Opinion
Case No. CA98-09-079.
July 12, 1999.
Kathleen D. Mezher, for plaintiff-appellant.
James V. Heath, for defendant-appellee.
Plaintiff-appellant, Marcie L. Snyder, appeals a decision of the Clermont County Court of Common Pleas denying her motion for prejudgment interest following a jury verdict in her favor on a negligence claim. We affirm.
On August 3, 1990, appellant (age fourteen at the time) was a passenger in an automobile driven by defendant-appellee, Elizabeth A. Elliott. Appellee swerved into a ditch to avoid rear-ending another vehicle at a stop sign. Appellant sustained injuries to her face, requiring surgery. Appellant "allowed the claim to lay dormant until she turned eighteen so that the scarring on * * * her face could be treated to the maximum extent possible." Some of appellant's medical care was provided in Ohio and some in Pennsylvania. Appellant filed her claim against appellee and others on August 15, 1995. Following discovery, it was determined that appellee's primary insurance coverage limit was $1,000,000 and a potential underinsured motorist coverage carrier was dismissed from the action.
Appellee's parents were also voluntarily dismissed.
Appellant's first written demand for $200,000 in settlement of the action was made on August 13, 1996. This demand was repeated on January 24, 1997 and April 25, 1997. The record does not reveal that any response was offered by appellee to these demands. However, a mediation conference occurred prior to August 22, 1997, during which discussion of possible settlement amounts occurred. Appellant did not provide appellee with complete documentation of all of her medical bills; due to the passage of time certain hospital bills were apparently unavailable.
Although liability was not contested, appellee made no written offer to settle the case until March 6, 1998, the Friday before the scheduled trial. Appellant rejected appellee's offer of $75,000 and a jury trial was held on March 9, 1998. The jury returned a verdict in the amount of $68,089. Following the verdict, appellant's new trial motion and motion for prejudgment interest were denied.
Appellant has raised one assignment of error:
THE TRIAL COURT ERRED TO THE PREJUDICE OF APPELLANT BY DENYING PLAINTIFF'S MOTION FOR PREJUDGMENT INTEREST
Appellant argues that because liability was uncontested and no formal settlement offer was made until just prior to trial, she was entitled to prejudgment interest pursuant to R.C. 1343.03(C) which provides:
Interest on a judgment, decree, or order for the payment of money rendered in a civil action based on tortious conduct and not settled by agreement of the parties shall be computed from the date the cause of action accrued to the date on which the money is paid, if, upon motion of any party to the action, the court determines at a hearing held subsequent to the verdict or decision in the action that the party required to pay the money failed to make a good faith effort to settle the case and that the party to whom the money is to be paid did not fail to make a good faith effort to settle the case.
The statute was enacted "to promote settlement efforts, to prevent parties who have engaged in tortious conduct from frivolously delaying the ultimate resolution of cases, and to encourage good faith efforts to settle controversies outside a trial setting." Moskovitz v. Mt. Sinai Med. Ctr. (1994), 69 Ohio St.3d 638, 657. The statute has four requirements. The party seeking such interest must petition the court, the court must hold a hearing, the court must find that the party required to pay the judgment failed to make a good faith effort to settle, and the court must find that the party to whom the judgment is to be paid did not fail to make a good faith effort to settle the case. Id. at 658. Because the statute uses the word "shall" if these four requirements are met, the decision to allow or not allow prejudgment interest is not discretionary. Id. However, what is discretionary with the trial court is the determination of lack of good faith. Id.
In Kalain v. Smith (1986), 25 Ohio St.3d 157, 159, the Ohio Supreme Court construed the phrase "failed to make a good faith effort to settle" as follows:
A party has not "failed to make a good faith effort" to settle under R.C. 1343.03(C) if he has (1) fully cooperated in discovery proceedings, (2) rationally evaluated his risks and potential liability, (3) not attempted to unnecessarily delay any of the proceedings, and (4) made a good faith monetary settlement offer or responded in good faith to an offer from the other party. If a party has a good faith objectively reasonable belief that he has no liability, he need not make a monetary settlement offer.
In Moskovitz v. Mt. Sinai Hospital Med. Ctr., the court provided further guidance by explicitly holding that "`failed to make a good faith effort to settle' does not mean the same as `bad faith.'" The court has also held that evidence concerning settlement negotiations should be liberally discoverable for the prejudgment interest hearing and that it is:
Incumbent on a party seeking an award to present evidence of a written (or something equally persuasive) offer to settle that was reasonable considering such factors as the type of case, the injuries involved, applicable law, defenses available, and the nature, scope and frequency of efforts to settle. Other factors would include responses — or lack thereof — and a demand substantiated by facts and figures. * * * These factors, and others, where appropriate, should also be considered by a trial court in making a prejudgment interest determination. (Emphasis added.)
Id. at 659.
A trial court is not free to adjust the effective date for computation of any award for equitable purposes. Musisca v. Massillon Comm. Hosp. (1994), 69 Ohio St.3d 673. Where the party required to pay the money fails to make a good faith effort to settle, he will be liable for prejudgment interest regardless of the length of time the case is pending before trial. Id.
