Stephens v. Castano-Castano.

THIRD DIVISION
ELLINGTON, P. J.,
BETHEL, J., and SENIOR APPELLATE JUDGE PHIPPS
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
May 29, 2018
In the Court of Appeals of Georgia
A18A0100. STEPHENS v. CASTANO-CASTANO.
BETHEL, Judge.
This appeal arises from an accident in which Michael Stephens’ vehicle
collided with Yolanda Castano’s vehicle. On appeal, Michael Stephens (the defendant
in the underlying litigation) argues that the trial court erred: (1) in denying his motion
to enforce a settlement agreement; (2) by prohibiting questioning and evidence
regarding a treating physician’s financial interest in the case; and (3) by excluding
questioning and evidence related to the treating physician’s potential bias and
credibility. We decline to find that the trial court committed error when it denied
Stephens’ motion to enforce the settlement agreement and when it excluded evidence
that Castano’s attorney referred her to the treating physician. However, Stephens
should have been permitted to introduce evidence of the treating physician’s financial
interest in the case. Therefore, for the reasons that follow, we affirm in part and
reverse in part.
Alleged Settlement Agreement
Following a car accident in which Castano claimed she was injured by a
vehicle driven by Stephens, Castano retained legal counsel. On September 3, 2013,
Castano’s counsel sent a settlement demand for the $25,000 insurance policy limits
to Stephens’ insurer. In addition to requesting payment in the amount of the policy
limits, the settlement demand letter indicated that settlement was contingent upon
sworn affidavits from the insurer, insured, and defense counsel regarding the amount
of insurance coverage available, and a limited release. The demand letter indicated
that it would otherwise be withdrawn in 30 days, and that payment was to be made
within that time.
Twenty days later, a representative from Stephens’ insurer called Castano’s
counsel to indicate that it would pay policy limits, would work with defense counsel
on the limited release, and that it was attempting to contact Stephens with respect to
the affidavit. The insurance representative stated that she could not immediately issue
the check and that she would have to wait until she was instructed to do so by defense
counsel. Castano’s counsel indicated that he would wait to hear from defense counsel.
2
On November 5, 2013, defense counsel contacted Castano’s counsel via email
“to facilitate the settlement of this matter.” To that end, defense counsel requested the
status of any liens resulting from the accident and drafting instructions for the
settlement check. A little over an hour later, Castano’s counsel responded with
payment instructions for the check and stated that liens were being negotiated and
would be paid from “this recovery” directly from their escrow account. Defense
counsel requested confirmation that there were no Medicare or Medicaid liens and
that a limited liability release had been requested (as opposed to a general release).
Minutes later, Castano’s counsel clarified that there were no Medicare or Medicaid
liens and that a limited liability release was all that was needed.
However, one week later, Castano’s counsel sent a letter to defense counsel
claiming that Stephens and his insurer had failed to timely respond to the settlement
demand, and that any payment of the policy limits would be rejected. Two weeks
later, Stephens’ insurer tendered the $25,000 settlement check and proposed limited
liability release to Castano’s counsel. Castano’s counsel immediately rejected the
tender, stating that the insurer’s delays had been “unreasonable.”
Castano filed suit against Stephens alleging negligence and negligence per se
and requested damages and attorney fees. Stephens filed a motion to enforce the
3
settlement. Following a hearing, the trial court denied the motion, stating that by its
express terms, the original offer contained in the demand letter had expired on
October 5, 2013, and that the emails exchanged between the parties, alone, were not
sufficient to constitute an offer and acceptance such that a new contract to settle
between the parties could be inferred following the expiration of the original offer.
Expert Witness
Prior to trial, Castano filed a motion in limine to exclude any reference or
suggestion that she was referred to Dr. Chappuis, the physician who performed her
neck surgery, by her attorney or that her attorney assisted in securing funding for the
treatment. Stephens objected, noting that the jury was entitled to consider Dr.
Chappuis’ financial interest in the case and potential bias, interest, or partisanship.
Following oral argument, the trial court granted Castano’s motion, noting that the
attorney referral to the physician was not relevant, and that Dr. Chappuis would be
entitled to collect on the amounts owed regardless of the outcome of the case, and that
the lien on the lawsuit was merely security on the debt.
