Nolan Clayton v. Gregory Smith , 113 N.E.3d 693 ( 2018 )

FILED
Oct 26 2018, 9:06 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
William H. Kelley Ann Marie Waldron
Thaddeus C. Kelley WALDRON LAW
KELLEY LAW OFFICES LLC Indianapolis, Indiana
Bloomington, Indiana
Michael E. Simmons
HUME SMITH GEDDES GREEN &
SIMMONS, LLP
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Nolan Clayton, October 26, 2018
Appellant-Defendant, Court of Appeals Case No.
18A-CT-705
v. Appeal from the Marion Superior
Court
Gregory Smith, The Honorable James B. Osborn,
Appellee-Plaintiff. Judge
Trial Court Cause No.
49D14-1606-CT-21431
Bailey, Judge.
Court of Appeals of Indiana | Opinion 18A-CT-705 | October 26, 2018 Page 1 of 29
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.1 Clayton appeals, asking
that we set aside the judgment entered upon the jury verdict and remand for a
new trial. We affirm.
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
1
A declaratory judgment action involving one or more of the insurers was pending in another court.
Court of Appeals of Indiana | Opinion 18A-CT-705 | October 26, 2018 Page 2 of 29
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
Court of Appeals of Indiana | Opinion 18A-CT-705 | October 26, 2018 Page 3 of 29
out, the pair crashed into a hostess stand and broke it. A Stacked Pickle
employee locked the door and called for a cab to pick up the men outside.
[6] Smith and Clayton began to bang on the glass and yell that a coat had been left
behind. Someone handed a coat out to Smith or Clayton and they moved away
from the door. Thereafter, some Stacked Pickle patrons or employees saw
Smith and Clayton wrestling around on the pavement, but their words were not
audible inside the building. As the summoned cab arrived, Smith’s truck passed
the cab and headed north. Clayton was the driver and Smith was the
passenger. Neither would later remember how Clayton obtained the truck keys
or what discussion preceded Clayton taking the wheel.
[7] Minutes later, at around 3:52 a.m. on February 18, Smith’s truck crashed into a
tree near 10th Street and White River Parkway. Clayton was not seriously
injured. However, Smith was ejected from the truck and suffered a broken
neck. He was rendered quadriplegic, deprived of sensation below his neck and
lacking control of his extremities, other than some limited bicep function.
Blood tests revealed that, at 4:52 a.m., Smith’s blood alcohol content was 0.245
and, at 6:20 a.m., Clayton’s blood alcohol content was 0.208. Clayton was
arrested and ultimately pleaded guilty to driving while intoxicated.
[8] Smith had liability coverage through a policy issued by Progressive
Southeastern Insurance Company (“Progressive”). Progressive denied that its
policy provided bodily injury coverage for a single vehicle accident in which its
named insured was the injured party; however, Progressive tendered $5,000.00
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for medical payments. Clayton’s parents had a policy with Allstate Insurance
(“Allstate”). Stacked Pickle was insured by Erie Insurance (“Erie”). Allstate
and Erie provided payments to Smith pursuant to settlement agreements.
Clayton assigned any cause of action he might have against Progressive, for bad
faith or other claims, to Allstate. Additionally, Smith agreed that he would not
execute recovery upon Clayton’s personal assets.
[9] On June 15, 2016, Smith filed a personal injury complaint against Clayton in
Marion County Superior Court, seeking both compensatory and punitive
damages. Allstate and Progressive intervened to provide legal representation
for Clayton.2 Clayton raised a non-party defense, naming Stacked Pickle.
[10] In January of 2017, Progressive filed a declaratory judgment in a Marion
County court, seeking a declaration that it had no liability for bodily injury
incurred in the single vehicle collision. In the instant matter, the trial court
denied motions to stay pending resolution of the declaratory action or to
bifurcate the personal injury trial. The matter proceeded to a jury trial on
December 4, 2017.
