Clayton v. Smith

Bailey, Judge.

ATTORNEYS FOR APPELLANT William H. Kelley
Thaddeus C. Kelley
KELLEY LAW OFFICES LLC
Bloomington, Indiana ATTORNEYS FOR APPELLEE Ann Marie Waldron
WALDRON LAW
Indianapolis, Indiana Michael E. Simmons
HUME SMITH GEDDES GREEN &
SIMMONS, LLP
Indianapolis, Indiana Appeal from the Marion Superior Court The Honorable James B. Osborn, Judge Trial Court Cause No. 49D14-1606-CT-21431 Bailey, Judge.

Case Summary

[1] Upon the trial of a personal injury action brought by Gregory Smith ("Smith") against Nolan Clayton ("Clayton"), a jury found Clayton liable for $21,000,000.00, and the trial court subsequently awarded Smith a portion of the prejudgment interest he requested. Clayton moved for post-verdict credit for advance payments purportedly made by insurers on his behalf, but the trial court did not contemporaneously reduce the verdict. Clayton appeals, asking that we set aside the judgment entered upon the jury verdict and remand for a new trial. We affirm.

A declaratory judgment action involving one or more of the insurers was pending in another court.

Issues

[2] Clayton presents four issues for review:

I. Whether the trial court abused its discretion in making evidentiary rulings pertaining to prior conduct of Clayton and Smith;
II. Whether the trial court abused its discretion in admitting testimony from Smith's three expert or skilled witnesses;
III. Whether Smith was improperly awarded prejudgment interest; and

IV. Whether Clayton is entitled to post-verdict credit for advance payments.

Facts and Procedural History

[3] Smith and Clayton met as Stacked Pickle co-workers and became friends who socialized a few times per week, typically going to a gym to work out or to bars to drink and watch televised sports. As of February 2016, Smith was the manager of a Stacked Pickle bar in Fishers. He volunteered to work a few hours on the evening of February 17, 2016 at a special event at the Stacked Pickle near downtown Indianapolis. Smith asked Clayton to accompany him and wait while Smith worked. [4] Smith drove his truck to the Indianapolis Stacked Pickle, with Clayton as his passenger. At that time, it was anticipated that Smith would be driving himself and Clayton home. Smith began his work and Clayton sat down at a bar table. Clayton ordered his first alcoholic drink around 10:30 p.m. About one hour later, Smith was told that there were sufficient employees to cover the special event without him. Smith sat down at Clayton's table and began to consume alcoholic drinks also. [5] After several hours of drinking, Smith and Clayton apparently realized that they should not drive. They had some discussion about calling a ride-sharing service, but Clayton was unable to get his telephone application to work. Ultimately, a Stacked Pickle employee asked that Smith leave. He and Clayton complied with the request, but both were unable to walk steadily. On the way prejudgment interest in the amount of $714,574.35, providing for a total judgment against Clayton of $21,714,574.35. [12] Clayton filed a motion to reconsider the award of prejudgment interest and a motion to correct error. Clayton also filed a motion for post-verdict credit for advance payments, seeking $5,000.00 credit for sums paid by Progressive, and seeking credit in an amount equal to the payment received by Smith from Allstate in a confidential settlement. On February 14, 2018, the trial court conducted a hearing on the pending motions. Clayton's motions for reconsideration of prejudgment interest and correction of error were denied. Although the trial court heard argument on Clayton's motion for credit for advance payments, the parties acknowledged that resolution of the declaratory judgment was pending, and ultimately the trial court did not enter an order reducing the jury verdict against Clayton at that time. Clayton now appeals.

Ultimately, at least eight attorneys entered an appearance to represent a party or an intervenor.

Discussion and Decision Prior Conduct Evidence

[13] Clayton contends that the trial court's evidentiary rulings denied him a fair trial on the matter of liability. Specifically, Clayton observes that the jury - tasked with apportioning fault - learned of his prior bad conduct but did not learn of Smith's criminal history. [14] During pretrial depositions, Clayton admitted to driving while intoxicated prior to the accident, although he had no alcohol-related arrests or convictions, and tendency to demonstrate whether his conduct at the time of the collision was a conscious and voluntary act committed in reckless disregard of the consequences to others. Id. The evidence was thus relevant within the meaning of Rule 401, but the Court "hasten[ed] to emphasize the evidence was relevant only on the issue of punitive damages." Id. at 706-07. [22] However, as Clayton observes, the Court left open the question of relevance in other situations:

Amicus curiae Indiana Trial Lawyers Association contends evidence of prior convictions is also relevant on the question of reasonable care and proximate cause, both of which are implicated in determining liability for a negligence claim. The parties do not explore this issue likely because liability was conceded. In similar fashion we decline to explore this issue as well. Instead we leave it open for another day.

