Ulm v. Ford Motor Company
Annotate this Case
Ulm v. Ford Motor Company (97-308); 170 Vt. 281; 750 A.2d 981
[Filed 07-Jan-2000]
NOTICE: This opinion is subject to motions for reargument under
V.R.A.P. 40 as well as formal revision before publication in the Vermont
Reports. Readers are requested to notify the Reporter of Decisions,
Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
any errors in order that corrections may be made before this opinion goes
to press.
No. 97-308
James L. Ulm Supreme Court
On Appeal from
v. Windham Superior Court
Ford Motor Company April Term, 1999
Kaiser Foundation Health Plan of
Massachusetts, Inc.
Richard W. Norton, J.
Michael F. Hanley and Barney L. Brannen of Plante, Hanley & Brannen,
P.C., White River Junction, for Plaintiff-Appellee.
John J. Boyland of Boylan & Bowen, Springfield, Wendy F. Lumish of
Carlton, Fields, Ward, Emmanuel, Smith & Cutler, P.A., Miami, Florida, and
James M. Campbell and Kurt B. Gerstner of Campbell Campbell & Edwards,
Boston, Massachusetts, for Defendant-Appellant Ford Motor Co.
Neal D. Ferenc, Moretown, for Intervenor-Appellant Kaiser Foundation
Health Plan of Massachusetts, Inc.
PRESENT: Amestoy, C.J., Dooley, Morse, Johnson and Skoglund, JJ.
AMESTOY, C.J. Defendant Ford Motor Company appeals from a Windham
Superior Court jury verdict awarding plaintiff James Ulm $1.25 million for
injuries he sustained as a passenger in a Ford Bronco where the claimed
cause of injury was a defective steering system. On appeal, defendant
argues that (1) the court erred in denying defendant's motion for judgment
as a matter of law because plaintiff failed to establish that the alleged
defect caused plaintiff's injuries; (2) the court erred in excluding
evidence that plaintiff was not wearing a safety belt when the accident
occurred; (3) the court abused its discretion in allowing plaintiff to
introduce into evidence or to use in cross-examination references to other
incidents of sector-shaft failure without a showing of substantial
similarity, and the evidence was either irrelevant or unfairly
prejudicial; (4) defendant was unfairly prejudiced by the manner in which
excited utterances were admitted and emphasized by both plaintiff and the
court; and (5) the court erred in allowing prejudgment interest after the
jury rendered a general verdict. In this appeal, we also address
intervenor Kaiser Foundation Health Plan of Massachusetts' (Kaiser) appeal
of the superior court's decision dismissing Kaiser's claim for subrogation
rights. We affirm the decision in all respects.
Facts introduced at trial established that on September 9, 1990, after
spending the day boating on the Harriman Reservoir in Wilmington,
plaintiff and friend Gary Corey left the reservoir boat landing in a 1978
Ford Bronco, owned by friend Chris Wood. Corey drove the Bronco along the
dirt road leading to his cottage at a speed of approximately twenty to
twenty-five miles per hour. As the vehicle approached a curve in the
road, Corey lost control of the steering. The vehicle went off the road,
climbed an embankment, struck a tree, and rolled over onto its passenger
side. Plaintiff broke his back and sustained a spinal cord injury that
paralyzed him from the waist down. Plaintiff brought a strict liability
action against Ford, alleging that defective design in the 1978 Ford
Bronco steering system caused the steering gear sector shaft to break at
some point prior to the accident, causing the loss of steering control
which led to the accident.
The jury awarded $1,250,000 in damages, of which $260,000 was
allocated to emotional distress damages. Post-trial, plaintiff sought
prejudgment interest based on the total past
economic losses to which his economist had testified. After adjustments
for pretrial settlements and prejudgment interest, the court entered
judgment for plaintiff in the amount of $1,290,460.52.
