Lewis v. Ukran ( 2019 )

Filed 6/26/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
THYME LEWIS, B290128
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. BC517320)
v.
ALEKSANDR UKRAN et al.,
Defendants and Appellants.
APPEAL from a judgment and order of the Superior Court
of Los Angeles County, Lia V. Martin, Judge. Affirmed.
Robie & Matthai, Kyle Kveton and Natalie A.
Kouyoumdjian for Defendants and Appellants.
Mardirossian & Associates, Inc., Garo Mardirossian, Armen
Akaragian, Adam Feit; and The Ehrlich Law Firm, Jeffrey I.
Ehrlich, and Clinton Ehrlich for Plaintiff and Respondent.
_______________________________________
INTRODUCTION
This case arises out of a van-versus-motorcycle accident
between plaintiff and respondent Thyme Lewis and defendant
and appellant Aleksandr Ukran.1 Following a bench trial, the
trial judge found Ukran negligently caused the accident and
awarded Lewis total damages of $1,651,702.39 for past medical
expenses and past lost earnings, loss of future earning capacity,
and future medical damages. The court also awarded pre-
judgment interest running from the date of Lewis’s Code of Civil
Procedure section 9982 settlement offer.
Ukran moved for a new trial, arguing the damages award
was excessive because: (1) it was not supported by sufficient
evidence; and (2) damages awarded for future medical expenses
and future lost earnings were not reduced to present cash value.
The trial court denied the motion. Ukran appeals from both the
final judgment and the order awarding pre-judgment interest.
We affirm.
We publish our opinion to resolve an open legal question:
who bears what burden of proof when reducing an award of
future damages to present value? Neither party points us to, and
we have been unable to locate, a California case expressly
addressing the issue. The federal Circuit Courts of Appeals are
split. Because neither party in this case offered any evidence
1 Ukran was driving the van in the course and scope of his
employment for appellant Lov Gettogether, Inc. (LGI). For ease
of reference, we refer to Ukran and LGI collectively as Ukran.
2 All
further statutory references are to the Code of Civil
Procedure, unless otherwise indicated.
2
(expert or otherwise) concerning the appropriate discount rate,
the trial court declined to perform a present value calculation.
We hold, in a contested case, a party (typically a defendant)
seeking to reduce an award of future damages to present value
bears the burden of proving an appropriate method of doing so,
including an appropriate discount rate. A party (typically a
plaintiff) who seeks an upward adjustment of a future damages
award to account for inflation bears the burden of proving an
appropriate method of doing so, including an appropriate
inflation rate. This aligns the burdens of proof with the parties’
respective economic interests. A trier of fact should not reduce
damages to present value, or adjust for inflation, absent such
evidence or a stipulation of the parties.
FACTUAL AND PROCEDURAL BACKGROUND
We state the facts in the manner most favorable to the
judgment. (Gyerman v. United States Lines Co. (1972) 7 Cal.3d
488, 492, fn. 1.) Given Ukran’s contentions on appeal, our
recitation of the circumstances of Lewis’s injury can be brief.
On March 26, 2013, Ukran was driving his van and made a
sharp left turn directly into Lewis’s path of travel. Lewis braked
hard, but the front tire of his motorcycle collided with the side of
Ukran’s van. Lewis flew off his motorcycle and landed on the
van’s roof, thereby sustaining major injuries to many parts of his
body.
Lewis filed a complaint for negligence against Ukran.
Seven months later, Lewis served Ukran with a section 998 offer
3
to settle his claims for $950,000. Ukran did not accept the offer
and a bench trial commenced.
Lewis was 51-years-old at the time of trial. He testified he
worked in the entertainment industry as an actor, including a
six-year stint on the TV show “Days of Our Lives,” and played on
celebrity basketball and baseball teams. In 2009, Lewis began
doing stunt-related training. Within the three years before the
accident, Lewis did approximately thirty jobs involving
choregraphed fight scenes and stunt driving. Lewis testified he
was unable to perform the stunt jobs he had lined up for 2013
because of the injuries he suffered in the crash, causing him to
lose $40,000 in earnings. He attempted shooting a Mercedes
commercial about six months after the accident, but his physical
limitations made the driving very taxing, causing him to miss his
mark and break the left headlight of the Mercedes. Another
stuntman replaced Lewis to finish the shot. Lewis further
testified he felt he had the ability to continue working as a
stuntman for 15 years had the accident not occurred and
estimated he would have earned between $4.5 and $7 million.
