Donn Peterson, et al., Appellants, vs. Allstate Insurance Company, Respondent.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A03-1390

 

 

Donn Peterson, et al.,

Appellants,

 

vs.

 

Allstate Insurance Company,

Respondent.

 

 

Filed May 4, 2004

Affirmed in part, reversed in part, and remanded

Robert H. Schumacher, Judge

 

Dakota County District Court

File No. C40110960

 

Ronald H. Schneider, Dawn M. Weber, Schneider Law Firm, 706 South First Street, Post Office Box 776, Willmar, MN 56201 (for appellants)

 

David A. Schooler, Carrie A. Daniel, Larson King, LLP, 2800 Wells Fargo Place, 30 East Seventh Street, St. Paul, MN 55101 (for respondent)

 

            Considered and decided by Willis, Presiding Judge; Schumacher, Judge; and Wright, Judge.

U N P U B L I S H E D   O P I N I O N

ROBERT H. SCHUMACHER, Judge

            On appeal from final judgment and denial of posttrial motions, Donn and Donna Peterson argue that the district court erred in applying Minn. Stat. § 548.36 (2002), the collateral source set-off statute, to the jury verdict, and that the district court made multiple evidentiary errors.  We affirm the district court's evidentiary rulings.  Because it is unclear how the district court calculated the collateral source set-off amount, we remand for a recalculation of the collateral source set-off amount. 

FACTS

In September 1998, the Petersons were involved in a motor vehicle accident caused by Lorette Mulroy, who was driving a vehicle owned by Jeffrey Schwarze.  As a result of the accident, Donna Peterson sustained injuries to her upper neck and shoulder region, damage to a disk in her spinal cord, a fractured wrist that caused permanent disfiguration, and a contusion in her left breast which caused significant pain and required multiple biopsies.  The Petersons settled their negligence claims with both tortfeasors.  Under the settlement, Donna received $130,000 and Donn received $30,000.  

The Petersons sued Allstate, their insurance carrier, for underinsured motorist benefits.  A jury awarded Donna $158,700 for past and future damages, and Donn was awarded $10,000 for past and future loss of consortium. 

Allstate then filed a collateral source set-off motion, asking the district court to reduce the Petersons award by $46,814.30.  Allstate reached this total by adding $23,000 in no-fault benefits, which it paid, to $23,814.30 in medical expenses paid by Health Partners.  In response to Allstate's motion, the Petersons asserted that Health Partners had already made a subrogation claim for $13,849.57 and, consequently, that amount should be deducted from the collateral source set-off amount.  In addition, the Petersons claimed the collateral source set-off amount should be reduced by the amount they paid in insurance premiums in the two years prior to the accident. 

After the hearing, the Petersons notified the district court they were attempting to determine the exact amount paid in insurance premiums.  The same day, however, the court issued an order finding the collateral source set-off amount to be $43,814.30.  The order does not contain any calculations that show how the district court arrived at the $43,814.30 set-off, and it does not address the subrogation claim and insurance premium issues raised by the Petersons. 

The court applied the $43,814.30 set-off amount to the $168,700 verdict, which resulted in a net total of $124,885.70.[1]   Because the $124,885.70 amount was less than the $130,000 settlement Donna received from the tortfeasors, the district court concluded that Donna is not entitled to an underinsured motorist award, and that Allstate, as the prevailing party, is entitled to judgment and reimbursements for taxable costs and disbursements. 

The Petersons in posttrial motions argued in part that the district court improperly applied Minn. Stat. § 548.36 (2002), the collateral source set-off statute, and that the court made multiple evidentiary errors.  The district court denied the motions.[2]

D E C I S I O N

1.         The district court has broad discretion to admit or exclude evidence, and its ruling will not be disturbed unless it is based on an erroneous view of the law or constitutes an abuse of discretion.  Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn. 1990).  The complaining party bears the burden of demonstrating that an improper evidentiary ruling caused prejudicial error.  Id.

Allstate hired Dr. Kenneth Crabb to examine Donna Peterson's left breast, assess the extent of her injuries, and give an opinion as to the proper course of treatment.  In his final report, Dr. Crabb stated Donna's injuries would probably require surgery.  He stated at a subsequent deposition that after having the opportunity to review more information regarding Donna's injuries, he no longer believed surgery was necessary.  Because Dr. Crabb's opinion changed as to whether Donna needed surgery, the Petersons moved in limine that Dr. Crabb's report is an admission by Allstate and therefore admissible evidence.

The district court ruled that the report could not be received in evidence if Dr. Crabb testified at trial.  Dr. Crabb's videotaped deposition was played to the jury, and although most references to his report were redacted, the court did allow references to the report for impeachment purposes.  On appeal, the Petersons argue the report was an admission by Allstate that should have been admitted into evidence. 

