Stephen James Utts, M.D. v. Dennie Short, Individually and as of the Estate of Clifton Short, Norma L. Short Patricia Ann Cain And Sam Short ( 2004 )

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-03-00512-CV
Stephen James Utts, M.D., Appellant
v.
Dennie Short, Individually and as Executor of the Estate of Clifton Short, Deceased;
Norma L. Short; Patricia Ann Cain; and Sam Short, Appellees
FROM THE PROBATE COURT NO. 1 OF TRAVIS COUNTY
NO. 63,688-A, HONORABLE GUY S. HERMAN, JUDGE PRESIDING
MEMORANDUM OPINION
In this wrongful death case, we must decide whether the trial court, upon remand from
the supreme court, erred in its allocation of a settlement credit to the recoveries of appellees, Dennie
Short, individually and as executor of the estate of Clifton Short, deceased; Norma L. Short; Patricia
Ann Cain; and Sam Short (collectively, “appellees”).1 In the first of two issues, appellant Stephen
James Utts, M.D., contends that the trial court erred by not allocating the settlement credit in
proportion to each appellee’s percentage of the total jury award. In his second issue, Dr. Utts
contends that we should reform the trial court’s judgment to reflect the prejudgment and
1
Appellees are related to the deceased, Clifton Short, as follows: Norma L. Short is his
widow; Dennie Short, Patricia Ann Cain, and Sam Short are his children. A fourth child, Dorothy
Short Walker, settled in earlier proceedings below and is no longer a party. Her settlement is the
subject of the disputed settlement credit.
postjudgment interest rates as amended in the 2003 legislative session. For the reasons set forth
below, we affirm the judgment of the trial court.
BACKGROUND
This case involves a lengthy procedural history, beginning with the filing of suit in
1994 against Dr. Utts, HCA South Austin Medical Center (“HCA”), and Dr. Jean-Pierre Forage2 for
damages arising out of the alleged wrongful death of Clifton Short. In 1997, one of the plaintiffs,
Dorothy Short Walker, settled her claims with HCA for $200,000. Her release with HCA directed
that $50,000 be paid to Walker and $150,000 be paid to the law firm representing all of the plaintiffs,
including Walker. On the same day she signed the release, Walker directed her attorneys to pay from
the $50,000 portion a $10,000 gift to each individual plaintiff, Dennie Short, Norma L. Short,
Patricia Ann Cain, and Sam Short. Soon afterward, those four individuals and the Estate settled with
HCA for ten dollars each, resulting in HCA’s total settlement of $200,050 with all plaintiffs. All
of the plaintiffs then nonsuited HCA. Shortly thereafter, Walker nonsuited her claim against Dr. Utts
and no longer participated in the case.
The case then proceeded to trial, with Dr. Utts as the only remaining defendant.
Before trial, Dr. Utts filed a written election for a $200,0403 dollar-for-dollar settlement credit as to
each “claimant” under chapter 33 of the civil practice and remedies code.4 The plaintiffs objected,
2
Dr. Forage was nonsuited early in the litigation.
3
This was later corrected to $200,050 to reflect the total settlement with HCA.
4
See Act of May 8, 1995, 74th Leg., R.S., ch. 136, § 1, sec. 33.011(1), 1995 Tex. Gen. Laws
971, 973 (definition of “claimant”) (amended 2003) (current version at Tex. Civ. Prac. & Rem. Code
Ann. § 33.011(1) (West Supp. 2004)); id. sec. 33.012, 1995 Tex. Gen. Laws at 974 (providing for
2
arguing that Dr. Utts was not entitled to a credit for Walker’s $200,000 settlement because Walker
was not a claimant as defined in chapter 33. They further contended that because they settled with
HCA for ten dollars each, Dr. Utts was only entitled to a ten-dollar credit per plaintiff, for a total of
fifty dollars. After a jury trial, the jury found Dr. Utts twenty-five percent negligent and HCA
seventy-five percent negligent. The jury awarded $100,000 to the Estate; $300,000 to Norma Short;
and $12,000 to Dennie, Patricia, and Sam.
The plaintiffs moved for judgment on the verdict with a fifty-dollar settlement credit.
