Title: Allstate Insurance Co. v. Wade

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  Hassell, C.J., Lacy, Keenan, Koontz, Kinser, and 
Lemons, JJ., and Compton, S.J. 
 
ALLSTATE INSURANCE COMPANY 
 
v.  Record No. 021201 
 
TIMOTHY L. WADE, ET AL. 
 
 
ALVIN WAYNE SOWERS 
 
v. Record No. 021209      OPINION BY JUSTICE ELIZABETH B. LACY 
 
 
 
 
 
 
 
   April 17, 2003 
TIMOTHY L. WADE, ET AL. 
 
 
BRUCE WILLIAM DEGARMO 
 
v. Record No. 021227 
 
TIMOTHY L. WADE, ET AL. 
 
 
FROM THE CIRCUIT COURT OF PATRICK COUNTY 
David V. Williams, Judge 
 
This is a consolidated appeal from a judgment awarding 
compensatory and punitive damages for injuries suffered in an 
automobile accident.  The issues involve whether the jury 
should have received information concerning the potential 
liability of a party's uninsured motorist insurance carrier, 
whether consideration of the compensatory and punitive damages 
issues should have been bifurcated, and whether the evidence 
presented supported the compensatory and punitive damages 
awards. 
Bruce William DeGarmo and Alvin Wayne Sowers began 
drinking whiskey and beer around 5:00 p.m. on October 16, 
1998.  DeGarmo had four or five shots of bourbon whiskey and 
Sowers had three or four beers before the two men drove to an 
ABC store in Henry County.  After purchasing a fifth of 
whiskey, the two men drove to an isolated road and drank the 
whiskey.  The men returned to the ABC store and purchased a 
second fifth of whiskey which they also drank.  While the 
details of the events that transpired over the next few hours 
are in conflict, the two men continued drinking and driving 
throughout the evening, ultimately winding up on a gravel road 
near a church shortly before 11:00 p.m. 
When DeGarmo, the driver of the vehicle, stopped near the 
church, he left the driver's seat and told Sowers to drive.  
DeGarmo testified that he was "drunk" and "couldn't hardly 
hold [his] head up anymore."  Sowers testified that he was 
also intoxicated at this point but, nevertheless, began 
driving DeGarmo's car down the curvy, country road.  DeGarmo 
urged Sowers to "speed up" because DeGarmo wanted to get home.  
Sowers then increased his speed to 50 or 55 miles per hour.  
While in a blind curve, Sowers passed another vehicle and 
entered a second blind curve where he lost control of the 
vehicle, crossed into the oncoming traffic lane, and collided 
head-on with a vehicle driven by Cheryl S. Kiefer.  Judith G. 
 
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Steele, Timothy L. Wade, and Ronald S. Steele were passengers 
in Kiefer's vehicle. 
Following the accident, DeGarmo moved to the back seat of 
his vehicle, and Sowers moved to the passenger seat.  The two 
men told the investigating officer that a third party was 
driving DeGarmo's vehicle but that he had "jumped out and run" 
after the accident.  The investigating officer smelled a 
strong odor of alcohol around DeGarmo and Sowers, as did the 
emergency room physician who treated them.  The emergency room 
physician testified that DeGarmo and Sowers said that they 
were traveling 70 miles per hour or more at the time of the 
accident.  The blood alcohol levels of DeGarmo and Sowers were 
0.179 and 0.264, respectively. 
Kiefer, Judith Steele, and Wade each filed motions for 
judgment against Sowers and DeGarmo asserting that Sowers' 
negligent driving caused the accident and that DeGarmo 
negligently entrusted his car to Sowers.1  Each plaintiff 
sought compensatory and punitive damages from both defendants. 
Kiefer's uninsured motorist insurance carrier, Allstate 
Insurance Company (Allstate), entered an appearance in each 
case in its own name pursuant to Code § 38.2-2206(F).  At a 
                     
1 Ronald Steele also filed a motion for judgment against 
Sowers and DeGarmo, but his claim was settled prior to 
commencement of the trial and is not before us in these 
appeals. 
 
