Joe and James are undergoing a divorce. Joe previously suffered an accident in which he lost his leg. James supported Joe after the accident. He provided financial, emotional, and physical help when Joe became disabled and unable to work. Joe brought suit for damages and named James as a plaintiff. James claimed loss of consortium in the personal injury suit. Both Joe and James received a significant award for damages, which they converted to an annuity.
James wants to know if he is entitled to any of Joe’s annuity payments as the divorce approaches. He also seeks to understand the extent of his entitlement. Do they count as marital property for property division and alimony purposes?
The controlling Massachusetts case of Dalessio v. Dalessio was decided by the Supreme Judicial Court in 1991. [1]In that case, the husband had suffered a workplace accident in which he lost his arm. He sued and received a $3,000,000 personal injury judgment. His wife received $1,000,000. With interest, the total was about $7,000,000. The jury awarded these amounts via a general verdict, making the exact compensation for the husband’s damages unquantifiable. It didn’t specify amounts for pain and suffering, medical expenses, loss of income, or earning capacity.
Two years later, the parties divorced. The judge in Probate and Family Court ruled that annuity payments were part of the marital estate. He admitted actuarial evidence on the annuity’s present value. The judge allocated one-third of the proceeds for pain and suffering, and two-thirds for medical expenses and lost earning capacity. He noted that part of the lawsuit proceeds, designated for pain and suffering, compensated only the husband for his losses and pain that would be experienced only by him. Accordingly, the judge effectively reduced the wife’s award. The husband appealed, claiming that the judge abused his discretion in dividing the tort proceeds.
The Supreme Judicial Court held that no such abuse of discretion occurred. First, the Court noted that proceeds from a personal injury judgment are subject to marital property division, despite the husband having exchanged them for an annuity. “The character of the proceeds as property within his Section 34 assignable estate does not change simply because he used them to purchase an annuity,” the Court noted. “A contrary conclusion could encourage spouses anticipating divorce to purchase annuities with their capital assets in order to insulate them from equitable division.” [2]
Moreover, the Court noted that there was no abuse of discretion when the judge decided to designate one-third of the lawsuit proceeds as pain and suffering damages. The Court noted there is no specific formula attached to this issue. The judge carefully considered whether the spouse would share in future losses experienced solely by the husband.
If you have any questions about family law or domestic relations issues, you may schedule a free consultation with our office. Call 978-225-9030 during regular business hours or complete a contact form here, and we will get back to you at our earliest opportunity.
[1] Dalessio v. Dalessio, 409 Mass. 821 (1991).
[2] Id., at 827.