Stover v. Lakeland Square Owners Ass'n

Decision Date25 January 1989
Docket NumberNo. 87-1265,87-1265
Citation434 N.W.2d 866
PartiesDorothy STOVER, Appellee, v. LAKELAND SQUARE OWNERS ASSOCIATION, Appellant.
CourtIowa Supreme Court

Joseph L. Fitzgibbons and Steven D. Nelson of Fitzgibbons Brothers, Estherville, for appellant.

James A. Clarity and Lonnie B. Saunders of Narey, Clarity & Chozen, Spirit Lake, for appellee.


NEUMAN, Justice.

This appeal stems from a jury verdict entered against defendant Lakeland Square Owners Association (Lakeland) in a slip-and-fall case brought by plaintiff Dorothy Stover. Aside from its claim that the verdict is unsupported by the evidence, Lakeland's primary contention is that the trial court should have given an instruction on the nontaxability of damage awards and that the court's failure to do so entitles Lakeland to a new trial. Because we decide today that a trial court need not give a nontaxability instruction, and that Lakeland's other assignments of error are without merit, we affirm.

On May 10, 1985, Dorothy Stover fell while climbing a wooden stoop (single low step) in front of the condominium in which her doctor's office was located. The condominium is owned and managed by Lakeland. The fall broke her right shoulder severely, requiring installation of an artificial joint. This lawsuit followed.

In the course of the ensuing jury trial, evidence demonstrated that Mrs. Stover was seventy-nine years old at the time of her accident and had very poor eyesight. She testified that she had negotiated the stoop without difficulty many times, but that this time she thought she had caught the toe of her left foot on the "lip" protruding from the front of the stoop. She noted that while she did not know exactly why she had fallen, she believed the front end of the stoop was getting higher over time, and that it seemed to slope toward the building.

Jim Powers, president of Lakeland, testified that the stoop was installed because the ground around the condominium had in fact settled, increasing the distance from the surface of the sidewalk to the threshold of the doctor's office. The designer of the stoop, Bill Eich, testified that he had designed the structure to be as safe as possible, and that it had no handrail because the doctor's office door opened outward. He also noted that because the stoop was placed on top of the sidewalk, it would settle at the same rate as the sidewalk. He offered his opinion that the distance from the walk to the top of the stoop therefore remained constant.

At the close of plaintiff's case and again at the end of the presentation of all the evidence, Lakeland moved for directed verdict on the basis that substantial evidence did not support Stover's claims. The motions were overruled. When it came time to submit jury instructions, Lakeland asked for an instruction to the effect that damage awards are not reduced by state or federal income taxes. The court refused to so instruct. Lakeland also requested that the court give uniform instruction number 22.3, which states that a possessor of land must exercise reasonable care to protect invitees but need not "guarantee or insure" their safety. The court declined, and instead gave Instruction No. 20 which is identical to 22.3 but for the fact that it lacks the "guarantee or insure" language.

The jury awarded Mrs. Stover $45,000, reduced twenty percent by her comparative fault. Lakeland's motions for judgment n.o.v. and for new trial were both overruled.

On appeal from the judgment entered on the jury's verdict, Lakeland presents four grounds for reversal: (1) the trial court's refusal to submit Lakeland's "nontaxability" instruction to the jury; (2) the trial court's refusal to adopt Lakeland's proffered instruction on a landowner's duty to an invitee; (3) the trial court's denial of Lakeland's motions for directed verdict and judgment n.o.v.; and (4) the trial court's refusal to grant a mistrial based on counsel's reference to the name of an insurance adjuster who had visited Mrs. Stover.

Because this is an action at law, our review is confined to the correction of assigned errors. Uffelman v. Fire Pension Bd., 424 N.W.2d 467, 467 (Iowa 1988). We address Lakeland's contentions of error in the order presented.

I. Instruction on Nontaxability of Damage Awards:

Defendant requested the following jury instruction:

You are instructed that any award herein is not income within the definitions of the Iowa Dept. of Revenue and the I.R.S., and consequently not subject to income tax.

The court declined to give this "nontaxability" instruction, and Lakeland objected on the basis that refusal to do so would allow the jury to speculate about the effect of taxes on Stover's damage award. Defendant later incorporated this objection into its motion for new trial.

Generally, Iowa law requires that a court give a requested instruction when it states a correct rule of law having application to the facts of the case and the concept is not otherwise embodied in the other instructions. See Adam v. T.I.P. Rural Elec. Cooperative, 271 N.W.2d 896, 901 (Iowa 1978). Nonetheless, error in giving or refusing to give an instruction does not require reversal unless the error is prejudicial. Rudolph v. Iowa Methodist Medical Center, 293 N.W.2d 550, 555 (Iowa 1980). It is undisputed that a personal injury award is not subject to federal or state taxes, see 26 U.S.C. § 104(a)(2) (1988); Iowa Code § 422.7 (1987). Thus the question presented is whether it was reversible error for the trial court to refuse to so instruct the jury.