Dr. Utts countered that he was entitled to an additional $200,000 credit because the remaining
plaintiffs benefited from Walker’s settlement with HCA. After a hearing on the motion for
judgment, the trial court determined that Dr. Utts waived the right to the $200,000 credit because
he did not introduce evidence about the settlement before the case was submitted to the jury. The
trial court also determined that Walker was not a claimant as defined under chapter 33 of the civil
practice and remedies code. The trial court rendered judgment for the plaintiffs based on the total
jury award, less ten dollars per plaintiff, for a total of a fifty-dollar settlement credit.
Dr. Utts appealed to this Court, contending that the structure of the settlement was
a sham to circumvent his statutory right to a settlement credit. This Court affirmed the judgment of
the trial court on the ground that “although Walker was a claimant under the Code, a defendant is
not entitled to receive credit for one claimant’s settlement against the recovery of a different claimant
in a wrongful death case.” Utts v. Short, 987 S.W.2d 626, 633 (Tex. App.—Austin 1999), rev’d, 81
election of dollar-for-dollar settlement credit) (amended 2003) (current version at Tex. Civ. Prac.
& Rem. Code Ann. § 33.012 (West Supp. 2004)).
3
S.W.3d 822 (Tex. 2002). Dr. Utts then appealed to the supreme court, which initially affirmed the
judgment of this Court. See Utts v. Short, 44 Tex. Sup. Ct. J. 134 (Dec. 7, 2000), op. withdrawn on
reh’g, 2001 WL 1795019 (Feb. 28, 2002). On a second rehearing, the supreme court reversed the
judgment of this Court and remanded the case to the trial court. Utts, 81 S.W.3d at 830 [hereinafter
Utts I]. A majority of the court held that Dr. Utts had presented sufficient evidence raising a
presumption of entitlement to a $190,000 settlement credit: $150,000 for expenses paid to the
plaintiffs’ attorney and $40,000 for Walker’s four $10,000 payments to the individual plaintiffs. Id.
“Consequently, we presume that each individual Short family member’s recovery from Dr. Utts
should be credited with the amount reflecting the benefit he or she received from the settlement
proceeds.” Id. (citing Mobil Oil Corp. v. Ellender, 968 S.W.2d 917, 927 (Tex. 1998)). The burden
then shifted to each plaintiff to rebut that presumption. Id. The supreme court remanded the case
to the trial court to “allow each Short family member to present evidence to show that he or she did
not receive any benefit from the Walker-HCA settlement.” Id.
On remand to the trial court, appellees submitted with their motion for judgment
affidavits attesting that they did not believe they benefited from Walker’s settlement. They averred
in the alternative that because $150,000 of the settlement went toward their attorney’s expenses, they
benefited individually in a one-sixth share, or $25,000.5 They further averred that the $10,000
payments to each individual were gifts from Walker, not part of the settlement. At the hearing on
the motion for judgment, counsel for Dr. Utts objected to the affidavits on several grounds but did
5
The $150,000 expense payment was divided by six because there were six plaintiffs at the
time of the settlement: Dorothy Short Walker, the Estate of Clifton Short, Dennie Short, Norma
Short, Patricia Ann Cain, and Sam Short.
4
not obtain a ruling on the objections. The trial court determined that Dr. Utts was entitled to a
$190,000 credit: $150,000 for the expenses paid and $40,000 for Dorothy Walker’s payments to the
individual plaintiffs. The trial court allocated a $35,000 credit to each individual’s recovery, which
eliminated the awards to Dennie, Patricia, and Sam. The trial court allocated a $25,000 credit to the
Estate because it had not received a gift from Walker. Accounting for prejudgment interest, the
judgment awarded $142,785.72 to Norma Short and $67,193.28 to the Estate. The judgment further
ordered that appellees pay Dr. Utts $10,664.10 in court costs for the earlier appeals to this Court and
the supreme court.
In two issues, Dr. Utts contends that the judgment should be reformed. Dr. Utts urges
in his first issue that the trial court’s allocation of the settlement credit was in error, because it
disregarded the supreme court’s directives in Utts I and Drilex Systems, Inc. v. Flores. See Utts I,
81 S.W.3d at 822; Drilex Sys., Inc. v. Flores, 1 S.W.3d 112 (Tex. 1999). The proper allocation, Dr.
Utts asserts, is to divide the settlement credit in proportion to each appellee’s percentage of the total
jury award. Dr. Utts contends in his second issue that we should reform the trial court’s judgment
to reflect the prejudgment and postjudgment interest rates as amended in the 2003 legislative session,
to wit a minimum of five percent, instead of the former minimum of ten percent.