Many of the people he was working with as he moved up the
ranks were earning between $300,000 and $400,000 per year.
Lewis also called Thomas McComas, a stuntman, director,
and stunt coordinator3 with 20 years of experience, to testify
about Lewis’s future earning capacity. McComas opined that
Lewis, who is African American, “matched perfectly to being a
stunt performer” given the new push for diversity in television
and film. McComas testified Lewis could be working on
commercials that would each pay him between $30,000 and
3 As a stunt coordinator, McComas figures out the logistics of the
stunt, including the budget for the stunt and the people to hire.
4
$50,000. And someone of Lewis’s “skill level and ethnicity” would
earn between $200,000 and $300,000 per year on average, though
$500,000 per year “is definitely not an unattainable number.” He
further testified that, because Lewis looks younger than he is,
“there’s no reason that he couldn’t work until his mid-60s.”
Following trial, the court issued and filed its Order for
Judgment and its Statement of Decision. The court found Ukran,
while in the course and scope of his employment at LGI, was
negligent and his negligence was a substantial factor in causing
harm to Lewis. It also awarded $1,651,702.39 to Lewis, which
consisted of a stipulated amount of $107,002.39 for Lewis’s past
medical damages and $40,000 in past lost earnings, $1,200,000
for lost earning capacity, and $304,700 for future medical
damages. The court declined to reduce Lewis’s future damages to
present cash value, explaining “there was no evidence presented
regarding how that calculation would properly be made.” The
court also awarded pre-judgment interest from the date Lewis
served his section 998 offer under Civil Code section 3291.
Ukran moved for a new trial, contending Lewis’s evidence
was insufficient as a matter of law to support the court’s award of
lost earning capacity, and future damages should have been
reduced to present cash value. The court denied the motion and
this appeal followed.
DISCUSSION
I. Damages for Lost Earning Capacity
Ukran contends the court’s damages award for lost earning
capacity was excessive and not supported by sufficient evidence.
We disagree.
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A. Legal Principles and Standard of Review
When reviewing whether a trial court’s damages award is
excessive and whether a trial court erred in denying a motion for
new trial, we employ the substantial evidence standard. (Major v.
Western Home Insurance Co. (2009) 169 Cal.App.4th 1197, 1213.)
Loss of earning capacity damages are closely related to loss
of future earnings damages in that they both compensate
plaintiff for earnings the plaintiff would have received in the
future but for the injury. Loss of earning capacity is simply a
broader way of compensating for future earnings loss. (Haning et
al., Cal. Practice Guide: Personal Injury (The Rutter Group 2018)
¶ 3:582, p. 3-103.) Loss of earning capacity refers to the extent to
which the injury interferes with plaintiff’s ability to draw higher
earnings in the future by advancing to a better paying position or
an alternative career. Id. at ¶3:496, pp. 3-91-92, ¶3:582, p. 3-103;
see also Connolly v. Pre-Mixed Concrete Co. (1957) 49 Cal. 2d.483,
488–489 [loss of earning capacity damages awarded to a
“champion tennis player” who had won the National Singles Title
three times, won the “four major championships of the world” and
been offered a professional tennis tour; permissible to look to
salary for professional tennis players].
More specifically, loss of earning capacity is “the difference
between what the plaintiff’s earning capacity was before her
injury and what it is after the injury.” (Licudine v. Cedars-Sinai
Medical Center (2016) 3 Cal.App.5th 881, 893 (Licudine I).)
“[T]he focus is not on what the plaintiff would have earned in the
future, but on what she could have earned.” (Ibid. [internal
quotations omitted].) Thus, “proof of the plaintiff’s prior
earnings, while relevant to demonstrate earning capacity, is not a
6
prerequisite to the award of these damages [citations].” (Ibid.)