4
At trial, Stephens made an offer of proof to introduce testimony and evidence
regarding Dr. Chappuis’ financial interest and potential bias in the case.1 The jury
awarded a verdict of $700,000 against Stephens. This appeal followed.
1. Stephens argues that the trial court erred in denying his motion to enforce
settlement. This Court applies a de novo standard of review to a trial court’s order on
a motion to enforce a settlement agreement. DeRossett Enter., Inc. v. Gen. Elec.
Capital Corp., 275 Ga. App. 728, 728 (621 SE2d 755) (2005).
Because the issues raised are analogous to those raised in a motion for
summary judgment, in order to succeed on a motion to enforce a
settlement agreement, a party must show the court that the documents,
affidavits, depositions and other evidence in the record reveal that there
is no evidence sufficient to create a jury issue on at least one essential
element of the appellant’s case. Thus, we review the evidence in a light
most favorable to the nonmoving party.
Tillman v. Mejabi, 331 Ga. App. 415, 415 (771 SE2d 110) (2015) (citation omitted).
(a) Stephens first argues that the trial court should have considered parol
evidence (that is, the prior communications between the parties) to explain
ambiguities in the email communications. He asserts that, following the initial letter
1
Dr. Chappuis’ video deposition, with financial interest information removed,
was played for the jury at trial in lieu of live testimony.
5
from Castano demanding settlement within thirty days for policy limits (that was sent
on September 3, 2013), Castano accepted a counter-offer contained in the November
5th email between the parties. The text of that email was: “We have been retained by
[Stephens’ insurer] to facilitate the settlement of this matter. Will you please provide
me with the status of any liens resulting from this accident and the drafting
instructions for the settlement check? Thanks, and I look forward to working with you
to get this matter resolved.” A little over an hour later, Castano’s counsel responded
that “we are negotiating the liens now and will pay them from this recovery directly
from our escrow acct.” Castano also included payment instructions for the check.
It is clear that the initial offer, set to expire within thirty days, was not timely
accepted. See Herring v. Dunning, 213 Ga. App. 695, 699 (446 SE2d 199) (1994)
(“The offer must be accepted in the manner specified by it; and if it calls for a
promise, then a promise must be made; or if it calls for an act; it can be accepted only
by the doing of the act.”). See also Penn v. Muktar, 309 Ga. App. 849, 850-851 (711
SE2d 337) (2011) (offer to settle required insurance company to perform certain acts
within 20 days of demand letter). Here, the demand letter expressly required that
6
payment be physically delivered to the office of Castano’s counsel.2 That did not
occur. Therefore, Stephens relies upon the “counter-offer” contained in the November
5th email correspondence. However, after reviewing the language contained within
that email, we do not agree that it constituted a “counter-offer” that was accepted and
resulted in an enforceable agreement. See Herring, 213 Ga. App. at 697 (“If the offer
is in any case so indefinite as to make it impossible for a court to decide just what it
means, and to fix the legal liability of the parties, its acceptance can not result in an
enforceable agreement.” (citation omitted)).
[I]n order for the contract3 to be valid the agreement must ordinarily be
expressed plainly and explicitly enough to show what the parties agreed
upon. A contract cannot be enforced in any form of action if its terms are
incomplete or incomprehensible. There are instances when certain
deficiencies or ambiguities may be explained by facts aliunde to the
instrument itself. However, information of such extrinsic nature may not
be utilized to supply that which is essential to constitute a valid contract.
2
Settlement for the $25,000 policy limit was also contingent upon sworn
affidavits from the insurer and Stephens and a limited release.
3
“Settlement agreements must meet the same requirements of formation and
enforceability as other contracts.” Turner v. Williamson, 321 Ga. App. 209, 212 (738
SE2d 712) (2013) (citation omitted).
7
West v. Downer, 218 Ga. 235, 241-242 (5) (127 SE2d 359) (1962) (citations omitted).
See also Kreimer v. Kreimer, 274 Ga. 359, 363 (2) (552 SE2d 826) (2001) (“It is well
established that no contract exists until all essential terms have been agreed to, and
the failure to agree to even one essential term means that there is no agreement to be
enforced.” (citation and punctuation omitted)). “If a contract fails to establish an
essential term, and leaves the settling of that term to be agreed upon later by the
parties to the contract, the contract is deemed an unenforceable ‘agreement to agree.’”
