Ex Parte Barnett

• Decision Date: 03 August 2007
• Docket Number: 1060174.
• Parties: Ex parte Luneal BARNETT, as administrator of the estate of Robert Shorter, deceased. (In re Francina Morales v. Luneal Barnett, as administrator of the estate of Robert Shorter, deceased).
• Court: Alabama Supreme Court

978 So.2d 729

Ex parte Luneal BARNETT, as administrator of the estate of Robert Shorter, deceased.

(In re Francina Morales v. Luneal Barnett, as administrator of the estate of Robert Shorter, deceased).

1060174.

Supreme Court of Alabama.

August 3, 2007.

J. Mark Hart and Allen R. Trippeer, Jr., of Haskell Slaughter Young & Rediker, Birmingham, for petitioner.

Bruce J. McKee and James R. Moncus III of Hare, Wynn, Newell & Newton, L.L.P., Birmingham, for respondent.

SEE, Justice.

Facts and Procedural History

Francina Morales was injured in June 2003 when she was struck by an automobile driven by Robert Shorter. She sued Shorter, claiming damages in the amount of $175,000. During the course of the litigation, Shorter died, and Luneal Barnett, as the administrator of Shorter's estate, was substituted as the defendant. Morales received $20,000 from her insurer, GEICO, under the underinsured-motorist provisions of her automobile-liability insurance policy. At trial, the jury awarded Morales damages of $35,000, and Barnett moved for a set-off of $20,000 to account for the insurance proceeds Morales had already received from GEICO. The trial court denied the motion and entered a judgment for Morales in the amount of $35,000. Barnett moved for the trial court to reconsider its ruling denying the set-off, and the trial court then amended its judgment to reduce the amount of the judgment by the $20,000 insurance payment. In doing so, the trial court relied on Batchelor v. Brye, 421 So.2d 1267 (Ala.Civ. App.1982), for its holding that a jury verdict against a defendant tortfeasor is subject to a set-off in the amount of the underinsured-motorist policy proceeds paid to the plaintiff.

The Court of Civil Appeals reversed the trial court's judgment, limiting the holding in Batchelor to cases involving joint tortfeasors. Morales v. Barnett, [Ms 2050326, October 13, 2006] ___ So.2d ___ (Ala.Civ.App.2006). The Court of Civil Appeals held that the collateral-source rule prohibits the trial court from reducing the damages recoverable from Shorter's estate by the amount of the underinsured-motorist policy proceeds Morales received. We granted Barnett's petition for the writ of certiorari to consider this holding.

Standard of Review

"Where the facts are not in dispute and we are presented with a pure question of law, as here, this Court's review is de novo." Christian v. Murray, 915 So.2d 23, 25 (Ala.2005) (citing State v. American Tobacco Co., 772 So.2d 417, 419 (Ala.2000), Ex parte Graham, 702 So.2d 1215, 1221 (Ala.1997), and Beavers v. County of Walker, 645 So.2d 1365, 1372 (Ala.1994)).

Analysis

Under the collateral-source rule, "an amount of damages is not decreased by benefits received by a plaintiff from a source wholly collateral to and independent of the wrongdoer...." Williston v. Ard, 611 So.2d 274, 278 (Ala.1992). In this case, the Court must determine whether uninsured/underinsured-motorist ("UM") insurance¹ benefits are a collateral source for the purposes of the collateral-source rule.

Barnett does not appear to question the applicability of the collateral-source rule generally; instead, she argues that the collateral-source rule does not apply in cases involving UM insurance. For this argument, Barnett cites the Court of Civil Appeals' decision in Batchelor v. Brye, supra. She also argues that the "unique" and "hybrid" nature of UM insurance militates against applying the collateral-source rule in a case involving UM insurance.

Barnett first argues that the Court of Civil Appeals erred in distinguishing the present case from Batchelor v. Brye, supra. In Batchelor, the father of a boy killed in an automobile accident sued his UM insurance carrier and two joint tortfeasors, one of whom was insured and the other not. The plaintiff and the insurance carrier settled the UM claim for $10,000. The plaintiff then proceeded to trial against the two joint tortfeasors. The jury returned a verdict against the joint tortfeasors, assessing the plaintiff's damages at $30,000. The insured defendant paid $20,000 into the court and then moved to have the $30,000 judgment ordered satisfied. The trial court granted the motion, and the Court of Civil Appeals affirmed, concluding:

"The plaintiff's insurer ... stood in the shoes of the uninsured motorist ... as a source of payment to the plaintiff.... Though the jury, without knowledge of the plaintiff's settlement with [his insurer], later found the plaintiff's damages to be $30,000, the plaintiff had already received one-third of that amount from his insurer due to the liability of [the uninsured motorist]."

