                                                                         F I L E D
                                                                  United States Court of Appeals
                                                                          Tenth Circuit
                      UNITED STATES COURT OF APPEALS
                                                                         MAR 29 2001
                                   TENTH CIRCUIT
                                                                     PATRICK FISHER
                                                                              Clerk

 BARTLEY ILES; OLLIVE ILES,

           Plaintiffs - Appellees and
           Cross-Appellants,                     Nos. 00-2006 and 00-2011
 vs.                                            (D.C. No. CIV-98-671-RLP)
                                                         (D.N.M.)
 AUTOZONE STORES INC., a Nevada
 Corporation,

           Defendant - Appellant and
           Cross-Appellee.


                              ORDER AND JUDGMENT *


Before TACHA, Chief Judge, and KELLY, Circuit Judges, LUNGSTRUM, **
District Judge.


       Defendant-Appellant AutoZone Stores appeals from judgment on a jury

verdict in this personal injury diversity action brought by Plaintiffs-Appellees

Bartley and Ollive Iles. The case was tried before a magistrate judge and the jury

determined that total damages were $253,500, allocating 99 percent of fault to


       *
        This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. This court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
       **
         The Honorable John W. Lungstrum, United States District Court for the
District of Kansas, sitting by designation.
AutoZone.   1
                The Iles cross-appeal. We have jurisdiction pursuant to 28 U.S.C. §

1291 and we affirm in part and reverse in part.



                                      Background

       As the parties are familiar with the facts, we will only outline them briefly

here. On February 15, 1996, Bartley Iles paid a visit to the Farmington, New

Mexico, AutoZone store. As he turned away from the customer service counter

after asking a question, he stepped on an empty display tray sitting on a cart with

wheels that Autozone customarily used for product displays. Mr. Iles slipped and

fell to the floor, sustaining a tear of the rotator cuff of his right shoulder. After

surgery, Mr. Iles has a 23 percent impairment of his right, upper extremity, and a

14 percent impairment to his person as a whole. III Aplt. App. at 593. At the

time of the accident, Mr. Iles was 62 years old and working part-time as a

plumber in his own plumbing business.        Id. at 682-83, 694. As a result of the

accident, Mr. Iles is no longer able to work as a plumber.     Id. at 595. In June

1998, Mr. Iles and his wife, Ollive, filed their complaint. Mr. Iles sought


       1
         After reducing the damages award by the 1 percent comparative fault due
to Mr. Iles, the court awarded the Ileses a total of $250,965.00. I Aplt. App. at
27. AutoZone later filed a Motion for Order for Offset and Amended Judgment,
Id. at 34, which the court granted in part, further reducing the Ileses’ award by
$7,726.36, the amount the court determined Autozone had paid for Mr. Iles’
medical bills. Id. at 229. The court then entered an Amended Judgment awarding
the Ileses damages in the amount of $243,238.64. Id. at 224.

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compensatory damages, while Mrs. Iles claimed damages for loss of household

services. I Aplt. App. at 4.

      On appeal, Autozone argues that (1) the jury’s verdict is not supported by

substantial evidence, (2) the trial court erred in excluding evidence of disability

and medical payments made to Plaintiffs based on the collateral source rule, (3)

the trial court erred in denying its post-trial motion for judgment n.o.v., new trial

or remittitur, (4) the trial court erred in offsetting only $7,726.36, rather than the

entire $12,726.36 in medical payments made by Autozone’s insurer to Plaintiffs,

and (5) the trial court abused its discretion in awarding $2,885 in attorney fees

against AutoZone as a discovery sanction. Aplt. Br. at 2.

      The Ileses cross-appeal, arguing that the trial court erred in (1) not

awarding prejudgment interest, (2) not awarding additional discovery sanctions

for Autozone’s discovery abuses, and (3) not allowing a separate trial on punitive

damages. Aplee. Br. at 3.



                                      Discussion

A. AutoZone’s Appeal

      1. AutoZone’s Motion for Judgment NOV, New Trial, or Remittitur

      We turn first to Autozone’s first three arguments on appeal. AutoZone

treats these as three separate arguments. However, after reading AutoZone’s


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brief, these three issues primarily concern AutoZone’s post-trial motion based on

the sufficiency of the evidence and the trial court’s exclusion of evidence that

AutoZone made medical payments to Mr. Iles in the amount of $12,726.36.            See I

Aplt. App. at 38. AutoZone moved for judgment as a matter of law at the close

of all the evidence, which the district court denied. III Aplt. App. at 757-58.

Post-trial, AutoZone timely filed a motion for judgment n.o.v., new trial, or

remittitur, I Aplt. App. at 38, which the court also denied.    Id. at 232; III Aplt.

App. at 853-55, 864-65.