Id. (citation omitted).
Here, the amount of the proposed settlement, which is an essential element, was
missing from the November 5th “counter-offer.” Stephens would have us infer the
amount from his prior letter containing the $25,000 settlement offer. But this is not
a permissible use of parol evidence under these circumstances. See Wiley v. Tom
Howell & Assoc., Inc., 154 Ga. App. 235, 237 (267 SE2d 816) (1980) (“Parol or
extrinsic evidence cannot supply the deficiency of the missing essential element.”).
Parol evidence, together will all the attendant and surrounding
circumstances, may be proved to explain an ambiguity, latent or patent,
in a contract . . . . Furthermore, an offer is not too indefinite if it can be
made certain by reference to outside matters . . . . There is a difference
between ambiguity, which imports doubleness and uncertainty of
meaning, and that degree of indefiniteness which imports no meaning
8
at all. The former can be explained by parol. The latter cannot be merely
explained, but a deficiency must be supplied.
See S. Airways Co. v. DeKalb Cty., 102 Ga. App. 850, 859 (5) (118 SE2d 234) (1960)
(citation and punctuation omitted). Moreover, it would be equally fair to read the
November 5th email exchange as a simple exchange of information, wherein
Stephens’ counsel requested payment instructions and lien information so as to
facilitate further settlement discussions. See Hansen v. Doan, 320 Ga. App. 609, 613
(1) (740 SE2d 338) (2013) (“a mere request for confirmation does not constitute a
counteroffer”). Thus, because the November 5th email was indefinite and omitted an
essential term, it did not result in an enforceable settlement agreement between the
parties.
(b) In the alternative, Stephens argues that the settlement agreement should be
enforced because there was a valid agreement between the parties and Castano
waived any breach of conditions. Castano argues that Stephens waived this argument
by failing to raise it before the trial court. We agree that Stephens failed to preserve
this argument for appeal. See Locke’s Graphic & Vinyl Signs, Inc. v. Citicorp Vendor
Fin., Inc., 285 Ga. App. 826, 828 (2) (a) (648 SE2d 156) (2007) (“An argument not
9
raised in the trial court is waived and cannot be raised for the first time on appeal.”
(footnote omitted)). As such, we cannot consider it.
(c) Finally, Stephens argues that to the extent there was any ambiguity in the
emails that could not be resolved by parol evidence, the jury should have decided
whether there was a settlement. This argument fails because the “issue of contract
construction is at the outset a question of law for the court.” Livoti v. Aycock, 263 Ga.
App. 897, 902 (2) (590 SE2d 159) (2003) (citation omitted). Here, the problem is not
an ambiguity in the email communications between the parties, but rather that the
communications were so indefinite that it failed to establish any enforceable
agreement at all. This argument lacks merit.
2. Stephens next argues that the trial court erred in excluding certain questions
and evidence that affected the credibility and bias of Dr. Chappuis, Castano’s treating
physician. The admission or exclusion of evidence “is generally committed to the
sound discretion of the trial court, whose determination shall not be disturbed on
appeal unless it amounts to an abuse of discretion.” Cooper Tire & Rubber Co. v.
Crosby, 273 Ga. 454, 456-457 (2) (543 SE2d 21) (2001) (footnote omitted).
(a) Stephens first argues that the trial court should have allowed him to
question Dr. Chappuis and introduce evidence regarding his financial interest in the
10
case. Specifically, Stephens sought to introduce evidence at trial that Dr. Chappuis
had a lien on any recovery in the case and that this constituted a financial interest in
the outcome of the case. The trial court excluded the evidence because it was
“unconvinced by Defendant’s argument that because Plaintiff’s treatment provider
has a lien on the lawsuit proceeds that he is biased due to a financial interest in the
case.” The trial court found that the “lien” was “merely a security on Plaintiff’s debt
owed to the physician,” and that the physician would be “entitled to collect on the
debt regardless of the outcome of the case.” However, Stephens argues that the lien
is relevant because regardless of whether the amount was equally due and owing
without it, the doctor was more likely to be paid the full amount owed if Castano was
awarded damages in the suit. In response, Castano argues that the evidence was
prohibited by the collateral source rule and should not be admitted under Rule 403.
