Present: Hassell, C.J., Lacy, Koontz, Kinser, Lemons, and Agee,
JJ., and Carrico, S.J.
GARY DEAN BULLARD
OPINION BY
v. Record No. 031519 SENIOR JUSTICE HARRY L. CARRICO
April 23, 2004
DINA M. ALFONSO
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
Robert B. Cromwell, Jr., Judge
In this personal injury case, the sole question for
decision is whether the trial court erred in excluding evidence
of lost income allegedly suffered by the plaintiff. Finding the
exclusion erroneous, we will reverse.
In a motion for judgment filed below, the plaintiff, Gary
Dean Bullard, sought to recover from the defendant, Dina M.
Alfonso, damages for personal injuries suffered by the plaintiff
in an automobile accident allegedly caused by the defendant’s
negligence. In the motion, the plaintiff alleged, inter alia,
that as a direct and proximate result of the defendant’s
negligence he “was prevented from attending to his lawful
affairs, thereby losing wages, earnings and profits.”
At the time of the accident, the plaintiff was a drywall
hanger and plasterer employed by Grant Drywall and Plastering,
Inc., a Subchapter S corporation of which the plaintiff was sole
stockholder and president. The plaintiff claimed that, as a
result of his injuries, he was unable to perform his duties as a
drywall hanger and plasterer for approximately six months and
suffered a wage loss of $4,500.00 per month, for a total of
$27,000.00.
In a discovery deposition, the plaintiff testified that his
employer had continued to pay him his monthly salary of
$4,500.00 during the six-month period he was unable to work.∗
The defendant then filed a motion in limine seeking “to exclude
any attempted claim by the plaintiff to assert a lost wage claim
since he continued to receive his salary without reduction and
without sick leave, vacation or any other collateral source.”
After argument on the motion, the trial court, the
Honorable Alan E. Rosenblatt presiding, granted the motion in
limine. Then, in a trial before a jury, the Honorable Robert B.
Cromwell, Jr., presiding, the evidence of lost wages was
excluded and the plaintiff was awarded the sum of $15,000.00 as
damages for his injuries. The plaintiff moved to set aside the
verdict for the court’s “refusal to allow the Plaintiff to
introduce testimony and other evidence of wage loss as proffered
into the record.” The court denied the motion and entered final
judgment on the verdict. We awarded the plaintiff this appeal.
Code § 8.01-35 is pertinent to resolution of the question
before us. It provides as follows:
∗
The plaintiff testified later at trial that the funds used
to pay his salary during his disability consisted of “prior
years’ earnings” that had been left in “the business account.”
He said he had “already been taxed on that money.”
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In any suit brought for personal injury or death, provable
damages for loss of income due to such injury or death
shall not be diminished because of reimbursement of income
to the plaintiff . . . from any other source, nor shall the
fact of any such reimbursement be admitted into evidence.
Also pertinent is the collateral source rule. The Court
first recognized this rule more than one-hundred years ago in
Baltimore & Ohio R.R. Co. v. Wightman, 70 Va. (29 Gratt.) 431
(1877), where we held that the trial court did not err in
refusing to admit evidence offered by the defendant in a tort
case to show that the wife and children of a deceased had
received the proceeds from life insurance policies in the sum of
$5,000.00. We said: “The mere fact that the family of the
deceased received money from some other source would not justly
influence the measure of compensation to be made by the
defendant for injuries attributable to the misconduct of its
employees and agents.” Id. at 446.
We recently applied the collateral source rule in Acuar v.
Letourneau, 260 Va. 180, 188-89, 531 S.E.2d 316, 320 (2000).
There, we held that the portions of bills for medical expenses
written off by a plaintiff’s health care providers could not be
deducted from the amount of damages owed by a tortfeasor. Id.
at 192, 531 S.E.2d at 322. We said that “the injured party
should be made whole by the tortfeasor, not by a combination of
compensation from the tortfeasor and collateral sources.” Id.
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at 192-93, 531 S.E.2d at 323. See also Acordia of Virginia Ins.
