Crabtree ex rel. Kemp v. Estate of Crabtree, 55S01-0409-CV-431.

• Decision Date: 09 November 2005
• Docket Number: No. 55S01-0409-CV-431.,55S01-0409-CV-431.
• Citation: 837 N.E.2d 135
• Parties: Alicia CRABTREE And Jacelyn Crabtree, By Their Next Friend Kimberly KEMP, Appellants (Plaintiffs below), v. ESTATE OF Jackie L. CRABTREE, Jr., Appellee (Defendant below).
• Court: Indiana Supreme Court

Page 135

837 N.E.2d 135

Alicia CRABTREE And Jacelyn Crabtree, By Their Next Friend Kimberly KEMP, Appellants (Plaintiffs below), v. ESTATE OF Jackie L. CRABTREE, Jr., Appellee (Defendant below).

No. 55S01-0409-CV-431.

Supreme Court of Indiana.

November 9, 2005.

Stephen A. Oliver, Martinsville, for Appellants.

Seth M. Lahn, Indianapolis, for Appellee.

BOEHM, Justice.

The plaintiffs in this case were injured in an accident as passengers in a car driven by their father while he was intoxicated. After their father died of unrelated causes, the children brought this suit against his estate. We hold that Indiana law does not permit recovery of punitive damages from a decedent's estate. We also hold that under the terms of this policy, the final judgment should exclude damages included in the verdict that were already satisfied by payments under the defendant's medical expenses coverage.

Facts and Procedural History

Alicia and Jacelyn Crabtree were passengers when the car driven by their father, Jackie Crabtree, Jr., ("Crabtree") was involved in an accident. Crabtree's breath test indicated .15% blood alcohol content and the investigating officer's report concluded that Crabtree was at fault for failure to yield to the oncoming vehicle. The car was insured by Allstate Insurance Company,¹ and Allstate made payments under the Medical Payments coverage in amounts of $3,203.05 for Alicia and $3,648.75 for Jacelyn.²

Approximately one year later, Crabtree died of causes unrelated to the accident. The children, by their mother, Kimberly Kemp, sued Crabtree's estate for compensatory and punitive damages. The trial court granted the Estate's motion to dismiss the punitive damages claim, and the claim for compensatory damages was tried to a jury, resulting in an award of $11,500.00 to each child. On the Estate's motion, the trial court reduced the judgments by the amounts that Allstate had paid to the children's medical service providers under the Medical Payments coverage of the policy insuring the car that Crabtree was driving.

The plaintiffs appealed, challenging the trial court's dismissal of their claim for punitive damages and also the reduction of their awards for medical payments. The Court of Appeals held that the punitive damages claim survived Crabtree's death, and that the medical payments were not "advance payments" under the statute permitting reduction of an award to the extent of advance payments by an insurer. Rather, Allstate was entitled to be reimbursed as a subrogee for the medical payments made to Alicia and Jacelyn, which required that it bear a proportionate share of the children's litigation expenses in collecting from the Estate. A.C. v. Estate of Crabtree, 809 N.E.2d 433, 438, 442 (Ind.Ct.App.2004). We granted transfer. Crabtree v. Crabtree, 822 N.E.2d 977 (Ind.2004).

I. Punitive Damages

The plaintiffs sought to recover punitive damages from Crabtree's estate. We take the allegations of the complaint as true for purposes of this appeal and review de novo the trial court's order dismissing the punitive damages claim because it involves a pure question of law. Niksich v. Cotton, 810 N.E.2d 1003, 1004 (Ind.2004); Randolph v. Methodist Hosp., Inc., 793 N.E.2d 231, 234 (Ind.Ct.App.2003), trans. denied. We will affirm the trial court's grant of a motion to dismiss for failure to state a claim only if the complaint states a set of facts which, even if proved, do not support the relief requested in the complaint. City of New Haven v. Reichhart, 748 N.E.2d 374, 377-78 (Ind.2001).

The plaintiffs cite Indiana's Survival Statute, Indiana Code chapter 34-9-3 (2004). Section 1 of the Survival Statute was designed to overrule the common law rule that a claim evaporated with the death of the defendant. It provides that if "an individual who is . . . liable in a cause of action dies, the cause of action survives . . ." I.C. § 34-9-3-1(a). Based on this statutory language, the plaintiffs contend that their claim for punitive damages survives Crabtree's death. This section does not address the issue of punitive damages one way or the other. It contains no explicit mention of punitive damages. This itself can be viewed as an implicit rejection of punitive damages, which ordinarily are recoverable under a statutory cause of action only by explicit statutory authorization. Ind. Civil Rights Comm'n v. Alder, 714 N.E.2d 632, 638 (Ind.1999). More importantly, by its terms this statute preserves a "cause of action." There is no "cause of action" for punitive damages. Punitive damages are a remedy, not a separate cause of action. Allstate Ins. Co. v. Axsom, 696 N.E.2d 482, 485 (Ind.Ct.App.1998), trans. denied. Successful pursuit of a cause of action for compensatory damages is a prerequisite to an award of punitive damages. See Erie Ins. Co. v. Hickman, 622 N.E.2d 515, 523 (Ind.1993); Sullivan v. Am. Cas. Co. of Reading, Pa., 605 N.E.2d 134, 140 (Ind.1992). There is no freestanding claim for punitive damages apart from the underlying cause of action.

