Reisenauer v. Schaefer

• Decision Date: 20 April 1994
• Docket Number: No. 930237,930237
• Citation: 515 N.W.2d 152
• Parties: Rod REISENAUER, Plaintiff and Appellant, v. James E. SCHAEFER and Pamela Susag, Defendants and Appellees. Civ.
• Court: North Dakota Supreme Court

Page 152

515 N.W.2d 152

Rod REISENAUER, Plaintiff and Appellant, v. James E. SCHAEFER and Pamela Susag, Defendants and Appellees.

Civ. No. 930237.

Supreme Court of North Dakota.

April 20, 1994.

Michael J. Maus, Howe, Hardy, Galloway & Maus, PC, Dickinson, for plaintiff and appellant.

Robert J. Snyder, Snyder Coles Lawyers, Bismarck, for defendant and appellee James E. Schaefer.

Jerry W. Evenson, Zuger, Kirmis & Smith, Bismarck, for defendant and appellee Pamela Susag.

LEVINE, Justice.

Rod Reisenauer appeals from a judgment awarding him only damages for noneconomic loss. We affirm in part, reverse in part and remand.

On June 24, 1990, Reisenauer and James Schaefer were involved in an automobile accident. Schaefer was driving a vehicle owned by Pamela Susag. Reisenauer sued Schaefer for negligent operation of the vehicle and Susag for negligent entrustment of her vehicle to Schaefer. The jury found Schaefer negligent, and Susag not negligent. It also decided that Reisenauer suffered a serious injury and that his damages were wholly attributable to Schaefer's negligence. The jury awarded Reisenauer $1,700 for noneconomic loss ¹ and $28,900 for economic loss, ² $900 of which was for past medical expenses and $28,000 of which was for past loss of productive time.

Following the jury's special verdict, Schaefer moved to exclude the amount awarded for economic loss from the judgment to be entered. Schaefer argued that because Reisenauer had admitted in his answers to Schaefer's interrogatories that Schaefer was a secured person and that Reisenauer was entitled to no-fault benefits and had not exhausted his basic no-fault benefits, Schaefer was exempt from liability to pay damages for Reisenauer's economic loss. Reisenauer replied that Schaefer did not raise the issue properly and failed to present any proof as to what amount of basic no-fault benefits Reisenauer had received. The trial court granted Schaefer's motion and entered judgment accordingly. Reisenauer appealed.

On appeal, Reisenauer raises two issues: whether the trial court erred in granting Schaefer's motion to exclude economic loss and whether Reisenauer is entitled to a new trial.

I.

Reisenauer argues that the trial court erred in granting Schaefer's motion to exclude economic loss because the secured-person exemption, NDCC § 26.1-41-08, is an affirmative defense which Schaefer waived by failing to raise prior to trial and that in order to claim the secured-person exemption, Schaefer must show that the economic damages were not paid or payable to Reisenauer as basic no-fault benefits. We reject Reisenauer's arguments because they ignore the legislative scheme of chapter 26.1-41 and the text and structure of NDCC § 26.1-41-08.

Section 26.1-41-08 provides to a secured person an exemption from liability for damages under specified circumstances:

"1. In any action against a secured person to recover damages because of accidental bodily injury arising out of the ownership or operation of a secured motor vehicle in this state, the secured person is exempt from liability to pay damages for:

a. Noneconomic loss unless the injury is a serious injury.

b. Economic loss to the extent of all basic no-fault benefits paid or to become payable for such injury under this chapter after subtracting the same elements of loss recoverable under any workers' compensation law.

"2. The exemption under subsection 1 does not apply unless the person who has sustained accidental bodily injury is a person who may qualify for basic no-fault benefits pursuant to section 26.1-41-06 and who is not excluded under section 26.1-41-07."

Under subsection (1)(a) of the statute, a secured person ³ is exempt from liability for noneconomic loss unless the victim has sustained a serious injury. We have construed this subsection as a "threshold requirement for seeking noneconomic damages" and have placed the burden on the plaintiff to allege and establish that she has met the threshold requirement. Erdmann v. Thomas, 446 N.W.2d 245, 246 (N.D.1989); see also Calavera v. Vix, 356 N.W.2d 901, 902 (N.D.1984). In Erdmann, in determining whether the trial court properly admitted the plaintiff's medical bills into evidence, we explained that "[u]nder § 26.1-41-08(1)(a), ... Erdmann was not entitled to recover for noneconomic loss unless his injury qualified as a 'serious injury' " and that as the plaintiff, Erdmann "ha[d] the burden of alleging and establishing at trial that the no-fault threshold requirement has been met." Erdmann, supra at 246.

