Joyce Steel Erection, Ltd. v. Gordon Ray Bonner , 506 S.W.3d 58 ( 2015 )

In The
Court of Appeals
Sixth Appellate District of Texas at Texarkana
No. 06-14-00064-CV
JOYCE STEEL ERECTION, LTD., Appellant
V.
GORDON RAY BONNER, Appellee
On Appeal from the 202nd District Court
Bowie County, Texas
Trial Court No. 11C0822-202
Before Morriss, C.J., Moseley and Carter,* JJ.
Opinion by Justice Carter
_________________
*Jack Carter, Justice, Retired, Sitting by Assignment
OPINION
While working on the construction of a building at Red River Army Depot, Gordon Ray
Bonner was pinned between a 150,000-pound concrete tilt wall and a concrete embankment wall.
As a result, Bonner suffered severe injuries to his pelvis, arteries, genitals, bladder, urethra, and
right leg that required numerous surgeries and other medical procedures. Bonner asserted claims
against Joyce Steel Erection, Ltd.,1 Caruthers Construction, Inc., and Self Concrete, Inc., for his
injuries. Caruthers Construction and Self Concrete settled with Bonner before trial. A jury found
that Bonner had incurred $3,500,000.00 in past damages and $3,500,000.00 in future damages. It
also found that Joyce Crane was thirty-four percent responsible for the occurrence; Bonner was
thirty-three percent responsible; and Premier Constructors, Inc.,2 Bonner’s employer, was thirty-
three percent responsible. In addition, the parties stipulated that Bonner’s past medical expenses
were $358,205.52 and that his past lost wages were $147,633.29. After making deductions for
Bonner’s percentage of responsibility and the pretrial settlements,3 the trial court entered judgment
against Joyce Crane in the amount of $2,345,480.69, including prejudgment interest. Joyce Crane
appeals to this Court asserting that the trial court erred in (1) failing to exclude damages attributable
to Premier, the responsible third party, and (2) in failing to follow the declining-principal formula
1
Both parties refer to Joyce Steel Erection, Ltd., as “Joyce Crane” in their briefs; therefore, we will refer to this party
as Joyce Crane as well.
2
Joyce Crane designated Premier as a responsible third party. See TEX. CIV. PRAC. & REM. CODE ANN. § 33.004(a)
(West 2015).
3
Bonner received $1,000,000.00 in settlement from Self Concrete on November 1, 2013, and $2,100,000.00 in
settlement from Caruthers Construction on March 10, 2014. The jury found that the negligence of neither Self
Concrete nor Caruthers Construction proximately caused the occurrence.
2
in calculating prejudgment interest. We find that the trial court did not err in failing to exclude
damages attributable to the responsible third party, but that it erred in its calculation of prejudgment
interest by not following the declining-principal formula. We, therefore, modify the trial court’s
judgment and affirm the judgment, as modified.
I. The Trial Court Did Not Err in Failing to Exclude Damages Attributable to Premier
In Chapter 33 of the Texas Civil Practice and Remedies Code, the Texas Legislature
established a comprehensive system for apportioning fault among all persons responsible for harm
arising from tortious acts or acts that violate the Texas Deceptive Trade Practices–Consumer
Protection Act. TEX. CIV. PRAC. & REM. CODE ANN. §§ 33.001–.017 (West 2015). In so doing,
the Legislature also limited the availability of joint and several liability. See id. Under this system,
the trier of fact determines the percentage of responsibility attributable to each claimant, each
defendant, each settling party, and each designated responsible third party. TEX. CIV. PRAC. &
REM. CODE ANN. § 33.003(a). If a claimant’s responsibility exceeds fifty percent, the claimant is
barred from recovering damages. TEX. CIV. PRAC. & REM. CODE ANN. § 33.001. Further,
Chapter 33 places a limit on a claimant’s potential recovery by requiring that the amount of
recoverable damages be reduced by the percentage of responsibility apportioned to the claimant
and by all the amounts received in settlement. TEX. CIV. PRAC. & REM. CODE ANN. § 33.012(a),
(b); Battaglia v. Alexander, 177 S.W.3d 893, 906 (Tex. 2005). It also limits the liability of a
defendant whose responsibility does not exceed fifty percent to an amount equal to the percentage
of responsibility apportioned to that defendant. TEX. CIV. PRAC. & REM. CODE ANN. § 33.013(a);
Battaglia, 177 S.W.3d at 906. Only when a defendant’s responsibility exceeds fifty percent is it
3
jointly and severally liable for the entire amount of the claimant’s recoverable damages, minus the
amount attributed to the claimant and all settlement proceeds. TEX. CIV. PRAC. & REM. CODE ANN.