Batchelor, 421 So.2d at 1268-69. The court further noted that "while uninsured motorist payments may be used to partially meet the plaintiff's measure of damages, the plaintiff is never entitled to recover from any source more than the actual measure of damages." 421 So.2d at 1269. The court in Batchelor concluded that "[t]he goal of uninsured motorist coverage is to make the plaintiff whole but not to allow double recovery." 421 So.2d at 1269. For this reason, the court reduced the plaintiff's damages by virtue of the settlement with the UM insurance carrier and allowed "the $10,000 received by the plaintiff under the uninsured motorist provision of his policy [to] be used to partially satisfy the $30,000 judgment." 421 So.2d at 1268. We agree with Barnett that Batchelor is largely on point.²

The court in Batchelor did not discuss our cases applying the collateral-source rule, but "[i]t is well settled that the amount paid by an insurer to a plaintiff for damage to his vehicle does not affect his measure of recovery and that evidence of an insurance payment is not ordinarily admissible." Jones v. Carter, 646 So.2d 651, 653 (Ala.1994). "`The collateral source doctrine ... provides that damages recoverable for a wrong are not diminished because the injured party has been wholly or partially indemnified or compensated for his loss by insurance effected by him and to which the wrongdoer did not contribute....'" Mitchell v. Moore, 406 So.2d 347, 351 (Ala.1981) (quoting Powell v. Brady, 30 Colo.App. 406, 414, 496 P.2d 328, 332-33 (1972)). Batchelor appears to run afoul of the collateral-source rule. Thus, we must either overrule it or hold that the collateral-source rule does not apply to UM insurance benefits.

Barnett argues that the collateral-source rule should not apply to UM insurance benefits because its application would allow Morales to receive a double recovery and to be in a better position following the accident than if the accident had not occurred. Alabama law generally bars double recoveries, and, although "`a party is entitled to full compensation for his injuries,'" Wilbourn v. Ray, 603 So.2d 969, 972 (Ala.1992) (quoting McClendon v. City of Boaz, 395 So.2d 21, 26 (Ala.1981)), she "`can gain but one satisfaction.'" Lee L. Saad Constr. Co. v. DPF Architects, P.C., 851 So.2d 507, 521 (Ala.2002) (quoting Mobile Ins., Inc. v. Smith, 441 So.2d 894, 896 (Ala.1983)). Thus, according to Barnett, the trial court correctly set off the $20,000 that Morales's UM insurance carrier paid to Morales pursuant to her UM insurance policy, and the judgment was satisfied when Barnett's insurer paid the remaining $15,000 of the judgment.

The rule against double recoveries bars a plaintiff from recovering more than her full damages when payments have been made by a tortfeasor or on behalf of a tortfeasor. 4 Restatement (Second) of Torts § 920A(1) (1972). "The collateral-source rule is an exception to the general rule of damages preventing a double recovery by an injured party." Wills v. Foster, 372 Ill.App.3d 670, 673, 867 N.E.2d 1223, 1226, 311 Ill.Dec. 237, 240 (2007); see also Hardaway Mgmt. Co. v. Southerland, 977 S.W.2d 910, 918 (Ky. 1998) ("There is a strong public policy in this Commonwealth against double recovery for the same elements of loss. An exception, of course, is the collateral source rule that `damages recoverable for a wrong are not diminished by the fact that the injured party has been wholly or partly indemnified by insurance (to whose procurement the wrongdoer did not contribute).'" (emphasis omitted)). This Court has stated that "the amount paid by an insurer to a plaintiff for damage to his vehicle does not affect his measure of recovery ...." Jones v. Carter, 646 So.2d 651, 653 (Ala.1994); see also Jones v. Crawford, 361 So.2d 518, 522 (Ala.1978) ("The courts of this state have held many times that what has occurred between insurer and insured is of no concern to the defendant—that the sum received from insurance cannot be shown in mitigation of damages for the injury." (footnote omitted)); Sturdivant v. Crawford, 240 Ala. 383, 385, 199 So. 537, 538 (1940) ("The amount paid by the insurance company [for the damage to the plaintiff's car] does not even affect the measure of recovery. The insurance of the property is a mere indemnity, and insurer and insured are regarded as one person. The mere fact that the insurer had paid the insured cannot affect the action against the wrongdoer who has destroyed or injured the property, the subject of the insurance."). Thus, the collateral-source rule generally precludes the trial court from deducting from the damages award the benefits the plaintiff received from an insurance policy, notwithstanding the fact that the plaintiff may receive what appears to be a "double recovery."

Barnett argues that we should follow Haynes v. Yale-New Haven Hospital, 243 Conn. 17, 27, 699 A.2d 964, 969 (1997), which held that "for the particular purpose of characterizing underinsured motorist payments, the relationship ... between the underinsured carrier and the defendant may be viewed as analogous to that of joint tortfeasors, and thus that the general tort rule precluding double recovery from joint tortfeasors should apply." (Footnote omitted.) Under Alabama law, among defendants jointly liable for the injury to the plaintiff...