       In a diversity action, federal law governs the decision whether a judgment

n.o.v., new trial, or remittitur should be granted.    Blanke v. Alexander , 152 F.3d

1224, 1235-36 (10th Cir. 1998);      Pegasus Helicopters, Inc. v. United

Technologies Corp. , 35 F.3d 507, 510 (10th Cir. 1994). We review the district

court’s denial of a Rule 50(b) motion for judgment as a matter of law de novo.

Tyler v. RE/MAX Mountain States, Inc.        , 232 F.3d 808, 812 (10th Cir. 2000). We

review all the evidence in the record and construe that evidence in the light most

favorable to the nonmoving party.       Id. However, “[t]he jury has the exclusive

function of appraising credibility, determining the weight to be given to the

testimony, drawing inferences from the facts established, resolving conflicts in

the evidence, and reaching ultimate conclusions of fact.”      United Int’l Holdings,

Inc. v. Wharf (Holdings) Ltd. , 210 F.3d 1207, 1227 (10th Cir.) (internal


                                             -4-
quotations and citation omitted),     cert. granted in part , 121 S. Ct. 425 (2000).

Judgment as a matter of law is only appropriate “if the evidence points but one

way and is susceptible to no reasonable inferences which may support the

opposing party’s position.”      Tyler , 232 F.3d at 812 (internal quotations and

citation omitted).

       Autozone falls well short of this standard. We agree with the trial judge

that “there was a ton of evidence . . . submitted during this trial on [AutoZone’s]

negligence.” III Aplt. App. at 853. For example, employees of Autozone who

witnessed the accident testified that the empty product display tray Mr. Iles

slipped on was “slippery, just like glass,” II Aplt. App. at 394, “a dangerous

situation . . . sitting right there where somebody can have an accident,”      id. at 407,

a “hazardous condition,”      id. at 464, “like ice,” III Aplt. App. at 625, and that

there was a “safer way” to restock the product floor. II Aplt. App. at 461;       see

also III Aplt. App. at 580. Employees testified that it was not Autozone’s normal

procedure to leave display trays empty and unattended on the store floor. II Aplt.

App. at 398-99; III Aplt. App. at 556-57, 576. The jury also heard testimony that

the empty product display was not an “open and obvious” danger, II Aplt. App. at

405-06, that there was nothing Mr. Iles could do to avoid the accident,       id. at 415,

and that no AutoZone employee warned Mr. Iles of the potential hazard.           Id. at

406, 465; III Aplt. App. at 622. Expert medical testimony established that the


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fall was the cause of Mr. Iles’ injury, III Aplt. App. at 584, that Mr. Iles is

permanently impaired as a result of the fall,     id. at 593, and that he can no longer

work as a plumber.    Id. at 595. Given the wealth of evidence the jury heard

regarding Autozone’s negligence and the fact that credibility determinations lie

exclusively within the jury’s province, we hold that the district court did not err

in denying AutoZone’s motion for judgment n.o.v.

       AutoZone moved for a new trial contending that the jury’s verdict is

contrary to the weight of the evidence, and that there was error in exclusion of

evidence. We review denial of a motion for a new trial for abuse of discretion.

Sanjuan v. IBP, Inc. , 160 F.3d 1291, 1296 (10th Cir. 1998). As discussed above,

there was a wealth of evidence presented to the jury on AutoZone’s negligence,

meaning the district court was well within its discretion denying a new trial based

on sufficiency of the evidence.

       As for the exclusion of evidence, AutoZone contends that the trial court

improperly excluded evidence of medical and disability payments received by the

Plaintiffs from AutoZone’s insurer based on the collateral source rule. Aplt. Br.

at 25. Although we find it debatable as to whether AutoZone properly preserved

this issue for appellate review by making the required offer of proof,      see Polys v.

Trans-Colorado Airlines, Inc.    , 941 F.2d 1404, 1406-07 (10th Cir. 1991); Fed. R.

Evid. 103(a)(2), we subject the exclusion of the medical and disability payments


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to harmless error analysis. Generally, the denial of a motion for a new trial for

alleged evidentiary errors is reviewed for an abuse of discretion.    Sanjuan , 160

F.3d at 1296. “If error is found in the admission of evidence, we will set aside a

jury verdict only if the error prejudicially affects a substantial right of a party.”

Id. ; see also Fed. R. Evid. 103(a). However, because the collateral source rule is

a substantive state rule of evidence, the trial court’s determination of state law is

reviewed de novo.     Blanke , 152 F.3d at 1228, 1231.

