KATHLEEN VANATTA V BENJAMIN J PAOLUCCI
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STATE OF MICHIGAN
COURT OF APPEALS
KATHLEEN VANATTA,
UNPUBLISHED
November 20, 2001
Plaintiff-Appellant,
v
No. 215889
Oakland Circuit Court
LC No. 97-540527-NH
BENJAMIN J. PAOLUCCI, D.O. and
BENJAMIN J. PAOLUCCI, D.O., P.C.,
Defendants-Appellees.
ON REMAND
Before: Collins, P.J., and Jansen and Whitbeck, JJ.
PER CURIAM.
This case comes to us on remand from the Supreme Court. We again affirm.
I. Basic Facts And Procedural History
The first opinion1 in this case set out the pertinent facts:
In 1997, Vanatta filed suit against defendants and Oakland General
Hospital Osteopathic (the hospital) alleging malpractice. On the first day of trial,
Vanatta informed defendants that she had entered into a settlement agreement
with the hospital. Defendants asked the trial court to order Vanatta to disclose the
terms of the agreement, but the trial court denied their motion in an October 6,
1998 order. Defendants then filed an application for leave to appeal and moved
this Court, pursuant to MCR 7.211(C)(4) and (C)(6), for immediate consideration
and peremptory reversal “of the trial court’s order denying [defendants] access to
the amount and terms of the settlement agreement entered into between plaintiff
and [defendant hospital].” On October 12, 1998, this Court granted defendants’
motions and peremptorily reversed the trial court’s October 6, 1998 order. This
Court ordered the trial court to “immediately allow defendants to disclose to the
1
Vanatta v Paolucci, unpublished per curiam opinion of the Court of Appeals, issued
December 1, 2000 (Docket No. 215889).
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jury subject to the parties’ non-disclosure agreement, the terms of plaintiff’s
agreement with the other defendants.” This Court did not retain jurisdiction.
After this Court issued its order, defendants informed the jury of the terms of the
settlement agreement. On October 13, 1998, the jury returned a verdict of no
cause of action. On November 2, 1998, the trial court entered a judgment of no
cause of action pursuant to the jury verdict.
After the trial court entered the judgment of no cause of action, Vanatta
filed an application for leave to appeal in the Michigan Supreme Court. Vanatta
asked the Supreme Court to “reverse the [October 12, 1998] Court of Appeals
order and remand this matter to the trial court for a new trial.” The Supreme
Court, however, denied her application for leave to appeal.
Vanatta appealed to this Court claiming that it was error for defendants to reveal to the jury the
terms of her settlement with the hospital. We then applied the law of the case doctrine and,
having determined that “none of the facts or law relevant to this issue have changed since this
Court entered its earlier decision,” affirmed.
Vanatta filed an application for leave to appeal with the Supreme Court. Rather than
granting leave to appeal, the Supreme Court vacated this Court’s opinion and remanded the case
to us
to decide whether disclosure to the jury of a settlement between plaintiff and an
alleged co-tortfeasor was harmless. The October 1998 Court of Appeals order
directing the trial court to allow defendant to disclose the settlement to the jury is
contrary to the rule of Brewer v Payless Stations, Inc, 412 Mich 673 (1982).
Unlike the Second Court of Appeals panel, this Court is not limited by the law of
the case under the circumstances of the present case as this Court has not
previously addressed the merits of this case. Further, this Court’s May 25, 1999,
denial order was interlocutory.[2]
II. The Issue On Appeal
The Supreme Court in its remand order stated that it was not limited by the law of the
case doctrine “under the circumstances of the present case as this Court has not previously
addressed the merits of this case.” The Supreme Court refrained from saying that the law of the
case doctrine does not limit this Court’s analysis. Nevertheless, the Supreme Court has directed
us to whether informing the jury of the settlement was harmless error, an issue we can only reach
if the law of the case doctrine does not apply. Accordingly, we assume that, by the marvelous
alchemy of a Supreme Court order, the law of the case doctrine does not apply now.
2
Vanatta v Paolucci, 464 Mich 875; 630 NW2d 626 (2001).
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Further, the Supreme Court has conclusively determined that allowing defendants to
disclose the terms of Vanatta’s settlement agreement with the hospital to the jury violated the
rule announced in Brewer:
When there is no genuine dispute regarding either the existence of a release or a
settlement between plaintiff and a codefendant or the amount to be deducted, the
jury shall not be informed of the existence of a settlement or the amount paid,
unless the parties stipulate otherwise. Following the jury verdict, upon motion of
the defendant, the court shall make the necessary calculation and find the amount
by which the jury verdict will be reduced.[3]
This rule is intended, at least in part, to protect against exposing the jury to pieces of evidence
that “have or should have no bearing upon either liability or ultimate damages,” thereby avoiding
confusion surrounding the jury’s role.4 Whether we agree with the way the Supreme Court has
applied the Brewer rule to this case is irrelevant because the Supreme Court’s order binds us.