Once the factfinder has determined which career options are
reasonably probable for the plaintiff to achieve, it can value the
earning capacity of that career in three ways: “(1) by the
testimony of an expert witness; (2) by the testimony of lay
witnesses, including the plaintiff; or (3) by proof of the plaintiff’s
prior earnings in that same career.” (Id. at p. 897, citations
omitted.)
B. Substantial Evidence Supports the Judgment
The court awarded $1,200,000 for lost earning capacity,
finding Lewis had the capacity to do stunt work for 12 years and
to earn an average of $100,000 per year. Lewis presented his
own testimony and the testimony of McComas to value his lost
earning capacity. Lewis testified he had the ability to continue
working as a stuntman for 15 years had the accident not
occurred, and estimated he would have earned between $4.5 and
$7 million. He based his estimate on his knowledge of what other
people in the industry were making as they moved up the ranks
(between $200,000 and $400,000 per year). McComas estimated
Lewis would have made between $200,000 and $300,000 per
year, although $500,000 per year was “not an unattainable
number,” and “there’s no reason that he couldn’t work until his
mid-60s.”
Ukran contends “the same infirmities” in the evidence exist
here as in Licudine I. We are unpersuaded. In Licudine I,
plaintiff was awarded $730,000 for claimed loss of earning
capacity as an attorney because she had been admitted to, but
had not yet attended, law school. (Licudine I, supra, 3
Cal.App.5th at pp. 889-890.) The trial court set aside the award,
7
stating “‘there was no evidence whatsoever of the compensation
earned by graduates of any law school, much less the law school
plaintiff chose to attend, or compensation of any attorneys, no
matter how experienced.’” (Id. at p. 890.) The court of appeal
affirmed, holding plaintiff did not adduce any evidence to
establish it was reasonably probable she could have obtained
employment as an attorney or any evidence of the earnings of
lawyers. (Id. at 887.) Plaintiff’s evidence in Licudine I consisted
only of her interest in a legal career and her letters of acceptance
to law school. But here, Lewis had been in the stunt industry for
four years before the accident, and Lewis and McComas testified
to how much Lewis could earn as a stunt performer.
Ukran acknowledges “plaintiff offered limited testimony
regarding his income and earnings” before the accident, but
claims the damages award is excessive because Lewis’s actual
earnings were significantly below $100,000 per year and Lewis
offered no admissible evidence demonstrating specific guaranteed
jobs he lost after the accident. We reject this argument for two
reasons. First, the focus in determining loss of earning capacity
is what Lewis could have earned in the future, not what he
earned in the past. (Licudine I, supra, 3 Cal.App.5th at p. 893.)
Second, there is evidence in the record of how much Lewis would
have earned on certain jobs: Lewis would have earned
approximately $20,000 for two-weeks of work on “Streets of Fury”
and he earned $50,000 working on a Mercedes commercial after
he was injured (despite needing to be replaced for one of the shots
in the commercial).
Ukran also challenges the court’s finding Lewis had the
capacity to do stunt work for 12 years absent his injuries. The
court found it was “overly optimistic to believe that Mr. Lewis
8
had the capacity to do this work for a full 15 years . . . . [but] it is
reasonable to believe he could have performed all levels of stunt
work for 12 years.” Ukran contends Lewis offered no credible
expert testimony with respect to his anticipated life expectancy in
the entertainment industry as an actor, stuntman or precision
driver and points to McComas’s testimony that the movie
industry is rapidly changing. It is not our role to reweigh the
evidence. (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981.)
And, contrary to Ukran’s contentions, expert testimony is not
vital to a claim for loss of earning capacity. (Gargir v. B’Nei Akiva
(1998) 66 Cal.App.4th 1269, 1282 [“it is not necessary for a party
to produce expert testimony on future earning ability . . .”].)
Finally, Ukran contends the court erred in characterizing
Lewis’s future earnings claim as “loss of earning capacity.”