We agree that Stephens should have been allowed to question Dr. Chappuis regarding
his financial interest in the case.
“Cross-examination is the principal means by which the believability of a
witness and the truth of his testimony are tested. A party is entitled to a thorough and
sifting cross-examination of the witnesses against him.” Bowen v. State, 252 Ga. App.
382, 382-383 (556 SE2d 252) (2001) (citations and footnotes omitted). See also
11
Postell v. Hankla, 317 Ga. App. 86, 90 (2) (728 SE2d 886) (2012). “As a general
principle, the jury is entitled to consider a witness’s financial interest in a case.”
Postell, 317 Ga. App. at 90 (2) (footnote omitted).
“The collateral source rule, stated simply, is that the receipt of benefits or
mitigation of loss from sources other than the defendant will not operate to diminish
the plaintiff’s recovery of damages.” Polito v. Holland, 258 Ga. 54, 55 (3) (365 SE2d
273) (1988) (citation omitted). Thus, the “collateral source rule permits an injured
party to recover damages from a defendant notwithstanding that the plaintiff received
compensation from other sources.” Bennett v. Haley, 132 Ga. App. 512, 522 (16) (208
SE2d 302) (1974). The underlying rationale for this rule is that “a tortfeasor is not
allowed to benefit by its wrongful conduct or to mitigate its liability by collateral
sources provided by others.” Kelley v. Purcell, 301 Ga. App. 88, 91 (686 SE2d 879)
(2009) (citation omitted). Because of this rule, “evidence of collateral benefits is not
generally material.” Polito, 258 Ga. at 56 (3).
Here, however, there has been no “receipt of benefit or mitigation of loss” from
other sources. Castano still owes the full costs of her treatment and her obligation has
not been reduced. The evidence sought to be introduced by Stephens is not payment
of Castano’s medical bill by some third party, nor does it show a write-off, waiver,
12
or reduction of the bill, as may lead a jury to reduce improperly a plaintiff’s award of
damages. Rather, Stephens simply sought to introduce evidence that Dr. Chappuis
entered into an arrangement whereby the physician would be paid from the proceeds
of Castano’s recovery. Thus, excluding this evidence did not serve the underlying
rationale of the collateral source rule. See, e.g., Rangel v. Anderson, 202 F. Supp. 3d
1361, 1372-1373 (II) (S.D. Ga. 2016).
Furthermore, Dr. Chappuis’ financial interest in the outcome of the case is
highly relevant to the issue of his credibility and potential bias, as Dr. Chappuis has
become an investor of sorts in the lawsuit. If Castano receives a large verdict amount,
then Dr. Chappuis has a near certain chance of fully and quickly recovering the costs
of the treatment provided to Castano at no initial cost. On the other hand, if Castano
does not recover at trial, Dr. Chappuis’ chances of being fully reimbursed are more
doubtful. Thus, the expert witness has a financial motivation to testify favorably for
Castano, and the probative value of this testimony outweighs its prejudicial effect.
See Lloyd v. State, 40 Ga. App. 230, 231 (149 SE 174) (1929) (“The intent or motive
of a witness is a legitimate subject of inquiry, and the fact that a witness, in his
connection with any pending litigation, is influenced by financial considerations may
affect his credit and diminish the weight of his testimony.” (citations and punctuation
13
omitted)). Consequently, the jury should consider the relationship between Castano
and Dr. Chappuis when assessing the credibility of that physician’s testimony.4 See
OCGA § 24-6-622 (“The state of a witness’s feelings towards the parties and the
witness’s relationship to the parties may always be proved for the consideration of the
jury.”); Chrysler Group, LLC v. Walden, No. S17G0832, 2018 WL 1323992, at *7
(Ga. March 15, 2018) (evidence of a witness’s compensation package from defendant
company made existence of bias in favor of that defendant more probable).5
(b) Lastly, Stephens argues that he should have been permitted to inquire into
Castano’s referral to Dr. Chappuis by her attorney because that information was
relevant to the witness’s credibility and bias. The trial court relied on Waits v. Hardy6
in concluding that the information was not relevant. Under the facts of this case, we
do not find that the trial court abused its discretion in excluding this evidence.
