Moore v. Subaru of America

• Decision Date: 14 December 1989
• Docket Number: Nos. 88-1314,88-1327 and 88-1364,s. 88-1314
• Parties: Thomas A. MOORE and Edward J. Moore, Jr., Plaintiffs-Appellants/Cross-Appellees, v. SUBARU OF AMERICA, a New Jersey corporation; Randall S. Loftis, doing business as Ran's Subaru, Defendants-Appellees/Cross-Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1445

891 F.2d 1445

Thomas A. MOORE and Edward J. Moore, Jr., Plaintiffs-Appellants/Cross-Appellees, v. SUBARU OF AMERICA, a New Jersey corporation; Randall S.

Loftis, doing business as Ran's Subaru,

Defendants-Appellees/Cross-Appellants.

Nos. 88-1314, 88-1327 and 88-1364.

United States Court of Appeals, Tenth Circuit.

Dec. 14, 1989.

Garvin A. Isaacs (Thomas A. Wallace, and Glen D. Huff and David A. Branscum of Foliart, Huff, Ottaway & Caldwell, Oklahoma City, with him on the briefs), for plaintiffs-appellants/cross-appellees.

Bert M. Jones and William D. Perrine of Rhodes, Hieronymus, Jones, Tucker and Gable, Tulsa, for defendants-appellees/cross-appellants.

Before McKAY, McWILLIAMS, and BRORBY, Circuit Judges.

McKAY, Circuit Judge.

This is an appeal from a jury verdict and set-off of prior settlement.

I. Facts

Plaintiffs were injured in an automobile accident on August 17, 1982, in Shawnee, Oklahoma. They were rear seat passengers in a 1982 Subaru station wagon when the owner-driver suffered an epileptic seizure and crashed into a brick building. Although plaintiffs originally sought recovery only against the owner-driver of the vehicle, the complaint was later amended to include Subaru of America. The owner-driver of the vehicle was dismissed upon executing a settlement and/or a loan-receipt agreement with each plaintiff.

At trial, plaintiffs Thomas and Edward Moore claimed a defective rear seat belt design and defective seating system rendered Thomas Moore a quadriplegic and caused serious injury to Edward Moore. The trial was bifurcated and the jury found for plaintiffs on the issue of liability. On April 8, 1987, the jury rendered its verdict on the issue of damages in favor of Thomas Moore in the amount of $1.5 million and in favor of Edward Moore in the amount of $40,000.00. Barbara Moore was not a party to the trial, having dismissed her case with prejudice the day before trial.

On July 24, 1987, after entering judgment on the jury verdict, the trial court set off the amounts received by plaintiffs' settlement with the owner-driver's insurance carrier. Edward Moore received $125,000.00 from the owner-driver's primary insurance carrier. Thomas Moore received $244,072.00 from the primary insurance carrier and $2,000,000.00 from the excess carrier in the form of a loan-receipt agreement. Finding that the purported loan-receipt agreement was subject to set-off, the trial court reduced $2,000,000.00 from the jury verdict for Thomas Moore and $125,000.00 from the jury verdict entered in favor of Edward Moore. Further orders were entered by the trial court on January 28, 1988, after timely Rule 59 motions by both parties. The trial court ordered prejudgment interest on the jury verdict prior to set-off. The trial court also ordered defendant to pay plaintiff's attorney fees and expenses as a sanction for discovery disputes and costs. On February 22, 1988, the trial court entered an Amended Judgment calculating prejudgment interest from the date Subaru was joined and set off the additional amount of $244,072.00 which Thomas Moore received from the primary insurer of the owner-driver. ¹ The trial court found that plaintiff Thomas Moore should recover nothing because the verdict in his favor was less than the set-off amount and he was not entitled to post-judgment interest. The same was true for Edward Moore.

Plaintiff Thomas Moore appeals the trial court's set-off of the loan-receipt agreement claiming that set-off is not allowed under Indiana law and that Subaru waived the affirmative defense of set-off. Thomas Moore also alleges that the damages awarded are inadequate as a matter of law. Plaintiffs Thomas Moore and Edward Moore claim the trial court erred in not giving an instruction on punitive damages and excluding evidence of implied admissions of liability by misconduct on discovery. Defendant presents a protective cross-appeal regarding the trial court's order and computation of pre-judgment interest prior to set-off and the trial court's error in evidentiary rulings. Because the relief defendant requests is dependent upon the outcome of plaintiffs' appeal, we will first address the three basic issues presented by the appellants.