I. Plaintiff's Motion for Judgment as a Matter of Law
A. Defendant's Failure to Renew Motion for Judgment as a Matter of Law
We first address defendant's argument that the court erred in denying
its motion for judgment as a matter of law. Although defendant moved for
judgment as a matter of law at the close of plaintiff's case, it failed to
renew the motion at the close of the evidence as V.R.C.P. 50(b) requires.
Defendant argues that plaintiff introduced no evidence after defendant made
its motion and urges a more flexible interpretation of the renewal
requirement, in accordance with the federal approach to the rule. See
Greenwood v. Societe Francaise De, 111 F.3d 1239, 1244 n.6 (5th Cir. 1997)
(courts have "excused technical noncompliance [with Rule 50(b)] where the
purposes of the requirement have been satisfied"). It also argues that
where a defendant moves for judgment as a matter of law at the close of a
plaintiff's case, and then objects to a jury charge on the same grounds,
the objection to the jury charge suffices as a renewal of the original
motion. See id. at 1245.
Contrary to federal interpretation, we have "construed [Rule 50]
strictly and held that even where a motion for directed verdict was made
at the end of plaintiff's case, if not renewed at the close of all
evidence as required by V.R.C.P. 50(b), the issues are waived." Lent v.
Huntoon, 143 Vt. 539, 551, 470 A.2d 1162, 1170-71 (1983). Moreover, after
defendant made its motion, plaintiff did introduce additional evidence: a
Ford memorandum in which one Ford representative concluded that "[i]t is
probable that these sector failures are a result of an impact after which
the customer did not recognize . . . a problem until complete failure."
In its reply
brief, defendant qualifies its initial argument that plaintiff introduced
no evidence after defendant's motion, arguing instead that plaintiff
introduced no new evidence after defendant's motion. Regardless, we
conclude that "[r]enewal of the motion is necessary to appeal from a denial
of or failure to grant a motion for judgment as a matter of law."
V.R.C.P. 50(b).
B. Verdict Supported by Evidence
Even within a strict application of the renewal requirement, defendant
argues that a failure to renew a V.R.C.P. 50(b) motion should be excused
where "manifest injustice" will otherwise occur. See Doctor's Assocs. v.
Weible, 92 F.3d 108, 113-14 (2d Cir. 1996). In Weible, the court relieved
the moving party from the requirements of F.R.C.P. 50 because relief was
necessary to avoid the manifest injustice of a jury verdict wholly without
legal support. See id. (citing Sojak v. Hudson Waterways Corp., 590 F.2d 53, 54-55 (2nd Cir. 1978) ("Where a jury's verdict is wholly without legal
support, we will order a new trial in order to prevent a manifest
injustice.").
Plaintiff's theory of the case was that the steering gear sector shaft
in the subject Bronco fractured and severed, causing a loss of steering
control and leading to the accident. Plaintiff alleged that the defect
resulted from Ford's rush to design a four-wheel vehicle to compete with
the popular Chevy Blazer. Plaintiff argued that Ford compressed the time
usually required to design and develop a sport utility vehicle - in this
case, the new Bronco - in 1978. As a result, many parts and systems for
the Bronco were taken from Ford's existing vehicles, including the entire
steering system, which was taken from a Ford pick-up truck and was
significantly different from the system used in the older model Bronco.
The effects of this steering system change were never tested in the new
Bronco. According to plaintiff, Ford soon began experiencing problems with
the steering systems in its new four-wheel drive vehicles.
Specifically, the steering gear sector shafts would occasionally fracture,
disconnecting the steering wheel from the front wheels of the vehicle. In
several memoranda detailing laboratory test data, Ford acknowledged the
problem but indicated that a sector shaft would not break all the way
through with a stress load of less than 40,000 inch-pounds of torque. The
highest recorded load from Ford's own road testing was 27,000 inch-pounds;
thus, Ford's engineers concluded that sector shafts could not have been
fractured by "normal" usage, but only by extraordinary abuse. Plaintiff,
however, alleged that a fracture could be initiated at much lower loads.
