Carolyn RUGGLES, by the ESTATE OF Carolyn MAYER, Appellant, v. Monte GROW, Appellee.
No. S-7986.
Supreme Court of Alaska.
Aug. 20, 1999.
984 P.2d 509
Before the plaintiff may be entitled to your verdict against the State under this law, you must find from a preponderance of the evidence:
First: That the Big Lake North Recreation Site, and specifically the swimming area at the recreation site, was in a dangerous condition on May 31, 1993;
Second: That the injury of which plaintiff complains was proximately caused by the dangerous condition;
Third: That the injury occurred in a way which was reasonably foreseeable as a consequence of the dangerous condition of the property; and
Fourth: That the dangerous condition had existed for a sufficient period of time or was so obvious, or both, that the State should have discovered and eliminated it.
The State had a duty to make reasonable inspections.
(Emphasis added.) The State argues that the trial court misstated the law because the instruction implied that the State had the duty to inspect “each and every piece of remote land it owns.”
Implicit in the duty to discover and eliminate hidden dangers of a sufficient duration, which is set out in the “Fourth” part of Instruction 23, is the duty to make reasonable inspections. Thus the last sentence of the instruction did not impose a new duty on the State. As the propriety of the earlier part of the instruction is not challenged, the final sentence cannot be considered error.
Nor do we believe that the final sentence was error in the context of this case. We do not have here undifferentiated public land which people may utilize for recreational pursuits only at their own risk. In Kooly v. State, 958 P.2d 1106 (Alaska 1998), we held that the State did not owe a duty of care to sledders who used state rights-of-way as sledding hills. We noted that although the hill where the accident occurred was commonly used for sledding, the State had not “formally dedicated the sledding hill as a recreational area.” Id. at 1109. We also observed that it was “not possible to make the thousands of miles of state rights-of-way adjacent to highways safe for sledding.” Id. Here, by contrast, the area in question was roped off for swimming and was part of a state recreation area. In Moloso v. State, 644 P.2d 205, 219 (Alaska 1982), a case involving a state construction area, we observed that landowners have a duty to warn entering persons of hidden dangers of which the entering persons are unaware. Implicit in this duty is a duty to inspect for hidden dangers. Such a duty should properly apply to designated use areas like the swimming area involved in this case.
IV. CONCLUSION
The jury‘s verdict awarding damages for future medical expenses and not for diminished future earning capacity was inconsistent. Accordingly, McCubbins‘s motion for a new trial on the issue of damages should have been granted. No error was committed which requires a new trial on liability, including apportionment of fault. Therefore, we REMAND for a new trial on damages and VACATE the rulings regarding the prevailing party determination and decreased prejudgment interest.
Paul W. Waggoner, Anchorage, for Appellee.
Before MATTHEWS, Chief Justice, COMPTON, EASTAUGH, FABE, and BRYNER, Justices.
OPINION
MATTHEWS, Chief Justice.
I. INTRODUCTION
This case is here for the second time. The historical and most of the procedural facts are set forth in our prior opinion, Grow v. Ruggles.1 We recite only the facts necessary to understand the issues in this appeal.
II. FACTS AND PROCEEDINGS
Carolyn Ruggles was injured in an automobile accident involving Monte Grow. Allstate Insurance Company insured both parties.2 Ruggles sued Grow, who was defended by Allstate. Allstate paid Ruggles‘s medical expenses from the medical payments coverage of her policy.3 Allstate requested Ruggles not to include its subrogated claim for medical expenses in her suit against Grow. Ruggles refused to honor this request.4 Eventually the superior court ruled that the medical expenses must be deducted from any recovery Ruggles received, but evidence of the expenses could be presented to the jury as evidence bearing on the severity of her injury.