       We do not need to reach this issue of state law because we find that even if

the trial court erred in excluding the evidence of medical and disability payments,

the error was harmless. “Error in the admission or exclusion of evidence is

harmless if it does not affect the substantial rights of the parties, and the burden

of demonstrating that substantial rights were affected rests with the party

asserting error.”   United States v. Mitchell , 113 F.3d 1528, 1532 (10th Cir. 1997)

(internal quotations and citation omitted). As AutoZone fails to demonstrate that

its substantial rights were affected, we hold that any error in the exclusion of the

evidence was harmless.

       The last issue we must address is AutoZone’s contention that the jury

award is so excessive that AutoZone should either be granted a new trial on

damages or remittitur. Under federal law, we review the trial court’s refusal to

grant a new trial or remittitur based on an excessive damage award for an abuse


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of discretion. Blanke , 152 F.3d at 1236. Defendants “bear the heavy burden of

demonstrating that the verdict was clearly, decidedly, or overwhelmingly against

the weight of the evidence.”     Id. (internal quotations and citation omitted).

“[A]bsent an award so excessive or inadequate as to shock the judicial

conscience and to raise an irresistible inference that passion, prejudice,

corruption or other improper cause invaded the trial, the jury’s determination of

the fact is considered inviolate.”   Id. (internal quotations and citation omitted).

We also note that “general damages for pain and suffering . . . are not susceptible

to proof by a set dollar amount.”    Id. at 1237.

       AutoZone has failed to prove that the verdict was “clearly, decidedly, or

overwhelmingly against the weight of the evidence.” Although we agree with the

trial judge that the amount of the verdict was large given the nature of the injury,

we also agree that it was not enough to “shock the judicial conscience.”       See III

Aplt. App. at 853-54. As the trial judge stated, “if you add up medical expenses,

lost wages, lost earning capacity, all of which evidence was presented, as well as

something for pain and suffering, . . . this verdict was [not] excessive.”     Id. at

854. Although AutoZone also argues that Mr. Iles failed to mitigate his damages,

Aplt. Br. at 24, we disagree. Mr. Iles testified that he applied to over forty

different employers but could not find a job. III Aplt. App.       at 707-09. The trial

judge did not abuse his discretion in denying a new trial or remittitur based on an


                                            -8-
excessive damage award.

       2. Offsetting the Damages Award Post-Trial

       AutoZone moved the trial court for an amended judgment on the grounds

that it was entitled to an offset for medical payments AutoZone’s insurer made to

Mr. Iles in the amount of $12,726.36. I Aplt. App. at 34. After hearing oral

argument on the issue at a post-trial hearing, III Aplt. App. at 848-53, the trial

judge determined that AutoZone had reimbursed its insurance company for

$5,000 more than was required under the policy and, therefore, under the

collateral source rule, AutoZone was only due an offset in the amount of

$7,726.36. I Aplt. App. at 229. On appeal, AutoZone argues that the judgment

should have been offset by the full $12,726.36. We agree.

       Because the collateral source rule is a substantive state rule, we review the

trial court’s determination de novo.    Blanke , 152 F.3d at 1228, 1231. The

collateral source rule in New Mexico “is designed to preclude an alleged tort-

feaser from setting up in mitigation or reduction of damages that the plaintiff has

been compensated by insurance in whole or in part,     where such insurance was not

procured by the alleged wrongdoer      .” Yardman v. San Juan Downs, Inc.   , 906

P.2d 742, 753 (N.M. Ct. App. 1995) (emphasis added);       see also Jojola v.

Baldridge Lumber Co. , 635 P.2d 316, 320 (N.M. Ct. App. 1981). No one

contests that AutoZone procured the insurance at issue in this case and paid all


                                           -9-
the premiums for it.   See Yardman , 906 P.2d at 753. On appeal, the Ileses argue

that AutoZone should not be allowed to offset the additional $5,000 because that

was paid to Mr. Iles under a medical pay provision that constitutes first-party, no-

fault insurance coverage.    See I Aplt. App. at 134, 137. However, New Mexico

law does not support this distinction.      See Miera v. Dairyland Ins. Co. , 143 F.3d

1337, 1341-42 (10th Cir. 1998) (holding that in New Mexico, an insurer may

offset from payment under an uninsured motorist coverage policy amounts paid

under medical payment coverage). Because AutoZone procured the insurance

that paid Mr. Iles the $5,000 at issue, AutoZone should be allowed to offset the

$5,000 against the damages award.

       3. Discovery Sanctions

       AutoZone appeals the trial court’s award of $2,885 in discovery sanctions.

Aplt. Br. at 35. The Ileses cross-appeal, arguing that AutoZone’s discovery

abuses were so “legion” that additional sanctions should have been awarded.

Aplee. Br. at 31. We review the trial court’s imposition of discovery sanctions

for an abuse of discretion, considering the totality of the circumstances.