Id
. at 706, n. 5. [23] Although Clayton broadly claims that Smith's criminal history was relevant to "throw light on his state of mind," Appellant's Brief at 14, as in Sims, the proximate cause of Smith's injuries was not in dispute. Nor did Clayton claim that he had acted with reasonable care; rather, he admitted some fault but stopped short of conceding that he had greater fault than Smith and non-party Stacked Pickle. As such, the issues of proximate cause and reasonable care were not the contested issues before the jury herein. The jury, which did not award punitive damages, apportioned fault and awarded compensatory damages. Given that our Supreme Court has held that a drunk driver's prior positions. Clayton was potentially liable for punitive damages. "Admitting evidence of past similar criminal conduct allows the factfinder to determine whether defendant has learned his lesson and profited by his past experience or whether despite his past experience the defendant nonetheless engaged in a 'conscious, voluntary act or omission in reckless disregard of the consequences to another party.'" Sims, 73 N.E.3d 709 (quoting N. Ind. Pub. Serv. Co. v. Sharp, 790 N.E.2d 462, 465 (Ind. 2003)). That said, Smith and Clayton were deemed to be birds of a feather before the eyes of the jury, as to their willingness to drink and drive. [26] Clayton described his typical social outings with Smith as "we were probably going to the bars a couple nights a week, and he would - would drink a lot. So I mean every - every - a couple days a week, probably, I saw him pretty intoxicated." (Tr. Vol. II, pg. 95.) Subsequently, Clayton admitted that he must have been driving at the time of the collision, although he lacked memory of that, and the following exchange ensued:

Smith's Counsel: Well, you have - before this accident with Greg Smith, you had previously been intoxicated and been out driving vehicles, right?
Clayton: We both had done it together a couple - on a couple different occasions, yes.
Smith's Counsel: But that's not my question. My question is you, had [you] been out previously intoxicated and driving a vehicle, correct?

Clayton's Counsel: Excuse me, Your Honor, I'm going to object.

(Tr. Vol. II, pg. 103.) Clayton's counsel objected only after Clayton explained that both he and Smith had driven while intoxicated and Smith's counsel asked a follow-up, clarifying question. By this point, the jury had heard the evidence of both parties' past misconduct. [27] Clayton's remedy, albeit limited, would have been to ask for a limiting instruction in accordance with Sims, that is, the jury could have been instructed that they were to consider evidence of Clayton's past misconduct of drunk driving only relative to punitive damages. The request was not made. At bottom, Clayton's argument on appeal is that Smith's past criminal conduct was more egregious than Clayton's and the jury should have heard about it. But Smith's convictions were not relevant and, regardless of relevancy, the jury was informed of Smith's willingness to drink and drive. The jury was not left to apportion fault with a misleading impression that only one of the young men in the truck had such a propensity. Clayton has not demonstrated an abuse of discretion in the trial court's evidentiary rulings in this regard.

Smith requested preclusion of: Any evidence, questions, or remarks pertaining to Plaintiff's driving record, criminal arrests, criminal charges and/or convictions, or the underlying facts related thereto; and Any evidence, questions, or remarks related to criminal arrests, charges or convictions, including civil infractions, of Plaintiff which are not otherwise admissible under Rule of Evidence 609. (Appellee's App. Vol. II, pg. 7.)

Clayton did not seek to introduce evidence of the prior convictions to impeach Smith's testimony. Indiana Evidence Rule 609 provides the general rule and limitation in such instances: "For the purpose of attacking the credibility of a witness, evidence that the witness has been convicted of a crime or an attempt of a crime must be admitted but only if the crime committed or attempted is (1) murder, treason, rape, robbery, kidnapping, burglary, arson, or criminal confinement; or (2) a crime involving dishonesty or false statement, including perjury."

