California plaintiffs who win verdict awards in personal injury cases may have their awards of future damages for reductions in earning capacity and medical expenses reduced to their present value. This is because the courts recognize that future money is worth less than it is now, and the future amounts that are awarded account for the value of the money if it was invested today. In Lewis v. Ukran, Cal. Ct. App. No. B290128, the California Court of Appeal reviewed a case in which damages that were awarded for future losses were not reduced to their present value in a case in which neither side presented evidence about the discount rate or about inflation.
Factual and procedural background
Thyme Lewis, a 51-year-old stunt worker in the entertainment industry, was operating his motorcycle on May 26, 2013. Aleksandr Ukran was driving a van for his employer, LGI. Ukran made a sharp lefthand turn in front of Lewis’s oncoming motorcycle. While Lewis braked, he was unable to avoid a collision. His front tire struck the side of Ukran’s van, causing him to be thrown off of the motorcycle and onto the top of the van. The accident caused him to suffer major injuries throughout his body.
Lewis filed a lawsuit against Ukran, arguing that he had been negligent and that his negligence caused the accident and Lewis’s resulting injuries and losses. Seven months after he filed his complaint, he served Ukran with a § 998 demand in the amount of $950,000. Ukran let the demand expire without accepting it or requesting more information. The parties did not reach a settlement agreement, so the case proceeded to a bench trial.
At the trial, Lewis called Thomas McComas to testify. McComas was a stunt coordinator and stuntman with more than 20 years of experience. McComas testified that Lewis could be making between $30,000 and $50,000 per commercial and between $200,000 to $300,000 per year as a stuntman if he had not been injured. Prior to his accident, Lewis had been a stuntman for four years and had not earned more than $100,000 in a year.
The trial court judge entered a verdict in favor of Lewis in the amount of $1,651,702.39. Of that amount, $107,002.39 was stipulated by the parties for Lewis’s past medical expenses. Another $40,000 was stipulated by the parties for Lewis’s past losses of income. The court also awarded Lewis $1.2 million for his future reduction in earnings capacity and $304,700 for his future medical expenses. The court also awarded Lewis prejudgment interest because his verdict award exceeded his § 998 demand. Ukran filed a motion for a new trial, which was denied. He then filed an appeal of the judgment, arguing that the court should have reduced the future damages to their present value and that the court’s award of damages was excessive. Finally, the appellant argued that the court should not have awarded Lewis prejudgment interest because his § 998 demand was not made in good faith.
Issue: 1) Whether the damages for lost earning capacity were excessive; 2) Whether the court erred by failing to reduce the award to its present value; and 3) Whether the court erred by awarding prejudgment interest?
Ukran argued that the trial court erred when the judge ordered damages of $1.2 million for the loss of future earnings capacity. He also argued that the court should have reduced the award for future damages to its present value but that it failed to do so. Finally, Ukran argued that the court should not have ordered him to pay prejudgment interest because Lewis made his § 998 demand in bad faith because Ukran did not have enough information to fairly evaluate it.
Rule: 1) Lost earning capacity is the extent to which the future ability to earn an income is impacted by an injury; 2) The present value of an award of future damages is the amount of money that could be invested to total the future amount; and 3) Prejudgment interest can be awarded when a plaintiff’s § 998 demand is rejected and is less than what the plaintiff recovers in a verdict unless the demand was not made in good faith.
In California, a person’s lost earning capacity is similar to his or her future income losses, but it is not the same thing. Lost earning capacity is broader than the future loss of income because it looks at the reduction in the ability to earn an income because of an injury. Courts can reduce a gross verdict award for future damages to their present value, and they can also increase future awards by the inflation rate. Finally, courts will award prejudgment interest to plaintiffs if they receive more money in their verdicts than the amount that they demanded from the defendant in their § 998 demands if the defendants did not accept them. However, an award of prejudgment interest will not be awarded if a plaintiff does not act in good faith when he or she makes his or her § 998 demand in good faith.
The court first looked at whether the award of the future losses of earning capacity damages was excessive. Ukran argued that Lewis did not present expert testimony about his future income and that the trial record did not support the fact that he would be able to work as a stuntman for 12 more years or to earn $1.2 million over that time period. The Court of Appeals disagreed, finding that plaintiffs are not required to call expert witnesses to testify about the future potential earnings. The court also found that while Lewis made less than $100,000 per year before his accident, McComas testified that he could have potentially earned substantially more in the future if he had not been injured.
The court then considered whether the court erred by failing to reduce the gross verdict award for future damages to its present value. However, the court noted that the defendant did not present any evidence about a discount rate that should be used, and the plaintiff did not present any evidence about the rate of inflation. Since the matter of determining the present value was evidentiary in nature, the court found that the trial court judge did not err by not reducing the future damages to their present value. This was because the judge was not presented with any evidence about how the present value should be determined.
Finally, the court considered whether the trial court judge erred when it awarded prejudgment interest. The defendant argued that the plaintiff submitted his § 998 demand only seven months after the complaint had been filed. He also argued that the demand was not made in good faith because the plaintiff had failed to answer a question on the interrogatories about the amount of future losses of earnings capacity that he was claiming. The appeals court found that the defendant did not file a motion to compel additional information or ask the plaintiff for clarification and that the defendant had four months to do so. Because of this, the appeals court found that the demand was made in good faith, and the award of prejudgment interest was appropriate.
The Court of Appeal affirmed the trial court’s ruling, which allowed the gross verdict to stand. It also awarded Lewis his costs on appeal.
Consult with an experienced Los Angeles personal injury lawyer
If you have been injured in an accident, it is possible for you to recover compensation for both your past losses and your future expected losses. To learn more about your potential claim, contact the law firm of Steven M. Sweat APC to schedule a consultation by calling us at 323.944.0993.