§ 33.013(b). The 1995 amendments to Chapter 33 allowed a defendant to significantly reduce the
potential for joint and several liability by enabling it to join a third party who was not sued by the
claimant but who might bear some percentage of responsibility for the claimant’s damages.4 See
Act of May 8, 1995, 74th Leg., R.S., ch. 136, § 1, 1995 Tex. Gen. Laws 971, 972–73 (amended
2003, 2011) (current versions at TEX. CIV. PRAC. & REM. CODE ANN. §§ 33.003(a)(4), 33.004,
33.011(6)).5
Section 33.012 requires the trial court to “reduce the amount of damages to be recovered
by the claimant” by the percentage of the claimant’s responsibility and the sum of all settlements
received. TEX. CIV. PRAC. & REM. CODE ANN. § 33.012(a), (b). In its first point of error, Joyce
Crane argues that Section 33.012 requires the trial court to exclude any damages attributable to the
responsible third party before making deductions for the claimant’s percentage of responsibility
and the value of any settlements. Joyce Crane points to the language used in Section 33.012
requiring the trial court to “reduce the amount of damages to be recovered by the claimant.” It
first points out that “the amount of damages to be recovered by the claimant” is not necessarily the
same as the “damages found by the jury,” citing to health care liability claim cases where, although
the jury may find actual non-economic damages exceeding the statutory cap, the statutory cap is
4
Chapter 33 no longer requires joinder of a responsible third party; rather, a defendant files a motion to “designate” a
responsible third party. TEX. CIV. PRAC. & REM. CODE ANN. § 33.004. In addition, persons who may be designated
responsible third parties have been greatly expanded. See TEX. CIV. PRAC. & REM. CODE ANN. § 33.011(6).
5
See also David W. Holman, Responsible Third Parties, 46 S. TEX. L. REV. 869, 877–89 (2005).
4
“the amount to be recovered by the claimant.” See Valley Grande Manor v. Paredes, No. 13-11-
00752-CV, 2013 WL 3517806, at *2 (Tex. App.—Corpus Christi July 11, 2013, pet. denied) (mem.
op.) (jury’s award of $275,000.00 damages reduced to $250,000.00 by trial court before reducing
amount to be recovered by $10,000.00 settlement). Joyce Crane then argues that since Section
33.0046 prevents the claimant from recovering against the responsible third party, then the amount
of damages caused by the responsible third party is not included in “the damages to be recovered
by the claimant” under Section 33.012. Therefore, it reasons, the trial court should deduct an
amount equal to the percentage of fault apportioned to the responsible third party from the damages
found by the jury to determine “the damages to be recovered by the claimant” under Section
33.012.7 According to Joyce Crane, it is from this reduced figure that the trial court should then
deduct amounts for the claimant’s percentage of responsibility and the sum of all settlements.8
A. Standard of Review
Our analysis of whether Section 33.012 requires the trial court to deduct an amount equal
to the percentage of fault apportioned to a responsible third party from the damages found by the
jury to determine “the damages to be recovered by the claimant” involves statutory construction,
which is a question of law that we review de novo. See CI Sales & Serv., Inc. v. Hinton, 329
6
Section 33.004 provides, in pertinent part, that “a finding of fault against the [responsible third party] . . . does not
by itself impose liability on the [responsible third party] . . . .” TEX. CIV. PRAC. & REM. CODE ANN. § 33.004(i)(1).
7
The parties direct us to, and we have found, no authority that considers this issue.
8
Joyce Crane then uses this reduced figure and proposes a formula for determining Bonner’s responsibility that after
deducting for settlements, results in a take-nothing judgment for Joyce Crane. Since we do not agree that the
Legislature intended that “the amount to be recovered by the claimant” excludes the amounts attributable to a
responsible third party, we do not reach this portion of Joyce Crane’s argument.
