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Personal Injury Proceeds Lost and Consideration of Post Divorce Wages
© 2005 National Legal Research Group, Inc.
INDIANA: Beckley v. Beckley, 822 N.E.2d 158 (Ind. 2005).
The trial court erred by holding that a FELA award is divisible property where any portion of it is for pain and suffering and not for lost postdivorce wages. Even though Indiana does not recognize the concept of separate property, compensation for postdivorce wages still cannot be divided. Even if only part of the award is compensation for lost postdivorce wages, that part must still be measured and excluded. But the burden of proving the lost postdivorce wages component of the award is on the owning spouse. Where the husband failed to carry that burden, the entire award was subject to division. The trial court's error of law was therefore harmless on the facts.
The husband and the wife appealed the determination by the trial court as to the classification and distribution of a settlement under the Federal Employees Liability Act (FELA) as marital property. The intermediate court of appeals reversed the trial court's holding based upon a determination that the FELA settlement was not marital property subject to distribution. The Indiana Supreme Court affirmed.
Four months prior to the wife's filing for divorce, the husband, a railroad worker, received a FELA settlement of $175,000 for a work-related accident. The wife claimed it was marital property, and the trial court awarded her 25% of the award and 31% of the marital property, asserting that the unequal distribution was because of the wife's greater capacity to earn a living. Both sides appealed. The husband appealed the classification of the FELA settlement as marital, and the wife challenged the unequal distribution. Following a reversal by the court of appeals, which deemed the matter one of first impression, the supreme court heard the matter.
The husband argued that a FELA settlement was similar to a workers' compensation award and, therefore, was not a marital asset subject to distribution. The court noted that Indiana had long recognized that a workers' compensation award was not considered a part of the marital estate, as it represented lost future earnings and thus was not a vested property interest that could be divided. Such an award was to be distinguished from a tort award for pain and suffering, which could be included in the marital estate. In comparing FELA to a workers' compensation statute, the court, however, found that there were several distinctions. First, FELA was not a workers' compensation statute, as evidenced by direct prior holdings acknowledging that Congress had not seen fit to create a worker's compensation scheme for railroad workers. Recovery under a workers' compensation statute can be obtained because of an accidental injury regardless of fault. Under FELA, liability is imposed and recovery allowed only when it is shown that the worker suffers injury as a result of negligence. Most importantly, however, was the recognition by the court that a FELA injury recovery could include damages for pain and suffering. Here, the trial court found that a portion of the FELA recovery represented an award for future wages and thus was not a part of the marital estate subject to distribution. But it also found that a portion of the settlement included an award for pain and suffering. Nevertheless, relying upon language in an earlier Indiana Court of Appeals decision, Smith v. Bradley, 676 N.E.2d 388 (Ind. Ct. App. 1997), the trial court herein held that if any portion of the FELA settlement was due to pain and suffering the entire amount of the settlement or award would be included in the marital estate, declining to undertake the task of dividing the two components of the FELA settlement where the awarding authority or parties themselves had not done so. The supreme court rejected this view and reading of Smith v. Bradley as it applied to FELA cases. It laid down the following rule: Where a FELA settlement is in lieu of lost future wages only, then it is not "property" within the meaning of the dissolution statute and thus is not subject to distribution; however, in those instances where the FELA award includes both lost wages and pain and suffering, then only that portion awarded for pain and suffering is included in the marital estate.
Despite the establishment of this rule, however, the supreme court did not necessarily conclude that the trial court's judgment should be reversed. The presumption of the dissolution statute is that all assets of either or both parties are property subject to division. The party who seeks to rebut the presumption, i.e., the party who seeks to have property not included, bears the burden of demonstrating that the statutory presumption does not apply. It was the husband in this case who sought to exclude that portion of the FELA award based upon lost future wages and earning capacity, which are similar to workers' compensation benefits in that they are not a vested property interest subject to dissolution. Here, the husband failed to meet that burden by not showing what portion of the FELA award was for lost future wages and what was for pain and suffering. Having failed to carry that burden, it was not error for the trial court in this instance to have included the entire award in the marital pot and distributed it accordingly. The supreme court apparently let stand the unequal distribution award between the husband and the wife of 69%-31% in favor of the husband by not addressing it.
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