Agency, Inc. v. Genito Glenn, L.P., 263 Va. 377, 387, 560 S.E.2d
246, 251 (2002); Schickling v. Aspinall, 235 Va. 472, 474, 369
S.E.2d 172, 174 (1988); Walthew v. Davis, 201 Va. 557, 563, 111
S.E.2d 784, 788 (1960); Burks v. Webb, 199 Va. 296, 304, 99
S.E.2d 629, 636 (1957); Johnson v. Kellam, 162 Va. 757, 764, 175
S.E. 634, 636 (1934); Owen v. Dixon, 162 Va. 601, 608, 175 S.E.
41, 43 (1934).
The plaintiff contends that Code § 8.01-35 is a
codification of the collateral source rule. The defendant
contends that it is not. The defendant notes that in Schickling
we said that, under the collateral source rule, “compensation or
indemnity received by a tort victim from a source collateral to
the tortfeasor may not be applied as a credit against the
quantum of damages the tortfeasor owes,” 235 Va. at 474, 369
S.E.2d at 174 (emphasis added), while Code § 8.01-35 provides
that such damages “shall not be diminished because of
reimbursement of income to the plaintiff.” (Emphasis added.)
The defendant maintains that Code § 8.01-35 “has replaced
the common law Collateral Source Rule” so that now the focus is
not upon the receipt of compensation for loss of income but upon
the reimbursement of income. Here, the defendant says, the
plaintiff lost no income, there was nothing to be reimbursed
and, therefore, Code § 8.01-35 is inapplicable.
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We do not agree that the use of the word “reimbursement” in
Code § 8.01-35 has the effect of altering the collateral source
rule as it was enunciated in Schickling. A person reimbursed
for loss of income certainly receives compensation as a result,
so if there is any distinction between receiving compensation
and obtaining reimbursement in the context of the collateral
source rule, it is a distinction without a difference.
The defendant also argues that the salary payments made to
the plaintiff in this case were not from “any other source,” as
contemplated by Code § 8.01-35. Rather, the defendant says,
“the Plaintiff continued to receive his same salary of $4,500
per month from his corporation as an employee of his
corporation.”
The defendant misreads Code § 8.01-35. As noted supra, the
Code section provides that a plaintiff’s claim for loss of
income shall not be diminished because of reimbursement “from
any other source.” The defendant would have us read the words
“from any other source” as meaning a source not collateral to
the defendant but to the plaintiff, thus excluding any
compensation received from such a source in determining whether
a plaintiff’s damages for loss of income are diminished within
the meaning of Code § 8.01-35. To adopt this meaning would, in
effect, overrule the previous decisions in which we have applied
the collateral source rule.
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Correctly read, the words “from any other source” mean a
source collateral to the defendant, i.e., a source other than
the defendant. See Schickling, 235 Va. at 474, 369 S.E.2d at
174 (compensation from source collateral to the tortfeasor not
deductible); Kellam, 162 Va. at 764-65, 175 S.E. at 636-37
(compensation from a source wholly independent of the defendant
not deductible); Black’s Law Dictionary 256 (7th ed. 1999) 256
(defining “collateral-source rule” as meaning that compensation
“from a source independent of the tortfeasor . . . should not be
deducted from the damages that the tortfeasor must pay).”
The question then becomes whether the compensation paid to
the plaintiff by his employer in this case is deductible from
the damages the tortfeasor owes. Our earlier decisions are
informative. In Acordia, supra, we quoted with approval Comment
b to the Restatement (Second) of Torts § 920A (1979):
If the plaintiff was himself responsible for the benefit,
as by maintaining his own insurance or by making
advantageous employment arrangements, the law allows him to
keep it for himself. If the benefit was a gift to the
plaintiff from a third party or established for him by law,
he should not be deprived of the advantage that it confers.
263 Va. at 387, 560 S.E.2d at 251.
Although not cited in Acordia, Comment c(2) to the above
section of the Restatement is also helpful:
c. The rule that collateral benefits are not subtracted
from the plaintiff’s recovery applies to the following
types of benefits:
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. . . .
