Tuesday, May 25, 2010

Hayes v. Price[1]

Opinion handed down May 25, 2010.
Link to Mo. Sup. Ct. Opinion

The Supreme Court of Missouri held that the trial court erred in submitting a comparable fault instruction because the defendant in this motor vehicle accident suit did not present evidence that the plaintiff was able to take evasive measures to avoid the accident. Furthermore, the Court held that the trial court did not err in denying plaintiff’s request for prejudgment interest. The plaintiff’s offer of settlement did not comply with section 408.040.21 because it included a demand for production of documents and statements from third parties.

I. Facts and Holding

On September 25, 2004, Ronald Joe Hayes was driving his motorcycle in Joplin, Missouri with his friend, Greg Cook.[2] As the pair traveled southbound on a four-lane road that did not have a turn lane, they approached a Ford Bronco waiting to turn left at an intersection.[3] Meanwhile, Trisha G. Price was traveling in the opposite direction and saw the two southbound motorcycles approaching the intersection.[4] At the intersection, Ms. Price stopped in the left lane, intending to turn left, but the Bronco created a blind spot which blocked her view of the motorcycles and their view of her car.[5] As Ms. Price turned, she drove into the left side of Mr. Hayes’ motorcycle inflicting severe injuries upon Mr. Hayes’ hip and leg.[6] While both Mr. Hayes and Ms. Price had a green light, Mr. Hayes had the right-of-way.[7] In addition, Mr. Hayes was traveling five miles per hour under the posted speed limit.[8]

In order to qualify for prejudgment interest, Mr. Hayes sent Ms. Price a demand letter, pursuant to section RSMo. 408.040.2.[9] In the letter, “Mr. Hayes offered to release Ms. Price from any liability if she paid him $325,000” and produced certain documents and sworn witness statements.[10] Mr. Hayes sent the demand letter by certified mail and kept the offer open for 60 days, but Ms. Price did not accept the offer.[11] As a result, Mr. Hayes filed suit, and the case was tried on February 14, 2006.[12]

“Mr. Hayes submitted his case to the jury on the theory that Ms. Price was negligent for failure to yield.”[13] Ms. Price submitted a comparative fault instruction to the jury: failure to keep a careful lookout.[14] As a result, Mr. Hayes moved to exclude any matter related to the comparative fault instruction, but the trial court overruled the motion.[15] The jury returned a verdict in favor of Mr. Hayes for $625,000. [16] However, the jury apportioned “20 percent of the fault to Mr. Hayes and 80 percent of the fault to Ms. Price.”[17] As a result of the fault attributed to Mr. Hayes, the trial court reduced the damages award by $125,000 and overruled Mr. Hayes’ motion for prejudgment interest.[18]

Mr. Hayes appealed the judgment of the trial court and claimed that the court erred in submitting the comparative fault instruction because Ms. Price did not present evidence in support of the submission.[19] Second, Mr. Hayes contended that the trial court should have granted him prejudgment interest because he complied with the statutory requirements.[20] After a hearing by the court of appeals, the Supreme Court of Missouri granted transfer.[21]

II. Legal Background

A. Submission of Comparative Fault Jury Instruction

Mr. Hayes first point on appeal was that the trial court erred in submitting to the jury a comparative fault instruction for failure to keep a careful lookout because Ms. Price did not present substantial evidence to support the submission of the instruction.[22] The standard of review for determining whether a jury was properly instructed is de novo.[23] The court reviewed the record “in the light most favorable to submission of the instruction.”[24]

Issues submitted to a jury must be supported by substantial evidence.[25] “Substantial evidence” permits a jury to decide a case based on the probative value of the evidence.[26] If a jury instruction is not supported by substantial evidence, then the court committed instructional error, which warrants reversal “only if the error resulted in prejudice that materially affects the merits of the action.”[27]

In Thurman v. Anderson,[28] the Supreme Court of Missouri held that a driver entering an intersection with the right of way is justified in assuming that cars traveling in the opposite direction will obey a traffic signal until a driver gives “positive indication to the contrary.”[29] A driver has every right to proceed through an intersection even though there is another driver approaching unless it is apparent that the other driver is not respecting the traffic law.[30] According to the Supreme Court of Missouri, the essence of the “failure to keep a careful lookout” claim is a failure to see and a failure to act.[31] There are two parts to the inquiry: (1) “if the driver was keeping a careful lookout, could the driver have seen the danger;” and (2) “if the driver could have seen the danger, did the driver have the ability to take some precautionary measure such as veering, utilizing a horn, or slowing speed to prevent the accident?”[32]