Grow made an offer of judgment under
Ruggles appealed unsuccessfully on inconsistent verdict grounds.8 Grow appealed on the ground that he should have been awarded attorney‘s fees since the verdict was less than the offer of judgment.9 We agreed and remanded for a new fee determination.10
On remand the superior court, at the request of Allstate and Grow, substituted Allstate for Grow as the real party in interest. In response to Ruggles‘s subsequent motions to reconsider this ruling or to allow the prosecution of counterclaims against Allstate, the court concluded that it had erred by permitting the substitution and it rescinded its previous order. Grow thus remained as the sole defendant. After considering numerous motions, the court deducted from the verdict the medical expenses which Allstate had paid, and awarded Ruggles reduced interest on the judgment pursuant to the version of
On appeal Ruggles presents three arguments. Quoting from the argument headings in her brief, they are:
- the trial court should not have credited Grow with Ruggles‘s collateral source benefits;
- the trial court judgment award of costs and attorney‘s fees and interest in Grow‘s favor is contrary to the remand and manifestly unreasonable;
- if the trial court adjudicates the rights between Allstate and Ruggles, then there must be due process safeguards.
We address these arguments in turn.
III. DISCUSSION
A. Deduction of the Medical Payments
Ruggles argues that the question of whether she must pay part of her recovery to Allstate represents a question between her and Allstate and was thus improperly decided by the court on remand. Ruggles also argues that the collateral source rule prevents the deduction made by the trial court. She further contends that permitting the de-
Each of these contentions is effectively answered by the consequences flowing from the fact that Allstate requested Ruggles‘s attorneys not to present its claim for medical expenses. Once this request was made Ruggles lost the right to present the claim. The trial court‘s pre-verdict order requiring the deduction of medical expenses, and the court‘s post-remand deduction of such expenses, corrected the wrongful inclusion of Allstate‘s claim with Ruggles‘s claim. We explain this conclusion in the following paragraphs.
When an insurer pays expenses on behalf of an insured it is subrogated to the insured‘s claim. The insurer effectively receives an assignment of its expenditure by operation of law and contract.11 If the insurer does not object, the insured may include the subrogated claim in its claim against a third-party tortfeasor. Any proceeds recovered must be paid to the insurer, less pro rata costs and fees incurred by the insured in prosecuting and collecting the claim. But the subrogated claim belongs to the insurer. The insurer may pursue a direct action against the tortfeasor, discount and settle its claim, or determine that the claim should not be pursued. These rights are inherent in our discussion of the subject in Brinkerhoff v. Swearingen Aviation Corp.:
Although [the insured] could have sued to recover for the full amount of damage and held the appropriate portion of that recovery ... in trust for his insurer whose subrogation rights arose upon payment under the policy, the insurance company‘s decision to settle its claim foreclosed this option. We also attach no relevance to [the insured‘s] allegation that the settlement agreement reached [with the tortfeasor] was collusive. An insurance company is free to settle its subrogation claims for any amount.12
When Allstate instructed Ruggles not to pursue its subrogation claim, Ruggles lacked authority to pursue it. Grow was entitled to raise this lack of authority, for it represented a legitimate partial defense to Ruggles‘s claim.13
Deducting the subrogated claim did not violate the collateral source rule. Quoting Tolan v. ERA Helicopters, Inc.,14 Ruggles notes that the collateral source rule provides that “a tort-feasor is not entitled to have his liability reduced merely because [the] plaintiff was fortunate to have received compensation for his injuries or expenses from a collateral source.” But this rule speaks to the relationship between insureds and tortfeasors, not to that between insureds and their insurers. Given that the insurer is the owner of the subrogated claim, the rule cannot be read to permit an insured to pursue subrogated collateral source benefits against the insurer‘s wishes.15 And the rule should not prevent a tortfeasor from raising lack of authority to present a claim as a partial defense.
Nor did the deduction violate the rule preventing insurers from prosecuting subrogation claims against parties whom they insure. Allstate was not prosecuting a claim against its insured. Its efforts were directed instead toward achieving the opposite result: Allstate sought control of its claim to prevent Ruggles from bringing the claim against Grow. This represented a logical step for Allstate, since it would have been both the payor and the payee of the claim. It could accomplish the same result as prosecuting
B. Award of Costs and Fees
Ruggles‘s argument that the award to Grow of attorney‘s fees is contrary to the remand is frivolous. The penultimate sentence of our opinion stated: “Thus, pursuant to
Ruggles‘s argument that the amount of fees awarded Grow, $15,328.95, is manifestly unreasonable is merely conclusory. She notes that Allstate‘s total defense costs exceeded $70,000, but she does not attempt to demonstrate that the court misapplied either
The only comprehensible argument Ruggles offers concerns costs, as distinct from fees, and the trial court‘s reduction of interest. She notes that Grow‘s motion for rehearing had requested that we explicitly direct the trial court to award costs as well as attorney‘s fees and that reduced interest be applied. We denied the motion for rehearing without explanation in an order dated December 6, 1993. She contends that our denial of rehearing precluded the trial court from awarding costs and making the interest adjustment on remand. This argument lacks merit, for the denial of a motion for rehearing has no precedential effect and establishes no law binding on the trial court after remand. Indeed, a common reason for denying a motion for rehearing is that the subject of the motion should be addressed by the trial court after remand.