3
pre-trial hearing, Allstate moved the trial court for 
permission to tell the jury that it was Kiefer's insurance 
carrier and to argue to the jury that an award of punitive 
damages would not serve the function of deterrence and 
punishment if Allstate, rather than the defendants, paid the 
award.  The trial court denied Allstate's motion. 
The cases were consolidated prior to trial.  The morning 
of trial, Sowers and DeGarmo both admitted that they were 
negligent, that their negligence was a proximate cause of the 
plaintiffs' injuries, and that the plaintiffs were entitled to 
compensatory damages.  The defendants moved to bifurcate the 
issues of compensatory and punitive damages and to exclude 
evidence of post-accident statements or conduct by the 
defendants.2  The defendants also asserted that the allegations 
in the motions for judgment did not support an award of 
punitive damages. 
The trial court denied the defendants' motions.  The 
issues of punitive and compensatory damages were submitted to 
the jury.  The jury found Sowers and DeGarmo jointly and 
severally liable for compensatory damages of $75,000 each for 
                     
2 The defendants had previously sought bifurcation of the 
punitive damage issue from each of the four cases prior to 
their consolidation. In that request they sought a single 
hearing on that issue, arguing that they should not be exposed 
to four punitive damages awards for the same conduct. This 
request was also denied. 
 
4
Wade and Kiefer and $100,000 for Steele.  The jury also found 
DeGarmo liable for punitive damages of $5,000 to each of the 
plaintiffs.  The trial court denied the defendants' motions to 
set aside the verdict and entered judgment on the verdict.  We 
awarded appeals to DeGarmo, Sowers, and Allstate from the 
trial court's judgment and consolidated those appeals for 
consideration here. 
ALLSTATE'S APPEAL 
Record No. 021201 
Allstate asserts that the trial court erred in not 
allowing Allstate to tell the jury that it was the uninsured 
motorist insurance carrier for Kiefer and to argue that an 
award of punitive damages would not serve as a deterrent if 
such award was paid by Allstate, not the defendant 
tortfeasors.  Allstate argues that the requested action came 
within the scope of Code § 38.2-2206(F) which allows an 
insurer to appear in its own name and to take such action 
"allowable by law." 
We have previously held that an insurance carrier was not 
allowed to inform the jury that it was the uninsured motorist 
carrier for the plaintiff and that it would be the source of 
payment for any damages the jury may award.  In Travelers Ins. 
Co. v. Lobello, 212 Va. 534, 186 S.E.2d 80 (1972), the 
plaintiff asserted that the defendants were jointly and 
 
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severally liable for the plaintiff's damages.  The trial court 
allowed Travelers Insurance Company to tell the jury that it 
was the plaintiff's uninsured motorist carrier, that it was 
assisting in the defense of one of the defendants, and that it 
would be responsible for " 'payment for the recovery of any 
verdict' " returned against that defendant.  Id. at 535, 186 
S.E.2d at 82.  We held that this communication was reversible 
error.  Injection of information identifying a party as an 
insurer may imply that the second defendant was insured and 
that such insurance would be available for both defendants.  
This created "a situation permitting the return of a possibly 
inflated verdict binding upon all defendants so liable."  Id. 
at 536, 186 S.E.2d at 82. 
Allstate seeks to distinguish Lobello pointing out that 
Lobello did not involve punitive damages and that, unlike the 
Lobello plaintiff, the plaintiff here did not object to the 
insurer's motion.  Relying on Willard v. Aetna Cas. & Sur. 
Co., 213 Va. 481, 483, 193 S.E.2d 776, 778 (1973), Allstate 
asserts that if the insurer waives its objection to the 
injection of insurance in litigation, as Allstate did in this 
case, the mention of insurance is not improper. 
Allstate's attempt to distinguish Lobello is not 
persuasive.  First, the rationale of Lobello does not rely on 
the nature of the damages at issue.  Next, the injection of 
 