Knowlton, v. Teltrust Phones, Inc.       , 189 F.3d 1177, 1182 (10th Cir. 1999). In this

case, the trial court found that “[i]t is undisputed that the defendant did not

timely produce documents previously requested and that the manner of producing

these documents was dilatory and, in fact, many of the documents requested and


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ordered by the Court to be produced were not produced.” I Aplt. App. at 236.

The trial court awarded “the attorney’s fees and costs necessitated because of

defendant’s failure to produce documents.”          Id. ; see also Fed. R. Civ. P. 37(b).

Under the circumstances of this case, we hold that the trial court did not abuse its

discretion in awarding $2,885 as discovery sanctions.

B. The Ileses’ Remaining Claims on Cross-Appeal

       The Ileses have two remaining claims on cross-appeal: that the trial court

erred in not awarding them prejudgment interest, and that the trial court erred in

not allowing them to proceed with a separate trial on punitive damages. We

address each claim in turn.

       The Ileses filed a motion for prejudgment interest, I Aplt. App. at 30,

which the trial court denied.   Id. at 227. While we generally review the district

court’s denial of prejudgment interest for an abuse of discretion, interest

questions in diversity cases are determined by state law and we review any

statutory interpretation or underlying legal analysis de novo.        Atlantic Richfield

Co. v. Farm Credit Bank of Wichita     , 226 F.3d 1138, 1156 (10th Cir. 2000).

       N.M. Stat. Ann. § 56-8-4(B) provides that “[t]he court in its discretion may

allow interest of up to ten percent from the date the complaint is served upon the

defendant after considering among other things: (1) if the plaintiff was the cause

of unreasonable delay in the adjudication of the plaintiff’s claims; and (2) if the


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defendant had previously made a reasonable and timely offer of settlement to the

plaintiff.” The purpose of the statute is to foster settlement and prevent delay.

Sunwest Bank of Albuquerque, N.A. v. Colucci         , 872 P.2d 346, 351 (N.M. 1994).

Stated another way, “prejudgment interest is an award to discourage recalcitrance

and unwarranted delays in cases which should be more speedily resolved; an

award to ensure that just compensation to the tort victim is not eroded by the

dilatory tactics of the tortfeasor.”   Weidler v. Big J Enter., Inc. , 953 P.2d 1089,

1102-03 (N.M. Ct. App. 1997). The statute applies to all actions, including

personal injury actions where damages are not ascertainable before trial.

Southard v. Fox , 833 P.2d 251, 253 (N.M. Ct. App. 1992). In New Mexico, only

where the trial court’s decision is contrary to logic and reason will an appellate

court find an abuse of discretion.     Id. at 255.

       At the post-trial hearing on the Ileses’ motion of prejudgment interest, the

trial court found that the plaintiffs were not the cause of any delay and that the

Defendant’s settlement offer of $65,000 was not unreasonable given the timing

of the offer and Mr. Iles’ relatively low medical expenses. III Aplt. App. at 847-

48. Because the trial court is in the best position to evaluate the progress of the

case and the conduct of the parties regarding the non-exclusive factors contained

in § 56-8-4(B), we defer to the district court’s exercise of discretion.

       The Ileses’ final claim on cross-appeal is that the district court erred in not


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allowing them to proceed with a separate trial on punitive damages. At the close

of trial, the Ileses made an oral motion to amend their complaint to add a punitive

damages claim under Fed. R. Civ. P. 15(b), III Aplt. App. at 746, 749, which the

district court denied.   Id. at 753-54. Post-trial, the Ileses renewed this request in

a written motion, I Aplt. App. at 50, which the district court also denied.     Id. at

235.

       We review the district court’s denial of a Rule 15(b) motion for an abuse

of discretion. Gold v. Local 7 United Food and Commercial Workers Union            , 159

F.3d 1307, 1309 (10th Cir. 1998). In this case, the district court found that no

evidence in the trial “would get [AutoZone] close to the recklessness standard”

required by New Mexico law for punitive damages, III Aplt. App. at 866;         see also

Gonzales v. Surgidev Corp. , 899 P.2d 576, 588 (N.M. 1995), and that

AutoZone’s discovery violations did not “have a material effect on any potential

claim for punitive damages.” I Aplt. App. at 235. We also note that nothing in

the record indicates that the issue of punitive damages was tried with AutoZone’s

“express or implied consent” as Rule 15(b) requires.        See Fed. R. Civ. P. 15(b);

Gold , 159 F.3d at 1309. Therefore, we hold that the district court did not abuse

its discretion in denying the Ileses’ request for a new trial on punitive damages.

       AFFIRMED in part, REVERSED in part, and REMANDED with directions




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for the trial court to offset the final damage award consistent with this opinion.

                                       Entered for the Court


                                       Paul J. Kelly, Jr.
                                       Circuit Judge




                                        - 14 -
