Metropolitan News-Enterprise


Monday, January 13, 2003


Page 3


C.A. Rules Disability Benefits Not Excluded Under Collateral Source Rule


By a MetNews Staff Writer


Evidence that an injured plaintiff who claims lost retirement benefits as an element of damages has received, or will receive, disability retirement benefits is not excludable under the collateral source rule, the Fourth District Court of Appeal ruled Friday.

Div. Two granted a writ of mandate to a car dealer being sued by a former fire captain in San Bernardino Superior Court. Norbert Staudt claims that he was injured and forced to retire because Rotolo Chevrolet supplied his employer with a defective vehicle.

 Staudt’s expert estimates that his early retirement cost him more than $870,000 in regular retirement benefits, which plaintiff’s attorney James F. Tierney III, of the Redlands firm Welebir & McCune, indicated he intended to claim as damages. The expert also said that Staudt would receive about $840,000 in disability retirement benefits, but plaintiff’s counsel moved for an order excluding that evidence from the trial.

San Bernardino Superior Court Judge Keith Davis granted the motion, reasoning that the disability retirement benefits constituted moneys received in connection with an injury, from a source “wholly independent of the tortfeasor,” so that evidence of the payment is barred by California’s well-established collateral source rule.

But Justice Thomas Hollenhorst, writing for the Court of Appeal, disagreed. While the collateral source rule in effect allows “double compensation” for an injury,  Davis’ ruling would give Staudt “triple compensation,” the justice reasoned.

“He will obtain damages based on lost income, additional damages based on his lost ‘regular’  retirement benefits, and his actual disability retirement benefits,” Hollenhorst explained.  “The rule does not require this inequitable result, and we find it inapplicable here.”

The justice agreed that Staudt’s employer is a collateral source. But since “a pension is a pension is a pension,” Hollenhorst wrote, “the fact that the employer provides two potential types of pension benefits does not make one type ‘collateral’ to the other, which is already ‘collateral’ to Staudt’s lost earnings.”

Hollenhorst distinguished McKinney v. California Portland Cement Co. (2002) 96 Cal.App.4th 1214. That ruling allowed the plaintiff in a wrongful death action, the decedent’s widow, to claim the decedent’s lost pension benefits as damages and precluded the defendant from offering evidence that she was receiving Social Security payments as well as a surviving spouse benefit under the pension plan, which permitted the decedent to accept a to accept a reduced lifetime benefit in return for the survivor benefit. 

“[I]n McKinney, the collateral source rule was applied to Social Security benefits which replaced benefits that had stopped, and to pension payments which had been constructively paid for, thus triggering the classic rationale for the rule,” he explained. “Here, however, Staudt’s disability pension payments do not replace anything; they are alternative payments to a regular pension.  Nor is there any indication that Staudt took any action or expended any funds in order to ensure the availability of a disability retirement.”

The case is Rotolo Chevrolet v. Superior Court, E032039.


Copyright 2003, Metropolitan News Company