(2) Employment benefits. These may be gratuitous, as in
the case in which the employer, although not legally
required to do so, continues to pay the employee’s wages
during his incapacity.
And, in Schickling, we said:
In the early cases, the collateral compensation involved
was money paid {to} the plaintiff by his own insurer.
Later cases have applied the rule to social security
benefits, public and private pension payments, unemployment
and workers’ compensation benefits, vacation and sick leave
allowances, and other payments made by employers to injured
employees, both contractual and gratuitous.
235 Va. at 474, 369 S.E.2d at 174.
Finally, in Phillips v. United States, 182 F. Supp. 312
(E.D. Va. 1960), the plaintiff was injured in an automobile
accident and his salary was gratuitously paid by his employer
during the period of his disability. Interpreting Virginia law,
the District Court held the plaintiff was “nevertheless,
entitled to recover for loss of time” from work under the
collateral source rule. Id. at 317.
Here, the plaintiff argues that the salary payments made to
him by his employer were, in fact, from a source collateral to
the defendant and that under the collateral source rule and Code
§ 8.01-35, he should have been permitted to submit his wage-loss
claim to the jury. On the other hand, the defendant argues that
“this Court has never actually held, as opposed to stated in
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dicta, that a plaintiff who actually continued to receive a
salary can make a claim for lost wages.”
It is true that none of our previous cases involved a
situation where an employer continued to pay an employee’s
salary during the period of the employee’s disability. However,
our earlier references to such a situation were part of the
rationale for the decisions then made and, therefore, not dicta.
But if there be any doubt about the matter, we now expressly
hold that under the collateral source rule and Code § 8.01-35,
compensation paid by an employer to an employee during the
period of the employee’s disability is not deductible from the
quantum of damages the tortfeasor owes. And it follows that
evidence of the employee’s loss of income is admissible in
evidence at trial and that, under Code § 8.01-35, the fact of
any reimbursement to the employee by the employer shall not be
admitted into evidence.
But, argues the defendant, the plaintiff was not entitled
to have his claim submitted to the jury because he continued to
perform his duties as corporate president and “[t]he corporation
. . . generated income from the employees who performed drywall
and plastering services as well as from subcontracting work to
other entities.” Although the defendant takes considerable
liberty with the record concerning these matters, we will assume
for the purpose of discussion that he has correctly stated what
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the record shows. But whether the plaintiff continued to
perform his duties as corporate president and the corporation
generated income from the employees who performed drywall and
plastering services as well as subcontracting work to other
entitles is all irrelevant to the question whether the
plaintiff’s evidence of lost income was properly excluded in the
trial below.
The fact remains, and it is undisputed by the defendant,
that the plaintiff was disabled from performing his drywall
hanging and plastering duties for six months. Yet his employer
continued paying him his monthly salary of $4,500.00
notwithstanding his inability to perform such duties. We hold
that this constitutes reimbursement “from any other source”
under Code § 8.01-35 and that reimbursement cannot be used to
diminish the plaintiff’s “provable damages for loss of income
. . . nor shall the fact of any such reimbursement be admitted
into evidence.”
The plaintiff should have the opportunity to prove his
damages for loss of income. Accordingly, for the trial court’s
error in excluding the plaintiff’s evidence on that point, we
will reverse the judgment appealed from and remand the case for
a new trial limited to the issue of damages consistent with the
views expressed in this opinion. Any recovery for such loss
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shall, of course, be in addition to other damages the jury finds
the plaintiff suffered for his personal injuries.
This disposition gives the plaintiff a chance to bring his
case within the purview of the collateral source rule, which is
to strike a balance between two competing principles of
tort law: (1) a plaintiff is entitled to compensation
sufficient to make him whole, but no more; and (2) a
defendant is liable for all damages that proximately result
from his wrong. A plaintiff who receives a double recovery
for a single tort enjoys a windfall; a defendant who
escapes, in whole or in part, liability for his wrong
enjoys a windfall. Because the law must sanction one
windfall and deny the other, it favors the victim of the
wrong rather than the wrongdoer.
Schickling, 235 Va. at 474-75, 369 S.E.2d at 174.
Reversed and remanded.
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