Thus, whether this disclosure to the jury was harmless is the only issue we may consider.
III. The Parties’ Arguments
As we understand it, Vanatta’s settlement with the hospital required the hospital to pay
her $225,000 and, if the jury verdict exceeded $325,000, the hospital would then pay Vanatta an
additional $25,000. As defendants note, this Court issued the October 6, 1998, order during their
final arguments. The jury did not receive evidence of the settlement nor did they hear references
to the settlement during opening statements. Defense counsel only referred to the nature and
amount of settlement against the hospital in closing arguments, which the trial court put in its
proper context by instructing the jury that the attorneys’ arguments, statements, and remarks
were not evidence. Further, defendants contend, disclosing this agreement was, by definition,
harmless because the jury specifically found on a special verdict form that Dr. Paolucci was not
negligent.
In contrast, Vanatta argues that the jury could have concluded that the hospital, as the
settling party, had admitted liability. Therefore, Vanatta claims, the jury might have concluded
that the hospital was the real culprit, not defendants because the defendants did not settle.
Vanatta also suggests that the jury might have inferred that the settlement amount was an
accurate measure of damages, making no additional damages award necessary. Relying on
Brewer, Vanatta argues that neither inference was valid and that the prejudicial effect seriously
undermined her right to a fair trial.
3
Brewer, supra at 679 (emphasis added).
4
Id.
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IV. Harmless Error
The court rules, which guide all proceedings in this state’s courts, set the foundation for
the harmless error rule, announcing a specific policy “to avoid the consequences of error that
does not affect the substantial rights of the parties.”5 In turn, MCR 2.613(A) prescribes:
An error in the admission or the exclusion of evidence, an error in a ruling
or order, or an error or defect in anything done or omitted by the court or by the
parties is not ground for granting a new trial, for setting aside a verdict, or for
vacating, modifying, or otherwise disturbing a judgment or order, unless refusal
to take this action appears to the court inconsistent with substantial justice.[6]
Thus, in examining the proceedings, the legal benchmark we apply is the “inconsistent with
substantial justice” standard. We apply this standard to the error in informing the jury of the
settlement to determine whether it was harmless.
This case is substantially similar to Kokinakes v British Leyland LTD.7 In Kokinakes, the
plaintiff was involved in a single-car accident.8 He then sued British Leyland, the car
manufacturer, under negligent design and breach of warranty theories.9 During his closing
argument, defense counsel informed the jury that the first three years of Kokinakes’ lost wages
were not recoverable because “[t]hey are recovered from insurance.”10 It is not clear whether the
trial in Kokinakes occurred after the rule announced in Brewer became effective on March 1,
1982.11 However, it is clear this Court in Kokinakes substantively applied the Brewer rule,
holding that defense counsel erred in referring to the insurance policy in front of the jury.12
Nevertheless, this Court concluded that this was harmless error because the “jury never reached
the issue of damages. A special verdict form was submitted to the jury. The jury specifically
found that defendant British Leyland, Ltd., was not negligent and that it did not breach an
implied warranty of fitness.”13
5
MCR 1.105.
6
Emphasis added.
7
Kokinakes v British Leyland LTD, 124 Mich App 650; 335 NW2d 114 (1983).
8
Id. at 652.
9
Id.
10
Id. at 652.
11
See Brewer, supra at 679 (making rule prospective).
12
Kokinakes, supra at 653.
13
Id. at 654; see also Colbert v Primary Care Medical, PC, 226 Mich App 99, 102-103; 547
NW2d 36 (1997) (evidence that plaintiff received public assistance could have affected the
calculation of damages, but was harmless because the jury never reached the issue).
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Similarly, the jury in this case never reached the issue of damages. Rather, the jury
specifically found that Dr. Paolucci was not negligent. Vanatta correctly contends that
introducing this sort of evidence might affect how a jury attributes blame for an injury and,
therefore, apportions or even denies damages. However, as in Kokinakes, it is clear that the
jury’s deliberations never progressed to the stage when the policy underlying Brewer would be
relevant. Having found that Dr. Paolucci was not negligent, there was no possibility that the jury
became confused regarding how to consider the settlement. The trial court’s standard instruction
concerning the limited value of an attorney’s arguments further minimized any prejudice that
could have possibly flowed from the reference. Though error, this reference in front of the jury
was not inconsistent with substantial justice and, therefore, it was harmless.
Affirmed.
/s/ Jeffrey G. Collins
/s/ William C. Whitbeck
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