Under subsection (1)(b) of NDCC § 26.1-41-08, a secured person is exempt from liability for economic damages to the extent the victim has been or will be paid basic no-fault benefits for those economic damages. See also Imperial Casualty & Indem. Co. v. General Casualty Co., 458 N.W.2d 335, 337 (N.D.1990). "Basic no-fault benefits" are benefits for economic loss resulting from accidental bodily injury and are limited to $30,000 per person for any one accident and may not exceed $150 per week for work loss. NDCC § 26.1-41-01(2). The statute establishes prerequisites for the recovery of damages for noneconomic loss and economic loss. ⁴ Just as the plaintiff must establish a serious injury to recover for noneconomic loss from a secured-person defendant, so must the plaintiff establish economic loss in excess of paid or payable basic no-fault benefits in order to recover damages for economic loss from a secured-person defendant. Section 26.1-41-08(1)(b) is subject to the same construction as section 26.1-41-08(1)(a); that is, it is a threshold requirement which a plaintiff must meet before he may recover for his economic loss. In other words, a plaintiff is not entitled to recover in tort for economic loss unless he alleges and establishes that his economic loss exceeds the basic no-fault benefits paid or payable to him.

Our construction of section 26.1-41-08(1) as a threshold requirement is in keeping with the purpose of chapter 26.1-41 (the No-Fault Act). The primary purpose of the No-Fault Act is to compensate automobile accident victims adequately. Moser v. Wilhelm, 300 N.W.2d 840, 847 (N.D.1980). Toward that end, the Act requires all owners of motor vehicles to carry coverage for economic loss resulting from accidental bodily injury (along with liability coverage), NDCC § 26.1-41-02, and limits tort recovery. NDCC § 26.1-41-08. This is the key aspect of no-fault: to transfer victim compensation from fault-based common law tort recovery to a compulsory no-fault insurance fund. See Walter J. Blum & Harry Kalven, Jr., Ceilings, Costs, and Compulsion in Auto Compensation Legislation, 1973 Utah L.Rev. 341, 344; Thomas O. Smith, "North Dakota Auto Accident Reparations Act"--North Dakota's No-Fault Insurance Law, 52 N.D.L.Rev. 147, 149-50 (1975). By removing the bulk of motor vehicle accidents from the constraints of the tort system, no-fault statutory schemes provide direct and rapid compensation to automobile accident victims through an insurance fund without regard to fault. 12A George J. Couch et al., Cyclopedia of Insurance Law § 45:664 (2d ed. 1981); Blum & Kalven, supra at 344. Construing section 26.1-41-08(1) as a threshold requirement which a plaintiff must satisfy in order to recover in tort is consistent with the purpose of the No-Fault Act to compensate adequately automobile accident victims through the mandatory no-fault insurance fund. See Smith, supra at 156-59.

Additionally, the burden of proving that economic loss exceeds basic no-fault benefits paid or payable to the plaintiff best is borne by the plaintiff. The plaintiff knows what his basic no-fault benefits are, how much he has received, and how much he will get. He also knows what his unreimbursed economic damages are. See, e.g., In re Mt. Pleasant Bank & Trust Co., 455 N.W.2d 680, 685 (Iowa 1990) ["[T]he burden of proof ordinarily rests on the party who possesses the facts on the issue in dispute."]. As both a matter of statutory construction and fairness, then, section 26.1-41-08(1)(b) is a threshold requirement for which the plaintiff bears the burden of proof.

Unlike the "serious injury" threshold of section 26.1-41-08(1)(a), however, the issue of whether the plaintiff's economic loss exceeds the no-fault benefits paid or payable to her is not one for the jury. Depending upon the particular circumstances, the trial court may decide the issue pretrial, but in any event should decide it and exclude the amount of paid or payable basic no-fault benefits before entering judgment, in order to prevent double recovery. See Moser v. Wilhelm, supra at 845-47 [holding that plaintiff properly was prevented from introducing evidence of economic loss where plaintiff admitted she had not exhausted her basic no-fault benefits and only issue was whether defendant was a secured person].

Reisenauer did not establish the amount of economic loss that exceeded the basic no-fault benefits paid or payable to him. Instead, in response to Schaefer's motion to reduce the jury's determination of Reisenauer's economic loss by the amount of basic no-fault benefits paid or payable to Reisenauer, Reisenauer simply responded that it would be "ludicrous" to assume that he had received $28,900 in basic no-fault benefits. That was the extent of the guidance Reisenauer offered to the trial court. It was Reisenauer, not Schaefer, who bore the burden of showing that his economic loss exceeded the basic no-fault benefits paid or payable to him for that loss. Faced with no information about the amount of Reisenauer's basic no-fault benefits or their purpose, and an award that was, on its face, less than the maximum allowable amount of basic no-fault benefits, see NDCC § 26.1-41-01(2), the trial court simply excluded the whole $28,900 from the judgment. However warranted the trial court's order may seem under the circumstances, we believe that justice best is served by reversing and remanding with direction to...