5
S.W.3d 475, 500 (Tex. 2010); McIntyre v. Ramirez, 109 S.W.3d 741, 745 (Tex. 2003). Our primary
goal in construing a statute is to ascertain and give effect to the Legislature’s intent. Hinton, 329
S.W.3d at 500; Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 865 (Tex. 1999);
Pilgrim’s Pride Corp. v. Cernat, 205 S.W.3d 110, 117 (Tex. App.—Texarkana 2006, pet. denied).
To ascertain that intent, we look first to the “‘plain and common meaning of the statute’s words.’”
McIntyre, 109 S.W.3d at 745 (quoting State ex rel. State Dep’t of Highways & Pub. Transp. v.
Gonzalez, 82 S.W.3d 322, 327 (Tex. 2002); Fitzgerald, 996 S.W.2d at 865); see TEX. GOV’T CODE
ANN. § 311.011 (West 2013). We construe the statute according to its plain language if the
language is unambiguous. McIntyre, 109 S.W.3d at 745; Fitzgerald, 996 S.W.2d at 865; Cernat,
205 S.W.3d at 117. Further, in determining legislative intent, we look to the statute as a whole and
not isolated portions. In re M.N., 262 S.W.3d 799, 802 (Tex. 2008). We presume that the
Legislature had a purpose for words included in the statute and that it purposefully omitted words
excluded from the statute. Id.; Cernat, 205 S.W.3d at 117. When a statutory term is undefined,
we will not find “a meaning that is out of harmony or inconsistent with other provisions in the
statute.” McIntyre, 109 S.W.3d at 745. Other matters, such as the object to be attained,
circumstances of the statute’s enactment, legislative history, and the consequences of a particular
construction, may also be considered in determining the Legislature’s intent. See TEX. GOV’T
CODE ANN. § 311.023(1)–(3), (5) (West 2013); McIntyre, 109 S.W.3d at 745; Fitzgerald, 996
S.W.2d at 866. However, when a statute is unambiguous, these other matters will not be used to
create an ambiguity. Fitzgerald, 996 S.W.2d at 865–66. Compare Molinet v. Kimbrell, 356 S.W.3d
407, 414 (Tex. 2011) (inappropriate to consider extrinsic aids to alter clear and unambiguous
6
statutory language), with State v. Hodges, 92 S.W.3d 489, 494 (Tex. 2002) (even when statute is
clear and unambiguous, appellate court may consider statute’s objectives and consequences of
particular construction, among other things) (citing TEX. GOV’T CODE ANN. § 311.023 (West
2013)).
B. Plain and Ordinary Meaning
Since Joyce Crane argues that the trial court should have reduced the “amount of damages
to be recovered” by the percentage of fault attributed to the responsible third party, we will examine
the references to the term “recover damages” in the statute. In Chapter 33 of the Civil Practice
and Remedies Code, the Legislature employs variations of “recover damages” at least nine times.
Section 33.001 provides that “a claimant may not recover damages if his percentage of
responsibility is greater than 50 percent.” TEX. CIV. PRAC. & REM. CODE ANN. § 33.001 (emphasis
added). Section 33.003 requires the trier of fact to determine the percentage of responsibility of
the claimant(s), defendant(s), and other persons who caused “the harm for which recovery of
damages is sought.” TEX. CIV. PRAC. & REM. CODE ANN. § 33.003(a) (emphasis added). A
claimant is defined as “a person seeking recovery of damages,” and a defendant “includes any
person from whom . . . a claimant seeks recovery of damages.” TEX. CIV. PRAC. & REM. CODE
ANN. § 33.011(1)–(2) (emphasis added). The phrase “harm for which recovery of damages is
sought” is also used in defining “percentage of responsibility,” “settling person,” and “responsible
third party.” TEX. CIV. PRAC. & REM. CODE ANN. § 33.011(4)–(6) (emphasis added). Finally,
Section 33.012 requires the trial court to reduce “the amount of damages to be recovered by the
claimant . . . by the claimant’s percentage of responsibility” and the sum of all settlements. TEX.
