Imlay v. City of Lake Crystal, CX-88-2551
| Decision Date | 30 March 1990 |
| Docket Number | No. CX-88-2551,CX-88-2551 |
| Parties | Steven L. IMLAY, et al., Petitioners, Appellants, v. CITY OF LAKE CRYSTAL d/b/a Lake Crystal Municipal Liquor Store, et al., Defendants and Third-Party Plaintiffs, Respondents, v. Vicki CARVER, Administrator of the Estate of Virgil H. Miller, Deceased, Third-Party Defendant, State of Minnesota, Intervenor. |
| Court | Minnesota Supreme Court |
Syllabus by the Court
1. Rational bases exist for both Minn.Stat. §§ 604.02, subd. 1, and 548.36 (1986) sufficient to withstand an equal protection constitutional challenge.
2. Respondent city did not waive its statutory joint and several liability limits by purchasing liability insurance.
3. Collateral source payments should not be deducted from appellants' judgment against respondent city when subrogation rights have been asserted to the payments and when appellants would have no double recovery.
4. Pre-verdict interest can be awarded when the statutory limit on the judgment is a percentage of fault cap.
Mary C. Cade, David J. Moskal, Schwebel, Goetz & Seiben, Minneapolis, John M. Riedy, McLean Peterson Law Firm, Mankato, for appellants.
Lindsay G. Arthur, Jr., Katherine L. MacKinnon, Arthur, Chapman & McDonough, Minneapolis, for respondents.
Hubert H. Humphrey, III, P. Kenneth Kohnstamm, Atty. General's Office, St. Paul, for intervenor.
Heard, considered, and decided by the court en banc.
Appellants brought a personal injury action against respondent city, in its capacity as operator of a liquor store, for injuries sustained in a collision with an uninsured, intoxicated motorcyclist who was served alcoholic beverages by respondent while obviously intoxicated. Respondent city filed a third-party action against the motorcyclist's estate. The jury found respondent city 20% at fault and the motorcyclist 80%, and returned a verdict for appellants for over $2.2 million. The trial court reduced this amount by certain collateral source payments appellants received and pursuant to a statutory limit on municipal joint and several liability. A Minnesota Court of Appeals panel affirmed the constitutionality of both the joint liability cap and the collateral source statute and each of their applications, but reversed and remanded on the calculation of interest. Imlay v. City of Lake Crystal, 444 N.W.2d 594, 598-602 (Minn.App.1989). We affirm in part, reverse in part, and remand.
The undisputed facts are that on June 16, 1984, appellants Steven and Theresa Imlay sustained serious injuries when their motorcycle was struck by an uninsured, intoxicated motorcyclist, Virgil Miller, who crossed into their lane on a rural county road. Miller, who was killed in the collision, was served alcoholic beverages by the City of Lake Crystal, doing business as the Lake Crystal Municipal Liquor Store, shortly before the collision.
Steven Imlay's injuries included amputation of his left leg below the knee, a fractured pelvis, a ruptured spleen, a collapsed lung, and other internal injuries. In addition, his left arm, left shoulder, and vocal cord are paralyzed. Theresa Imlay suffered a fractured pelvis, soft tissue and tendon damage to her left knee and ankle, and a left wrist injury.
The Imlays brought a personal injury action against respondent city on January 21, 1985, under the Minnesota Liquor Act. Minn.Stat. § 340A.801 et seq. (1986). The city then brought a third-party action against Miller's estate. Prior to trial, the Imlays received $703,326.79 in benefits from Milwaukee Guardian Insurance, Inc. ("Milwaukee") to compensate them for the fault of the uninsured motorist. Appellants also received $192,370.20 for their medical expenses from their health insurer, State Farm Insurance Company, and $50,000.00 from Tri-State Insurance Company.
The jury found respondent city illegally sold alcohol to Miller when he was obviously intoxicated, and this illegal sale and Miller's negligence combined to cause appellants' injuries, with 20% of the fault apportioned to respondent city and 80% to Miller. Steven Imlay, who was driving appellants' motorcycle, was attributed no fault. The jury set damages at $1,601,212.00 for Steven Imlay and $600,000.00 for Theresa Imlay, which included damages for pain, disability, disfigurement, emotional distress, medical expenses, property damage, loss of earnings, and loss of consortium, to the date of trial and thereafter.