[11] On December 11, 2017, the jury apportioned fault for Smith’s injuries: 5% to
Stacked Pickle, as a non-party, 35% to Smith, and 60% to Clayton. Smith’s
damages were found to be $35,000,000.00; accordingly, $21,000,000.00 was
Clayton’s share. The jury awarded no punitive damages. Smith was granted
2
Ultimately, at least eight attorneys entered an appearance to represent a party or an intervenor.
Court of Appeals of Indiana | Opinion 18A-CT-705 | October 26, 2018 Page 5 of 29
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.
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
Court of Appeals of Indiana | Opinion 18A-CT-705 | October 26, 2018 Page 6 of 29
Smith admitted to having some criminal history. Smith’s criminal history,
which he sought to exclude via a motion in limine,3 consisted of one conviction
each for public intoxication, reckless driving, and battery. He was on probation
at the time of the accident and one probationary term required that he not
consume alcohol in an illegal manner.
[15] A theory of Clayton’s defense was that Smith, highly motivated to avoid further
legal peril or violation of his probation, must have insisted upon Clayton
driving. As such, he argued that the jury might apportion greater fault to Smith
if advised of his criminal history. The trial court disagreed with Clayton’s
relevance argument and granted Smith’s motion in limine.
[16] During Smith’s case-in-chief, Clayton was called as a witness. He testified that
both he and Smith had driven while intoxicated on some prior occasions.
Despite defense counsel’s contention that Clayton’s testimony had “opened the
door” to evidence of Smith’s criminal history, and the trial court’s indication
that this “might” have happened, ultimately the criminal history was not
admitted into evidence. (Tr. Vol. II, pg. 104.) In sum, the jury heard about
Smith’s and Clayton’s prior uncharged conduct of driving while intoxicated but
3
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.)
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did not hear about Smith’s convictions, one of which was alcohol-related and
two of which were allegedly committed while Smith was under the influence of
alcohol.
[17] A trial court exercises broad discretion in ruling on the admissibility of
evidence, and an appellate court should disturb its ruling only where it is shown
that the court abused its discretion. Sims v. Pappas, 73 N.E.3d 700, 705 (Ind.
2017). An abuse of discretion occurs when the trial court’s decision is clearly
against the logic and effect of the facts and circumstances before the court. Id.[18] “Evidence is relevant if: (a) it has any tendency to make a fact more or less
probable than it would be without the evidence; and (b) the fact is of
consequence in determining the action.” Ind. R. Evid. 401. Pursuant to
Evidence Rule 403, “[t]he court may exclude relevant evidence if its probative
value is substantially outweighed by a danger of one or more of the following:
unfair prejudice, confusing the issues, misleading the jury, undue delay, or
needlessly presenting cumulative evidence.” “Although evidence must be
relevant to be admissible, not all relevant evidence is admissible.” Sims, 73
N.E.3d at 707.
[19] Smith contended that his and Clayton’s lack of memory about the choice of
driver and the absence of corroboration from bystanders rendered the jury
unable to determine whether Smith influenced Clayton to drive. Accordingly,
Smith claimed that his prior criminal history was not relevant to the
determination of a fact in issue. Clayton argued the criminal history was
Court of Appeals of Indiana | Opinion 18A-CT-705 | October 26, 2018 Page 8 of 29
admissible to show Smith’s state of mind and was evidence of his habit.
Clayton also argued that the criminal history was relevant to damages,
specifically, lost wages, and to punitive damages.4
[20] In Sims, our Indiana Supreme Court considered whether and under what
circumstances a drunk driver’s prior alcohol-related driving convictions could
be introduced into evidence. The Court specified that evidence of the driver’s
prior convictions was “not relevant” with respect to the plaintiff’s claims for
compensatory damages and loss of consortium, and thus the Court addressed
only whether the evidence was relative to the punitive damages claim.5 73
N.E.3d at 706.