ANALYSIS
Allocation of Settlement Credit
In his first issue, Dr. Utts contends that the trial court incorrectly allocated the
settlement credit among appellees’ recoveries. The parties disagree about which standard of review
we are to apply, and the Utts I decision is silent on this issue. Dr. Utts urges that allocation of
5
settlement credits is a legal question and accordingly we should apply a de novo standard of review.
For support, Dr. Utts cites Sugarland Properties, Inc. v. Becnel. 26 S.W.3d 113 (Tex.
App.—Houston [1st Dist.] 2000, no pet.). There, the issue was whether the trial court erred in
reducing the verdict by both a dollar-for-dollar and proportionate reduction settlement credit. Id. at
119. Because the resolution of the question required interpretation of two statutory provisions, the
court conducted a de novo review. Id. Dr. Utts also cites Brown & Root, Inc. v. Shelton, which
simply cited Becnel for the proposition that “proper application of settlement credits is a question
of law reviewed by a de novo standard.” No. 12-01-00259-CV, 2003 Tex. App. LEXIS 6642, at *32
(Tex. App.—Tyler July 31, 2003, no pet.).
Appellees counter that we should apply an abuse-of-discretion standard of review
because allocation of the settlement credit in this instance involved a factual determination.
Appellees cite Sanchez v. Mica Corp. for support. 107 S.W.3d 13 (Tex. App.—San Antonio 2002,
pet. granted), judgm’t vacated in part on other grounds and remanded for settlement by 2003 Tex.
LEXIS 38 (Tex. Mar. 27, 2003). There, the appellant contested the trial court’s ruling that the initial
settlement allocation was a sham transaction. The appellees urged the court to apply an abuse-of-
discretion standard of review because the determination involved mixed questions of law and fact.
The court agreed with appellees and reviewed the ruling for an abuse of discretion. Id. at 24.
We agree with appellees that we should review the allocation of the settlement credit
under an abuse-of-discretion standard. Unlike in Becnel, our analysis of this issue does not involve
statutory interpretation. Moreover, unlike Sanchez, Dr. Utts’s entitlement to the settlement credit
is not in dispute. Instead, Dr. Utts only challenges the trial court’s allocation of the credit among
6
the appellees. The supreme court presumed that appellees benefited from the settlement and that the
trial court should credit each appellee’s recovery “with the amount reflecting the benefit he or she
received from the settlement proceeds.” Utts I, 81 S.W.3d at 830 (citing Ellender, 968 S.W.2d at
927). The burden then shifted to the appellees to present evidence rebutting that presumption.
Appellees presented evidence in the form of affidavits that not only refuted any benefit but also
asserted—were the trial court to determine they received a benefit—the amount of the benefit to be
allocated to each appellee. Weighing the evidence presented by appellees involved the exercise of
the trial court’s discretion. That this fact-finding function was contemplated by the supreme court
is clear from its discussions couching benefits and gifts in terms of questions of fact. Id. at 828-29
(“One who claims a gift has the burden to prove that such is the fact . . . . [W]hen a case involves
facts suggesting that a nonsettling plaintiff may have benefited . . ., the nonsettling defendant must
raise this allegation . . . .”). Thus, we will apply an abuse-of-discretion standard of review to the trial
court’s allocation of the settlement credit.
When reviewing matters committed to the trial court’s discretion, we may not
substitute our judgment for that of the trial court. Bowie Mem’l Hosp. v. Wright, 79 S.W.3d 48, 52
(Tex. 2002). We may reverse a trial court under this standard only when we find that “the court
acted in an unreasonable or arbitrary manner,” Beaumont Bank, N.A. v. Buller, 806 S.W.2d 223, 226
(Tex. 1991), or “without regard for any guiding rules or principles.” Owens-Corning Fiberglas
Corp. v. Malone, 972 S.W.2d 35, 43 (Tex. 1998) (quoting City of Brownsville v. Alvarado, 897
S.W.2d 750, 754 (Tex. 1995)). The trial court does not abuse its discretion if some evidence
7
reasonably supports its decision. Butnaru v. Ford Motor Co., 84 S.W.3d 198, 211 (Tex. 2002)
(citing Davis v. Huey, 571 S.W.2d 859, 862 (Tex. 1978)).
