Kimberly Wood v. Neal E. Wood Jr. , 2015 ME 140 ( 2015 )

MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2015 ME 140
Docket: Wal-15-81
Submitted
On Briefs: September 28, 2015
Decided: November 3, 2015
Panel: SAUFLEY, C.J., and ALEXANDER, MEAD, GORMAN, JABAR, and HUMPHREY, JJ.
KIMBERLY WOOD
v.
NEAL E. WOOD JR.
GORMAN, J.
[¶1] Kimberly Wood appeals from an order of the Superior Court
(Waldo County, R. Murray, J.) amending a judgment entered on Kimberly’s
negligence claim against her husband, Neal E. Wood Jr., after a jury trial.
Kimberly contends that the court improperly credited Neal’s insurer for the
amounts it paid directly to Kimberly’s medical providers before this action was
commenced. We vacate the order amending the judgment and remand for further
findings.
I. BACKGROUND
[¶2] The parties do not dispute the underlying facts as established at trial.
On April 3, 2010, Kimberly was a passenger on a motorcycle operated by her
husband when she was injured in an accident caused by his negligence. At the
2
time, both Neal and Kimberly were named insureds on a motorcycle insurance
policy from Progressive Insurance Company. That policy contained the following
provision for medical payments coverage:
PART II - MOTORCYCLE MEDICAL PAYMENTS
COVERAGE
INSURING AGREEMENT
If you pay the premium for this coverage, we will pay the reasonable
expenses incurred for necessary medical services received within
three years from the date of a motor vehicle accident because of
bodily injury:
1. sustained by an insured person; and
2. caused by that motor vehicle accident.
We, or someone on our behalf, will determine:
1. whether the expenses for medical services are reasonable;
and
2. whether the medical services are necessary.
Kimberly had $5,000 in medical payments coverage pursuant to the policy.1
[¶3] Between April and November of 2010, Progressive made a series of
seven payments to Kimberly’s medical providers totaling $5,619.69. Four of the
checks totaling $3,073.28 listed Neal as the “[i]nsured” and Kimberly as the
1
The policy further provided, “When we are reimbursed by an insured person for payments we have
made under Part II – Motorcycle Medical Payments Coverage, we are responsible for a pro rata share of
the attorney fees incurred by the insured person in recovering payment from a liable party.”
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“[c]laimant,” and contained a claim number corresponding to the April 3, 2010,
date of loss. The other three checks totaling $2,546.41 contained no reference to
Neal, Kimberly, or the claim.
[¶4] Kimberly filed a complaint against Neal in the District Court (Belfast)2
alleging one count of negligence in connection with the accident. After a trial held
in August of 2014, a jury returned a verdict finding Neal negligent and awarding
Kimberly $50,000 in “total damages for the injuries which she sustained as a result
of the accident occurring on April 3, 2010.” The court entered a judgment on the
verdict in the amount of $50,000.
[¶5] Neal later moved to amend the judgment to obtain a credit for the
$5,619.69 in prejudgment payments that Progressive had made to Kimberly, and
Kimberly sought payment of her costs and prejudgment interest pursuant to
M.R. Civ. P. 54(d). By decision dated January 21, 2015, the court granted Neal’s
motion to amend the judgment to award Kimberly $44,380.31 (the $50,000 verdict
less the $5,619.69 in prepayments) based on its application of 24-A M.R.S. § 2426
(2014). The court also awarded Kimberly costs and prejudgment interest based on
the total damages award of $44,380.31. Kimberly appeals.
2
Neal later removed the case to the Superior Court (Waldo County) for a jury trial pursuant to
M.R. Civ. P. 76C.
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II. DISCUSSION
[¶6] Kimberly argues that the court erred in interpreting 24-A M.R.S.
§ 2426 to allow Neal a credit against the judgment for $5,000 (the medical
payments maximum coverage) of what Progressive had already paid to her medical
providers. The interpretation of section 2426 is an issue of law we review de novo,
first by evaluating the plain language of the statute to determine its meaning.
MaineToday Media, Inc. v. State, 2013 ME 100, ¶ 6, 82 A.3d 104; Landis v.
Hannaford Bros. Co., 2000 ME 111, ¶ 9, 754 A.2d 958. If the language is
unambiguous, we interpret it accordingly. MaineToday Media, Inc., 2013 ME 100,
¶ 6, 82 A.3d 104. If the language is ambiguous, we consider other indicia of
legislative intent to discern its meaning. Id.