[21] In performing this narrow review, the Court agreed with the Court of Appeals
that “evidence of similar acts may be admissible ‘because of the light which it
throws on the state of mind of a person, as for example, his knowledge, motive
or intent.’” Id. (quoting Lindley v. Oppegaard, 275 N.E.2d 825, 827 (1971)). The
Court concluded that evidence of the driver’s two prior similar acts had a
4
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.”
5
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.
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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
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alcohol-related convictions are not relevant to compensatory damages, it would
follow that a drunk passenger’s prior alcohol-related convictions are not
relevant to compensatory damages. That is, Smith did not sustain greater or
lesser compensable damages from the collision because he had a criminal
history.6
[24] Thus, only the narrow question remains as to whether Smith’s prior convictions
might constitute “state of mind” evidence relevant to the jury’s apportionment
of fault under the unique circumstances of this case. We are not so persuaded.
Arguably, one who had been criminally punished in the past and was actively
on probation would be motivated to avoid drunk driving and might insist that
another person drive instead. However, there is simply no evidence that Smith
did so insist. His criminal history was not relevant to a fact “of consequence in
determining the action.” Evid. R. 401.7
[25] Clayton also claims that, as a matter of fundamental fairness, if Smith’s past
convictions were excluded, evidence of Clayton’s past misconduct should have
been excluded. Initially, we observe that Smith and Clayton were not in like
6
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.
7
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.
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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?
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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.8 Clayton has not demonstrated an abuse of
discretion in the trial court’s evidentiary rulings in this regard.
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
8
Clayton also testified that Smith “would get a little aggressive when he would drink.” (Tr. Vol. II, pg. 160.)
Court of Appeals of Indiana | Opinion 18A-CT-705 | October 26, 2018 Page 13 of 29
or skilled witnesses: “Motion to exclude Plaintiff’s expert witness Sara Ford,”
“Motion to exclude Plaintiff’s expert witness Ralph M. Buschbacher, M.D.,”
and “Motion to exclude certain testimony of Plaintiff’s expert witness Debra E.
Berens.” (Appellant’s App. at 159, 174, 204.) The trial court denied each of the
motions; Clayton lodged continuing objections at trial based upon the grounds
enumerated in his pretrial motions and now argues that the trial court abused its
discretion by permitting the introduction of all or a portion of each challenged
expert’s testimony.
[29] Clayton’s motion to exclude witness Sara Ford (“Ford”), a vocational
economist, addressed alleged deficiencies brought to light in Ford’s deposition
testimony. Ford had opined that Smith was 100% disabled and concluded that
he suffered a lifetime loss of earning totaling $2,150,684.00. Clayton argued
that Ford had made a bald assertion as to total disability, based upon
incomplete information and faulty logic. Allegedly, Ford “failed to provide an
adequate foundation for her opinion that Plaintiff is 100% occupationally
disabled since she reviewed an insufficient amount of data, she did not review
data specific to Plaintiff’s local job market, and because she used boilerplate
language in her report not tailored to the Plaintiff.” (Id. at 162.) Clayton
contended that Ford had reviewed out-of-date medical records and strenuously
suggested that Ford’s determination of 100% vocational disability was suspect
because it was not based upon a physician’s like assessment or a medical
records notation of 100% disability. Clayton also alleged that Ford had ignored
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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.
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Under this rule, a witness may be qualified as an expert by only one of the
enumerated characteristics: knowledge, skill, experience, training, or
education. Kubsch v. State, 784 N.E.2d 905, 921 (Ind. 2003). “It is within the
trial court’s sound discretion to decide whether a person qualifies as an expert
witness.” Id.[32] Expert scientific testimony is admissible only if the court is satisfied that the
scientific principles upon which the expert testimony rests are reliable, and the
court determines admissibility under 702(b) by considering the factors discussed
in Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993). Id. A witness not
qualified to offer expert testimony under Evidence Rule 702 may be qualified as
a “skilled witness” or “skilled lay observer.” Id. at 922. A skilled witness has a
degree of knowledge that falls short of being declared an expert under Rule 702,
but somewhat beyond that possessed by ordinary jurors. Id. Pursuant to
Indiana Evidence Rule 701, a skilled witness may provide an opinion or
inference that is “(a) rationally based on the witness’s perception; and (b)
helpful to a clear understanding of the witness’s testimony or to a determination
of a fact in issue.”