7
CIV. PRAC. & REM. CODE ANN. § 33.012(a), (b) (emphasis added). “Recover,” in the context of a
legal cause of action, means “to gain by legal process” or “to obtain a final legal judgment in one’s
favor.” MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 1040 (11th ed. 2006); see also BLACK’S
LAW DICTIONARY 1389 (9th ed. 2009). In this same context, “recovery” means “[t]he obtainment
of . . . [damages] by a judgment.” BLACK’S LAW DICTIONARY 1389. Thus, the plain and common
usage of these phrases would be to obtain a judgment for damages. There is nothing within these
statutes to indicate that the Legislature meant to use the word “recover” in the phrases “recover
damages,” “recovery of damages,” or “damages to be recovered” in any manner other than its plain
and common usage. Under this usage, “the amount of damages to be recovered by claimant” under
Section 33.012 means simply the amount of money damages that will be obtained by the claimant
in the final judgment. Although the starting point is generally the amount of damages found by
the trier of fact, Section 33.012 establishes the process by which the amount of damages to be
recovered by the claimant is determined.
It is true that there may be amounts of damages allowed by law, such as prejudgment
interest, that are added to the amount of damages found by the trier of fact and that are included in
the amount of damages to be recovered. See Battaglia, 177 S.W.3d at 907. Conversely, in some
instances, there is a statutory limit on the amount of damages a claimant may recover for certain
claims. See, e.g., TEX. CIV. PRAC. & REM. CODE ANN. §§ 74.301–.303 (West 2011) (limiting
amount of damages claimant may recover in health-care liability claims). Joyce Crane argues that
since statutorily-mandated limitations vary the “amount of damages to be recovered by the
claimant,” the Legislature must have intended that the amount of damages attributable to a
8
responsible third party would also be excluded from this amount. However, the limitations on
recovery of certain damages in health-care liability claims are based on specific statutory
provisions. Id. There is no such statutory provision excluding the amount of damages attributable
to a responsible third party from the amount of damages to be recovered by the claimant. Further,
an examination of Chapter 33 shows that this is clearly not what the Legislature intended.
C. What Was Put In, What Was Left Out
In Chapter 33, the Legislature sets forth the process for determining, for each person at
fault for the claimant’s alleged harm, that person’s proportionate responsibility for claimant’s
damages. TEX. CIV. PRAC. & REM. CODE ANN. § 33.003(a). It also places a limit on the amount
of damages the claimant may recover and a limit on the amount for which a defendant bearing fifty
percent or less of the fault may be liable. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 33.012,
33.013(a); Battaglia, 177 S.W.3d at 906; Cernat, 205 S.W.3d at 118.
Under Section 33.003(a), the trier of fact determines the proportionate responsibility of
each claimant, each defendant, each settling person, and each responsible third party. TEX. CIV.
PRAC. & REM. CODE ANN. § 33.003(a). Of these four categories of persons responsible for the
claimant’s damages, the Legislature has provided that only two will limit the amount of damages
to be recovered by the claimant. First, an amount equal to the claimant’s proportionate
responsibility is deducted from this amount. TEX. CIV. PRAC. & REM. CODE ANN. § 33.012(a).
Then, the trial court is directed to further reduce the amount “by the sum of the dollar amounts of
all settlements.” TEX. CIV. PRAC. & REM. CODE ANN. § 33.012(b). Significantly, Section 33.012,
which places limits on the amount of damages the claimant may recover, is silent regarding any
9
amount of damages attributable to a responsible third party. By including deductions for the
claimant’s proportionate responsibility and the amounts of settlements, it appears that the
Legislature intended to reduce the amount of damages to be recovered by the claimant only by
these amounts. At the same time, by excluding any mention of the amount of damages attributable
to a responsible third party, the Legislature expressed an intention that the amount of damages to
be recovered by the claimant would not be reduced by this amount.
D. Legislative History
The legislative history of Chapter 33 also lends support to this interpretation. The
Legislature first provided for a determination of the proportionate responsibility of settling persons
in 1987. In that year, the Legislature added Section 33.003 to require the trier of fact to determine
the percentage of responsibility of each claimant, each defendant, and each settling person. Act of
June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 2.06, 1987 Tex. Gen. Laws 37, 41 (amended 1995, 2003)
(current version at TEX. CIV. PRAC. & REM. CODE ANN. § 33.003). The same year, the Legislature
amended Section 33.012, adding provisions requiring the trial court to “reduce the amount of
damages recovered by the claimant” by the percentage of the claimant’s responsibility and
settlements. Act of June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 2.08, 1987 Tex. Gen. Laws 37, 41–
42 (amended 1995, 2003, 2005) (current version at TEX. CIV. PRAC. & REM. CODE ANN.
