Appeal from the District Court of the Fourth Judicial District of the State of Idaho, Ada County. Hon. Deborah A. Bail, District Judge.
The opinion of the court was delivered by: Horton, Justice.
SUBSTITUTE OPINION, THE
COURT'S PRIOR OPINION
DATED MARCH 1, 2012 IS
Jose and Nayeli Carrillo, father and daughter, sued Boise Tire Co. (Boise Tire), alleging that Boise Tire improperly performed a tire rotation on their vehicle and that as a result, the Carrillos and Marisela Lycan, Jose's partner and Nayeli's mother, were in a motor vehicle accident. Marisela was killed, Jose was injured, and eighteen-month old Nayeli underwent testing that revealed no physical injury. A jury found that Boise Tire's conduct was reckless. Boise Tire moved for new trial on the grounds that (1) the Carrillos' pleadings merely alleged negligence and therefore the court committed legal error by permitting the Carrillos to argue that Boise Tire's conduct was reckless, (2) the jury verdict was excessive and the result of passion or prejudice, and (3) the jury verdict was not supported by sufficient evidence. The district court issued a remittitur as to Nayeli's noneconomic damage award but otherwise denied the motion. Boise Tire appeals that denial as well as the court's holding that I.C. § 6-1606 did not require the Carrillos' damage awards to be reduced by the subrogation interest transferred from the Carrillos' insurer to their attorney, nor by social security benefits obtained by the Carrillos. We affirm in part, reverse in part, and remand for proceedings consistent with this opinion.
I. FACTUAL AND PROCEDURAL BACKGROUND
Jose Carrillo and Marisela Lycan were cohabiting partners who had a child together. In preparation for a trip, Marisela took their vehicle to be serviced by Boise Tire on March 30, 2007. Boise Tire rotated and inspected the vehicle's tires. The next day, Jose, Marisela, and their eighteen-month old daughter Nayeli set out on the trip. On April 1, 2007, when Jose was driving at highway speed, the right rear wheel separated from the vehicle without warning. Jose lost control and the vehicle rolled. Marisela had removed her seatbelt to check on Nayeli and was killed when she was thrown from the vehicle. At the hospital, Nayeli underwent a series of tests that revealed no physical injury. Jose almost immediately underwent surgery to address injuries to his arm, shoulder, neck, and upper back. Jose testified he had to undergo rotator cuff surgery a year after the accident due to ongoing problems with his shoulder. At trial, he continued to have pain and limited mobility.
The Carrillos filed suit against Boise Tire on October 16, 2007. The complaint alleged negligence, negligent infliction of emotional distress, and wrongful death. As discovery progressed, Boise Tire filed motions in limine regarding several types of evidence, including a motion to exclude evidence that the conduct of Shane Mendenhall, the Boise Tire employee who had serviced the Carrillos' vehicle, had been intentional, willful, or reckless. Boise Tire argued that "[n]owhere in the Complaint is it factually alleged that Boise Tire engaged in any intentional, willful or reckless misconduct . . . , and nowhere in the Complaint is any cause of action alleged based on intentional, willful or reckless misconduct." Boise Tire asserted that in the absence of such allegations, Boise Tire was deprived of notice that it faced liability in excess of the cap on noneconomic damages imposed by I.C. § 6-1603. Boise Tire stated that it "w[ould] not, by express or implied consent, try any issues regarding any alleged intentional, willful or reckless misconduct . . . ." The trial court denied Boise Tire's motion, and the case proceeded to trial.
Several experts testified at trial. Dr. Alan Johnson testified as a metallurgy and accident reconstruction expert on behalf of the Carrillos. Johnson believed that the lug studs broke at Boise Tire, leaving a visible remnant in Mendenhall's socket that he would have had to knowingly remove in order to complete his work. Johnson acknowledged that this may have happened because the studs may have been made from poor quality steel. Jerry Ogden, a forensic engineer and accident reconstructionist, also testified on the Carrillos' behalf. Ogden testified that the accident happened suddenly and without warning. Ogden also testified that the three wheels that remained attached each had three lug studs with nuts affixed by torque in excess of the maximum appropriate level, and that the broken studs fractured at the first thread. Ogden considered these findings consistent with his conclusion that the lug nuts affixed to the studs of the failed wheel had been overtightened. Scott Kimbrough, a failure analyst and accident reconstructionist, testified on behalf of Boise Tire. Kimbrough believed that at least two of the three studs that Johnson alleged were broken and removed by Boise Tire were in fact present when the accident occurred. He testified that the lug nuts were not overtightened, but failed because the studs were made of poor steel.
There was also trial testimony regarding Nayeli's condition before and after the accident. Prior to the accident, Jose's older daughters Felida and Nelida cared for Nayeli while her parents worked. Felida testified that Nayeli had been "[j]ust like any toddler, she talked, she walked, she ate, drank. She was a little kid. She was pretty good." Nelida described Nayeli before the accident as "full of life. She loved to play a lot with the kids. She enjoyed, you know, being around my kids. She enjoyed when her mom would get home, and it was just like, oh, she would just jump up and down, and she was really happy." Nayeli was also beginning to put sentences together.
After the accident, Nayeli returned to Idaho with Nelida while Jose underwent surgery and recuperated for about a week. Nelida testified that while she cared for Nayeli: [Nayeli] would scream and cry because she wanted light. . . . she wouldn't even talk to me. I would try feeding her. She didn't want to eat. She wouldn't even ask me any questions.