Ms. Price argued that Mr. Hayes could have avoided the collision. [33] The evidence indicated that Mr. Hayes had the ability to observe Ms. Price’s vehicle approach the intersection, before her vehicle was hidden by the Bronco.[34] However, even if Ms. Price had her turn signal on, “Mr. Hayes had a green light and the right of way as he approached the intersection.”[35] There was no evidence regarding whether there was sufficient time for Mr. Hayes to take action preventing the collision at the point that Mr. Hayes exited the blind zone.[36]

“Because the failure to keep a careful lookout instruction was not supported by substantial evidence,” the Supreme Court of Missouri held that the instruction was improperly submitted to the jury.[37] Furthermore, the submission was prejudicial because, as a result of the erroneous instruction, the jury assessed Mr. Hayes a percentage of the fault for the accident, and his damages were reduced by that percentage.[38] Therefore, the “portion of the trial court’s judgment accessing 20 percent of the fault to Mr. Hayes [wa]s reversed.”[39]

B. Prejudgment Interest under Section 408.040.2

In addition, Mr. Hayes contended that the trial court erred in refusing to award him prejudgment interest.[40] Mr. Hayes further asserted that section 408.040.2 permits a person to make a demand that includes a request for the production of other information.[41] “Interpretation of a statute is a matter of law” which Missouri courts review de novo.[42] A party may not receive prejudgment interest unless a proper settlement demand is made.[43] When a party satisfies the requirements of section 408.040.2, a trial court is obligated to grant a request for prejudgment interest.[44]

Mr. Hayes and Ms. Price “agreed that Mr. Hayes’ offer of settlement included a demand for a monetary amount that is readily ascertainable”—$325,000.[45] In addition, Mr. Hayes “demanded copies of titles to cars owned or driven by Ms. Price and her parents, certified copies of all indemnity agreements . . ., all applicable liability insurance policies, and sworn statements of Ms. Price and each of her parents” taken by Mr. Hayes’ attorney.[46]

The Court found that the statutory language did not permit or prohibit simultaneous demands for non-monetary and monetary compensation.[47] The Court examined the language of section 408.040.2 to determine if the statute permitted the inclusion of non-monetary demands in a settlement offer.[48] According to the Court, the phrase “‘offer of settlement’ is broader than the phrase ‘demand of payment’ and arguably could include non-monetary demands.”[49] However, based on the context of both phrases, the court determined that the intent of the legislature was to insure that an offer is capable of being quantified in a specific dollar amount.[50] An offer must be quantifiable in a certain dollar amount to allow a comparison between the offer and the actual judgment amount.[51] Furthermore, the Court prohibited parties from making both monetary and non-monetary demands based on public policy reasons.[52] Section 408.040.2 serves two public policies: (1) compensating claimants for costs incurred because of litigation delays; and (2) promoting settlement.[53] The statute encourages a defendant to “buy peace in the form of a monetary settlement.”[54]

A non-monetary demand is not reasonably related to compensating a claimant for costs incurred due to litigation delay.[55] According to the court, a non-monetary demand does not promote settlement either.[56] The only way for Ms. Price to accept Mr. Hayes’ settlement offer was for Ms. Price’s parents to cooperate with Mr. Hayes’ demands.[57] Therefore, it was impossible for Ms. Price to accept the settlement by herself and, as a consequence, the court said that the offer actually impeded settlement.[58] As a result, the Supreme Court of Missouri held that there was no error in the trial court’s order “denying the request for prejudgment interest.”[59]

III. Comment

In this case, the Supreme Court of Missouri had a chance to broaden the reach of the “failure to keep a careful lookout” defense. However, it chose not do so. It is certainly not hard to imagine sympathy, on the judges’ behalf, for Mr. Hayes: a motorcycle driver who was hit by a motor vehicle that did not have the right-of-way.

On the other hand, any sympathy on the part of the judges did not carry into Mr. Hayes pre-judgment interest claim. While it is not clear that all non-monetary demands are disallowed under the statute, the court’s holding in this case will certainly dissuade people from including them in settlement offers. However, non-monetary demands are sometimes crucial parts of a settlement agreement. Confidentiality is important to corporations wishing to avoid a public relations fiasco. Reinstatement of a lost privilege or right is important to a person who was denied access to the privilege or right.

Admittedly, parties to a settlement are often primarily concerned with monetary demands. However, it is not difficult to imagine scenarios where a non-monetary demand is an important, maybe even a primary, interest of a party in a settlement. Be that as it may, the Supreme Court of Missouri clearly thinks that non-monetary demands are an impediment to settlement.

