letter. Please send me a copy of the insurance policy at issue. If you have a statement from my client, Joshua Smith, please send it to me. I look forward to working with you in regard to a resolution of this case.
Mr. Shaw's claim is based on his assertion that the insurance carrier did not have sixty days to consider the offer. He claims his insurance carrier did not receive the letter until at least July 21, 2000, seven days after the offer to settle was mailed. Thus, he asserts, the offer to settle remained open for fifty-three days after the date Mr. Shaw states that the insurance company received the certified letter containing the settlement offer. And because the offer was open only for fifty-three days from receipt of the letter by the insurance carrier, the statutory requirement was not satisfied and the court lacked authority to grant prejudgment interest.
Mr. Smith claims in rebuttal that the issue of whether the offer remained open for sixty days as prescribed by section 408.040.2 was not presented to the trial court, and, thus, was waived. He claims that Mr. Shaw did not deny the allegation in his petition that he had satisfied all the requirements of section 408.040.2 to effect its provisions for prejudgment interest. He notes that his Petition for Damages asserted compliance with section 408.040.2, including the requisite certified mailing, in paragraph 9. Mr. Shaw's answer to the petition, and specifically paragraph 9, acknowledges that Mr. Smith's certified letter was sent on or about July 14, 2000. Although Mr. Shaw's answer makes no additional specific response to Mr. Smith's assertions in paragraph 9 of the petition, his answer does contain a general denial to all allegations not specifically admitted. Thus, Mr. Shaw commenced the litigation admitting only that Mr. Smith's letter had been mailed as asserted in Mr. Smith's petition.
The trial court found in its judgment that Mr. Smith complied with section 408.040.2, thereby invoking the court's authority to award prejudgment interest. The court articulated that Mr. Smith sent the requisite letter by certified mail and that settlement was not attained within the sixty-day period provided for by the statute. The court found "that all requirements of Missouri Revised Statute § 408.040 had been met and that Plaintiff is entitled to pre-judgment interest from the 61st date of his offer to settle through April 19, 2003."
Mr. Shaw filed a motion to amend the September 17, 2003, judgment by eliminating the award of prejudgment interest for reasons stated in the suggestions filed contemporaneously with the motion but did not raise the issue that the settlement offer did not remain open for sixty days as required by the statute. Mr. Shaw acknowledged in the suggestions filed in support of his post judgment motion to amend the September 17, 2000, judgment that Mr. Smith's offer to settle had remained open for sixty days. Mr. Shaw's statement was that, "He [Mr. Smith] left his offer open for sixty (60) days as set forth in section 408.040.2." Thus, Mr. Shaw acknowledged to the trial court that Mr. Smith had kept open his offer to settle the case for sixty days, thereby waiving any claim that he might have raised. He now, on appeal, attempts to raise the specific issue for the first time. With limited exception, assertions of error made for the first time on appeal normally do not present issues for appellate review. Collins v. Hertenstein , 90 S.W.3d 87, 101 (Mo.App.W.D. 2002). Appellate review is limited to issues raised before the trial court. Ibarra v. Mo. Poster Sign Co. , 838 S.W.2d 35, 40 (Mo.App.W.D. 1992).
Whether the statutory requirement that the offer of settlement remain open for sixty days is jurisdictional need not be addressed, Mr. Shaw having acknowledged in his written statement to the trial court that the settlement offer remained open for sixty days.
In his reply brief, Mr. Shaw invites this court to exercise its discretion under Rule 84.13(c) and consider his argument under the plain error doctrine. He notes that the court can consider an issue yet unaddressed in the case that affects substantial rights if the court determines that manifest injustice or miscarriage of justice would otherwise result. Rule 84.13(c) provides: "Plain errors affecting substantial rights may be considered on appeal, in the discretion of the court, though not raised or preserved, when the court finds that manifest injustice or miscarriage of justice has resulted therefrom." Appellate courts rarely grant plain error review in civil cases, as the rule "should be used sparingly and does not justify a review of every alleged trial error that has not been properly preserved for appellate review." Messina v. Prather , 42 S.W.3d 753, 763 (Mo.App.W.D. 2001) (quoting State v. Valentine , 646 S.W.2d 729, 731 (Mo. 1983)). The propriety of granting plain error review is fact-specific. Id. Unless a claim facially establishes substantial grounds for believing that a "manifest injustice or a miscarriage of justice" would result if left uncorrected, the court will decline to review for plain error. Coleman v. Gilyard , 969 S.W.2d 271, 274 (Mo.App.W.D. 1998) (quoting Brown v. Mercantile Bank of Poplar Bluff , 820 S.W.2d 327, 335 (Mo.App.S.D. 1991)). The requisite showing to support plain error review is not demonstrated.
Mr. Shaw claims in his third sub point that the prejudgment interest award should be reversed because he was given neither a hearing nor an opportunity to contest Mr. Smith's delay in prosecuting his claim. The Court in Lester noted that section 408.040.2 does not provide for a hearing or other means for contesting a delay in prosecuting plaintiff's claim where the provisions of section 408.040.2 are utilized by plaintiff. Lester , 850 S.W.2d at 873. But the Court said that it need not consider the failure of the statute to provide a hearing because the defendant in the case had not alleged delay and its review of the record showed that "the offer of settlement was made approximately one year after the filing of the lawsuit, and from that point on, the case proceeded expeditiously. There was no delay." Id. The Court then denied the point.
In this case, despite Mr. Smith having sought prejudgment interest in his petition and throughout the proceedings before the trial court, Mr. Shaw did not raise the issue until he filed his Motion to Amend the September 17, 2003, judgment. Thus, before the case proceeded to judgment, Mr. Shaw had neither sought a hearing nor had he raised the claim that the statute was unconstitutional for its failure to provide him a hearing or other means to contest any delay in the prosecution of Mr. Smith's claim for the purpose of extracting a greater sum from him as prejudgment interest. "Constitutional issues are waived unless raised at the earliest possible opportunity consistent with orderly procedure." Hollis v. Blevins , 926 S.W.2d 683, 683 (Mo. banc 1996). Like in Lester , the record in this case shows that the issue was not timely raised before the trial court had entered judgment. The point is denied.
The judgment is reversed in part and affirmed in part. The case is remanded to the trial court for entry of a judgment in accordance with this opinion.
Harold L. Lowenstein and Edwin H. Smith, JJ. concur.