At trial, plaintiff argued that the Bronco steering system was defectively
designed such that, prior to the accident, a stress event initiated a
fracture in the subject Bronco's sector shaft. Once the fracture was
started, a series of progressively smaller, less remarkable impacts
completed the fracture, resulting in the loss of steering control that
caused the accident.
Defendant argues that plaintiff's expert on design defect and
causation, Professor Hochgraf, based his opinion on speculation as to the
events that caused the sector shaft failure and that, in fact, the
evidence affirmatively demonstrated that the vehicle had not experienced a
stress event of the type described by Hochgraf. Hochgraf testified that
the prerequisite for a sector shaft failure was a load event in the range
of 37,000 inch pounds followed by up to twenty additional loads of
declining but significant strength. Ford claims that the evidence adduced
at trial, however, revealed that the subject Bronco's sector shaft was
replaced in 1990, that only Wood and Corey had driven the vehicle since
the sector shaft replacement, and that their usage was minimal and normal,
involving neither off-road driving nor a significant loading event.
Although neither Wood nor Corey recalled any significant impact event
while driving the Bronco, plaintiff's expert testified that the impact
necessary to cause the initial crack could be
unremarkable to a driver, particularly given the fact that the vehicle was
used on dirt roads. Indeed, Corey and several other plaintiff's witnesses
testified that the roads the Bronco repeatedly traveled upon were rutted,
pot-holed, and generally very rough. Defendant seems to tacitly concede
this point in its reply brief, suggesting that ruts in the road may have
been so significant that the Bronco, despite Corey's attempt to turn the
wheel to the left, remained firmly stuck in a rut. Thus, despite the fact
that the Bronco was not used for off-road driving, several of plaintiff's
witnesses testified that the vehicle was used repeatedly on rutted,
pot-holed, and rough roads. Consistent with plaintiff's expert's
testimony, William Daley, a witness who was at the scene immediately after
the accident, testified that the driver, Corey, told him that "he turned
the wheel and it just, the vehicle did whatever it wanted, couldn't
control it . . . the vehicle just went out of control." Although
defendant argues that this statement is ambiguous and could just as easily
describe a tire getting caught in a rut, Ford experts agreed at trial that
a sector-shaft failure would leave the driver with a free-playing steering
wheel and no control over the vehicle's wheels.
The evidence produced at trial sufficiently supports plaintiff's claim
that the defect in the 1978 Ford Bronco steering-system design caused the
subject steering sector shaft to initially fracture and eventually sever,
leading to the accident that resulted in plaintiff's injuries and
paralysis. Plaintiff's ample and persuasive evidence of causation, as
discussed below, "permits no such conclusion of [manifest] injustice."
Baskin v. Hawley, 807 F.2d 1120, 1130 (2nd Cir. 1986). Thus, the court
did not err in denying Ford's motion for judgment as a matter of law.
II. Plaintiff's Failure to Wear a Safety Belt
We next address defendant's argument that the trial court erred in
excluding evidence of plaintiff's failure to wear a safety belt.
Defendant asserts that (1) plaintiff's failure to wear a
safety belt was the proximate cause of his injuries, and (2) plaintiff's
failure to wear a safety belt was admissible to establish his comparative
fault.
Title 23 V.S.A. § 1259(a) imposes a fine on the operator of a motor
vehicle if any person is occupying a seat that has a federally approved
safety belt system and is not restrained by the safety belt while the
vehicle is in motion on a public highway. The statute also contains
evidentiary components that provide:
(d) Noncompliance with the provisions of this section shall not be
admissible as evidence in any civil proceeding.
(e) Failure to wear a safety belt in violation of this section shall
not constitute negligence or contributory negligence in any civil
proceeding or criminal action, nor be entered as evidence to bar
prosecution of a criminal offense.
Id. at § 1259(d), (e). When questioned at oral argument regarding the
statute's applicability, defense counsel argued that, because the statute
was not effective until January 1, 1994, it did not apply. The statute
became effective approximately five months after the complaint was filed,
but more than three years before the case went to trial.
