Younts v. Baldor Elec. Co. Inc.

Robert L. Brown, Justice, dissenting. I would reverse the circuit court’s decision which allowed evidence of Younts’s fire insurance in this case.

The question and answer giving rise to this issue occurred during Younts’s direct examination:

Q. And have you been able to reopen the business since the August ‘88 fire?

A. Haven’t been able to afford it.

No further comment was made by Younts, and no objection was raised by Baldor Electric at this point. Following direct examination, counsel for Baldor Electric asked for a hearing in chambers, where he argued that Younts, by his answer, had opened the door to interrogation about the insurance proceeds which he received as a result of the fire.

Younts’s counsel rejoined strongly by invoking the collateral source rule and the fact that Younts was underinsured. He then added:

. . .that this gentleman was underinsured, I’ll proffer for the record, and that he was giving an honest answer when he said that it was not affordable for him to reopen his business; that he’s not mislead (sic) the jury in any way by giving that response; that it is hugely prejudicial to my client to mention insurance in that Mr. Sharp’s client can still cross examine Mr. Younts on the feasibility of opening or reopening that business; that the prejudice so far outweighs the probative value of mentioning the insurance.

The circuit court ruled immediately that the insurance issue had been opened by Younts’s statement and added that Younts had been made substantially whole by the insurance proceeds, though he had not yet heard his testimony on this point. No testimony was taken in chambers.

Back in open court, Baldor Electric, on cross examination, pursued the amount of fire insurance paid Younts, which was said to be $41,500:

Q: So actually you made the business judgment not to go back into the Getta Tan business, did you not?

A: A business judgment?

Q: Yes.

A: I could not afford to go back in it.

Q: I see. With the forty-one thousand dollars you couldn’t afford to go back into business?

A: Sir, I didn’t have the forty-one thousand. I owed on the machinery.

Q: Well, if you bought them on credit before you couldn’t buy them on credit again?

A: Not with the amount of the other stuff that I lost in the trailer, no, sir, I couldn’t.

The jury then awarded Younts $2,000 on a $45,423.74 claim. It first had written on the verdict form that the award should be $3,923.74, which is the difference between the $41,500 insurance proceeds and $45,423.74, but it crossed this amount out in favor of $2,000. That the jury bottomed its award in part on the insurance proceeds received is patently obvious.

This is not a case where a plaintiff intentionally misled the jury or where rebuttal testimony is necessary to refute erroneous information. See, e.g., Pursley v. Price, 283 Ark. 33 , 670 S.W.2d 448 (1984). It is a situation where Younts believed what he was saying and could back it up with facts.

The majority, however, artfully dodges the crucial issue and predicates its decision on the failure of Younts to put on live testimony in chambers. This conclusion is reached even though the circuit court had the benefit of counsel’s argument that Younts was being truthful. The court chose instead to rule quickly after arguments by counsel. By doing so, the court interpreted Younts’s comment about non-affordability as deliberately misleading and imbued Younts’s answer with a motive of connivance when there was no factual basis for doing so.

What is really at issue here is the future of the collateral source rule. Simply put, the rule states that benefits received by the plaintiff from a source wholly independent of and collateral to the wrongdoer will not diminish the damages otherwise recoverable from the wrongdoer. 22 Am. Jur.2d, Damages § 566, p. 638, et seq. We have endorsed the rule in Arkansas. See Patton v. Williams, 284 Ark. 187 , 680 S.W.2d 707 (1984). By opening the door to insurance testimony on the flimsiest of pretexts, the majority erodes the rule until it is all but nonfunctional.

Opponents of the collateral source rule argue that it creates a windfall or, at least, the potential for double recovery. That argument, though, is refuted best by Jacob A. Stein in his distinguished treatise on personal injury damages:

As applied to insurance benefits, the collateral source rule expresses a policy judgment in favor of encouraging citizens to purchase and maintain insurance for personal injuries and for other eventualities. Furthermore, the collateral source rule partially serves to compensate for the large portion of the plaintiffs recovery that ordinarily must be paid to his other attorney under a contingent fee contract, which is an expense of the plaintiff not generally brought to the attention of the jury. Finally, in many insurance cases the rule produces no double recovery because insurance policies increasingly provide for either subrogation or refund of benefits upon a tort recovery.

Stein on Personal Injury Damages, “Collateral Source Doctrine,” § 10:2, p. 416 (2d Ed. 1991).

More was needed than Younts’s truthful comment to justify the overwhelming prejudice that resulted from the insurance testimony in this case. The case should be reversed and remanded for a new trial.