6
insurance in this case arose in the form of a pre-trial motion 
advanced by Allstate.  Allstate bore the burden of convincing 
the trial court that the action it requested was proper and 
should be allowed.  The plaintiffs' failure to "object" to 
Allstate's pre-trial motion is not dispositive under these 
circumstances. 
Allstate's reliance on Willard is also misplaced.  The 
injection of insurance into a case is generally held to be 
reversible error because of its prejudicial effect on a party.  
Most often the party prejudiced is the insurance carrier 
because, as we noted in Lobello, knowledge that insurance is 
available to pay any damages may result in an inflated damage 
award.  But the party prejudiced by the injection of insurance 
is not always the insurer.  In Lobello, the prejudice flowed 
to a defendant.  Here, allowing Allstate to explain its 
position as Kiefer's uninsured motorist carrier and that it 
would be paying the punitive damages award, could improperly 
deflate the amount of the award, prejudicing the plaintiffs.  
Accordingly, the statement in Willard upon which Allstate 
relies, that an insurer may waive the public policy forbidding 
the injection of insurance because such policy is for the 
"benefit and protection of the insurer," is not applicable in 
this case.  Id. at 483, 193 S.E.2d at 778. 
 
7
Allstate's final argument is that it should have been 
allowed to make the requested disclosures to the jury because 
the policy considerations relating to an award of punitive 
damages differ from those applicable to compensatory damages.  
Allstate argues that the purpose of punitive damages is to 
punish the tortfeasor and that purpose is defeated if punitive 
damages are paid by the insurance company rather than the 
tortfeasor.  Allstate acknowledges that thirty years ago we 
rejected this same argument.  In Lipscombe v. Security Ins. 
Co., 213 Va. 81, 85, 189 S.E.2d 320, 323 (1972), we held that 
the requirement in the predecessor to Code § 38.2-2206 that an 
insurer pay "all sums" which an insured is legally entitled to 
recover as damages included payment of punitive damages.  The 
insurer's policy argument failed because the subrogation 
provisions of that section subject the tortfeasor to liability 
for payment of punitive damages even though those damages are 
initially paid by the insurer.  Id., 189 S.E.2d at 323-24. 
Allstate seeks to avoid the holding in Lipscombe by 
asserting that Lipscombe involved an insured's direct action 
against its insurer and because Allstate, in this case, agreed 
to waive its subrogation rights.  First, the plaintiff in this 
case, Kiefer, like the defendant in Lipscombe, entered into a 
contract with the insurer for payment of all sums the 
plaintiff was entitled to recover, including sums based on the 
 
8
uninsured motorist provisions of the policy.  The difference 
in the form of the litigation undertaken to determine the 
extent of the insurer's liability does not distinguish 
Lipscombe from this case. 
Allstate's purported waiver of its subrogation rights is 
also immaterial.3  Since this Court's decision in Lipscombe, 
the General Assembly has enacted Code § 38.2-227 which 
specifically states that "[i]t is not against the public 
policy of the Commonwealth for any person to purchase 
insurance providing coverage for punitive damages" awarded in 
personal injury negligence cases.  This policy allowing 
payment of punitive damages by insurers is not contingent upon 
whether such insurer can or will exercise rights of 
subrogation. 
Finally, punishment of the wrongdoer is not the only 
purpose of punitive damages.  An award of punitive damages 
also serves the purposes of protecting the public and of 
providing an example and warning to deter others from engaging 
in the same or similar conduct.  Huffman v. Love, 245 Va. 311, 
315, 427 S.E.2d 357, 361 (1993) (citing Baker v. Marcus, 201 
                     
3 Apparently at trial, Allstate offered to waive its 
subrogation rights if the trial court granted its motion 
regarding its role and liability in this litigation and then 
did waive such rights "in return for the cooperation of 
[Sowers' and DeGarmo's] insurer in this appeal." 
 