Normally she would have been about like, "Where's poppy?" "Where's mommy?" You know, she didn't ask. I think she was just really confused.
When Jose returned home, Felida moved in with Jose and Nayeli in order to provide full time care. Felida testified that Nayeli "changed automatically. Like when we saw her at the hospital, she didn't even acknowledge us at all. She was just like being really mopey, like she just laid there, like she had no idea what she had just gone through." Nayeli would not eat or drink. While the three lived together, Felida noticed that Nayeli:
. . . was different. She didn't talk much. She wasn't starting to talk. She didn't say much to nobody anymore. It was kind of hard to get her to talk for a little bit. And then like her first time, when she came home, like the first week, I noticed, I don't know - I didn't know if she was having nightmares or whatnot, but she was waking up at night just like crying and screaming, and I don't know if she remembers there was a car wreck, but she would cry for her mom. And then after that, even now she doesn't a [sic] talk much. She doesn't say much.
Although Nayeli had been potty trained and occasionally used pull-ups prior to the accident, two years later she remained in diapers.
Trial testimony also addressed Jose's injuries. Dr. Kenneth Little testified as to Jose's cervical fractures and surgery immediately following the accident. Dr. Little saw Jose over the course of one year, at the end of which Jose continued to present some symptoms, some of which the doctor would expect to be "ongoing continually." Dr. Little completed a disability form for Jose on May 2, 2007, because Jose was not ready to return to work. Jose last visited Dr. Little on April 16, 2008. Dr. Little acknowledged that, at the time of trial, he was not familiar with Jose's condition or his ability to return to work.
Jose testified that he cannot sit still because of back pain and that he has limited range of motion, weakness, pain, and numbness in portions of his left shoulder, arm, and hand. Jose also testified that after the accident he suffered headaches and had trouble sleeping. Jose has not returned to work, and has been assessed as permanently disabled by the Social Security Administration.
After the close of testimony, the court instructed the jury that:
If you decide that Boise Tire was negligent and did not perform the duty it owed to the plaintiffs with reasonable care, you must then determine if the negligence arose out of willful or reckless misconduct. The words "willful or reckless" when used in these instructions and when applied to the allegations in this case, mean more than ordinary negligence. The words mean intentional or reckless actions, taken under circumstances where the actor knew or should have known that the actions not only created an unreasonable risk of harm to another, but involved a high degree of probability that such harm would actually result.
The jury returned a verdict in favor of the Carrillos, selecting "yes" in response to the verdict form's question whether "Boise Tire Company's negligence which was a proximate cause of Plaintiffs' injuries [was] willful or reckless." The jury awarded Jose $401,950 in economic damages and $688,128 in noneconomic damages for his personal injury claim. The jury awarded Nayeli $43,122 in economic and $1,000,000 in noneconomic damages for her personal injury claim. The jury also awarded $366,800 in economic and $1,000,000 in noneconomic damages on the Carrillos' wrongful death claim.
The court entered judgment on the jury's special verdict. Boise Tire moved for a new trial or remittitur on several grounds. Boise Tire alleged that (1) the jury awards were excessive and appeared to have been given under the influence of passion or prejudice, (2) the evidence was insufficient to justify the verdict, and (3) the verdict was in error because the Carrillos' failure to plead recklessness should have prevented them from arguing it to the jury. Boise Tire also moved to reduce the jury award pursuant to I.C. § 6-1606. The affidavit in support of that motion asserted that the Carrillos' awards must be reduced by Jose's social security disability benefits and Nayeli's social security survivor benefits. Boise Tire also asserted that the award must be set off because the Carrillos' insurer entered into an agreement with the Carrillos' attorneys under which it agreed to compensate counsel by reducing its subrogation claim by one-third.
For the most part, the trial court denied the motions. However, the court partially granted Boise Tire's request for remittitur, reducing Nayeli's recovery for noneconomic damages to $250,000 on her personal injury claim, determining that "in light of [her] lack of long-lasting physical injuries," the jury's $1,000,000 award was excessive. The trial court denied the Carrillos' requests for attorney fees, holding that I.C. § 12-120(3) did not apply because the transaction at issue was not commercial and that I.C. § 12-121 did not apply because Boise Tire's defense was not frivolous. Boise Tire timely appealed and the Carrillos have cross-appealed the district court's denial of their requested attorney fees.
We review a trial court's determinations regarding motions for new trial and attorney fees for abuse of discretion. Bybee v. Isaac, 145 Idaho 251, 255, 178 P.3d 616, 620 (2008); Shore v. Peterson, 146 Idaho 903, 915, 204 P.3d 1114, 1126 (2009). We assess whether the trial court "(1) correctly perceived the issue as one of discretion; (2) acted within the outer boundaries of its discretion and consistently with the legal standards applicable to the specific choices available to it; and (3) reached its decision by an exercise of reason." Sun Valley Potato Growers, Inc. v. Tex. Refinery Corp., 139 Idaho 761, 765, 86 P.3d 475, 479 (2004). Only an error which affects a party's substantial rights is grounds for new trial. I.R.C.P. 61; Schmechel v. Dille, 148 Idaho 176, 180, 219 P.3d 1192, 1196 (2009); Burgess v. Salmon River Canal Co., Ltd., 127 Idaho 565, 575, 903 P.2d 730, 740 (1995).
Statutory interpretation is a question of law over which this Court exercises free review. Dyet v. McKinley, 139 Idaho ...