Our standard of review on appeal is abuse of discretion.Moskovitz, 69 Ohio St.3d at 658. This court has explicitly stated that "the decision of whether prejudgment interest is warranted lies within the discretion of the trial court on a case-by-case basis." Beckworth v. Niemes (Apr. 13, 1992), Clermont App. No. CA91-03-018, unreported. In reaching a decision concerning prejudgment interest, the trial court must evaluate the case in light of the elements set forth in Kalain and there is no specific monetary threshold that either mandates or prevents the awarding of prejudgment interest. Id.
Here, the trial court set out the Kalain standard and then stated that "reviewing the pretrial actions of the parties with regard to settling this cause of action, the Court finds that both sides made good faith efforts to resolve the case." The trial court did not specifically address the four prongs of the Kalain standard and provided no specific finding as to whether appellee made a good faith monetary settlement offer or responded in good faith to an offer from appellant.
The evidence shows that appellant made several formal written demands without response from appellee and that appellee made only one formal offer of $75,000 on the eve of trial. A decision to award prejudgment interest would not have been an abuse of discretion. However, we find that the trial court's decision not to award interest was also within its discretion. During the hearing on the motion for prejudgment interest, the parties discussed the settlement efforts which had been undertaken. The court indicated familiarity with the history of the litigation and the mediation efforts. Although not controlling, the missing documentation for certain medical expenses was a factor the court could consider under the factors set forth in Moskowitz. Under these circumstances, the trial court's decision was not so unconscionable and unreasonable as to constitute an abuse of discretion. See Ziegler v. Wendel Poultry Serv., Inc. (1993), 67 Ohio St.3d 10, 13, citing Blakemore v. Blakemore (1984), 5 Ohio St.3d 217, 219. Therefore, appellant's sole assignment of error is overruled.
Judgment affirmed.
YOUNG, P.J., concurs.
VALEN, J., dissents.
As stated by the Second Appellate District, R.C. 1343.03(C) has two purposes: (1) to relieve the courts of the burden of litigating cases that should be settled, and (2) to deny a recalcitrant litigant the benefits he has realized in retaining funds long after he knows he must ultimately pay them over, and to give his adversary compensation in the form of interest he should have realized on the funds had they been paid out when the obligation was clear. Zinn v. Leach (Nov. 29, 1990), 1990 Ohio App. LEXIS 5199, unreported, at *31.
Liability was uncontested in this case. It was also uncontested that, as a result of appellee's negligence, appellant underwent five broken noses, four nasal reconstructions, two cartilage graphs, sustained extensive damage to her teeth and mouth, and suffered permanent scarring. As of the date appellant filed her complaint, appellee was aware that there was a total of approximately $18,000 in medical expenses. Despite this knowledge, appellee refused to make a settlement offer until the eve of trial.
Although five years transpired between the accident and appellant filing her claim, it is conceded that appellant filed her claim well within the statute of limitations. However, because of the passage of time, retrieval of medical records proved to be a difficult process. At the November 9, 1998 hearing, counsel for appellant stated that she made numerous efforts to obtain copies of all of the records but came up "empty," because many of the care providers had purged their records. At the same hearing, counsel for appellee indicated that appellant had failed to fulfill her good faith obligation because she failed to produce copies of all medical records. However, at the hearing, there was evidence that appellee had a reserve of $80,000 placed on this claim.
The Eleventh Appellate District addressed a similar situation in Luzar v. Reamansnyder (Mar. 9, 1990), 1990 Ohio App. LEXIS 836, unreported, where the court stated, "[T]he record before this court does not contain any indication that [plaintiff] purposely withheld the bills or that the amount and general nature of the bills and injuries were unknown to appellant." Id. at *8. Like the plaintiff in Luzar, the record shows that appellant "made a good faith effort to disclose relevant information and initiate the settlement negotiations." Id. On the other hand, even though appellee was aware of the general nature of appellant's bills and injuries, appellee refused to make any offer of settlement until the eve of trial.
In Zinn, 1990 Ohio App. LEXIS 5199, the defendants ignored four separate demands for settlement. Finally, five days before trial, the defendants extended an offer. The court in Zinn stated as follows:
[Defendants] finally made an offer to settle the claim * * * only five days before trial. Yet, the information then before them concerning their risks and liability had been available to them or in their hands for months or years. The record reflects no reason to support that delay. Rather, it compels a conclusion that [defendants] wished to retain their capital for as long as possible while causing [plaintiff] to incur more expenses and greater inconvenience.
Under the fourth prong of Kalain v. Smith (1986), 25 Ohio St.3d 157, when liability is uncontested, a party fails to make a good faith effort to settle if that party does not respond in good faith to an offer from the other party. Id. at 159. The court stated in Zinn, "The record is clear that [defendants] purposely delayed the proceedings * * * to protect them from their settlement obligation. Their last-minute offer to settle that case on information known to them for months or years lacked good faith."Zinn at *32. See, also, Fiorini v. Whiston (1993), 92 Ohio App.3d 419 (affirming trial court's finding of a lack of good faith where liability was undisputed and a settlement offer was extended on the eve of trial).
Good faith would have required appellee to evaluate the claim based upon the evidence at hand. From the date she filed her claim, appellant provided ample evidence for an evaluation. It is interesting to note that the medical bills presented at trial were the same medical bills that had been provided by appellant for evaluation and settlement. Like the defendants in Zinn, appellee failed to make a good faith effort to settle this case.
Unlike the majority, I would find that the trial court abused its discretion in denying appellant's motion for prejudgment interest. Therefore, I must respectfully dissent.