At the outset, we reject Dr. Utts’s contention that we should look to the settlement
credit allocation procedure set forth in Drilex for guidance. See 1 S.W.3d at 123-24 (allocating
settlement credit by percentage of total jury award). Although the justices’ various opinions in Utts
I expressed three different views about the applicability of Drilex’s settlement credit analysis, a
majority of the court held that “we do not apply Drilex to determine which settlement amounts Dr.
Utts may credit against the Short family members’ recoveries.” Utts I, 81 S.W.3d at 827.
Dr. Utts next contends that because the trial court implicitly sustained his objections
to appellees’ affidavits, appellees failed to meet their burden to show that they each benefited equally
from the Walker settlement. We disagree. At the hearing on the motion for judgment, counsel for
Dr. Utts objected to appellees’ affidavits on several grounds, including an objection that the
affidavits were inadequate for an evidentiary hearing. The trial court invited a response to the
objections from appellees’ counsel. After that discussion, the parties presented arguments about how
to allocate the settlement credit. The trial court then announced its ruling on the motion. Nowhere
in the record did the trial court rule on Dr. Utts’s objections, nor did Dr. Utts attempt to secure an
explicit ruling. Dr. Utts asserts that the trial court’s determination of entitlement to the full $190,000
settlement credit constitutes an implicit ruling excluding the evidence. To the contrary, the judgment
reflects that the trial court considered appellees’ affidavits: “Said sums represent the amount of the
verdict, less proper deductions for settlement credits from each Plaintiff’s recovery reflecting the
benefit he or she received from any settlement as dictated by the evidence presented by each Plaintiff
8
showing why they did or did not benefit from any settlement.” (Emphasis added.) We now turn to
an examination of whether the trial court’s allocation of the settlement credit constituted an abuse
of discretion.
Appellees’ motion for judgment, supported by their uncontroverted affidavits, sets
forth three options for allocating the benefit that appellees received from the settlement credit. The
first option allocated no settlement credit, based on the assumption that appellees received no
benefit. The second option allocated a $150,000 settlement credit, based on the assumption that
appellees each received a $25,000 benefit for the payment of their attorney’s expenses. The third
option allocated an additional $40,000 settlement credit, based on the assumption that each
individual appellee benefited from the $10,000 gift from Walker. The trial court, presented with the
choice of allocating no benefit, a $150,000 benefit, or the full $190,000 benefit, determined that
appellees together benefited from the full $190,000. The trial court then allocated, according to each
appellee’s individual benefit, $25,000 to each appellee for expenses paid and $10,000 to each
appellee who had received a payment from Walker.
We find the trial court’s choice to be reasonable given the standard set forth in Utts
I and the evidence adduced at the hearing on the motion for judgment. As directed by the supreme
court, the trial court credited each appellee “with the amount reflecting the benefit he or she received
from the settlement proceeds.” Utts I, 81 S.W.3d at 830 (citing Ellender, 968 S.W.2d at 927)
(emphasis added). This language demonstrates that the terms credit and benefit are not synonymous:
the supreme court envisioned separate determinations of entitlement to a settlement credit and the
resulting benefit to each appellee. Furthermore, on remanding the case, Utts I directed appellees to
9
present evidence of the benefit they received but made no statement about the form that evidence
must take. Id.
The trial court does not abuse its discretion if some evidence reasonably supports its
decision. Butnaru, 84 S.W.3d at 211 (citing Davis, 571 S.W.2d at 862). That the trial court chose
among the options supported by appellees’ affidavits does not constitute an abuse of discretion.
Accordingly, we do not find that the trial court abused its discretion in its allocation of the settlement
credit among the appellees. We overrule Dr. Utts’s first issue.