[33] Clayton has not challenged Ford’s credentials or qualifications to present expert
or skilled witness testimony. Rather, he criticized the thoroughness of her
research and observed that her assessment of 100% vocational disability had not
been echoed by a physician. However, “[o]nce the admissibility of the expert’s
opinion is established under Rule 702, ‘then the accuracy, consistency, and
credibility of the expert’s opinions may properly be left to vigorous cross-
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examination, presentation of contrary evidence, argument of counsel, and
resolution by the trier of fact.’” Estate of Borgwald v. Old Nat’l Bank, 12 N.E.3d
252, 257 (Ind. Ct. App. 2014) (quoting Sears Roebuck & Co. v. Manuilov, 742
N.E.2d 453, 460 (Ind. 2001)).
[34] Clayton subjected Ford’s methodology and conclusions to vigorous cross-
examination. Confronted with the knowledge that she alone had assigned the
fixed, maximum 100% numeric value, Ford testified that she had heavily relied
upon the fact that Smith could not use his hands to perform a task. Clayton
takes issue with the breadth of Ford’s research, the methodology used to
forecast lost wages, and the purported lack of corroboration of her definitive
conclusion.9 Such arguments go to the weight of the opinion testimony as
opposed to its admissibility. Clayton has not demonstrated that the trial court
abused its discretion by permitting Ford to testify.
[35] Regarding Dr. Buschbacher’s anticipated testimony, Clayton filed a motion to
exclude him as a witness, but substantively the motion sought exclusion of
specific areas of testimony. That is, based upon Dr. Buschbacher’s deposition
testimony, Clayton considered discussion of nine potential health risks to
9
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.
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“constitute speculation.” (App. Vol. III, pg. 177.) Prior to and at trial, Clayton
sought to exclude testimony he characterized as “nine opinions issued by [Dr.]
Buschbacher.” Id.[36] At trial, Dr. Buschbacher described Smith’s then-current medical conditions
and diagnoses; that is, Smith had sustained a permanent spinal cord injury at
the neck level, with poor prognosis for improvement, with attendant brain
injury, spasticity, shoulder pain, and depression.10 He was intellectually
normal. In Dr. Buschbacher’s opinion, Smith had a reduction in his life
expectancy of twenty years.
[37] Over Clayton’s objection, Dr. Buschbacher was permitted to describe “potential
complications” of Smith’s quadriplegia. (Tr. Vol. IV, pg. 57.) As for conditions
for which Smith was thought to be at risk, these included complications from
pressure sores, syringomyelia (enlargement of a tiny tube in the center of the
spinal cord), megacolon (which could require a colostomy), renal failure, deep
vein thrombosis, abnormal bone growth, accelerated cervical degenerative joint
disease, cardiovascular disease/abnormalities, and orthostatic hypotension.
[38] Clayton did not challenge Dr. Buschbacher’s qualifications to examine Smith,
to draw conclusions based upon a reasonable medical certainty, or to assist the
jury in understanding Smith’s diagnosis, prognosis, and risk factors. In short,
Clayton did not contest Dr. Buschbacher’s qualifications as a medical expert.
10
Dr. Buschbacher had examined Smith but was not one of his treating physicians.
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Rather, Clayton sought to tailor the expert testimony to exclude testimony
about certain risks relatively unlikely to occur.