To prevail on a punitive damages claim, the plaintiff must show that the defendant subjected another person to probable injury, with an awareness of such impending danger and with heedless indifference of the consequences. Sims, 73 N.E.3d at 706. The tortious conduct must be marked by malice, fraud, gross negligence, or oppressiveness that is not the result of mistake of law or fact, honest judgment error, overzealousness, mere negligence or other such noniniquitous human failing. Id.

Clayton theorized that, had Smith not been injured, Stacked Pickle management may have fired him for his drunken behavior at a company location and then argued that his lost wages could be correspondingly reduced by the jury. This theory, not based upon the actual events, is speculative. Moreover, as our Supreme Court has found prior criminal history irrelevant to compensatory damages, we are not free to carve out an exception for wages.

Having determined the lack of relevance to a fact of consequence in determining the action, we do not address Clayton's argument that Smith's criminal convictions constituted evidence of his habitual conduct of drinking and getting into trouble or the argument that Smith's criminal history was somehow relevant to a determination of the punitive damages claim against Clayton.

Clayton also testified that Smith "would get a little aggressive when he would drink." (Tr. Vol. II, pg. 160.)

Expert or Skilled Witnesses

[28] After pre-trial depositions were taken, Clayton filed a series of motions to exclude or restrict the opinion testimony of three of Smith's anticipated expert Smith's expressed desire to return to work and aspects of his education and work history. [30] The trial court permitted Ford to testify and she opined that Smith was 100% occupationally disabled, and she further testified that his lost earnings amounted to $2,150,684.00 (based upon his managerial earnings at the time of the collision multiplied by 30.7 work years). On appeal, Clayton renews his argument that Ford "failed to provide an adequate foundation for her opinion that plaintiff is 100% occupationally disabled as she did not review a sufficient amount of data, she did not review data specific to plaintiff's local job market, and because she used boilerplate language in her report that was not tailored to plaintiff." Appellant's Brief at 28. [31] The trial court acts as the gatekeeper when determining the admissibility of opinion evidence under Indiana Evidence Rule 702. Summerhill v. Klauer, 49 N.E.3d 175, 180 (Ind. Ct. App. 2015). Evidence Rule 702 provides:

(a) A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue.
(b) Expert scientific testimony is admissible only if the court is satisfied that the expert testimony rests upon reliable scientific principles.

litigant "would only be entitled to the present value of the aforementioned items under Indiana law." Appellant's Brief at 34. "Present value" has been defined as representing the present value of a sum of money to be paid over a period of years, with the discounted award consisting of an amount which would be invested to yield the future sum. Ind. Bureau of Motor Vehicles v. Ash, Inc., 895 N.E.2d 359, 368 (Ind. Ct. App. 2008). Although evidence of present value may assist the trier of fact in the determination of a reasonable award, it is not essential to an award of damages. Id. [42] At bottom, Clayton's position is that Berens did not offer specialized knowledge that could help the jury understand the evidence because she is not an economist. However, Clayton does not provide authority for the propositions that only an economist can project future aggregate costs or that each individual cost must be reduced to present value for presentment to the jury. Indeed, we have acknowledged that, although present value is generally a proper consideration in determining an appropriate award, "an awareness of general inflation and a constant depreciation and cheapening of money lies within the zone of discretion given to the trier of fact in the assessment of damages." Griffin v. Acker, 659 N.E.2d 659, 663 (Ind. Ct. App. 1995). Clayton's preference for testimony from an economist expressed uniformly in present day values is directed to the weight of the evidence. Again, he has not demonstrated that the trial court abused its discretion by refusing to exclude Dr. Berens as a skilled witness.

Although Ford was the sole witness to state that Smith has a total vocational disability, there was not a total absence of corroboration. Dr. Scott Shapiro testified that Smith's spinal cord injuries were so extensive that he retained only some bicep function. Dr. Julie Chow testified that Smith was classified as quadriplegic. Dr. Ralph Buschbacher testified that Smith's injuries were permanent and prognosis for improvement was poor. According to Dr. Buschbacher, Smith was "not a candidate for employment" and was "truly unemployable." (Tr. Vol. IV, pg. 56.) He opined that there was an 85% to 90% chance that Smith would not be gainfully employed. Smith's mother testified that his health was not stable enough to permit him to go back to school and that he needed a caregiver to leave home.