We reversed the judgment because Grow‘s offer under
C. Due Process
Ruggles complains that the trial court should have allowed her to file and pursue counterclaims against Allstate. She moved for permission to file such counterclaims on the same day that she sought reconsideration of the court‘s ruling substituting Allstate for Grow as a party defendant. In her reconsideration motion she asked the court to “remove Allstate and finalize this case as between Ruggles and Grow.” The court granted that relief. This mooted her motion for permission to file counterclaims against Allstate, and thus the trial court did not err in failing to grant the motion regarding counterclaims.
IV. CONCLUSION
For the above reasons the judgment is AFFIRMED.
FABE, Justice, with whom BRYNER, Justice, joins, concurring in part and dissenting in part.
Although I agree that the superior court properly construed our remand in Grow υ. Ruggles, I disagree with the majority‘s conclusion that the superior court appropriately deducted the amount of Allstate‘s medical payments from the judgment that its insured, Carolyn Ruggles, obtained against Monte Grow. Ruggles‘s obligation to reim-
Ruggles argues that the question whether she must reimburse Allstate for its payment of her medical expenses “is properly between Allstate and Ruggles, and should not have been before the trial court in this matter on remand.” She seeks to resolve this issue according to the terms of her contract with Allstate.
The superior court assumed, and the majority appears to agree, that “principles of subrogation” automatically resolve any dispute between Allstate and Ruggles in Allstate‘s favor. In the court‘s view, this conclusion obviates the need for consideration of Ruggles‘s claims against Allstate‘s right to reimbursement. But in Maynard v. State Farm Mutual Automobile Insurance Co.,1 we determined that whether an insurer is entitled to seek reimbursement from an injured party when it insures both the injured party and the tortfeasor depends on the contract between the insurer and the injured party.2 Maynard presented the following question: “May an insurance company seek reimbursement for medical expenses paid to its insured under his policy when it also insures the tortfeasor and the insured brings an action against the tortfeasor seeking damages for the same medical expenses?”3 We answered the question in the affirmative.4 Our conclusion that the insurance company was entitled to seek reimbursement from the insured party, however, was based on a close analysis of the contract between the parties, not on general principles of subrogation.5 The contract between Maynard and his insurer conclusively barred double recovery and provided that the insurer would “not pay any expenses for which the claimant ha[d] already been compensated.”6
In this case, by contrast, the superior court reduced Ruggles‘s judgment against Grow without reference to the contract between Ruggles and Allstate. Indeed, although Ruggles points to a portion of the contract requiring disagreements to be resolved through arbitration, and Grow refers to the affidavit of an Allstate employee stating that Ruggles‘s policy includes a subrogation clause, the entire contract does not even appear in the record. It is therefore impossible to evaluate either Ruggles‘s contractual claims against Allstate or Grow‘s allegations regarding the contract‘s subrogation clause. I agree with the court that both Brinkerhoff v. Swearingen Aviation Corp.7 and Rice v. Denley8 stand for the proposition that a subrogated insurer controls its claim and may direct its insured not to pursue it.9 But there is no way to be certain that Allstate is in fact a subrogated insurer without analyzing the contractual language. And if we cannot determine that Allstate is the subrogee, then it follows that we cannot determine whether Allstate controlled the claim.
Whether Allstate is entitled to reimbursement of the medical expenses portion of the judgment against Grow is best resolved in the context of Allstate‘s contractual dispute with Ruggles. In my view, the case should