4
Castano cites Vol Repairs II Inc. v. Knighten, 322 Ga. App. 416 (745 SE2d
673) (2013) in support of her argument that the trial court properly excluded evidence
of Dr. Chappuis’ financial interest in the case. However, under the particular facts of
that case, the trial court did not abuse its discretion in deciding that the line of
questioning was likely to run askew of the rule. Id. at 421 (3).
5
Although not raised by the parties, we note that this evidence, like all
evidence under our Evidence Code, is subject to a Rule 403 analysis.
6
214 Ga. 41, 44 (3) (1958).
14
In Waits, the Supreme Court of Georgia held that the trial court did not abuse
its discretion when it opted not to instruct the jury that comments by defense counsel
that the plaintiff did not visit a doctor until told to do so by his attorney and that the
action was a “trumped-up lawsuit” were improper and should be disregarded. Id. at
42-43. Instead, the trial court instructed the jury that the lawyers’ contentions were
not evidence and should not be considered as such. Id. In so holding, the Supreme
Court agreed with the trial court that the comments did not charge plaintiff’s counsel
with “being a party to a fraudulently framed-up lawsuit.” Id. at 44. The Supreme
Court went on to state that mentioning that
the plaintiff in a personal injury suit did not go to a doctor until his
lawyer sent him does not charge the lawyer with wrongful conduct. On
the contrary, it would seem that a lawyer in accepting employment in a
personal injury case would logically tell his client to be examined by a
doctor before he proceeds with the case, so that he may know whether
his client has suffered any injury or damage; otherwise, he might have
a case of clear liability where there is no injury or damage sustained.
Id.15
While Waits7 does not address the issue before us — that is, whether a referral
to a physician by plaintiff’s counsel affects that physician’s credibility and bias — we
agree that, under the facts of this case, the trial court did not abuse its discretion by
excluding evidence of Castano’s referral to Dr. Chappuis by her attorney as
irrelevant.
Relevant evidence is that “which logically tends to prove or to disprove any
material fact which is at issue in the case, and every act or circumstance serving to
elucidate or throw light upon a material issue or issues is relevant . . . . [W]here the
relevancy or competency of evidence is doubtful, it should be admitted and its weight
left to the determination of the jury.” Pound v. Medney, 176 Ga. App. 756, 759 (1)
(337 SE2d 772) (1985) (citation omitted). Relevant evidence may also be admitted
to support an inference of bias. See Chrysler Group, LLC, 339 Ga. App. at 743 (5).
7
In the second appeal of the case, Waits v. Hardy, 214 Ga. 495 (105 SE2d 719)
(1958), the Supreme Court of Georgia considered the admission of certain hearsay
evidence — that is, testimony that the plaintiff was referred to the doctor by her
lawyer. In determining that the hearsay evidence was not so harmful as to necessitate
a new trial, the Supreme Court held, without explanation, that “who referred the
plaintiff to the doctor was in effect immaterial.” Id. at 495. While this Court
appreciates those arguments advanced in the amicus brief, we do not take this to mean
that an attorney referral to a physician will always be irrelevant in every circumstance
and is therefore inadmissible evidence.
16
Bias is a term used in the common law of evidence to describe the
relationship between a party and a witness which might lead the witness
to slant, unconsciously or otherwise, his testimony in favor of or against
a party. Bias may be induced by a witness’ like, dislike, or fear of a
party, or by the witness’ self-interest. Proof of bias is almost always
relevant because the jury, as finder of fact and weigher of credibility, has
historically been entitled to assess all evidence which might bear on the
accuracy and truth of a witness’ testimony.
Id.In this case, we do not find the attorney referral to Dr. Chappuis, standing
alone, to be sufficient to affect Dr. Chappuis’ credibility or to show bias. At most,
there is a suggestion of unseemliness which creates a danger of unfair prejudice and
confusion of the issues before the jury. Therefore, without more, we cannot find that
the trial court abused its discretion by excluding this evidence.
Judgment affirmed in part and reversed in part. Senior Appellate Judge
Herbert E. Phipps, concurs. Ellington, P. J., concurs in judgment only.*
* THIS OPINION IS PHYSICAL PRECEDENT ONLY. COURT OF
APPEALS RULE 33.2 (a)
17