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Shirley v. Russell

November 7, 1995

MARGARET SHIRLEY, INDIVIDUALLY AND AS COPERSONAL REPRESENTATIVE OF THE ESTATE OF LOREN M. SHIRLEY, DECEASED, AND C. THOMAS WAGNER, AS COPERSONAL REPRESENTATIVE OF THE ESTATE OF LOREN M. SHIRLEY, DECEASED,

PLAINTIFFS-APPELLEES,

v.

GERALD R. RUSSELL AND ELMER BUCHTA TRUCKING, INCORPORATED,

DEFENDANTS-APPELLANTS.



Appeal from the United States District Court for the Southern District of Indiana, Evansville Division. No. 92 C 163--Gene E. Brooks, Judge.

Before RIPPLE, MANION, and KANNE, Circuit Judges.

KANNE, Circuit Judge.

ARGUED SEPTEMBER 7, 1995

DECIDED NOVEMBER 7, 1995

Plaintiffs-appellees sued defendants-appellants in diversity for wrongful death and prevailed in a bench trial to the tune of $577,733.83. We are asked in this appeal to determine two issues: (1) whether a spouse's survivor benefits provided by a state pension plan are collateral source payments admissible in evidence under Indiana's collateral source evidence statute, IND. CODE sec. 34-462 (1994); and (2) whether eyewitness testimony concerning paycheck notations offered to establish a payroll deduction is inadmissible hearsay under FED. R. EVID. 801 and 803. Lacking guidance from Indiana appellate courts on the first question, we stay this appeal and certify the question of statutory interpretation to the Indiana Supreme Court pursuant to 7TH CIR. R. 52 and IND. R. APP. P. 15(O).

Loren Shirley was a retired school teacher from Ohio who died on March 3, 1992, as a result of injuries sustained in an automobile accident that day on State Highway 57 in Daviess County, Indiana. The accident was caused by a tractor-trailer operated by Elmer Buchta Trucking, Inc., and driven by Gerald R. Russell. Margaret Shirley and C. Thomas Wagner, copersonal representatives of Loren Shirley's estate, sued Buchta Trucking and Russell under Indiana's wrongful death statute, IND. CODE sec. 34-1-1-2 (1994), in a diversity action in the United States District Court for the Southern District of Indiana.

The evidence at a three-day bench trial showed that prior to his death, Loren Shirley received a gross monthly pension of $1,503.26 from the State Teachers Retirement System of Ohio ("STRS"). This sum consisted of his pension of $1,671.43 minus a deduction of $158.17 to provide a survivor benefit *fn1 of $751.63 per month for his wife should he predecease her. Both the STRS pension and the survivor benefit included a 3 percent annual cost-of-living adjustment.

Over hearsay objections by defense counsel, the district court admitted Margaret Shirley's testimony that she had seen notations on her husband's paychecks indicating deductions for his STRS pension. *fn2 Following her testimony, the court denied a defense motion on the "collateral source issue" *fn3 and ruled that the survivor benefits qualified as an exception contained in section 34-462(1)(B). Defense counsel offered to present expert testimony that the survivor benefits reduced Margaret Shirley's economic loss by approximately $179,014. Plaintiffs' counsel stipulated to this testimony but not to its admissibility.

In its findings of fact and conclusions of law, the district court determined that Margaret Shirley, as a result of the defendants' tortious conduct, had suffered total losses of $577,733.83, of which $293,207 was attributed to the economic loss occasioned by her husband's death. *fn4 The court wrote:

The STRS payments that Margaret Shirley receives each month should not be included in determining economic loss. These payments amount to insurance benefits paid for directly by [Loren] Shirley. He elected to receive less each month in pension benefits so that his wife would be assured of some income after his death. In effect, his insurance premiums were deducted each month from his pension payment . . . Consequently, the court will not include the STRS payments received by Margaret Shirley in determining economic loss.

Defendants appeal the district court's decision on two grounds. First, they contend the district court erred by failing to include Margaret Shirley's monthly survivor benefit of $751.63 in its loss calculations. They argue that the benefit does not qualify as an enumerated exception prescribed by IND. CODE sec. 34-462(1) and should have been admitted into evidence and incorporated in determining Margaret Shirley's economic loss. Second, they contend that Margaret Shirley's testimony establishing her husband's pension contributions was hearsay not within any of the recognized exceptions and was erroneously admitted into evidence. We have jurisdiction to hear this appeal according to 28 U.S.C. sec. 1291.

II.

The district court applied its interpretation of the Indiana collateral source evidence statute to the facts. We review for clear error a district court's application of law to fact. Brooks v. Buscher, 62 F.3d 176, 179 (7th Cir. 1995). But this case demonstrates the sometimes murky distinction between interpretation of law and application of law to fact. The district court could apply only its understanding of the Indiana statute. Its construction of the statute therefore preceded its application of that construction, illustrating how application of law to fact may first require interpretation of law. This appeal thus concerns a district court's interpretation of state law, to which we apply a de novo standard ...


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