II. Standard of Review

The decisions by trial court judges which concern questions of fact are reviewed under the "clearly erroneous" standard. A finding of fact is "clearly erroneous" if the appellate court, after reviewing the record, finds no factual support for the decision. LeMaire v. United States, 826 F.2d 949, 953 (10th Cir.1987); Cowles v. Dow Keith Oil & Gas, Inc., 752 F.2d 508, 511 (10th Cir.1985), cert. denied, 479 U.S. 816, 107 S.Ct. 74, 93 L.Ed.2d 30 (1986). When there are two permissible views of the evidence, the factfinder's choice will not be reversed as clearly erroneous. Anderson v. Bessemer City, 470 U.S. 564, 573-74, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985); see Lone Star Steel Co. v. United Mine Workers, 851 F.2d 1239, 1242 (10th Cir.1988).

Under the Tenth Circuit Rules of Court, Rule 28.2(d), ² each party has a duty to state, in their initial briefs, where in the record each issue was raised and ruled upon. Rule 28.2(e) states:

Whenever an appeal is based upon a failure to admit or exclude evidence, or the giving or refusal to give a particular jury instruction, or any other act or ruling for which a party must record an objection to preserve the right to appeal, the party shall state where in the record a proper objection was made to the ruling and whether the objection is recorded and ruled upon.

The appellants here have failed to reflect where in the record the majority of issues contained in their briefs were raised, ruled upon, and objections made. Furthermore, the appellants have failed to designate many parts of the record which they make general reference to in their briefs. Without the record before us to substantiate the general allegations of error, we must defer to the trial court's decisions in these areas.

III. Set-Off of Loan-Receipt Agreement

In order to determine if set-off was proper, we must first resolve the issue of whether Indiana or Oklahoma law applies to the loan-receipt agreement. The agreement states that Indiana law governs its terms. However, Oklahoma is the forum state for this litigation.

In actions where jurisdiction is based on diversity of citizenship, the substantive law, including the choice of law rules, of the forum state is applied. Pound v. Insurance Co. of North America, 439 F.2d 1059, 1062 (10th Cir.1971); Hackbart v. Cincinnati Bengals, Inc., 601 F.2d 516, 522-23 (10th Cir.), cert. denied, 444 U.S. 931, 100 S.Ct. 275, 62 L.Ed.2d 188 (1979). Although the language of the loan-receipt agreement states that Indiana law governs the terms of the agreement, Indiana appears to be one of the few jurisdictions which recognizes these agreements as valid contracts which can circumvent set-off. American Transport Co. v. Central Indiana Railway Co., 255 Ind. 319, 264 N.E.2d 64 (1970). We hold that the trial court correctly found under conflict of law principles that Oklahoma law applies to the facts of this case.

The trial court found that Oklahoma law applied to the loan-receipt agreement under principles of either tort or contract law. When evaluating the facts of this case as a tort question, the Oklahoma choice of law rule requires application of the law of the state with the most significant relationship to the parties. White v. White, 618 P.2d 921, 924 (Okla.1980); Brickner v. Gooden, 525 P.2d 632, 637 (Okla.1974). The trial court concluded that "the state with the most significant relationship to the accident is Oklahoma." Order, July 24, 1987, at 5. We agree.

Even if the loan-receipt agreement issue is classified as contract, Oklahoma law applies. The Oklahoma choice of law rules for contracts require the forum court to apply the law of the state (1) chosen by the parties, Pate v. MFA Mutual Ins. Co., 649 P.2d 809, 811 (Okla.App.1982); (2) where the contract was made or entered into, Telex Corp. v. Hamilton, 576 P.2d 767, 768 (Okla.1978); or (3) the place of performance if indicated in the contract, Rhody v. State Farm Mut. Ins. Co., 771 F.2d 1416 (10th Cir.1985). The plaintiff and owner-driver chose the law of Indiana to apply to their agreement, and the loan was to be repaid (performed) in Indiana. The loan was entered into by Thomas Moore in Pennsylvania. Thus, under normal circumstances, a forum court applying Oklahoma choice of law rules for contracts would probably apply Indiana or perhaps Pennsylvania law, but under these three tests the forum court would not apply Oklahoma law.

However, two additional considerations require the application of Oklahoma law to the set-off issue under the facts of this case. These two considerations stem directly from the reasoning of Pate v. MFA Mutual Insurance Co., 649 P.2d 809 (Okla.App.1982). In Pate, the defendant insurance company sought to enforce a contract provision requiring credit for settlement with any other tort-feasor. This contract was entered into in Arkansas, and the policy was valid under Arkansas law. The Pate court, however, concluded that although normally the law of the state where the contract was entered into applied, in this case it would not apply Arkansas law because Arkansas law was contrary to the law and public policy of Oklahoma, the state of enforcement. Id. at 811. The Pate court pointed to a specific Oklahoma statute which made invalid any insurance provisions which attempted the very kind of credit attempted by Pate's insurer. The Pate court also cited the comments to the Restatement (Second) of Conflict of Laws § 6 (1971) which state that "the court will apply a local statute in the manner intended by the legislature even when the local law of another state would be applicable under usual conflict-of-law principles." Id. at 812. This principle, adopted in Pate, is directly applicable to the present case....