In response to numerous post-trial motions, the trial court held Minn.Stat. § 604.02, subd. 1 (1986), did not violate equal protection and respondent's purchase of liability insurance did not waive these limits on joint and several liability. The court found all the insurance payments constituted collateral sources under Minn.Stat. § 548.36 (1986), but only deducted from the total verdict the $703,326.79 in uninsured motorist benefits to which no subrogation right was asserted. Pursuant to Minn.Stat. § 604.02, subd. 1, the court assigned respondent city responsibility for 40% of the remaining judgment. As a result of the collateral source deduction and the limit on municipal joint and several liability, appellants were awarded a judgment of $599,154.08, plus costs, disbursements, and interest, against respondent. The court also found Miller's blood alcohol test results were properly admitted, and thus respondent's motion for a new trial was denied.
After appellants appealed, the attorney general's motion to intervene to defend the constitutionality of the challenged statutes was granted. A court of appeals panel affirmed the trial court on all grounds, except it held no pre-verdict interest was available and thus remanded for calculation of post-verdict interest; in addition, it upheld the constitutionality of the collateral source statute. Imlay, 444 N.W.2d at 598-602. We granted appellants' petition for further review. 1
1) Whether either Minn.Stat. §§ 604.02, subd. 1, or 548.36 (1986) violates the equal protection clauses of the United States and Minnesota Constitutions.
2) Whether a municipality's purchase of liability insurance constitutes a waiver of the limitation on liability provided by Minn.Stat. § 604.02, subd. 1 (1986).
3) Whether the lower courts properly deducted collateral source payments from the verdict pursuant to Minn.Stat. § 548.36 (1986).
4) Whether pre-verdict interest is properly due appellants from respondent.
Appellants challenge the constitutionality of Minn.Stat. §§ 604.02, subd. 1, and 548.36 (1986), arguing both statutes violate the equal protection clauses of the United States and Minnesota Constitutions. "This court exercises the power to declare a statute unconstitutional only when absolutely necessary," Snyder v. City of Minneapolis, 441 N.W.2d 781, 788 (1989), because statutes are presumed constitutional until the challenging party proves otherwise beyond a reasonable doubt. Hickman v. Group Health Plan, Inc., 396 N.W.2d 10, 13 (Minn.1986). It is also presumed "[t]he legislature does not intend to violate the constitution." Minn.Stat. § 645.17(3) (1988). The parties agree the rational basis test applies to the challenges under both the federal and state equal protection clauses. See Bernthal v. City of St. Paul, 376 N.W.2d 422, 424 (Minn.1985). We have adopted a two-part inquiry for determining whether a statute meets the rational basis test:
1. Does the challenged legislation have a legitimate purpose? and
2. Was it reasonable for the lawmakers to believe that use of the challenged classification would promote that purpose?
Lienhard v. State, 431 N.W.2d 861, 866-67 (Minn.1988) (citing Bernthal, 376 N.W.2d at 425).
Appellants argue Minn.Stat. § 604.02, subd. 1 (1986), is unconstitutional as applied to municipal liquor vendors because no legitimate purpose exists for distinguishing between municipal and private vendors in this context. Section 604.02, subdivision 1 (1986), provides:
When two or more persons are jointly liable, contributions to awards shall be in proportion to the percentage of fault attributable to each, except that each is jointly and severally liable for the whole award. * * * If the state or a municipality as defined in section 466.01 is jointly liable, and its fault is less than 35 percent, it is jointly and severally liable for an amount no greater than twice the amount of fault. 2
Of the total $2,201,212.00 verdict awarded to the Imlays, the jury apportioned 20% fault to respondent city. After finding Minn.Stat. § 604.02, subd. 1, constitutional, the trial court applied this provision at the city's request to cap the city's joint and several liability at 40%, 3 which the court of appeals panel affirmed. Imlay, 444 N.W.2d at 598. We concur.
The court of appeals panel held "protect[ing] municipalities from higher insurance rates and judgment awards," as well as promoting municipal fiscal stability, is section 604.02's legitimate purpose. Imlay, 444 N.W.2d at 598. The legislative history suggests such purposes were envisioned when the statute was enacted. E.g., Hearing on H.F. 1776, H.Jud.Comm., 74th Minn.Leg., Feb. 25, 1986 (audio tape) (comments of Rep. Olsen); Sen. debate on S.F. 2078, 74th Minn.Leg., March 18, 1986 (audio tape) (comments of Sen. Knaak). Appellants concede these reasons exist for the statute in general, yet maintain such purposes are legitimate "only where the activity protected is a public service." They further assert "[w]hen functioning as a vendor of intoxicating beverages, a municipality is not providing a public service and is no different than a private liquor vendor," so that no rational basis exists for such a distinction regarding joint and several liability.
Appellants' "public service" rationale, in effect, would entail a resurrection of the "governmental-proprietary" distinction originally created by the judiciary to avoid the harsh results of sovereign immunity, see Spanel v. Mounds View School District...
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