9
Va. 905, 909, 114 S.E.2d 617, 620 (1960)).  See Doe v. Isaacs, 
265 Va. ___, ___ S.E.2d ___ (2003) decided today. 
In summary, applying the principles established in 
Lipscombe, Lobello, and Code § 38.2-227, we conclude that the 
trial court correctly refused Allstate's request to inject 
insurance into this case because of the potential for 
prejudice to the plaintiffs and that the trial court's ruling 
was consistent with the public policy of the Commonwealth. 
APPEALS OF SOWERS AND DEGARMO 
Record Nos. 021209 and 021227 
DeGarmo and Sowers both assign error to the trial court's 
refusal to bifurcate the jury's consideration of punitive and 
compensatory damages.  The trial court's error, according to 
the defendants, allowed the compensatory damages award to be 
tainted by the jury's exposure to evidence relating to 
punitive damages, resulting in awards that were inflated and 
excessive as a matter of law.  DeGarmo also asserts that the 
evidence was insufficient to support an award of punitive 
damages. 
Bifurcation 
Trial courts have the inherent authority to consolidate 
claims for trial and have been given specific authority to 
order separate trials in certain circumstances.  Code § 8.01-
272; Rule 3:8; Clark v. Kimnach, 198 Va. 737, 745, 96 S.E.2d 
 
10
780, 787 (1957).  A decision to order separate trials or to 
consolidate claims for a single trial is a matter of 
procedure, left to the trial court's discretion.  In making 
this decision, a trial court must be cautious to insure that 
separating or consolidating claims for trial does not 
prejudice the substantial rights of any party.  Id.  When 
considering a request for separate trials, the trial court 
must also consider any resulting unnecessary delay, expense, 
or use of judicial resources that would flow from separate 
trials of the claims at issue.  Leech v. Beasley, 203 Va. 955, 
960-61, 128 S.E.2d 293, 297 (1962).  In reviewing the trial 
court's ruling regarding consolidation or separation of 
trials, we will not alter the ruling unless the trial court 
plainly abused its discretion.  Id.
Here, the defendants have not sought separate trials of 
the claims at issue.  Rather, the defendants requested 
bifurcation, or sequencing, of the jury's consideration of two 
issues in the case.  See e.g. Code § 8.01-374.1 (allowing 
bifurcation of issues in certain asbestos litigation).  
Nevertheless, the standards applied to determinations 
regarding the consolidation or separation of trials are 
equally applicable to questions involving the bifurcation of 
the issues presented in this case.  A determination in a civil 
trial regarding the bifurcation of a jury's consideration of 
 
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issues is a matter for the trial court's discretion and 
requires consideration of whether any party would be 
prejudiced by granting or not granting such request, as well 
as the impact on judicial resources, expense, and unnecessary 
delay. 
On the morning of trial, the defendants admitted 
liability and made a motion to bifurcate the jury's 
consideration of compensatory and punitive damages, arguing 
that the compensatory damages would be tainted by evidence 
relevant only to the punitive damages claims.  Such evidence 
included the intoxication of both defendants, their extended 
drinking "spree," and their claim that a third party was 
driving the car. 
The trial court, in ruling on the defendants' request, 
noted that juries are routinely required to differentiate 
between evidence of compensatory and punitive damages in 
negligence cases.  While the trial court commented that the 
defendants' admission of liability gave him "a little pause," 
it concluded that in the absence of any case directly on 
point, the matter could be handled through instructions to the 
jury. 
The defendants claim, however, that the amount of the 
compensatory awards shows that they were prejudiced by the 
jury's improper consideration of evidence relevant only to 
 
12
punitive damages and, therefore, that denying bifurcation was 
an abuse of discretion.  We disagree. 
The amount of the compensatory damages award alone is not 
determinative of whether the trial court abused its discretion 
in this case.  Whether the decision constituted an abuse of 
discretion must be viewed from the perspective of the facts 
and circumstances known to the trial court at the time of its 
ruling.  Nothing in this record suggested that the refusal to 
bifurcate would have caused the jury to experience any greater 
difficulty in determining compensatory damages than normally 
present in cases in which a jury determines a defendant's 
liability for and the amount of compensatory and punitive 
damages in a single proceeding. 
In this case, prior to jury selection the trial court 
instructed the venire regarding the nature of punitive damages 
and that certain evidence should be considered only for 
compensatory damages while other evidence should be considered 
only for punitive damages.  The court's instructions to the 
jury at the conclusion of the evidence distinguished between 
compensatory and punitive damages.  And, the verdict form 
submitted by the court to the jury delineated the compensatory 
damages award from the punitive damages award. 
The only deficiency cited by the defendants regarding 
instruction of the jury is Sowers' assertion that because 
 