Without citation to authority, Ukran argues Lewis’s claim was
“truly a claim for loss of future earnings” because he was “already
in the industry” and thus, Plaintiff “needed hard, baseline
historical income evidence to support his future earnings loss
claim.” We reject this contention. As the Licudine I court
explained, “[i]n cases where the plaintiff is already part of the
work force, courts have looked to the plaintiff’s earning capacity
in his or her chosen career.” (Licudine I, 3 Cal.App.5th at p. 896.)
Such is the case here. That Lewis worked as a stuntman for a
few years before the accident did not preclude him from seeking
damages for loss of earning capacity; instead, it “more than
sufficed to show a reasonable probability that he could have been
fit for that very same career in the future.” (Ibid.) Accordingly,
we conclude substantial evidence supported the judgment.
9
II. The Court Did Not Err By Declining to Reduce
Future Damages to Present Cash Value
“The present value of a gross award of future damages is
that sum of money prudently invested at the time of judgment
which will return, over the period the future damages are
incurred, the gross amount of the award. [Citations.] ‘The concept
of present value recognizes that money received after a given
period is worth less than the same amount received today. This
is . . . because money received today can be used to generate
additional value in the interim.’” (Holt v. Regents of the
University of California (1999) 73 Cal.App.4th 871, 878.)
Different approaches may be used to determine the present value
of a lump sum future damages award.4 Each calculation requires
the input of a discount rate and an inflation rate (i.e. a rate that
recognizes dollars in the future will buy less than would those
same dollars if received today). These rates vary over time and
are the subject of reasonable differences of opinion.
Ukran contends the court erred by not reducing the amount
of future medical expenses and future lost earnings awarded to
4 These approaches include calculating the difference between the
market rate of interest and the anticipated rate of inflation, and
then discounting by this “real interest rate”; including the effects
of inflation in the gross award and then discounting by the
market interest rate; or employing a zero discount rate (the “total
offset approach”), if stipulated by the parties or supported by
competent evidence on the inflationary and market interest
factors. (Haning et al., Cal. Practice Guide: Personal Injury (The
Rutter Group 2018) ¶ 3:527, p. 3-96.)
10
present cash value. He claims the trial court was required to do
so even in the absence any evidence proffered by any party of
appropriate discount or inflation rates, or the appropriate method
of calculating present cash value.
But the only California case Ukran cites for this position is
Scognamillo v. Herrick (2003) 106 Cal.App.4th 1139, a case
decided by a different panel of this Division. In Scognamillo,
defendants’ insurer failed to answer the complaint in an
automobile accident case within the allotted time period. The
trial court ultimately entered a default judgment in favor of the
plaintiff and denied defendants’ later motion to vacate. On
appeal, the judgment was affirmed in part, but reversed with
respect to two components of the damages award. The first
consisted of the cost of a possible second surgery, and potential
lost income while recuperating from it. The panel concluded the
need for a second surgery “was entirely speculative” because the
first planned surgery might well resolve plaintiff’s back injury.
The second consisted of the anticipated cost of the first back
surgery, and the future wages expected to be lost as a result of it.
The panel noted, “the trial court apparently did not reduce to
present cash value the award for future lost wages for the first
surgery, as it should have done. (Niles v. City of San Rafael
(1974) 42 Cal.App.3d 230, 241-242.) In light of these
circumstances, we will reverse the judgment and remand the
matter to the superior court for reconsideration of the amount of
damages to be awarded.” (Id. at p. 1151.) The panel directed the
trial court to reduce the award of future damages to present
value. (Ibid.) Because defendants defaulted, the panel also
directed that they not be permitted to participate in the
proceedings on remand. (Ibid.)
11
Ukran assumes the Scognamillo panel expected the trial
court, on remand, to reduce the future damages to present value
without taking any evidence of how to do so. But the panel’s
citation to Niles shows otherwise. In Niles, the appellant
challenged an inflationary rate as too high, and a discount rate as
too low, used by respondent’s trial expert to calculate damages for
future medical and other expenses. The Niles court discussed
this testimony at some length, concluding, “[t]he determination of
damages is primarily a factual matter on which the inevitable
wide differences of opinion do not call for the intervention of
appellate courts,” and the expert testimony constituted
substantial evidence in support of the verdict. (Niles, supra, 42
Cal.App.3d at pp. 241-244.) Implicit in the Scognamillo panel’s
remand is an expectation that the trial court, in reducing the
award of future damages, would require the plaintiff (as the only
party participating in the proceeding) to offer evidence proving up
the discounted cash value of the future damages award.
