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WAITS v. UNITED FIRE & CAS. CO.12/24/1997
[572 NW2d Page 567]
[572 NW2d Page 568]
Appellee, Lori Gail Waits, brought this action to recover underinsured motorist benefits under an automobile liability policy issued to her by appellant, United Fire & Casualty Company. In response to a special interrogatory, the jury found Waits had sustained damages of $178,616.78 as a result of the underinsured motorist's negligence. After reducing the verdict in an amount equal to the settlement payment received by Waits from the underinsured motorist, the court entered judgment against United Fire for $88,318.92, and interest. United Fire appealed. We hold the trial court abused its discretion in admitting evidence of the amount of Waits' settlement with the tortfeasor, and so we reverse and remand for a new trial.
I. Background Facts and Proceedings.
Waits was injured on February 15, 1992, when the vehicle she was driving was struck by a car driven by Theresa Fay. The accident occurred on a residential street in Knoxville, Iowa shortly before 1:00 a.m. Waits observed Fay's vehicle coming toward her in Waits' lane of travel, and in an attempt to avoid a collision, drove her car over the right curb and up on the sidewalk. Despite Waits' evasive action, Fay struck Waits' vehicle on the driver's side, causing extensive damage to Waits' automobile. Waits sustained a low back injury in the accident and eventually had surgery to remove a herniated disc.
At the time of the collision, Fay was insured by Allied Mutual Insurance Company. Waits was insured by United Fire under a policy providing underinsured motorist benefits. Waits reached a settlement with Allied, who agreed to pay its remaining policy limits, $90,297.86, to settle Waits' claim against Fay. (A portion of the limits had already been paid to settle other claims.) United Fire consented to this settlement.
Waits then brought this action to recover the $100,000 limits of the underinsured motorist (UIM) coverage in United Fire's policy. Prior to trial, United Fire stipulated to the following: (1) Fay was 100% at fault in causing the automobile accident; (2) Waits was covered by a policy of insurance issued by United Fire and containing underinsured motorist coverage; (3) the limits of the underinsured motorist coverage were $100,000; and (4) Waits had received the full amount available to her under Fay's insurance policy. Both parties agreed the jury would simply determine the total amount of Waits' damages caused by Fay; the court would then deduct the Allied payment from the jury's verdict and enter judgment for the difference, subject to United Fire's UIM limits.
The case was submitted to the jury on a special interrogatory, asking it to itemize the damages sustained by Waits in the collision with Fay. The jury set Waits' total damages at $178,616.78. The court then reduced this figure by the amount paid by Allied, entering judgment against United Fire for $88,318.92, plus interest. United Fire filed this appeal.
United Fire seeks reversal of the judgment, claiming the trial court erred or abused its discretion in several ways: (1) in striking United Fire's affirmative defense of release and satisfaction; (2) in admitting testimony regarding how the accident occurred; (3) in admitting evidence of and instructing the jury regarding the amount of Waits' settlement with the underinsured motorist; and (4) in giving an "eggshell plaintiff" instruction. Because we think United Fire's third assignment of error requires reversal of the judgment, we consider that issue first. We will discuss additional facts as they relate to the matters at issue.
II. Tortfeasor's Settlement Payment.
P
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