13
certain evidence was relevant and admissible solely for 
evaluating the punitive damages issue, the trial court should 
have given "clear and explicit instructions regarding which 
portions of the plaintiffs' testimony were to be considered by 
[the jury] regarding punitive damages only."  Sowers seeks to 
impose a procedural requirement that a trial court give a 
cautionary instruction regarding the proper use of each piece 
of evidence.  This has never been required in cases involving 
punitive and compensatory damages, and we decline to adopt it 
in this case. 
Finally, the defendants argue that this Court's decision 
in Eubank v. Spencer, 203 Va. 923, 128 S.E.2d 299 (1962), 
requires bifurcation in this case.  We disagree with the 
defendants.  In Eubank, the defendant admitted that he was 
negligent, and the trial proceeded on the plaintiff's claims 
for compensatory and punitive damages.  The plaintiff 
abandoned her claim for punitive damages after admission of 
evidence on both issues, and the jury considered only the 
compensatory damages issue.  The error of the trial court in 
Eubank was the failure to instruct the jury, following the 
abandonment of the punitive damages claim, that the jury 
should not consider the evidence irrelevant to compensatory 
damages.  Id. at 926-27, 128 S.E.2d at 302.  Here, the 
punitive damages claims were not abandoned by the plaintiffs. 
 
14
Accordingly, we conclude that the trial court did not 
abuse its discretion in refusing the defendants' request for 
bifurcation of the jury's consideration of compensatory and 
punitive damages. 
Compensatory Damages 
 
Defendants argue that the compensatory damages awards to 
Wade and Kiefer of $75,000 each and $100,000 to Steele, were 
excessive as a matter of law because the plaintiffs' special 
damages were approximately $2,000, $5,000, and $6,000, 
respectively. 
 
A verdict is excessive when it shocks the conscience of 
the court and creates the impression that the jury was biased 
or prejudiced against a party, or misunderstood the facts or 
the law, or suggests that it was not the product of fair and 
impartial decision making because it is so disproportionate to 
the injuries incurred.  Smithey v. Sinclair Refining Co., 203 
Va. 142, 146, 122 S.E.2d 872, 875 (1961). 
 
In this case, each of the plaintiffs suffered soft tissue 
injuries.  Wade sustained cervical and lumbar strains, and as 
a result, experiences neck pain while operating heavy 
equipment on his job.  Further, he curtailed his avocational 
activities due to his injuries.  Wade testified that at the 
time of the trial, three years after the accident, he 
continued to experience "pain, constant pain, every day."  
 
15
Similarly, Kiefer testified that she has low back pain 
"[e]very day" in conjunction with her work at a flower shop.  
She suffered pinched nerves and soft tissue injury which is 
consistent with chronic pain.  Finally, Steele suffered severe 
headaches and neck pain which did not respond to medication or 
physical therapy.  Her neurologist diagnosed her with a 
chronic cervical strain and muscle spasms which caused 
headaches.  The neurologist testified that Steele sustained a 
permanent injury in the accident which would cause chronic 
discomfort and pain on the left side of her neck and would 
limit her neck movement.  As a result of her injuries Steele 
must perform daily therapy exercises.  She testified that she 
lives with pain and has to "work with the pain." 
 
