Smith v. Zufelt

• Citation: 856 P.2d 8
• Decision Date: 24 September 1992
• Docket Number: No. 91CA1061,91CA1061
• Parties: Charles SMITH and Michael Smith, Defendants-Appellants, v. Ronald ZUFELT and Katherine Zufelt, as parents and next friends of Kory Zufelt, and Troy Zufelt, Plaintiffs-Appellees. . II
• Court: Colorado Court of Appeals

Page 8

856 P.2d 8

Charles SMITH and Michael Smith, Defendants-Appellants, v. Ronald ZUFELT and Katherine Zufelt, as parents and next

friends of Kory Zufelt, and Troy Zufelt,

Plaintiffs-Appellees.

No. 91CA1061.

Colorado Court of Appeals,

Div. II.

Sept. 24, 1992.

As Modified on Denial of Rehearing

Nov. 27, 1992.

Certiorari Granted July 26, 1993.

Shand, McLachlan, Newbold & Spear, P.C., Michael E. McLachlan, Durango, for defendants-appellants.

Dawes and Crane, P.C., Robert C. Dawes, Alex C. Tejada, Gail C. Harriss, Durango, for plaintiffs-appellees.

Opinion by Judge TURSI.

Defendants, Charles and Michael Smith, appeal from a judgment entered upon jury verdicts in favor of plaintiffs, Kory Zufelt and his parents and next friends, Ronald and Katherine Zufelt. We affirm in part, reverse in part, and remand for further proceedings.

This appeal arises from injuries sustained by plaintiff Kory Zufelt in a hunting accident which occurred on January 16, 1988. The following facts are not in dispute.

Ellis and Maude Smith agreed to watch 8-year-old Kory and 12-year-old Troy Zufelt for the day at their rural home while the senior Zufelts were at work. Because Maude Smith and Katherine Zufelt had agreed that the boys could hunt on the Smith property, the boys arrived at the Smith residence with their guns.

Maude was aware that the boys had previously hunted without adult supervision, and the Zufelts testified that their boys had done so with their consent. Neither Maude nor Katherine recalled discussing whether adults would supervise the boys while hunting at the Smith property, but Katherine did not request adults to accompany the boys, and Maude assumed that the Zufelts consented to their unsupervised hunting.

During the day that the Zufelt boys were at the Smiths', their son, daughter-in-law, and grandson arrived at the house for a visit. Although the grandson, 12-year-old Michael Smith, had never hunted without adult supervision, his father, Charles, gave Michael permission to hunt with the Zufelt boys unattended.

Michael used a gun and ammunition supplied by Ellis Smith, and during their hunting activities, Kory sustained a gunshot wound when Michael's rifle accidentally discharged.

Thereafter, this negligence action was initiated against Michael Smith, Charles and Hazel Smith, and Ellis and Maude Smith. Kory Zufelt sought to recover damages for the serious bodily injury he had suffered, while his parents asserted a separate claim for past and future medical expenses incurred by Kory to the age of majority.

Plaintiffs' claims against Maude and Ellis Smith were dismissed with prejudice before trial when, in a settlement agreement with all plaintiffs, these defendants jointly agreed to pay the sum of $88,629.24. The net settlement proceeds were allocated in the agreement to different parties, including $50,000 to Kory, $2,500 to the Zufelt family, and $7,000 to Troy. Additionally, the sum of $29,129.24 was paid to plaintiffs' attorneys for fees and costs.

Subsequently, pursuant to § 13-21-111.5(3)(b), C.R.S. (1992 Cum.Supp.), defendants designated Maude and Ellis Smith as statutory non-parties having fault. Upon trial against the remaining defendants, the jury returned two verdicts in favor of plaintiffs. In each verdict, the jury apportioned negligence for plaintiffs' injuries by allocating 84% fault to Charles Smith, 1% to Michael Smith, 0% to Hazel Smith, 15% to Maude Smith, and 0% to Ellis Smith.

The total award in favor of Kory amounted to $105,000, while Ronald and Katherine Zufelt received the total sum of $25,000. However, the trial court reduced the awards by 15%, the amount of liability apportioned by the jury to Maude Smith. Hence, defendants were ordered to pay plaintiffs $110,500, or 85% of the combined jury awards, their pro-rata share of liability.

I.

Defendants contend that the trial court erroneously denied their motion to offset the amount of the settlement proceeds against the damages awarded to plaintiffs. Plaintiffs respond that inasmuch as the damages awards were reduced by the percentage of Maude Smith's liability, pursuant to § 13-50.5-105, C.R.S. (1987 Repl.Vol. 6A), the trial court correctly refused to offset their settlement proceeds by application of the collateral source rule. We agree that a set-off is required.

Plaintiffs have not requested that we treat the settling parties separately, even though they were not jointly assessed by the jury as non-parties having fault. Under the record presented to us, we choose not to treat the settling parties separately.

Under these circumstances, certain settlement proceeds received by Kory Zufelt from the non-parties are collateral to the amount to which he is entitled to be made whole. Accordingly, under the existing statutory framework, we agree that these collateral funds must be set-off from the amount to which this plaintiff is entitled from defendants.

The statutory collateral source rule provides that the trial court must reduce the amount of damages awarded in a verdict for sustained personal injuries by the amount by which the injured person has been indemnified or compensated for his loss by any other person. Section 13-21-111.6, C.R.S. (1987 Repl.Vol. 6A).

Hence, indemnity or compensation received from settlement proceeds must be deducted from the jury's award when the settling defendant is designated as a non-party with fault but is found by the fact- finder not to have any fault for the injury sustained. Gutierrez v. Bussey, 837 P.2d 272 (Colo.App.1992); see United States Fidelity & Guaranty Co. v. Salida Gas Service Co., 793 P.2d 602 (Colo.App.1989).

Under the Uniform Contribution Among Tortfeasors Act, however, the trial court is required to reduce the aggregate claim against non-settling defendants to the extent of any percentage of fault or negligence attributable by the finder of fact to the non-party. Section 13-50.5-105, C.R.S. (1987 Repl.Vol. 6A). Consequently, when a settling designated non-party is found by the fact-finder to possess a percentage of fault for the injury, this pro-rata rule applies to reduce the verdict by the percentage of fault attributed thereto. Gutierrez v. Bussey, supra; see Herrera v. Gene's Towing, 827 P.2d 619 (Colo.App.1992); Wong v. Sharp, 734 F.Supp. 943 (D.Colo.1990).

In this case, we conclude initially that the settlement proceeds which the parties apportioned as payment of attorney fees and costs may not be used to offset the jury awards as a collateral source. In our view, these proceeds were not actually collected by plaintiffs for their losses and, therefore, do not constitute indemnification or compensation for the loss of the injured party, as contemplated in § 13-21-111.6. Cf. County Workers Compensation Pool v. Davis, 817 P.2d 521 (Colo.1991).

Nevertheless, the non-parties at fault have jointly allocated settlement proceeds to a plaintiff which exceed the percentage of fault for which they have been found liable. When this settlement distribution is added to the amount representing the percentage of fault for which the non-settling defendants are liable, Kory has received a sum which is cognizable under the collateral source rule. Under these circumstances, we conclude that the trial court must reduce the damages awarded by jury verdict by application of both statutes.

We must reconcile the purpose and function of each statute to give effect to each, Cooley v. Big Horn Harvestore Systems, Inc., 813 P.2d 736 (Colo.1991), and we must also presume that the General Assembly intended a just and reasonable result when enacting them. Section 2-4-201(1)(c), C.R.S. (1980 Repl.Vol....