Casey v. State Farm Mut. Auto. Ins. Co.
| Citation | 464 N.W.2d 736 |
| Decision Date | 08 January 1991 |
| Docket Number | No. C0-90-1408,C0-90-1408 |
| Parties | Robert J. CASEY, Respondents, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant. |
| Court | Court of Appeals of Minnesota |
Syllabus by the Court
1. The trial court had authority pursuant to the Declaratory Judgment Act, Minn.Stat. Sec. 555.08 (1988), to award attorney fees.
2. Having failed to challenge the amount of attorney fees awarded in the trial court, the insurer cannot raise the issue on appeal.
3. When an insured seeking underinsured motorist benefits settles a claim against the underinsured tortfeasor, the settlement should be apportioned between past and future damages in the percentages found by the jury in calculating the collateral source offset. The insured's use of the settlement money from the time of its receipt until the time the verdict is received should be taken into account to avoid a double recovery.
4. The trial court did not abuse its discretion in its award of costs and disbursements.
Harry Christian, Christian, Spartz, Keogh & Christian, Le Center, for respondents.
Kenneth R. White, Farrish, Johnson & Maschka, Mankato, for appellant.
Considered and decided by SCHUMACHER, and PARKER and KLAPHAKE, JJ.
Respondents Robert and Irene Casey brought this declaratory judgment action to determine their entitlement to underinsured motorist benefits. On July 31, 1989, the trial court granted summary judgment on the question of coverage, leaving for trial a determination of Caseys' damages. The July 31 order included an award of attorney fees in an amount to be determined after trial. A jury determined that the Caseys had suffered total damages of $236,575.92. The trial court granted attorney fees of $5,904 to Caseys. The parties were unable to agree on how a prior settlement of $100,000 should be treated for the purpose of calculating prejudgment interest. The trial court deducted 43% of the settlement from the jury award before calculating prejudgment interest. Subsequently, the trial court granted Caseys their costs and disbursements, and State Farm has appealed.
Irene Casey was severely injured in an automobile accident on March 11, 1986. At the time, she was a passenger in a car driven by her daughter-in-law, Carol Casey. A Volkswagen van, driven by William Olsen, crossed the median and struck the Casey automobile head on.
Olsen was insured under a policy issued by American Family Insurance Company with liability limits of $100,000. Carol Casey was insured by State Farm and had liability limits of $50,000. Robert and Irene Casey were insured under two policies issued by State Farm with $100,000 in underinsured motorist coverage on each policy.
Caseys commenced this action in July of 1987 to recover underinsured motorist benefits. In 1985, the legislature amended the underinsured motorist provisions of the No-Fault Act. See 1985 Minn. Laws ch. 168 Sec. 12 and ch. 309 Sec. 6. The Minnesota Supreme Court decided that the 1985 amendment applied only to policies which had been amended, renewed, or changed on or after October 1, 1985, the effective date of the statute. AMCO Ins. Co. v. Lang, 420 N.W.2d 895, 898 (Minn.1988). Subsequently, the Minnesota Supreme Court determined that the 1985 legislative amendment changed underinsured motorist coverage from "add-on" coverage to "difference-of-limits" coverage. See Broten v. Western Nat'l Mut. Ins. Co., 428 N.W.2d 85, 88 (Minn.1988).
Based on the Broten and AMCO decisions, counsel for State Farm contacted the Caseys' attorney in November 1988 and advised them that one of the Caseys' policies had not been amended, renewed or changed on or after October 1, 1985 and provided $100,000 in underinsured motorist benefits. Recovery of the underinsured motorist benefits was subject to proof of liability and damages. Counsel for State Farm claimed a jury could find Carol Casey partially at fault for the accident, triggering her $50,000 in liability coverage.
Despite State Farm's attorney's November 1988 letter, a State Farm claims specialist, apparently relying solely on the Broten decision, wrote to the Caseys' attorney in March 1989 denying there was any underinsured motorist coverage available. State Farm also asserted there was no liability on the part of Carol Casey. This letter prompted Caseys' attorney to move for summary judgment on the coverage issue.
The trial court granted the Caseys' motion for summary judgment. In addition, the trial court awarded attorney fees in an amount to be determined at the trial on damages. Finally, the trial court ordered State Farm, within two weeks of the date of the order for summary judgment, to join Carol Casey as a party or be precluded from asserting her negligence at trial. State Farm elected not to join Carol Casey.
