Boehm, R. v. Riversource Life Insurance ( 2015 )

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2015 PA Super 120ROBERT J. BOEHM AND BEVERLY LYNN IN THE SUPERIOR COURT OF
BOEHM, PENNSYLVANIA
Appellees
v.
RIVERSOURCE LIFE INSURANCE
COMPANY AND JAMES DAY, II,
Appellants No. 1999 WDA 2013
Appeal from the Judgment Entered December 13, 2013
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): G.D. 01-008289
BEFORE: FORD ELLIOTT, P.J.E., SHOGAN, and MUSMANNO, JJ.
CONCURRING AND DISSENTING OPINION BY SHOGAN, J.:FILED MAY 19, 2015
I join the Majority’s analysis and disposition of issues one through four
and six. However, because I do not believe this case presents the
appropriate context for application of the total offset method, I respectfully
dissent on issue five.
Our Supreme Court adopted the total offset method of calculating
damages in the limited context of lost future income resulting from an
automobile accident. Kaczkowski v. Bolubasz, 421 A.2d 1027 (Pa. 1980).
The Kaczkowski Court addressed, inter alia, the existing law on damages,
which discounted the loss of future wages to its present value by using the
six percent simple interest figure. Striving to obtain a damage award
formula that is “efficient, predictable as well as accurate,” the Kaczkowski
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Court concluded that “both a productivity factor and inflation should be
reflected in an award of lost future earnings.” Id. at 1029. As described by
the Kaczkowski Court:
[t]he total offset method assumes that in the long run, future
inflation and the discount rate will offset each other. . . . Since
over the long run interest rates, and, therefore, the discount
rates, will rise and fall with inflation, we shall exploit this natural
adjustment by offsetting the two factors in computing lost future
earning capacity.
* * *
An additional feature of the total offset method is that where
there is a variance, it will be in favor of the innocent victim and
not the tortfeasor who caused the loss.
Id. at 1037–1038.
Twenty years later, this Court expanded the Kaczkowski ruling to
damages caused by medical malpractice. In Sonlin v. Abington Memorial
Hospital, 748 A.2d 213 (Pa. Super. 2000), we noted that:
[a]lthough the [Kaczkowski] Court specifically declined to
expand its ruling to contexts other than future lost earnings,
opining that these should be resolved on a case by case basis, it
noted principles long settled in Pennsylvania law that “damages
are to be compensatory to the full extent of the injury
sustained,” and that actual compensation is given by graduating
the amount of damages exactly to the extent of the loss.”
Id., at 218–219 (quoting Kaczkowski, 421 A.2d at 1029). Rejecting the
defendant hospital’s argument that a jury award of $2,185,960 should be
discounted to its present value, we observed that “the inflation that the
Supreme Court found to be a fact of life in Kaczkowski is even greater in
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the field of medical services, where inflation is running at a rate greater than
the average for all goods and services.” Sonlin, 748 A.2d at 219 (quoting
trial court opinion). More recently, our Supreme Court expanded application
of the total offset method to future lost profits claimed as damages in an
action for breach of contract and constructive discharge. Helpin v.
Trustees of Univ. of Penn., 10 A.3d 267 (Pa. 2010). In doing so,
however, our Supreme Court cautioned that Kaczkowski was decided
narrowly, and that “with respect to the calculation of future damages, ‘in
other contexts,’ [it] did not wish to disturb the requirement that an award be
discounted to present value.” Id. at 274 (quoting Kaczkowski, 421 A.2d at
1037 n.21). The Helpin Court further indicated that, if properly presented
to it in the future, the Supreme Court would consider whether Kaczkowski
was wrongly decided. Id. at 277 n.6.
Here, the majority extends application of the total offset method to
damages arising out of insurance fraud. However, unlike future earnings,
medical services, and future profits, inflation will not impact the amount of
future premium payments in this case, which amount, according to the
plaintiffs’ credible witness, is fixed at $2,881.26 per year, or approximately
$240.00 per month. Findings of Fact and Conclusions of Law, 7/12/13, at ¶
36; N.T., 5/22–23/13, at 190–191; Trial Court Opinion, 2/24/14 at
unnumbered 2. Accord Lowery v. Lowery, 544 A.2d 972 (Pa. Super.
1988) (“[T]he holding of Kaczkowski is simply inapplicable to present
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valuation of pensions which do not by their own terms account for
inflation.”). Thus, application of the total offset method to the underlying
$125,000.00 damage award in this case contradicts the rationale of
Kaczkowski by compensating the plaintiffs beyond “the full extent of the
injury sustained,” Kaczkowski, 421 A.2d at 1029 (citations omitted), and,
in my view, impermissibly expands upon Supreme Court precedent.
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