Title: Bullard v. Alfonso

State: virginia

Issuer: Virginia Supreme Court

Document:

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.”  
 
2
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. 
                                                                  
 
 
3
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. 
 
4
 
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. 
 
5
 
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: 
 
 
6
. . . . 
 
(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 
 
7
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 
 
8
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 
 
9
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. 
 
10