In June of 1989, the claim against Olsen was settled for his policy limits of $100,000. The underinsured motorist benefits claim proceeded to a jury trial. The jury awarded total damages of $236,575.92. Of this amount, $128,175.92 was for past damages, and $108,400 was for future damages. Of the past damages, $82,626.12 was subject to prejudgment interest.
After the verdict was returned, the Caseys and State Farm disagreed on collateral source offsets for purposes of calculating prejudgment interest. The difference between the parties was in determining how the $100,000 settlement should be treated for calculating prejudgment interest. State Farm argued the entire $100,000 should be deducted before prejudgment interest was calculated. The Caseys argued that 43% of the settlement payment should be considered past damages subject to prejudgment interest and 57% future damages as determined by the jury's verdict. The trial court agreed with the Caseys and deducted $43,000 of the settlement.
In addition, pursuant to the summary judgment on the coverage issue, Caseys were awarded $5,904 in attorney fees related to establishing underinsured motorist coverage. The parties also disagreed on appropriate amount of costs and disbursements. The trial court, in a subsequent order, allowed $5,750.35 in costs and disbursements.
1. Did the trial court err in awarding attorney fees?
2. Did the trial court abuse its discretion in determining the amount of attorney fees awarded?
3. Did the trial court err in calculating prejudgment interest?
4. Did the trial court abuse its discretion in its award of costs and disbursements?
Attorney fees are generally not recoverable unless there is a statutory or contractual provision providing for such fees. Morrison v. Swenson, 274 Minn. 127, 137-38, 142 N.W.2d 640, 647 (1966). The Declaratory Judgment Act authorizes the trial court to afford such supplemental relief as may be necessary or proper. Minn.Stat. Sec. 555.08 (1988). Attorney fees are properly awarded in a declaratory judgment action as consequential damages for the insurer's breach of contract. See Kline v. Hanover Ins. Co., 368 N.W.2d 381, 383 (Minn.App.1985); Wondra v. American Family Ins. Group, 432 N.W.2d 455, 460 (Minn.App.1988), pet. for rev. denied (Minn. Jan. 25, 1989). This court has recently applied Wondra in reversing a trial court's refusal to award attorney fees where the insured sought first-party benefits. See Garrick v. Northland Ins. Co., 460 N.W.2d 920, 926 (Minn.App.1990) (uninsured motorist benefits). The trial court had authority to award attorney fees.
State Farm argues the trial court's award of $5,904 in attorney fees was excessive. In the trial court, State Farm did not argue that the attorney fees claimed were excessive; State Farm only argued that an award of attorney fees was not appropriate. This court's review is limited to those issues which the record establishes were raised in, and decided by, the trial court. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn.1988). Having failed to argue the fees awarded were excessive in the trial court, State Farm cannot raise the issue on appeal.
State Farm argues that significant amounts of the hours claimed were not spent on the coverage issue. This argument was never made to the trial court. Accordingly, the trial court made no decision on this issue, and there is nothing for this court to review. See Security Bank of Pine Island v. Holst, 298 Minn. 563, 564, 215 N.W.2d 61, 62 (1974).
An award of prejudgment interest serves two functions. It compensates the prevailing party for the true cost of money damages incurred, and it promotes settlements when liability and damage amounts are fairly certain. Solid Gold Realty, Inc. v. Mondry, 399 N.W.2d 681, 683 (Minn.App.1987). Such an award compensates the prevailing party for the loss of use of money. Higgins v. J.C. Penney Casualty Ins. Co., 413 N.W.2d 189, 192 (Minn.App.1987).
Prior to 1984, an award of prejudgment interest was only allowed where the "damages were readily ascertainable by computation or reference to generally recognized standards such as market value." See Summit Court, Inc. v. Northern States Power Co., 354 N.W.2d 13, 16 (Minn.1984). In 1984, the legislature amended Minn.Stat. Sec. 549.09, subd. 1 to provide prejudgment interest in most cases. 1984 Minn. Laws ch. 399, Sec. 1; ch. 472, Sec. 2; Solid Gold, 399 N.W.2d at 683.
Prior to calculating prejudgment interest, collateral source payments must be deducted. See Jewett v. Deutsch, 437 N.W.2d 717, 721-22 (Minn.App.1989). The parties agree that the prior $100,000 settlement constitutes a collateral source. The parties do not agree on how that collateral source should be treated. State Farm argues the entire settlement should be used to offset the past damages. This would result in the Caseys' receiving no prejudgment interest. Caseys contend the prior payment should be allocated between past and future damages in the same proportion as determined by the jury. The trial court agreed with the Caseys'...
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