Prejudgment and Postjudgment Interest
In his second issue, Dr. Utts contends that we should reform the trial court’s judgment
to reflect the postjudgment interest rates as amended in the 2003 legislative session, to wit a
minimum of five percent, instead of the former minimum of ten percent.6 Because prejudgment
interest in a wrongful death case is awarded at the same rate as postjudgment interest, Dr. Utts also
asks that we modify the prejudgment interest rate. See Tex. Fin. Code Ann. § 304.103 (West Supp.
2004).
Identical amendments to section 304.003(c) of the finance code went into effect on
June 20, 2003, through House Bill 2415, and September 1, 2003, through House Bill 4. Both acts
state that the amendments apply “in any case in which a final judgment is signed or subject to appeal
6
See Act of June 2, 2003, 78th Leg., R.S., ch. 676, § 1, 2003 Tex. Gen. Laws 2096, 2097
(effective June 20, 2003) (codified at Tex. Fin. Code Ann. § 304.003(c) (West Supp. 2004))
[hereinafter “House Bill 2415”]; Act of June 2, 2003, 78th Leg., R.S., ch. 204, § 6.01, 2003 Tex.
Gen. Laws 847, 862 (effective Sept. 1, 2003) (codified at Tex. Fin. Code Ann. § 304.003(c) (West
Supp. 2004)) [hereinafter “House Bill 4”].
10
on or after the effective date of this Act.”7 (Emphasis added.) Dr. Utts urges that because the trial
court signed the final judgment on May 6, 2003 and Dr. Utts filed his notice of appeal on July 31,
2003, this case was “subject to appeal” after the effective dates of the amendments. Appellees
counter that because the bill analyses explain that these amendments are to apply prospectively,8 after
the final judgment was signed in this case, the amendments do not apply here.
In our analysis of this issue, we adhere to the well-settled principles of statutory
construction. A court will apply the plain and common meaning of a statute and may not by
implication enlarge the meaning of any word in the statute beyond its ordinary meaning, especially
when the court can discern the legislative intent from a reasonable interpretation of the statute as it
is written. Sorokolit v. Rhodes, 889 S.W.2d 239, 241 (Tex. 1994). Courts should be careful not to
give one provision a meaning out of harmony or inconsistent with other provisions, although it might
be susceptible to such a construction standing alone. Texas Dep’t of Transp. v. Needham, 82 S.W.3d
314, 318 (Tex. 2002) (citing Barr v. Bernhard, 562 S.W.2d 844, 849 (Tex. 1978)). To be sure, a
court must presume that the legislature intends an entire statute to be effective and that a just and
reasonable result is intended. Tex. Gov’t Code Ann. § 311.021(2), (3) (West 1998). Thus, even
when a statute is not ambiguous on its face, a court may consider numerous factors to determine the
7
See Act of June 2, 2003, 78th Leg., R.S., ch. 676, § 2(a), 2003 Tex. Gen. Laws 2096, 2097
(effective June 20, 2003) (codified at Tex. Fin. Code Ann. § 304.003(c) (West Supp. 2004)); Act of
June 2, 2003, 78th Leg., R.S., ch. 204, § 6.04, 2003 Tex. Gen. Laws 847, 862 (effective Sept. 1,
2003) (codified at Tex. Fin. Code Ann. § 304.003(c) (West Supp. 2004)).
8
See Senate Comm. on Jurisprudence, Bill Analysis, Tex. H.B. 2415, § 2(a), 78th Leg., R.S.
(2003) (stating that the “signed or subject to appeal” section “[m]akes application of this Act
prospective”); Senate Comm. on State Affairs, Bill Analysis, Tex. H.B. 4, art. 6, § 6.04, 78th Leg.,
R.S. (2003) (stating that the “signed or subject to appeal” section “[m]akes application of the
changes in law made by this article prospective”).
11
legislature’s intent, including the legislative history and the consequences of a particular
construction. Id. § 311.023 (West 1998); Ken Petroleum Corp. v. Questor Drilling Corp., 24
S.W.3d 344, 350 (Tex. 2000).