-Drew Weber

[1] No. SC 90054, 2010 WL 2103043 (Mo. banc 2010).
[2] Id. at *1.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id. at *2. See Mo. Rev. Stat. § 408.040.2 (2000).
“In tort actions, if a claimant has made a demand for payment of a claim or an offer of settlement of a claim, to the party, parties or their representatives, and to such party’s liability insurer if known to the claimant, and the amount of the judgment or order exceeds the demand for payment or offer of settlement, then prejudgment interest shall be awarded, calculated from a date ninety days after the demand or offer was received, as shown by the certified mail return receipt, or from the date the demand or offer was rejected without counter offer, whichever is earlier. In order to qualify as a demand or offer pursuant to this section, such demand must:
(1) Be in writing and sent by certified mail return receipt requested; and
(2) Be accompanied by an affidavit of the claimant describing the nature of the claim, the nature of any injuries claimed and a general computation of any category of damages sought by the claimant with supporting documentation, if any is reasonably available; and
(3) For wrongful death, personal injury, and bodily injury claims, be accompanied by a list of the names and addresses of medical providers who have provided treatment to the claimant or decedent for such injuries, copies of all reasonably available medical bills, a list of employers if the claimant is seeking damages for loss of wages or earning, and written authorizations sufficient to allow the party, its representatives, and liability insurer if known to the claimant to obtain records from all employers and medical care providers; and
(4) Reference this section and be left open for ninety days.
Unless the parties agree in writing to a longer period of time, if the claimant fails to file a cause of action in circuit court prior to a date one hundred twenty days after the demand or offer was received, then the court shall not award prejudgment interest to the claimant. If the claimant is a minor or incompetent or deceased, the affidavit may be signed by any person who reasonably appears to be qualified to act as next friend or conservator or personal representative. If the claim is one for wrongful death, the affidavit may be signed by any person qualified pursuant to section 537.080, RSMo, to make claim for the death. Nothing contained herein shall limit the right of a claimant, in actions other than tort actions, to recover prejudgment interest as otherwise provided by law or contract.”
[10] Hayes, 2010 WL 2103043 at *2.
[11] Id.
[12] Id.
[13] Id.
[14] Id.
[15] Id.
[16] Id.
[17] Id.
[18] Id.
[19] Id.
[20] Id.
[21] Id. See Mo. Const. art. V, sec. 10.
[22] Hayes, 2010 WL 2103043 at *2.
[23] Id. (citing Bach v. Winfield-Foley Fire Prot. Dist., 257 S.W.3d 605, 608 (Mo. banc 2008)).
[24] Hayes, 2010 WL 2103043 at *2.
[25] Id. (citing Kauzlarich v. Atchison, Topeka, & Santa Fe Ry. Co., 910 S.W.2d 254, 258 (Mo. banc 1995)) (internal quotations omitted).
[26] Id. (quotingPowderly v. S. County Anesthesia Assoc. Ltd., 245 S.W.3d 267 (Mo. App. 2008)).
[27] Hayes, 2010 WL 2103043 at *2 (citing Bach v. Winfield-Foley Fire Prot. Dist., 257 S.W.3d 605, 608 (Mo. Banc 2008)).
[28] 693 S.W.2d 806 (Mo. banc 1985).
[29] Id. at 808.
[30] Id.
[31] Hayes, 2010 WL 2103043 at *3 (citing Lovelace v. Reed, 486 S.W.2d 417, 418-19 (Mo. 1972)).
[32] Id.
[33] Id.
[34] Id.
[35] Id.
[36] Id.
[37] Id. at *5.
[38] Id.
[39] Id.
[40] Id. See statute cited supra note 11.
[41] Hayes, 2010 WL 2103043 at *5.
[42] Smith v. Shaw, 159 S.W.3d 830, 833 (Mo. banc 2005).
[43] Werremeyer v. Kansas City Auto Salvage Co., 134 S.W.3d 633, 636 (Mo. banc 2004). “A proper demand must be definite in terms.” Brown v. Donham, 900 S.W.2d 630, 633 (Mo. banc 1995).
[44] McCormack v. Capital Elec. Constr. Co., 159 S.W.3d 387, 402 (Mo. App. 2004).
[45] Hayes, 2010 WL 2103043 at *7.
[46] Id.
[47] Id.
[48] Id.
[49] Id.
[50] Id. (quoting Brown v. Donham, 900 S.W.2d 630, 633 (Mo. banc 1995)).
[51] Hayes, 2010 WL 2103043 at *7.
[52] Id.
[53] Id.
[54] Id.
[55] Id. at *8.
[56] Id.
[57] Id.
[58] Id.
[59] Id.