Although new statutes generally do not apply to cases that are pending
at the time of their effective date, there is an exception for statutes
that are solely procedural or are remedial in nature. See Myott v. Myott,
149 Vt. 573, 575, 547 A.2d 1336, 1338 (1988). The question of the
applicability of a new statute to pending litigation is determined largely
by 1 V.S.A. §§ 213 and 214(b). See id. at 575-76, 547 A.2d at 1338.
Section 213 provides:
Acts of the general assembly, except acts regulating practice in
court, relating to the competency of witnesses or to amendments
of process or pleadings, shall not affect a suit begun or pending at
the time of their passage.
1 V.S.A. § 213 (emphasis added). The subsections of the safety belt
statute at issue prohibit the admissibility of a particular type of
evidence, thereby regulating practice in court. Because
the provisions within § 1259 that are at issue in this case are procedural
rather than substantive, they fall within § 213's exception and apply to
the instant case.
Defendant argues that the statute only prohibits references to the
fact that the safety belt statute has been violated. Section 1259(d),
however, prohibits the introduction of evidence of noncompliance with the
safety belt statute in a civil proceeding. Failure to wear a safety belt
is the most obvious example of noncompliance with the statute, and we
presume the Legislature chose the word "noncompliance" advisedly. See
Payea v. Howard Bank, 164 Vt. 106, 107, 663 A.2d 937, 938 (1995) ("When
construing a statute, we presume that language is inserted advisedly.").
Ford contends that even if the statute can be read as prohibiting the
introduction of the plaintiff's failure to wear a safety belt on the issue
of comparative fault, the failure to wear a safety belt is admissible on
defendant's theory that it was the sole proximate cause of plaintiff's
injury. We construe 23 V.S.A. § 1259(d), however, as prohibiting the
introduction of evidence of a failure to wear a safety belt in a civil
proceeding irrespective of the legal theory advanced by a party. Thus,
the court did not err in excluding this evidence.
III. Evidence Used in Cross-Examination
Ford next argues that the court abused its discretion in allowing
plaintiff to introduce into evidence or to use in cross-examination
references to other incidents of sector-shaft failure without a showing of
substantial similarity. In the alternative, Ford contends that even if
substantially similar, evidence of other incidents was not relevant.
Finally, Ford asserts that even if plaintiff has demonstrated relevancy,
evidence of other sector-shaft failures should have been excluded under
V.R.E. 403 because the unfair prejudice to Ford substantially outweighed
its probative value. Unless we determine that the trial court abused its
discretion in admitting
evidence of other accidents involving steering-sector fractures, we will
not disturb the court's rulings. See Mobbs v. Central Vermont Ry., Inc.,
155 Vt. 210, 226, 583 A.2d 566, 575 (1990) (rulings on similarity of
accidents lie within trial court's discretion).
Defendant objects to plaintiff's use of seven Ford documents in the
cross-examination of Ford's metallurgist. Exhibit 605 (entitled "4 x 4
Sector Failures") and Exhibit 610 (entitled "Broken Sector Shaft Problem")
were admitted into evidence. Exhibits 630 through 634 were individual
reports summarizing the results of Ford engineering investigations into
complaints of accidents alleging loss of steering control. Plaintiff made
reference to these latter documents during cross-examination, but they
were not admitted into evidence.
At trial, Ford objected to the introduction of Exhibit 605 "on
foundation grounds." On appeal, defendant amplifies its objection
contending that the court's failure to consider road conditions, prior
condition of the sector shafts, abuse by prior drivers, and evidence as to
the loading that the vehicle had experienced, made it error as a matter of
law to admit the exhibit. We disagree. Plaintiff established that the
seven incidents referenced in Exhibit 605 involved Ford vehicles with
steering systems identical to the 1978 Bronco. Moreover, Exhibit 605 was
relevant to the theory advanced by plaintiff's expert that a driver could
be unaware of the impact causing the initial crack in the sector shaft.