Dr. Buschbacher had examined Smith but was not one of his treating physicians.

Dr. Buschbacher clarified that he was more than 50% certain that Smith was at risk for complications, but this did not mean that Smith more than likely would experience a particular complication.

Dr. Buschbacher differentiated between risks less likely to occur and those very likely to occur. For example, he opined that all persons who have suffered a spinal cord injury lose bone mass and that there was a very high risk of osteoporosis or osteoporatic fracture below the spinal injury site.

Award of Prejudgment Interest

[43] Clayton next argues that Smith was ineligible for prejudgment interest because he failed to satisfy the statutory prerequisite of making a written offer of settlement to Clayton under the Tort Prejudgment Interest Statute, Indiana Code Sections 34-51-4-1 to -9 ("the TPIS"). Clayton acknowledges that Smith sent a letter to counsel who had been retained by Progressive to pursue a declaratory judgment but asserts that the only written offer of settlement in the tort action was addressed to Allstate's counsel. [44] Pursuant to Indiana Code Section 34-51-4-6, the chapter providing for prejudgment interest does not apply if:

(1) within one (1) year after a claim is filed in the court, or any longer period determined by the court to be necessary upon a showing of good cause, the party who filed the claim fails to make a written offer of settlement to the party or parties against whom the claim is filed;
(2) the terms of the offer fail to provide for payment of the settlement offer within sixty (60) days after the offer is accepted; or

(3) the amount of the offer exceeds one and one-third (1 1/3) of the amount of the judgment awarded.

[45] "A prerequisite to the recovery of prejudgment interest is a settlement letter." Alsheik v. Guerrero, 979 N.E.2d 151, 154 (Ind. 2012). Its purpose is to afford the adverse party with notice of a claim and to provide them with an opportunity to engage in meaningful settlement. Id. The letter must contain the appropriate time-limiting language and the letter must be timely sent. Id. [46] Smith filed suit against Clayton on June 15, 2016. On July 18, 2016, Randall Degan ("Degan") entered an appearance on behalf of Clayton and filed an answer. Degan had been retained by Allstate (who insured Clayton pursuant to his parents' insurance policy) to provide a defense for Clayton. On September 28, 2016, Smith sent a Time-Limited Settlement Demand addressed to Degan. Although Degan would subsequently be permitted to withdraw his representation, he was counsel of record for Clayton at that time. Progressive was then denying coverage; counsel retained by Progressive entered an appearance on Clayton's behalf on November 9, 2016. [47] On March 9, 2017, Smith sent a Time-Limited Settlement Demand addressed to Thomas Vetne, counsel for Progressive who had entered an appearance in the declaratory judgment action. The demand letter stated in part:

Your client ... Progressive is defending Clayton in the personal injury action pending in the Marion County Superior Court ... Cause number 49D14-1606-CT-021431; and has also initiated a Declaratory Judgment action [in] which you are representing Progressive in the Marion County Superior Court ... cause

number 49D02-1701-PL-002865. Because of the dual ongoing litigation and the time and expense which will be incurred in pursuing both lawsuits, it would seem appropriate to discuss settlement of Progressive's exposure prior to incurring those costs.

(Appellee's App. Vol. II, pg. 107.) [48] The TPIS requires that a compliant demand for settlement be made to the party or parties against whom the claim is filed. Here, the trial court found that Clayton received the requisite statutory settlement demand. Our review of the record indicates that, on September 28, 2016, Smith complied with the TPIS by making a demand for settlement upon Clayton, the sole defendant in this tort claim, through his counsel of record on that date. The sole defendant having been timely made aware of a demand for settlement, the TPIS does not require that additional entities be served with a demand letter. The trial court did not err in concluding that Smith was eligible for an award of prejudgment interest under the TPIS.

At the hearing on motion to correct error, Clayton's counsel acknowledged that "[Smith] gave a letter to Allstate's counsel, or defendant Clayton's counsel through Allstate," but argued that "[he] did not give one to counsel for Clayton for Progressive. So, they offered to settle with Allstate. Again, it wasn't a full and complete settlement." (Tr. Vol. IV, pg. 214.)