Hearsay is an out-of-court statement offered into evidence to prove the truth of the matter asserted.  Minn. R. Evid. 801(c).  Generally, hearsay evidence is not admissible.  Minn. R. Evid. 802.  Admissions by party-opponents and their agents are not considered hearsay.  Minn. R. Evid. 801(d)(2).  It is well settled that for the declaration of an agent to be binding as an admission of his principal it must not only be made in the performance and within the authorized scope of his duties as defendant's agent, but it also must be a statement of fact as distinguished from a mere expression of opinion.  Albertson v. Chicago, M. St. P. & P. R. Co., 242 Minn. 50, 59, 64 N.W.2d 175, 182 (1954).

Assuming Dr. Crabb was an agent of Allstate, his report is not an admission by Allstate.  The report constitutes Dr. Crabb's opinion as to Donna's proper course of treatment, rather than a statement of fact.  See id.  In addition, the report is hearsay because the Petersons intended to offer the report to prove that Donna's injuries required surgery.  The district court did not abuse its discretion in refusing to admit the report on the basis that it was not an admission.  The report was properly used for impeachment purposes in the videotape of Dr. Crabb.  

2.         The Petersons also argue that the district court abused its discretion by refusing to admit into evidence their insurance policy and evidence concerning the status of Allstate and Allstate's relationship to them.  The district court did inform the jury at the beginning of trial that "there's a contractual arrangement and that Allstate is standing in instead of [the tortfeasors]."  And in denying the Petersons' motion to inform the jury that the Petersons are insured by Allstate, that their insurance policy included underinsured motorist benefits, and that their case was brought for underinsured motorist benefits, the district court stated there was an

understanding that there is an admission by the Defendants that Allstate . . . does in fact have an underinsured motorist coverage with the Petersons, that they are not contesting that and that they are also in agreement that there is no liability on the part of Ms. Peterson.  That there is no issue of fault.  And that Allstate . . . concedes to the fault for the purpose of this action.

 

The record shows that the jury was adequately informed of Allstate's role in the trial.  The district court did not abuse its discretion by excluding the proffered evidence.

3.         Underinsured motorist coverage entitles an insured to recover "the amount of damages sustained but not recovered from the insurance policy of the driver or owner of any underinsured at fault vehicle."  Minn. Stat. § 65B.49, subd. 4a (2002).  After a tort judgment conclusively establishes the damages to which the insured is legally entitled, and upon a proper motion, the court must determine:

(1)           [The] amounts of collateral sources that have been paid for the benefit of the plaintiff or are otherwise available to the plaintiff as a result of losses except those for which a subrogation right has been asserted; and

 

(2)           [The] amounts that have been paid . . . by, or on behalf of, the plaintiff . . . for the two-year period immediately before the accrual of the action to secure the right to a collateral source benefit that the plaintiff is receiving as a result of the losses.

 

Minn. Stat. § 548.36, subd. 2 (2002).  The court must then reduce the damages award by the amounts of collateral sources paid for the plaintiff's benefit, minus any subrogated claims, and offset any reduction in the award by the amount of insurance premiums paid in the two years prior to the accident giving rise to the cause of action.  Id. at subd. 3(a) (2002).  If the remaining unpaid damages exceed the tortfeasor's liability insurance limits, the excess is payable by the underinsurance carrier to the extent of its coverage.  Richards v. Milwaukee Ins. Co., 518 N.W.2d 26, 28 (Minn. 1994). 

The Petersons argue that the district court erred in applying section 548.36 to their damages award of $168,700 by including a subrogated claim and failing to offset the collateral-source reduction in their damages award by the amount they paid in auto insurance premiums for the two years prior to the accident.  Statutory construction is a question of law, which this court reviews de novo.  Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn. 1998).

We are not able to properly address these issues because it is unclear how the district court calculated the $43,814.30 collateral source set-off.  Because we cannot determine whether a subrogated claim was included in the set-off, or whether the set-off amount was offset by insurance premiums paid by the Petersons in the two years prior to the accident, we reverse and remand this issue to the district court for a recalculation of the collateral source set-off under section 548.36, which clarifies what amounts are included in the set-off.

Affirmed in part, reversed in part, and remanded.

[1] On appeal, Allstate argues that the verdict was only $158,700 because Donn's $10,0000 award for loss of consortium should not be included in Donna's net award.  But Allstate failed to raise this issue in the district court, and therefore it is not properly before this court.  See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (stating reviewing courts may only consider issues presented to district court).

 

[2] We note that Allstate argues the Petersons improperly submitted a replacement brief on appeal that this court should strike.  The record shows that the Petersons only filed one brief with this court.