§ 33.012(a), (b)). Eight years later, the Legislature added the provisions regarding responsible
third parties. Act of May 8, 1995, 74th Leg., R.S., ch. 136, § 1, 1995 Tex. Gen. Laws 971, 972–
73. Although these amendments added the current requirement for the determination of the
percentage of fault of responsible third parties under Section 33.003(a), the Legislature made no
10
provision—nor has it since 1995—for reducing “the amount of damages recovered by the
claimant” under Section 33.012 by the amount of damages attributable to a responsible third party.
See id. This supports our determination that the Legislature did not intend the amount of damages
to be recovered by the claimant to be reduced by the amount of damages attributable to the
responsible third party.
Further, prior to the 1995 amendments, Chapter 33 allowed the claimant to control the
submission of the comparative responsibility issue. See Holman, 46 S. TEX. L. REV. at 876–77.
This greatly affected whether a defendant would, or would not, be held jointly and severally liable.
Id. at 877. For instance, in a situation in which there were three potential defendants, two of whom
were not capable of satisfying any judgment against them, and one of whom could satisfy the entire
judgment (the solvent defendant), the claimant could strategically decide to file suit only against
the solvent defendant. Since only the percentages of responsibility attributed to the claimant,
defendant, and any settling party were submitted under Section 33.003, a claimant could, under
the right circumstances, obtain a jury finding that would result in the solvent defendant being
jointly and severally liable. Under the pre-1995 law, the solvent defendant could only join the
other two defendants as contribution defendants in an effort to recoup some of the money he was
required to pay the claimant. See Act of June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 2.11, 2.11(a),
1987 Tex. Gen. Laws 37, 43 (amended 1995) (current version at TEX. CIV. PRAC. & REM. CODE
ANN. §§ 33.015–.016). However, the percentage of the contribution defendants’ responsibility was
determined as a separate issue. See Act of June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 2.11(a), 1987
Tex. Gen. Laws 37, 43–44 (amended 1995) (current version at TEX. CIV. PRAC. & REM. CODE ANN.
11
§ 33.016(c)). This could lead to a defendant being found jointly and severally liable even if its
responsibility for the occurrence was only minor. For instance, assume the claimant filed suit
against D1 (the solvent defendant) and obtained jury findings that D1 was seventy percent at fault
for $100,000.00 in damages. D1 would be liable to the claimant for $70,000.00. Also, assume D1
joined DA and DB as contribution defendants and obtained a jury finding on the contribution issue
that D1 was twenty percent responsible, DA was thirty percent responsible, and DB was fifty
percent responsible. If DA and DB are insolvent, then D1 must pay claimant $70,000.00, even
though he was only fourteen percent (twenty percent x seventy percent) responsible.
The bill analysis for the bill that contained the 1995 amendments to Chapter 33 makes clear
that the Legislature’s goal in adding the responsible third party provisions was to remedy this
result. House Comm. on State Affairs, Bill Analysis, Tex. S.B. 28, 74th Leg., R.S. (1995). After
setting forth the example in the previous paragraph, the analysis explains,
[I]f DA and DB are insolvent, D1 must pay $70,000 even though D1 actually caused
only 14 percent of the harm. If all of these parties were submitted to the jury on
one question [as provided in S.B. 28], D1 would not have had to pay any more than
$14,000 . . . . SB 28 would correct this problem by requiring all responsible parties
to be apportioned a percentage of the liability at the same time.
Id. at 8. Thus, the Legislature sought to give a liable defendant an effective means of limiting its
potential for joint and several liability. See Holman, 46 S. TEX. L. REV. at 877–79. At the same
time, there is no indication in the bill analysis that the Legislature sought to limit the claimant’s
recovery through the responsible third party amendments.
12
E. Joyce Crane’s Interpretation is Inconsistent with Other Provisions of Chapter
33
Joyce Crane’s interpretation is also out of harmony with other provisions of Chapter 33
and would foster inconsistent results. This can best be seen in a case in which one of the defendants
is jointly and severally liable. Section 33.013(b)(1) provides that if a liable defendant is found to
be more than fifty percent responsible for the claimant’s damages, he is “jointly and severally
liable for the damages recoverable by the claimant under Section 33.012.” TEX. CIV. PRAC. &
REM. CODE ANN. § 33.013(b)(1). As we have noted, Section 33.012 places a limit on the damages
the claimant may recover by reducing the amount to be recovered by the percentage of the
claimant’s responsibility and the sum of all settlements. The claimant’s recovery from the jointly
and severally liable defendant will be the amount remaining after these reductions. See Dalworth
Restoration, Inc. v. Rife-Marshall, 433 S.W.3d 773, 787 (Tex. App.—Fort Worth 2014, pet. dism’d
w.o.j.) (finding defendant wholly responsible for claimant’s damages does not preclude application
of settlement credit); Taveau v. Brenden, 174 S.W.3d 873, 881–82 (Tex. App.—Eastland 2005, pet.
