Davidson v. Prince
813 P.2d 1225 (1991)
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Rule of Law:
In Utah, it is improper for a trial court to instruct a jury on the tax-exempt status of a personal injury award because it introduces a collateral and speculative matter. However, giving such an instruction does not automatically constitute reversible error and may be deemed harmless depending on the context in which it was presented.
Facts:
- Erwin M. Prince, an employee of Folkens Brothers Trucking, negligently overturned a truck he was driving, which was carrying animals.
- The accident caused animals to be released onto the highway and into the surrounding area.
- Grant Davidson was subsequently attacked and injured by a steer that had escaped from Prince's overturned vehicle.
- Following the incident, Davidson sent a letter to Folkens Brothers Trucking describing the events.
- In the letter, Davidson stated that he stopped and got out of his vehicle approximately 10 feet from the animal before it charged.
- In later deposition testimony, Davidson estimated the distance between himself and the steer was approximately forty feet.
Procedural Posture:
- Grant Davidson filed a negligence action against Erwin M. Prince and Folkens Brothers Trucking in a Utah trial court.
- A jury returned a verdict finding the defendants 60% negligent and Davidson 40% contributorily negligent, awarding total damages of $45,539.80.
- The trial court entered a judgment in favor of Davidson for $27,323.88, reflecting the reduction for his contributory negligence.
- Davidson (appellant) filed a motion for a new trial, arguing the court made three errors of law.
- The trial court denied the motion for a new trial.
- Davidson (appellant) appealed the denial of his motion to the Utah Court of Appeals, an intermediate appellate court, with Folkens Brothers Trucking as the appellee.
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Issue:
Does a trial court commit reversible error by instructing the jury that a personal injury damages award is exempt from federal income taxation?
Opinions:
Majority - Billings, Associate Presiding Judge
No, while instructing the jury on the tax consequences of a personal injury award is improper, it was not reversible error in this case. The court adopts the majority view that such instructions are improper because they interject collateral matters, unnecessarily complicate trials, are speculative, and may nullify Congress's intent to provide a tax benefit to injured parties. However, the error here was harmless because the instruction was given in a broader context that also admonished the jury not to consider other collateral issues like punitive damages or attorney fees, thus mitigating its potential prejudice. The court also held that the trial court properly excluded expert testimony on the ultimate legal conclusion of whether the defendant was 'negligent' and correctly admitted a statement from the plaintiff's letter because the letter was a demand for payment, not a statement made in the course of compromise negotiations under Utah Rule of Evidence 408.
Concurring - Russon, Judge
Judge Russon concurred with the majority's reasoning and conclusions on the expert testimony and settlement letter issues (Parts II and III). However, he concurred only in the result regarding the jury instruction on tax consequences (Part I), indicating agreement with the outcome but not necessarily the reasoning.
Analysis:
This decision aligns Utah with the overwhelming majority of state courts that prohibit jury instructions on the tax-free nature of personal injury awards. By adopting this rule, the court aims to prevent jury speculation and the introduction of irrelevant issues into damages calculations. However, the court's application of a harmless error analysis, rather than a per se rule of reversal, provides trial courts with some flexibility and places a burden on the appealing party to demonstrate actual prejudice. The opinion also reinforces the important distinction under Utah Rule of Evidence 704 between an expert offering an opinion on an ultimate issue of fact and an expert offering an impermissible legal conclusion.