The Ford memorandum notes: "It is probable that these sector failures are
a result of impact after which the customer did not recognize . . . a
problem until complete failure." Exhibit 605 was relevant and properly
admitted by the court as a business record under V.R.E. 803(6).
Similarly, defendant's objection to the introduction of Exhibit 610
fails to demonstrate that the court abused its discretion in allowing
admission of the document. The internal Ford document - again admissible
as a business record - contains data "on fractured sector shafts
returned from the field" and recommendations to "define and correct this
problem." Admission of the document was well within the discretion of the
court.
Ford also objects to plaintiff's use, again during cross-examination
of Ford's metallurgist, of five memoranda prepared by Ford employees.
These memoranda document the results of investigations into five
individual instances of sector-shaft failures on 1978 and 1979 Broncos and
F-150s performed by Ford's power-steering-gear department. Plaintiff posed
the following question to Ford's witness:
Would you agree with me, sir, that the general characterization of
Ford's approach to investigating those accidents was that this
sector shaft could not have fractured under any kind of ordinary or
even severe road usage, therefore, it must not have fractured under
such usage?
Ford's witness replied, "No, I would not agree."
Plaintiff then sought to use Exhibits 630 through 634 to impeach
Ford's witness. Defendant objected that plaintiff's purpose was
irrelevant to the issues being decided. The court determined that the
exhibits were relevant to impeach the witness' testimony. Ford on appeal
provides more explanation for its claim of irrelevancy than it did for the
trial court, but falls far short of a showing of any error below. Ford
argues that without proof of how the other accidents referenced in the
exhibits occurred, the evidence could not impeach its expert's opinions.
Plaintiff's purpose in impeachment, however, was to bolster his theory of
the case that Ford's engineers repeatedly assumed that the sector-shaft
failures could only occur in an abnormal single event. Each of the
memoranda documenting the results of Ford's engineering investigations into
complaints of loss of steering control ended with the identical
conclusion: "Since this problem is a result of an overload condition and
not a design manufacturing problem, Steering Gear Engineering recommends
this problem be closed." Each memoranda dealt with
steering control mechanisms identical to those in a 1978 Bronco. The
court's determination that Exhibits 630 through 634 contained relevant
evidence was sound. Evidence is admissible if relevant, and relevant if
it has any tendency to make the existence of any fact of consequence to the
determination of the action more or less probable. See V.R.E. 401; Ball v.
Melsur Corp., 161 Vt. 35, 42, 633 A.2d 705, 711 (1993).
Defendant's alternative argument that the evidence, even if relevant,
was inadmissible under V.R.E. 403 is unavailing. The court has broad
discretion in determining whether the probative value of relevant evidence
outweighs any prejudicial effect. See State v. Wheel, 155 Vt. 587, 604,
587 A.2d 933, 944 (1990). The burden of showing abuse of discretion is a
heavy one. See Quirion v. Forcier, 161 Vt. 15, 21, 632 A.2d 365, 369
(1993). That burden has not been met here.
IV. Excited Utterances
We next address defendant's argument that the manner in which excited
utterances were explained and emphasized by plaintiff in his closing
argument, and then by the court in its curative instruction, unfairly
prejudiced defendant. During trial, plaintiff elicited testimony from
witness Daley that, at the scene, driver Corey told him the steering wheel
"felt like it was disconnected." Plaintiff also elicited testimony from
another witness, William Johnson, that while still trapped in the vehicle,
plaintiff said the accident "was not [Corey's] fault." During his closing,
plaintiff's counsel explained:
[T]hese are what lawyers call excited utterances.
You heard that phrase used during this trial. Excited utterances.
Excited utterances are given a special place in our legal system.
The view about excited utterances is, that because they are
spontaneous, they are entitled to special consideration when you
evaluate the evidence.