denied) (jointly and severally liable defendant liable for amount of damages after reduction for
settlements); Sugar Land Props., Inc. v. Becnel, 26 S.W.3d 113, 119–21 (Tex. App.—Houston [1st
Dist.] 2000, no pet.) (same). Consider two fact scenarios. In Scenario No. 1, claimant C files suit
for damages against three defendants, D1, D2, and D3, but settles with D3 for $10,000.00 before
trial. Under the legislative scheme, the trier of fact will determine the percentages of responsibility
for C, Dl, D2, and D3 under Section 33.003. Assume the jury finds C ten percent responsible, D1
sixty-five percent responsible, D2 twenty percent responsible, and D3 five percent responsible,
and assume $100,000.00 in damages. Ignoring prejudgment interest and any contribution claims,
13
under Section 33.012, the trial court would reduce the amount of damages by $10,000.00 (ten
percent x $100,000.00) for C’s percentage of responsibility and by another $10,000.00 for D3’s
settlement, leaving $80,000.00 as the amount of damages recoverable by C. Under Section
33.013(b)(1), D1 is jointly and severally liable for $80,000.00. In Scenario No. 2, assume the same
facts, except that D2 has not been sued by C; rather, assume that D2 was designated as a responsible
third party by D1. Under our interpretation of “the amount of damages to be recovered by the
claimant,” the result is the same in both scenarios, resulting in the claimant being made whole.
However, under Joyce Crane’s proposed interpretation, the trial court would initially reduce the
amount of damages by $20,000.00 (twenty percent x $100,000.00, the amount attributable to the
responsible third party, D2), then by an additional $10,000.00 for C’s percentage of responsibility
and $10,000.00 for D3’s settlement, leaving $60,000.00 as the amount of damages recoverable by
C and payable by D1. Thus, this interpretation would result in a less than full recovery by the
claimant and would nullify D1’s joint and several liability under Section 33.013(b)(1), a result the
Legislature could not have intended.9
We find that “the amount of damages to be recovered by the claimant” under Section
33.012 of the Texas Civil Practice and Remedies Code does not exclude damages attributable to a
responsible third party. The trial court did not err in failing to exclude the damages attributable to
the responsible third party, and we overrule Joyce Crane’s first point of error.
9
We recognize that a jointly and severally liable defendant may, in some cases, reap the benefits of large settlements
paid by settling parties that, in effect, also nullify joint and several liability. However, in those cases, the claimant
still makes a full recovery of its damages. That is quite different from the result dictated by Joyce Crane’s
interpretation, which would result in a less-than-full recovery by the claimant and allow the jointly and severally liable
defendant to nullify his joint and several liability through a responsible third party who has paid the claimant nothing.
14
II. The Trial Court Erred in Calculating Prejudgment Interest
In its second point of error, Joyce Crane asserts that the trial court erred in its calculation
of prejudgment interest by failing to follow the “declining-principal” formula as set forth by the
Texas Supreme Court in Battaglia. See Battaglia, 177 S.W.3d at 908; see also Brainard v. Trinity
Universal Ins. Co., 216 S.W.3d 809, 816–17 (Tex. 2006). We agree.
Prejudgment interest is “‘“compensation allowed by law as additional damages for lost use
of the money due as damages during the lapse of time between the accrual of the claim and the
date of judgment.”’” Battaglia, 177 S.W.3d at 907 (quoting Columbia Hosp. Corp. of Houston v.
Moore, 92 S.W.3d 470, 473 (Tex. 2002) (quoting Cavnar v. Quality Control Parking, Inc., 696
S.W.2d 549, 552 (Tex. 1985)); Natural Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 209, 225
(Tex. App.—Texarkana 2010), rev’d on other grounds, 397 S.W.3d 150 (Tex. 2012). Since this
case involves personal injury, prejudgment interest accrues on past damages “during the period
beginning on the earlier of the 180th day after the date the defendant receives written notice of a
claim or the date the suit is filed and ending on the day preceding the date judgment is rendered.”