[39] On appeal, Clayton observes that Dr. Buschbacher made certain admissions,
such as: it is more likely than not that Clayton would not suffer from
cardiovascular disease, predictably all persons suffer some joint degeneration in
time, the chances of a bone infection, deep vein thrombosis, or syringomyelia
are low, proper care could lessen the chance of renal failure to less than 10%,
the occurrence of megacolon is less than 10%, and it is impossible to predict a
specific risk of abnormal bone growth. These observations illustrate that Dr.
Buschbacher’s testimony was indeed subjected to vigorous testing of its
accuracy, consistency and credibility. Dr. Buschbacher did not simply
speculate as to whether some risks existed; rather, he testified that, based upon
his training and experience, some risks were present to a reasonable degree of
medical certainty.11 He explained the chances that some conditions would
manifest was low, some were hard to predict, and, as to at least one risk, it
could not be known.12 Dr. Buschbacher did not offer a medical opinion based
upon mere speculation nor did the trial court ignore its gatekeeping function.
11
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.
12
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.
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Clayton’s arguments are directed to the weight of the evidence and not its
admissibility.
[40] Finally, in his pre-trial motion, Clayton sought to exclude testimony from
Debra Berens, Ph.D. (“Berens”), a life care planner, “regarding the opinions
that rely on the expert opinion of an economist as they lack foundation.” (App.
Vol. III, pg. 205.) Berens testified that she had reviewed Smith’s medical
records, researched costs for services, and compiled a life care plan inclusive of
such expenses as home modifications, wheelchair replacement, massage
therapy, medications, psychological services, transportation, and medical care.
She explained the origins of assigned costs; for example, psychological and
medical providers “have been billing at that rate.” (Tr. Vol. IV, pg. 136.) Some
costs were derived from a national database; she looked to a Veterans
Administration estimate for wheelchair accessibility home modification costs.
She used current actual medication costs. Berens conceded that she “deferred
to an economist for some present value calculations,” Id. at 214, and some costs
were neither adjusted for inflation nor reduced to present value. Generally,
Berens used current costs multiplied by life expectancy and she suggested that
“a layperson could add up” the total once costs were assigned. Id. at 215.
[41] The thrust of Clayton’s appellate argument is that “the opinions in question
admittedly require an economist and no economist testified to support the plan”
and thus “Berens’ report and testimony is her own admission unsupported and
lack[ing] foundation and should have been excluded.” Appellant’s Brief at 35.
He also makes a bald assertion that, as to each expense, a “personal injury”
Court of Appeals of Indiana | Opinion 18A-CT-705 | October 26, 2018 Page 20 of 29
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.
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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.13
[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
13
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.)
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(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
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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.
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
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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
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(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
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encompasses a payment made by a defendant or the defendant’s insurance
company. Nealy, 910 N.E.2d at 846.
[55] Here, the jury heard evidence of tortious conduct and determined that Clayton
was liable to Smith. However, although Progressive provided a defense to
Clayton, it did so under a reservation of rights. Progressive denied that it had
an obligation to pay compensation arising from Clayton’s tortious conduct.
Given that the declaratory judgment was pending at the time of the post-trial
hearing in this personal injury action, it had not been judicially determined that
Progressive had any duty to Clayton. It had not been established that
Progressive was or was not defendant Clayton’s insurer. “The [advance
payments] statute provides simply that payment by the defendant or his
insurance company will be treated as advance payments thus reducing any
judgment to the extent that the award includes an amount paid by the advance
payment.” Crabtree, 837 N.E.2d at 142. Here, the trial court was not obliged,
upon argument of counsel and in the absence of further factual development,14
to reduce the jury verdict under the advance payment statute by the $5,000.00
tendered by Progressive.
[56] Clayton also summarily claimed, at the post-trial hearing, that sums paid by
Allstate to Smith pursuant to a confidential settlement should be treated, in
14
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.
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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.15 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.
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
15
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.
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contemporaneous reduction of the jury verdict under the advance payment
statute.
[59] Affirmed.
Mathias, J., and Bradford, J., concur.
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