Because the Survival Statute is silent on this point, we must resort to interpretation and precedent. As the Court of Appeals noted, this is a question of first impression in Indiana. There is a split of authority in other jurisdictions as to whether punitive damages are recoverable from a deceased tortfeasor's estate. The majority view denies punitive damages.³ The majority view reasons that punitive damages are intended to punish the wrongdoer. The death of the tortfeasor eliminates the court's ability to accomplish that goal so punitive damages are not recoverable against the estate of a deceased tortfeasor.⁴

A minority of jurisdictions permit recovery of punitive damages after the tortfeasor's death. Although the decedent can be neither punished nor deterred, these courts have found punitive damages sufficiently justified by deterrence of others from engaging in similar conduct.⁵ These courts take the view that potential tortfeasors will be deterred by the knowledge that their estates may be liable for punitive damages.⁶ Some also note that punitive damages provide additional compensation to victims for remote losses, inconvenience and attorney's fees.⁷ At least one court found it inconsistent to allow a punitive award to be collected from an estate if the tortfeasor was alive when the complaint was filed, but not if the complaint was filed after death.⁸

We believe the majority view is persuasive and hold that Indiana law does not permit recovery of punitive damages from the estate of a deceased tortfeasor. The central purpose of punitive damages is to punish the wrongdoer and to deter him from future misconduct, not to reward the plaintiff and not to compensate the plaintiff. "[T]he plaintiff has no right or entitlement to an award of punitive damages in any amount. Unlike a claim for compensatory damages, the trier of fact is not required to award punitive damages even if the facts that might justify an award are found." Cheatham v. Pohle, 789 N.E.2d 467, 472 (Ind.2003); see also Stroud v. Lints, 790 N.E.2d 440, 445 (Ind.2003) ("Neither the plaintiff nor the plaintiff's counsel has a right to an award of punitive damages in addition to compensatory damages.").

We recognize that punitive damages may serve a dual purpose of punishment of the tortfeasor and deterrence to others. Durham v. U-Haul Intern'l, 745 N.E.2d 755, 762 (Ind.2001) (citing State ex rel. Scobey v. Stevens, 103 Ind. 55, 59, 2 N.E. 214, 216 (1885)). We think, however, there is little, if any, additional deterrence supplied by the prospect that one's estate may be liable for punitive damages if one does not survive. Most tortfeasors in the case of an accident such as this presumably do not contemplate their own demise. If they consider punitive damages at all, they will deem themselves exposed to that possibility. To the extent the tortfeasor thinks at all about the consequences of his tort after he dies, he will recognize that he and his estate will have the obligation to provide full compensation to any victim. If we ever encounter a case where a tortfeasor seems to have considered his own death as an escape from punitive damages incident to some intentional tort, we can address that issue at that time. For now, we are content to hold that the purposes of punitive damages are not served by recovering them from a decedent.

Moreover, as already noted, the plaintiffs have a right to recover the full amount of their damages from the decedent's estate, and no plaintiff is entitled to a punitive damages recovery from any defendant. The effect of a punitive damages award against an estate is that the punishment will ultimately be borne by the heirs who are presumably wholly innocent of any wrongdoing. We think affirmative injustice thus would be done by allowing the deceased's innocent heirs to be punished for the wrongdoing of the decedent.

Concern for the heirs of the decedent is especially significant here, where the award, less attorney's fees, would be to the decedent's children. Because punitive damages are generally excluded from insurance coverage, any award would presumably come from the pockets of Crabtree's heirs. Crabtree's will, if there is one, is not in the record. If his heirs are his children, the net effect of any recovery by them would be to take funds from them to pay themselves, less attorney's fees. Moreover, pursuant to statute only twenty-five percent of a punitive damages award would go to the children as plaintiffs and seventy-five percent would go to the State. See I.C. § 34-51-3-6. The apparently successful plaintiffs would be net losers to the tune of at least three-fourths of any punitive damage award, and the only winners would be their attorney and the State. It is not easy to see why such a claim should ever be asserted on behalf of persons who are presumably the beneficiaries of the Estate.

II. Medical Payments as "Advance Payments"

The plaintiffs contend...