TEX. FIN. CODE ANN. § 304.104 (West 2006). Section 304.104 does not address how settlement
payments received by the claimant during the period in which prejudgment interest is accruing
should be applied. In this case, the trial court applied prejudgment interest to the entire amount of
past damages found by the jury, plus the amounts stipulated to by the parties for past medical
expenses and past lost wages, totaling $4,005,838.81.10 The trial court then applied the settlement
Although the trial court did not reduce this amount by Bonner’s percentage of responsibility, Joyce Crane raised no
10
objection at trial to the trial court’s failure to do so.
15
amounts to the principal ($4,005,838.81), but not to prejudgment interest. This yielded
prejudgment interest in the amount of $621,744.31.11 The parties agree that if the settlement
payments are applied using the declining-principal formula, prejudgment interest would be
reduced to $12,769.13, yielding a final judgment of $1,937,467.32.
In Brainard v. Trinity Universal Insurance Co., a case in which prejudgment interest was
also recoverable under Section 304.104,12 Brainard argued that prejudgment interest should be
applied to the entire amount of damages found by the jury and that the settlement credits should
not be applied until the date the parties moved for judgment. Brainard v. Trinity Universal Ins.
Co., 216 S.W.3d 809, 816 (Tex. 2006). The Supreme Court held that the settlement credit should
be applied as of the date the claimant received the settlement payment. Id. at 816–17. It reasoned
that if the claimant was awarded compensation other than for the lost use of money, it would be a
windfall to the claimant and a penalty for the defendant, and not interest. Id. at 816 (citing
Battaglia, 177 S.W.3d at 907); Justiss, 397 S.W.3d at 225. The court also reaffirmed that “the
11
The trial court’s calculations were:
Amount subject to prejudgment interest $4,005,838.81
($3,500,000.00 + $500,838.81 in stipulated past medical and lost wages)
5% prejudgment interest on $4,005,838.81 for 1021 days $560,273.75
(January 16, 2011 to November 1, 2013)
5% prejudgment interest on $3,005,838.81 for 130 days $53,528.80
(November 2, 2013 to March 10, 2014)
5% prejudgment interest on $905,838.81 for 32 days $7,941.76
(March 11, 2014 to May 12, 2014)
Total Prejudgment Interest $621,744.31
Although Bonner characterizes Brainard as “an underinsured motorist case,” the prejudgment interest considered
12
by the court applied to the underlying wrongful death action. Brainard, 216 S.W.3d at 815.
16
proper way to apply credits in the calculation of prejudgment interest” is by applying the
“‘declining-principal’ formula,” whereby settlements are credited on the date they are received.
Brainard, 216 S.W.3d at 907 (citing Battaglia, 177 S.W.3d at 907–09). Under the declining-
principal formula, settlement payments are applied “‘first to accrued prejudgment interest as of the
date the settlement payment was made, then to ‘principal,’ thereby reducing or perhaps eliminating
prejudgment interest from that point in time forward.’” Id. (quoting Battaglia, 177 S.W.3d at 908).
Under Brainard and Battaglia,13 the settlement credits in this case were required to be applied first
to the accrued prejudgment interest as of the date of the settlement payment and then to the
principal. We find that the trial court erred in failing to do so.
The parties agree that the correct amount of the judgment in this case under Brainard is
$1,937,467.32. We, therefore, modify paragraph 1(a) of the trial court’s judgment to reflect an
award of actual damages to Bonner in the amount of $1,937,467.32.
We affirm the judgment of the trial court, as modified.
Jack Carter
Justice
Date Submitted: May 21, 2015
Date Decided: June 17, 2015
13
Although Bonner contends Battaglia limited its holding to cases involving jointly and severally liable defendants,
we find no such limitation by the court. To the contrary, the court specifically stated that for a defendant who is not
jointly and severally liable, “a settlement payment would be applied first to accrued interest on that amount as of the
date of the settlement payment.” Battaglia, 177 S.W.3d at 908; see also Alvarez v. Garcia, No. 04-14-00142-CV,
2014 WL 6687529, *3 (Tex. App.—Fort Worth Nov. 26, 2014, no pet.) (mem. op.) (applying settlement credits using
declining-principal formula to non-joint-and-several defendant).
17