Alternatively, the trial court in a default case might take
judicial notice of an appropriate discount rate. To the extent
Scognamillo can be read to require a trial court to reduce a
damages award to present value without appropriate evidence of
how to perform that calculation, including the appropriate
discount rate, we disapprove of it.
Our review of California case law reveals no definitive
pronouncement regarding which party bears the burden of proof
concerning appropriate discount and inflation rates in contested
cases. The parties have not directed us to controlling authority.
Moreover, the federal courts are in conflict on the issue. For
example, the Ninth Circuit held the defendant has the burden of
producing evidence of the discount rate and plaintiff has the
12
burden of producing evidence of inflation. (Alma v. Manufacturers
Hanover Trust Co. (9th Cir. 1982) 684 F.2d 622, 626.) However,
if “neither party provides competent evidence of the inflation rate
or the discount rate, the district court must make a lump sum
award that is not adjusted for either factor.” (Ibid.) In arriving at
this conclusion, the Ninth Circuit explained “[t]he rate is an
evidentiary issue, and thus it is the responsibility of the parties
to produce evidence of the rate that is appropriate.” (Ibid.)
In Miller v. Union P.R. Co. (10th Cir. 1990) 900 F.2d 223,
226, the Tenth Circuit, relying on Alma, held the court did not
err in refusing to give a reduction to present value jury
instruction in the absence of any evidence concerning discounting
methods.5 The Third Circuit, however, places the burden of
producing evidence regarding a rational reduction to present
value on the plaintiff. See, e.g., Gorniak v. National R.R.
Passenger Corp. (3d Cir. 1989) 889 F.2d 481.
5 The Tenth Circuit explained it did not believe its holding was
“affected by Monessen S. Ry. V. Morgan, 486 U.S. 330, 100 L. Ed.
2d 349, 108 S. Ct. 1837 (1988), which held that a state trial court
erred in a [Federal Employers Liability Act] case when it refused
on the basis of a state rule to allow an award of future damages
to be reduced to present value.” (Miller, supra, 900 F.2d at p. 226,
fn. 1.) It acknowledged, however, that the Fourth Circuit in
Aldridge v. Baltimore and O.R.R., 866 F.2d 111 (4th Cir. 1989)
(en banc) “apparently conclude[ed] that Monessen requires
reduction in all cases.” (Ibid.) In Monessen, the Supreme Court
reversed a decision after the trial judge told the jury it could not
discount its damage award to present value. We agree with the
Tenth Circuit that Monessen does not address whether an
evidentiary foundation must be laid to support the giving of a
present value instruction.
13
We find the reasoning of the Ninth Circuit persuasive.
Placing the burden on defendant to present evidence of the
discount rate is also consistent with the Directions for Use to
CACI 3904A: “It would appear that because reduction to present
value benefits the defendant, the defendant bears the burden of
proof on the discount rate.” Therefore, we hold a defendant
seeking reduction to present value of a sum awarded for future
damages has the burden of presenting expert evidence of an
appropriate present value calculation, including the appropriate
discount rate, to enable the fact finder to make a rational
determination on the issue. In the present case, because Ukran
failed to introduce such evidence, the trial court correctly
declined to adjust the future damages award.6 The trial judge is
not obligated, sua sponte, to determine an appropriate discount
rate or method without evidence, and should not do so.
III. The Court Did Not Abuse Its Discretion By Awarding
Prejudgment Interest
Civil Code section 3291 states, in relevant part: “If the
plaintiff makes an offer pursuant to Section 998 of the Code of
6 Although the issue is not raised directly by the parties, we also
agree with the Ninth Circuit’s conclusion that a plaintiff seeking
to increase an award of future damages because of inflation bears
the burden of proving a reasonable inflation rate. Moreover,
there is more to a present value calculation than discount and
inflation rates. The court must make counter-factual
assumptions about when the money awarded as damages would
have been received; e.g., how much the plaintiff would have
earned in each of some number of given years. This, too, requires
evidence concerning the appropriate method of discounting the
assumed future cash flow.