[¶7] Title 24-A M.R.S. § 2426 provides in its entirety as follows:
§ 2426. Advance payments
1. No payment or payments made by any person, or by his
insurer by virtue of an insurance policy, on account of bodily injury or
death or damage to or loss of property of another, shall constitute an
admission of liability or waiver of defense as to such injury, death,
loss or damage, or be admissible in evidence in any action brought
against the insured person or his insurer for damages, indemnity or
benefits arising out of such injury, death, loss or damage unless
pleaded as a defense to the action.
2. All such payments shall be credited upon any settlement
with respect to the same damage, expense, or loss made by, or upon
any judgment rendered therefor in such an action against, the payor or
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his insurer, and in favor of any person to whom or on whose account
payment was made.
It therefore allows a credit when each of five conditions has been satisfied:
(1) a prepayment is made; (2) the prepayment was made by a person or by an
insurer “by virtue of an insurance policy”; (3) the prepayment was made “on
account of bodily injury or death or damage to or loss of property of another”;
(4) a settlement “with respect to the same damage, expense, or loss” is reached or
“any judgment . . . therefor” is rendered; and (5) the settlement or judgment is “in
favor of [the] person to whom or on whose account payment was made.”
24-A M.R.S. § 2426. Here, there is no dispute as to conditions 1, 2, 4, and 5; the
parties agree that Progressive indeed made prepayments for Kimberly, those
payments were made by virtue of her and Neal’s motorcycle insurance policy, and
a judgment was rendered in Kimberly’s favor for those injuries for which the
payments were made.
[¶8] The parties disagree regarding condition 3, that is, whether the
prepayments were made “on account of bodily injury . . . to . . . another.”
24-A M.R.S. § 2426(1). Kimberly argues that the prepayments were medical
expense payments pursuant to her own medical payments coverage in the policy,
and therefore were not issued pursuant to her or Neal’s obligation to another
person, placing them outside the scope of section 2426. The Superior Court
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concluded that this language of section 2426 applies to Progressive’s prepayments
regardless of whether those payments were made pursuant to Neal’s liability
coverage or Kimberly’s medical payment coverage.3 Neal argues that the Superior
Court correctly interpreted section 2426, but also suggests that the prepayments
were based on Progressive’s duty to pay as Neal’s liability carrier.
[¶9] We look to the plain language of the statute. A prepayment is eligible
for a credit only when made “on account of bodily injury . . . to . . . another.”
24-A M.R.S. § 2426(1) (emphasis added). In other words, a credit is available for
any payment made to an injured person because the at-fault party caused injury to
that person, i.e., because he is liable for that person’s injuries. See Black’s Law
Dictionary 873 (9th ed. 2009) (defining “liability insurance” as “[a]n agreement to
cover a loss resulting from the insured’s liability to a third party, such as a loss
incurred by a driver who injures a pedestrian”); see also 24-A M.R.S. § 2912(1)
3
We have interpreted section 2426 on only one occasion—in Landis v. Hannaford Brothers Co.,
2000 ME 111, 754 A.2d 958—on which the Superior Court relied in concluding that Progressive’s were
the type of payments for bodily injury that section 2426 was meant to address. In that case, the plaintiff
was injured after slipping on a wet floor. Landis, 2000 ME 111, ¶ 2, 754 A.2d 958. Hannaford paid the
plaintiff $6,000 for “medical expenses” prior to the trial. Id. ¶¶ 1-2. A jury found Hannaford liable, but
awarded the plaintiff no damages. Id. ¶ 3. Hannaford then attempted to offset its obligation to pay the
plaintiff’s litigation costs pursuant to M.R. Civ. P. 54(d) by the $6,000 it had prepaid. Id. ¶ 9. We
affirmed the Superior Court’s denial of Hannaford’s request for a credit for those amounts. Id. ¶¶ 4, 9,
13.
Landis does not direct the outcome here because there was no dispute that the amounts Hannaford had
already paid to the injured party were indeed prepayments pursuant to section 2426; the dispute was
instead whether those prepayments could be used to offset the costs awarded to the injured party pursuant
to Rule 54(d). Here, in contrast, the parties dispute whether the payments made by Progressive actually
qualify as prepayments within the meaning of section 2426.