Whether a verdict is excessive is left to the discretion 
of the trial court.  Modaber v. Kelley, 232 Va. 60, 69, 348 
S.E.2d 233, 238 (1986).  In this case, the verdict did not 
shock the conscience of the trial court.  The jury instruction 
specifically identified the elements of damage that could be 
included in a compensatory damages award.  Although there is a 
disparity between the actual medical expenses of these 
plaintiffs and the compensatory damages award, each plaintiff 
experiences chronic pain in the course of everyday life, and 
the jury was entitled to compensate them for pain and 
suffering.  When viewed in this light, the disparity between 
 
16
incurred medical costs and the amount of compensatory damages 
awarded does not rise to a level suggesting that it was not 
the product of fair and impartial decision making.  Based on 
this record, we cannot say that the trial court abused its 
discretion in refusing to set aside the compensatory damages 
awards on the grounds that they were excessive as a matter of 
law.4
Punitive Damages
 
DeGarmo asserts that, as a matter of law, the evidence is 
insufficient to support an award of punitive damages for 
negligent entrustment and that the trial court erred in 
refusing to set aside the punitive damages award against him. 
 
An award of punitive damages requires a showing that a 
defendant's "conduct was of 'such recklessness or negligence 
as evinces a conscious disregard of the rights of others.' "  
Puent v. Dickens, 245 Va. 217, 219, 427 S.E.2d 340, 342 (1993) 
(quoting Baker, 201 Va. at 909, 114 S.E.2d at 621).  DeGarmo 
argues that neither his intoxication nor his understanding of 
the extent of Sowers' intoxication alone, without evidence of 
additional egregious conduct, can support an award of punitive 
damages.  And, DeGarmo concludes, other than being very drunk, 
                     
4 In light of this holding, we need not address DeGarmo's 
assignment of error claiming that evidence of post-accident 
conduct should not have been admitted for purposes of 
compensatory damages. 
 
17
there is no evidence that he engaged in any conduct that could 
be considered reckless. 
 
We agree with DeGarmo that mere intoxication would be 
insufficient to establish willful and wanton conduct.5  
However, whether a defendant acted willfully or wantonly in 
conscious disregard for the safety of others, involves 
consideration of the entire conduct of the defendant.  
Huffman, 245 Va. at 314-15, 427 S.E.2d at 360.  The record in 
this case shows that DeGarmo and Sowers had been drinking 
together since approximately 5:00 p.m. and had consumed more 
than two fifths of whiskey and numerous beers.  Although 
DeGarmo drove until just before the accident at 11:00 p.m., he 
apparently decided that he could not drive any longer because 
if he did so, he would cause an accident.  As DeGarmo 
testified, he had "run [them] out of the road two or three 
times."  DeGarmo was aware of the amount of alcohol Sowers 
consumed and knew, or should have known, that Sowers was 
equally unable to drive safely and was equally likely to cause 
an accident.  Then, while Sowers was driving the car along 
narrow, curvy, country roads, DeGarmo repeatedly expressed a 
need to get home and urged Sowers to "speed up." 
                     
5 Code § 8.01-44.5 provides that a presumption of willful 
and wanton conduct attaches to a driver with a blood alcohol 
level 0.15 percent or higher.  
 
18
 
A jury could properly conclude that DeGarmo's conduct 
amounted to more than simple negligence and reflected a 
conscious disregard for the safety of others.  In addition to 
DeGarmo's intoxication and his knowledge of Sowers' 
intoxication, DeGarmo encouraged a person he knew was impaired 
to drive faster on roads that he knew were difficult to 
navigate.  Accordingly, the trial court did not err in 
refusing to set aside the punitive damages award against 
DeGarmo. 
 
In summary, for the reasons set out above, we conclude 
that the trial court did not err in refusing to allow Allstate 
to inform the jury that it was one of the plaintiffs' 
uninsured motorist insurance carrier and that it had liability 
for payment of any punitive damages award, that the trial 
court did not abuse its discretion in refusing to bifurcate 
the jury's consideration of punitive and compensatory damages, 
that the compensatory damages awards were not excessive as a 
matter of law, and that the evidence supported an award of 
punitive damages against DeGarmo.  Accordingly, we will affirm 
the judgment of the trial court. 
Record No. 021201 – Affirmed. 
Record No. 021209 – Affirmed. 
Record No. 021227 – Affirmed.
 
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