14
Civil Procedure which defendant does not accept prior to trial or
within 30 days, whichever occurs first, and the plaintiff obtains a
more favorable judgment, the judgment shall bear interest at the
legal rate of 10 percent per annum calculated from the date of the
plaintiff’s first offer . . . .” Although Lewis obtained a more
favorable award than his 998 offer, Ukran contends the trial
court erred in awarding pre-judgment interest because Lewis’s
offer was not made in good faith (i.e. the offer was not valid).
Whether a section 998 offer was reasonable and in good faith lies
within the discretion of the trial court and is reversible only if we
find an abuse of discretion. (Calvo Fisher & Jacob LLP v. Lujan
(2015) 234 Cal.App.4th 608, 629.)
“A 998 offer is valid only if, among other things, the offeror
knew that the offeree had reasonable access to the facts
necessary to intelligently ‘evaluate the offer.’” (Licudine v.
Cedars-Sinai Medical Center (2019) 30 Cal.App.5th 918, 921.)
Three factors are pertinent in making this determination: “(1)
how far into the litigation the 998 offer was made; (2) the
information available to the offeree prior to the 998 offer’s
expiration; and (3) whether the offeree let the offeror know it
lacked sufficient information to evaluate the offer, and how the
offeror responded.” (Ibid.) The offeree bears the burden of
showing that a 998 offer was not made in good faith. (Id. at p.
927.)
The trial court found Lewis made the offer in good faith,
concluding “Defendants had sufficient time to conduct an
investigation of the facts of the case, and that Defendants’ Form
and Special Interrogatories do not address Plaintiff’s lost earning
capacity.” This finding is not the product of an abuse of
discretion. Lewis served Ukran with a 998 offer in the amount of
15
$950,000 almost seven months after filing his complaint. Ukran
did not accept the offer prior to its expiration. Ukran argues he
lacked sufficient information to assess whether Lewis’s
settlement offer was reasonable because Lewis “failed to
meaningfully answer” Ukran’s interrogatories regarding lost
earnings. For example, in response to Form Interrogatory No.
8.8, which asked, in part, whether Lewis would lose income in the
future as a result of the accident and, if so, to provide an estimate
of the amount of lost income and how the amount would be
calculated, Lewis answered in the affirmative but failed to
provide an amount or a calculation. Further, Special
Interrogatory No. 7 asked Lewis to state the amount of his loss of
earnings claim and how that claim was calculated. Lewis
responded he had to decline various stunt jobs because of his
injuries and he was in the process of requesting documents
demonstrating income lost from these missed opportunities. But
Lewis served his responses to Ukran’s interrogatories over four
months before the 998 offer expired. Thus, although Lewis’s
responses to Ukran’s interrogatories addressing lost earning
capacity may have lacked detail, Ukran had adequate time to
evaluate Lewis’s offer. Ukran could have, but did not, meet-and-
confer with Lewis, move to compel further responses, depose
McComas, ask for more information, or request additional time to
assess the 998 offer.
Ukran relies on Najera v. Huerta (2011) 191 Cal.App.4th
872, but it is factually inapposite. In that case, “the section 998
offer was served concurrently with the summons and complaint,
[and] there were no special circumstances present to show that at
that early (and time-critical) juncture in the case, defendant’s
counsel had access to information or a reasonable opportunity to
16
evaluate plaintiff's offer within the 30-day period.” (Id. at p. 879.)
As discussed above, Ukran had the opportunity to evaluate
Lewis’s offer, but failed to do so. Accordingly, the court did not
abuse its discretion in granting Lewis’s motion for prejudgment
interest from the date of his 998 offer.
DISPOSITION
The judgment and order are affirmed. Lewis is awarded
his costs on appeal.
CERTIFIED FOR PUBLICATION
CURREY, J.
WE CONCUR:
WILLHITE, Acting P. J.
COLLINS, J.
17