Motion for Post-Verdict Credit

[49] In July of 2016, Smith forwarded medical bills to a Progressive claims adjuster and requested confirmation of receipt of the bills. A Progressive claims representative responded via e-mail: "To my knowledge, there is no bodily injury on this claim as it is a single vehicle accident. There is $5,000.00 of medical payments available and once that is exhausted health insurance will pick up." (Appellee's App. Vol. II, pg. 52.) Thereafter, Progressive paid out the sum of $5,000.00. [50] Post-trial, Clayton asserted that he was entitled to a $5,000.00 reduction of the jury award due to the Progressive payment, pursuant to Indiana Code chapter 34-44-2, which governs advance payments in a personal injury case. [51] Indiana Code Section 34-44-2-1 provides:

(a) This chapter applies to an action brought to recover damages for:

(1) personal injuries;
(2) wrongful death; or
(3) property damage.

(b) This chapter does not apply to actions in which there is more than one (1) defendant.

[52] Indiana Code Section 34-44-2-3 provides:

If it is determined that the plaintiff is entitled to recover in an action described in section 1 of this chapter:
(1) the defendant may introduce evidence of any advance payment made; and

(2) the court shall reduce the award to the plaintiff to the extent that the award includes an amount paid by the advance payment.

[53] The purpose of the advance payment statute is to prevent double recovery if an advance payment has been made to a plaintiff by a defendant's insurance company. Nealy v. Am. Family Mut. Ins. Co., 910 N.E.2d 842, 846 (Ind. Ct. App. 2009), trans. denied. Apart from the advance payment statute, some policies include an explicit provision for a setoff of medical expense payments. Id. at 848. Where a policy permits an insurer to offset payments under medical coverage against payments under liability coverage, the insurer has the burden of establishing that a liability judgment actually included the advanced medical expenses, and no offset will be allowed where it does not sustain this burden. Crabtree ex rel. Kemp v. Estate of Crabtree, 837 N.E.2d 135, 142 (Ind. 2005). [54] A typical case involving advance payments is one with an injured plaintiff in one vehicle and a tortfeasor in another, with medical payments coverage supplied by the insurer of the plaintiff's car and the relevant liability coverage insured by the tortfeasor's insurer. Nealy, 910 N.E.2d. at 845. In that case, an "advance payment" is one advanced by the tortfeasor's insurer as, in effect, an interim payment of potential damages for which the tortfeasor may be liable. Crabtree, 837 N.E.2d at 140. Reducing a judgment by the amount of an advance payment eliminates exposure of the defendant against whom the judgment is entered (as opposed to his insurer) to the amount already paid by the insurer. Id. The statutory definition of "advance payment" only their entirety, as advance payments offsetting the verdict. On appeal, Progressive asserts that Clayton was Allstate's insured and any payment to Smith from Allstate was to limit Clayton's liability in the tort action. Smith responds that Clayton's motion for set-off was premature and there has been no factual development as to the nature and extent of claims settled in the Allstate-Smith-Clayton settlement. However, Smith seems to concede that the automobile bodily injury liability limits of the Allstate policy ($100,000.00) could likely in future litigation be deemed an advance payment to Smith on behalf of Clayton. [57] As we have previously observed, the declaratory judgment action was pending when the trial court conducted the post-trial hearing in the personal injury case. At that hearing, argument of counsel was heard but no additional evidence was introduced. As such, we agree with Smith that Clayton did not establish his entitlement to have the jury verdict reduced at that hearing.

There was some discussion, in a bench conference, regarding an insurance policy and whether counsel had been provided with a copy. In any event, no testimony was elicited at the hearing and no evidentiary exhibits were formally admitted into evidence.

At the post-trial hearing, Smith acknowledged that Clayton had been partially released but also asserted that Allstate had been released upon any claim that Clayton might have for negligent or wrongful claims handling. Clayton assigned to Allstate any claim that he might have against Progressive. --------

Conclusion

[58] Clayton did not demonstrate an abuse of the trial court's discretion in its evidentiary rulings. The trial court did not err in finding the prejudgment interest statute to be applicable. Clayton did not establish entitlement to a 29 contemporaneous reduction of the jury verdict under the advance payment statute. [59] Affirmed. Mathias, J., and Bradford, J., concur.