Ford did not object to these statements at the time of argument, but
instead attempted to argue during its closing that plaintiff's statement
that excited utterances should receive special consideration was an
incorrect statement of the law. Ford then requested a curative
instruction, which the court provided:
And when the Court invokes the [excited utterances] doctrine and
allows it as an exception to the hearsay rule, it is because the
trustworthiness of the reliability of the statement itself is couched
in the surrounding circumstances and, therefore, the statement
would tend to be made without reflection or thought or just a
statement under those particular circumstances. Those excited
utterances are treated equally with all of the evidence allowed in
the case by the Court. You should understand that you may
consider that statement along with all of the other evidence in
making an assessment . . . in this case.
Defendant now argues that this supplemental charge only heightened the
significance of the testimony and thus unfairly prejudiced Ford. We
disagree for two reasons. First, the court's instruction provided a
correct statement of the law, see V.R.E. 803(2); Reporter's Notes V.R.E.
803 (Rule 803(2) among rules that "deal with out-of-court statements made
in circumstances of spontaneity that supply the necessary element of
trustworthiness"), and sufficiently countered the effect of statements
made by plaintiff's counsel. See Deyo v. Kinley, 152 Vt. 196, 203, 565 A.2d 1286, 1290 (1989) (court's curative instruction served adequately to
cure alleged error in plaintiffs' counsel's closing argument). No error
was committed by the court in its supplemental charge to the jury.
Second, Ford failed to object to the supplemental charge given by the trial
court. Where a party objects to a court's charge and the jury receives
supplemental instructions, the party must object to the supplemental
instruction in order to preserve the claim on appeal. See Nelson v.
Percy, 149 Vt. 168, 170, 540 A.2d 1035, 1036
(1987). Indeed, by its silence, defendant "appeared to accept the court's
response to the objection." See Deyo, 152 Vt. at 196, 565 A.2d at 1291.
V. Prejudgment Interest
Finally, we address defendant's argument that, where hard and soft
damage amounts are lumped together in a general verdict without a
breakdown by category, prejudgment interest should not be awarded. During
the jury charge conference, the court asked counsel whether it should
instruct the jury concerning prejudgment interest. Plaintiff stated that
the court should calculate the interest on those damages that were capable
of being reduced to an ascertainable sum (hard damages), but not on
inchoate damages (soft damages). The colloquy proceeded as follows:
Plaintiff's Counsel: We think the court should do it. We were very
careful . . . to distinguish between the hard damages and the soft
damages. And, so, we think this is a calculation the court can do,
and I think the court should tell the jury that they need not concern
themselves with interest.
Defense Counsel: Yeah, the only question would be if there is going
to be some sort of breakdown that separates the hard damages and
the other damages, so there is a way of calculating [interest].
Plaintiff's Counsel: We think the Court can do that based upon the
evidence Your Honor. . . .
Court: Well, in the past I have had the parties agree the court will
advise the jury that they need not concern themselves with fixed
damages according to the evidence such as hospital and medical
expense, loss of income, cost offered by your expert as to necessary
equipment this gentleman would require in the future . . . . I think
that's all hard evidence and can be distinguished from soft
damages . . . .
There was no further discussion regarding breaking down hard and soft
damages, and defense counsel did not raise the issue again. Later in the
discussion, the following colloquy occurred:
Court: All right. So, the plaintiff would . . . agree to the charge,
"You should not concern yourself with interest, cost or attorney fees
in calculating damages. The proper effect of those matters on the
amount of the judgment is a matter for the court to decide." Is that
agreeable to the defendant?
Defense Counsel: Yes, Your Honor, that would be fine.
The jury verdict form did not separate hard and soft damages, except
that it asked what portion of the total award was included for emotional
distress. After the trial, plaintiff requested prejudgment interest based
on the total post-economic losses to which his expert had testified.