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(2014) (distinguishing among types of automobile insurance policies by separating
“bodily injury liability” and “property damage liability” from “medical payments”
and “uninsured motorist coverage”); Dickau v. Vt. Mut. Ins. Co., 2014 ME 158,
¶ 5, 107 A.3d 621 (recognizing the “basic premise underlying insurance law, and
tort law in general, that an injured person’s damages are paid by or on behalf of the
at-fault party”). Indeed, Neal and Kimberly’s own policy defines “liability” as
damages owed “TO OTHERS . . . for bodily injury and property damage for
which an insured person becomes legally responsible because of an accident.”
Kimberly’s medical payments coverage, in contrast, sets out Progressive’s direct
obligation to Kimberly as an insured.
[¶10] The overall objective of section 2426 bolsters this plain language
interpretation. See Dickau, 2014 ME 158, ¶ 21, 107 A.3d 621 (“[W]e must
interpret the plain language by taking into account the subject matter and purposes
of the statute, and the consequences of a particular interpretation.”). The purpose
of the statute is to “encourage the payment of damages while a matter remains in
dispute” by both removing any prospect of the defendant or defendant’s insured
being deemed to have admitted liability or waived a defense if there is a
subsequent lawsuit brought by the injured party, and preventing a successful
plaintiff from obtaining a windfall in the form of the full amount of the judgment
in addition to any amounts that the defendant or the defendant’s insured had
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already prepaid. Landis, 2000 ME 111, ¶ 11, 754 A.2d 958; see 24-A M.R.S.
§ 2426(1) (stating that a qualifying prepayment “shall [not] constitute an admission
of liability or waiver of defense as to such injury . . . in any action brought against
the insured person” and “shall be credited upon any settlement . . . or upon any
judgment rendered . . . in such an action”). Indeed, section 2426 has no effect
other than to guard against certain possibilities in a later lawsuit filed by a third
person against the insured. This legislative intent is meaningless as to an insurer’s
obligation to its own insured, as in the case of medical payments coverage, because
an insured would have no cause to later attempt to prove liability against herself.
See Monahan v. Monahan, 2015 ME 65, ¶ 11 n.2, 116 A.3d 950 (stating that we
must interpret statutory provisions to avoid absurd results). Pursuant to its plain
language, we interpret section 2426 to apply only to payments made based on a
liability provision of a policy.
[¶11] For that reason, whether Progressive’s prepayments to Kimberly’s
medical providers were indeed “medical payments” pursuant to the policy’s
coverage of Kimberly, or “liability payments” pursuant to the policy’s coverage of
Neal, is dispositive of whether section 2426 operates to afford a credit for those
payments.
[¶12] Generally, we interpret insurance contracts as we do statutes, by
reviewing the plain language of the policy de novo, resolving any ambiguities in
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favor of the insured. Pelkey v. Gen. Elec. Capital Assurance Co., 2002 ME 142,
¶ 10, 804 A.2d 385. Whether a particular prepayment check was issued pursuant
to one portion of a policy or another portion of a policy is an issue of fact reviewed
for clear error, however, because it does not require any interpretation of the
contract language itself. See Bernier v. Merrill Air Eng’rs, 2001 ME 17, ¶¶ 7-8,
770 A.2d 97 (stating that a factual prerequisite to the application of a contract
provision is reviewed for clear error). Here, given the court’s conclusion that
section 2426 applied equally to medical payments or liability payments, no such
factual determination was ever made. Although the parties agreed that the copies
of Progressive’s prepayment checks submitted with Neal’s motion to amend the
judgment were in fact those by which Progressive paid Kimberly’s medical
providers, the court did not determine whether the payments were medical or
liability payments. Therefore, we must vacate the court’s decision granting that
credit and remand for a factual determination of the type of prepayments
Progressive made—whether liability payments pursuant to Neal’s policy, medical
payments pursuant to Kimberly’s policy, or some other type of payment;
reconsideration of Neal’s motion to amend the judgment based on that finding; and
recalculation of costs owed to Kimberly pursuant to Rule 54(d) based on the
amount of that judgment.
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The entry is:
Order amending judgment vacated. Remanded for
further proceedings consistent with this opinion.
On the briefs:
Sarah I. Gilbert, Esq., Elliott & MacLean, LLP, Camden, for
appellant Kimberly Wood
Paul S. Douglass, Esq., Paul S. Douglas, P.A., Lewiston, for
appellee Neal E. Wood Jr.
Waldo County Superior Court docket number CV-2013-22
FOR CLERK REFERENCE ONLY