This is not the first time we have considered the issue of a jury instruction on tax consequences. In Adams v. Deur, 173 N.W.2d 100, 105-07 (Iowa 1969), we ruled that failure to give an instruction regarding the potential tax effects on estate value and support in a wrongful death action did not constitute reversible error where the trial court had generally instructed the jury to take "all other facts and circumstances" in the evidence into account when calculating damages. Id. at 106. We based Adams on a three-part rationale that guides jury instructions generally and can be summarized as follows:

1. Instructions should not marshal the evidence or give undue prominence to any particular aspect of a case;

2. Courts, when instructing the jury, should not attempt to warn against every mistake or misapprehension a jury may make;

3. Jurors must be left to their intelligent apprehension and application of the rules put forth in the instructions.

Adams, 173 N.W.2d at 106 (citing Kelly v. Chicago, R.I. & P. Ry. Co., 138 Iowa 273, 277-78, 114 N.W. 536, 538 (1908)).

We note that the jury in the present case, not unlike the jury in Adams, was instructed to give "a fair, intelligent, dispassionate and impartial consideration of the evidence" when determining damages. We are confronted here, however, with a somewhat different issue than we faced in Adams. There the question was whether a jury, in calculating damages for loss of estate value and support, should be instructed to consider how much of decedent's future income would have gone to taxes had he lived. Hence Adams involved a proposed instruction for the jury to take taxes into account. The present case, however, concerns a dispute over an instruction not to take taxes into account. Hence we must decide if it is reversible error not to instruct a jury that personal injury damage awards are free from taxation.

A host of jurisdictions have considered this question. Although three divergent responses are generally expressed, we find the analysis of each instructive. In essence, courts differ widely over whether a jury must be advised that damage awards are nontaxable so that it will not artificially inflate an award to compensate for what it anticipates will be the possible (but misperceived) effects of taxation. See Klawonn v. Mitchell, 105 Ill.2d 450, 457, 475 N.E.2d 857, 860, 86 Ill.Dec. 478, 481 (1985).

The majority of jurisdictions considering the issue have held that refusal to give a nontaxability instruction is not reversible error. Three primary reasons are advanced: first, requiring a nontaxability instruction would open a "Pandora's box," legitimizing charges to the jury on " 'every conceivable matter as to which it should not misbehave or miscalculate,' " see e.g., Klawonn, 105 Ill.2d at 458, 475 N.E.2d at 860, 86 Ill.Dec. at 481 (quoting Norfolk & Western Rwy. Co. v. Liepelt, 444 U.S. 490, 503, 100 S.Ct. 755, 762, 62 L.Ed.2d 689, 699 (1980) (Blackmun, J., dissenting)); second, such an instruction requires a court to assume that jurors will not confine themselves to the evidence or the instructions, see e.g., Gorham v. Farmington Motor Inn, Inc., 159 Conn. 576, 581, 271 A.2d 94, 96-97 (1970); and third, a nontaxability instruction injects an extraneous, collateral issue into jury deliberations, potentially leading a jury into confusion, speculation, and conjecture over the effect of taxes (or lack thereof), see e.g., Turner v. General Motors Corp., 584 S.W.2d 844, 853 (Tex.1979).

Having found that the foregoing considerations outweigh the propriety of giving a nontaxability instruction, these jurisdictions have found no error where trial courts have refused to give it. See Young v. Environmental Air Prods., Inc., 136 Ariz. 206, 213, 665 P.2d 88, 95 (Ariz.App.1982), aff'd and modified on other grounds, 136 Ariz. 158, 665 P.2d 40 (Ariz.1983); Elk Corp. v. Jackson, 291 Ark. 448, 458, 725 S.W.2d 829, 835 (1987); Hildyard v. Western Fasteners, Inc., 33 Colo.App. 396, 407, 522 P.2d 596, 602 (1974); Gorham, 159 Conn. at 580-82, 271 A.2d at 96-97; Good Samaritan Hosp. Ass'n v. Saylor, 495 So.2d 782, 783 (Fla.App. 4th Dist.1986) (wrongful death action) (cf. Gray Drugfair, Inc. v. Heller, 478 So.2d 1159, 1159 (Fla.App. 3d Dist.1985) (instruction discretionary)); Kawamoto v. Yasutake, 49 Haw. 42, 51, 410 P.2d 976, 981 (1966); Klawonn, 105...

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