Defendant opposed the motion, arguing that, because the jury did not
separate the hard economic losses from the new inchoate losses, the court
was left to speculate as to exactly what the jury awarded other than with
regard to the emotional distress claim. The court granted plaintiff's
request for prejudgment interest in the amount of $150,290. This amount
was calculated based on plaintiff's expert's testimony regarding
plaintiff's past economic loss from the date of the accident to the date
the jury returned its verdict, at an interest rate of twelve percent.
Defendant claims that plaintiff made the affirmative decision that a
general verdict form should be used even after Ford pointed out that a
breakdown of the damage elements was required. As such, plaintiff failed
to meet his burden of establishing the hard damages to which interest
would attach. Even if a breakdown was not required, defendant argues,
there was no basis to conclude that the jury must have awarded plaintiff
all of the economic damages claimed by plaintiff. Defendant argues that,
since it challenged plaintiff's expert testimony on his past lost earnings
and past medical and life-care expenses, there is no way of ascertaining
whether the jury accepted or rejected any or all of the expert's
testimony.
We have previously held that the question of interest on reasonably
ascertainable damages is not properly within the discretion of the fact
finder. See Remes v. Nordic Group, Inc.,
__ Vt. __, __, 726 A.2d 77, 78-79 (1999). We also clarified, however, that
the rule does not encompass certain damage elements of personal injury
actions such as pain and suffering and permanent impairment where damages
are inchoate and rarely ascertainable at the time of injury. See Estate
of Fleming v. Nicholson, __ Vt. __, __, 724 A.2d 1026, 1030 (1998);
Turcotte v. Estate of LaRose, 153 Vt. 196, 200 n.2, 569 A.2d 1086, 1088
n.2 (1989). In Gilman v. Towmotor Corp., 160 Vt. 116, 621 A.2d 1260
(1992), we agreed with the defendant's argument on appeal that the jury's
failure to break down past damages according to type and date incurred gave
plaintiff "windfall" interest. See id. at 121, 621 A.2d at 1263.
Nonetheless, because Ford failed to object to the instruction or
interrogatories on this point, and "it was understood at trial that
interest would be calculated on the past damages found by the jury," the
defendant's objection was waived. Id. at 122, 621 A.2d at 1263 (citing
Hartnett v. Union Mut. Fire Ins. Co., 153 Vt. 152, 160, 569 A.2d 486, 490
(1989) (failure to object to portion of instruction on damages precludes
review on appeal)). Accordingly, we affirm the award of prejudgment
interest.
VI. Subrogation Rights Claim
In July 1994, Kaiser Foundation Health Plan of Massachusetts,
plaintiff's health insurance provider, filed a motion to intervene with
the superior court, asserting its subrogation rights in plaintiff's
lawsuit against Ford and other defendants. Plaintiff's subsequent summary
judgment motion was granted by the court in an August 1995 ruling which
held that the subject policy gave Kaiser only a right to reimbursement
after recovery, not an equitable subrogation right. Kaiser now appeals
that ruling. We affirm the court's dismissal.
We review a motion for summary judgment under the same standard as the
trial court: summary judgment is appropriate only when the record clearly
shows that there is no genuine
issue of material fact and that the movant is entitled to judgment as a
matter of law. See V.R.C.P. 56(c); Bacon v. Lascelles, 165 Vt. 214, 218,
678 A.2d 902, 905 (1996). In making this determination, we regard as true
all allegations of the nonmoving party that are supported by admissible
evidence, and we also give the nonmoving party the benefit of all
reasonable doubts and inferences. See Messier v. Metropolitan Life Ins.
Co., 154 Vt. 406, 409, 578 A.2d 98, 99-100 (1990).