Our sister courts in Fort Worth and Dallas have addressed this issue. In Columbia
Medical Center of Las Colinas v. Bush, the appellant contended that because its appeal was pending
when the amendments became effective, the new postjudgment interest rate should apply. 122
S.W.3d 835, 864 (Tex. App.—Fort Worth 2003, pet. filed). The court determined that the plain
meaning of “subject to appeal” when used to describe a judgment means “capable of being appealed”
and in turn that the amendments apply only to cases in which a judgment is signed or becomes
capable of being appealed after the effective date of the Act. Id. at 865. The court further considered
the legislative history declaring that the amendments apply prospectively. Id. at 866. For those
reasons, the court held that the “subject to appeal” language did not apply to cases pending on appeal
as of June 20, 2003. Id.
In Cigna Healthcare of Texas, Inc. v. Pybas, issued three weeks before the oral
argument of the instant case, our sister court in Dallas considered a similar argument in which it
construed the effective date of the amendments to be September 1, 2003. No. 05-03-00517-CV,
2004 Tex. App. LEXIS 1412, at *51 (Tex. App.—Dallas Feb. 12, 2004), judgm’t vacated and case
dismissed pursuant to settlement by 2004 Tex. App. LEXIS 2666 (Tex. App.—Dallas Mar. 25,
2004). Following the holding in Bush, the court held that “because the judgment in this case was
both signed and subject to appeal before September 1, 2003, the amended statute setting post-
judgment interest rates does not apply.” Id. at *53.
12
We agree with the interpretations in Bush and Pybas. Here, the trial court signed the
final judgment on May 6, 2003. The amendments to section 304.003(c) of the finance code apply
“in any case in which a final judgment is signed or subject to appeal on or after the effective date of
this Act,” which at the earliest was June 20, 2003 under House Bill 2415.9 Clearly, the final
judgment was signed before the effective date of the act. Furthermore, because the trial court
rendered a final judgment that disposed of all claims and all parties, this case also was subject to
appeal as of the date of the judgment, more than a month before the effective date of the act. See
Lehmann v. Har-Con Corp., 39 S.W.3d 191, 195 (Tex. 2001) (“[T]he general rule, with a few mostly
statutory exceptions, is that an appeal may be taken only from a final judgment. A judgment is final
for purposes of appeal if it disposes of all pending parties and claims in the record.”) (internal
citations omitted).
The legislative history expressly states that the amendments apply prospectively. See
Senate Comm. on Jurisprudence, Bill Analysis, Tex. H.B. 2415, § 2(a), 78th Leg., R.S. (2003) (the
“signed or subject to appeal” section “[m]akes application of this Act prospective”). “Prospective”
means “concerned with or relating to the future; effective in the future.” Webster’s Third New
International Dictionary 1821 (1986). Were we to construe the amendments to apply to cases
already subject to appeal before the effective date of the act, we would render the prospective
language meaningless. Because the judgment in this case was signed and subject to appeal before
June 20, 2003, and because the legislative history expressly states that the amendments apply
9
See Act of June 2, 2003, 78th Leg., R.S., ch. 676, § 2(a), 2003 Tex. Gen. Laws 2096, 2097
(effective June 20, 2003) (codified at Tex. Fin. Code Ann. § 304.003(c) (West Supp. 2004)).
13
prospectively, the amended prejudgment and postjudgment interest rates do not apply. We overrule
appellant’s second issue. Having overruled both of appellant’s issues, we affirm the judgment of the
trial court in all respects.
CONCLUSION
As directed by the supreme court, the trial court credited each appellee “with the
amount reflecting the benefit he or she received from the settlement proceeds.” Utts I, 81 S.W.3d
at 830 (citing Ellender, 968 S.W.2d at 927). We find the trial court’s choice of allocating the
settlement credit to be reasonable given the standard set forth in Utts I and the evidence adduced at
the hearing on the motion for judgment. Accordingly, we do not find that the trial court abused its
discretion in its allocation of the settlement credit among the appellees. Furthermore, because the
final judgment in this case was signed and subject to appeal before the 2003 amendments to section
304.003(c) of the finance code went into effect, we decline to reform the trial court’s judgment to
reflect the new prejudgment and postjudgment interest rates. Having overruled both of appellant’s
issues, we affirm the judgment of the trial court in all respects.
Jan P. Patterson, Justice
Before Chief Justice Law, Justices Patterson and Puryear
Affirmed
Filed: April 1, 2004
14