Kaiser's first argument is that the policy's language creates a right
of subrogation, thereby granting the insurer the right to intervene in
this lawsuit. The language at issue, appearing under the heading "Third
Party Liability/Motor Vehicle Insurance Recoveries," reads:
Sometimes we will provide or arrange health services when you
have a legal right against a person, organization or insurer to recover
for those services. This may happen, for example, if you are in an
automobile accident or have a job-related injury. It may also happen
if you are injured and another party is legally responsible. If an
injury or illness is caused by a third party or in an accident covered
by motor vehicle insurance, you must reimburse Health Plan for
services or benefits you receive as a result of the injury or illness, or
allow us to recover directly from the third party insurer. Even if the
payment by the third party or insurer is less than the full amount of
your damages, Health Plan has a right to be reimbursed for the
services it provided or paid for. Our recovery can be no more than
the fee-for-service cost of these services.
(Emphasis added.)
An insurance policy must be construed according to its terms and the
evident intent of the parties as expressed in the policy language. See
Northern Security Ins. Co. v. Hatch, 165 Vt. 383, 385-86, 683 A.2d 392,
394 (1996). Disputed terms should be read according to their plain,
ordinary and popular meaning. See American Protection Ins. Co. v. McMahan,
151 Vt. 520, 522, 562 A.2d 462, 464 (1989). Where a disputed term in an
insurance policy is
susceptible to two or more reasonable interpretations, the ambiguity must
be resolved in favor of the insured. See City of Burlington v. Associated
Elec. & Gas Ins. Servs., 164 Vt. 218, 221, 669 A.2d 1181, 1183 (1995).
Here, the policy's language does not explicitly provide a right of
subrogation for Kaiser. While the conjunction "or" between the clear
reimbursement right and the direct recovery provision indicates that there
is an option available, the policy does not clearly assign the right to
exercise that option to the insurer, an opportunity to which Kaiser easily
could have availed itself in drafting the policy. See, e.g., Lopez v.
Concord Gen. Mut. Ins. Group, 155 Vt. 320, 324, 583 A.2d 602, 605 (1990)
(as condition of obtaining medical payments benefits from automobile
insurance policy, insured signed "proof of loss" form, which included
following language: "I (we) hereby subrogate the said Company to all
rights and causes of action I (we) have against any person, persons or
corporation whomsoever for the above listed claim for services arising out
of or incident to said accident."). Despite Kaiser's arguments to the
contrary, if any inference at all can be drawn from the direct recovery
language here, it is that the option belongs to the insured who may "allow"
Kaiser to subrogate if the insured chooses not to sue the third party
himself. As the superior court observed in its summary judgment ruling,
the "[p]olicy provision in question merely creates a right of
reimbursement after recovery or right to allow insurer to recover. The
latter does not ripen until plaintiff has elected to do so."
Nor are we persuaded that the language of the policy at issue and the
facts of this case compel the application of the doctrine of equitable
subrogation. See Norfolk & Dedham Fire Ins. Co. v. Aetna Casualty &
Surety Co., 132 Vt. 341, 343, 318 A.2d 659, 661 (1974) ("Subrogation is an
equity creature akin to and derived from the law of unjust enrichment and
restitution."). This doctrine permits an insurer to be subrogated to the
claims of its insured, even if the policy lacks an express provision
reserving such a right. See id. The doctrine's purpose is "purely
equitable." Kusserow v. Blue Cross-Blue Shield, 140 Vt. 328, 334, 437 A.2d 1114, 1118 (1981).
Plaintiff in this case - unlike the insured in Kusserow - has
acknowledged his legal obligation to reimburse the insurer for the medical
expenses paid on behalf of the plaintiff. Insurer in this case - unlike
the insurer in Kusserow - cannot point to a plain and unambiguous
subrogation clause. See id. at 331-32, 437 A.2d at 1116 (subrogation
provision read that "no benefits shall be provided . . . unless and until
the [insured] shall in writing grant [the insurer] an assignment of his
right of recovery equal to the amount of benefits to be paid him hereunder
in connection with injuries . . . ."). The equitable purpose of
subrogation is not served when, as here, neither the actions of the
insured nor the policy of the insurer require judicial recognition of a
right of subrogation. We decline to recognize such a right for Kaiser.
Affirmed.
FOR THE COURT:
_______________________________________
Chief Justice
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