Source: http://openjurist.org/670/f2d/843/patti-s-delucca-et-al-v-united-states-of-america
Timestamp: 2017-02-28 10:11:55
Document Index: 763029021

Matched Legal Cases: ['§ 2674', '§ 377', '§ 724', '§ 2411', '§ 2411', '§ 724', '§ 2411', '§ 724', '§ 724', '§ 2411']

670 F2d 843 Patti S. Delucca, et al. v. United States of America | OpenJurist
670 F. 2d 843 - Patti S. Delucca, et al. v. United States of America HomeFederal Reporter, Second Series 670 F.2d.
670 F2d 843 Patti S. Delucca, et al. v. United States of America 670 F.2d 843
Patti S. DeLUCCA, et al., Plaintiff-Appellee,v.UNITED STATES of America, Defendant-Appellant.
No. 81-5011.
Argued and Submitted Feb. 3, 1982.Decided March 1, 1982.
Projected earnings for 1980          $21,468
Less federal income tax              - 3,099
Less state income tax                - 1,073
---------------------                -------
After tax income                     $17,296
Less 30% for decedent's consumption  - 5,189
Annual Loss of Support          $12,107
Since it is assumed that plaintiff wife will invest her award, a full compensation for loss of future support should also take into account the fact that income taxes must be paid on her investment earnings. Norfolk and Western Ry. Co. v. Liepelt, (444 U.S. 490) 100 S.Ct. 755 (62 L.Ed.2d 689) (February 1980). Cf. Sauers v. Alaska Barge, 600 F.2d 238, 247 (9th Cir. 1979). To provide plaintiff wife an income of $12,107.00 after paying state and federal income taxes reasonably approximated at a 20% effective rate, she must be given $15,134.00 ($15,134.00 X 80% = $12,107.00). To compensate for loss of support over 30.5 years, she should therefore receive $461,587.00 (30.5 X $15,134.00) as the present value of loss of support.
Damages to be awarded under the Federal Tort Claims Act ("FTCA") are governed by the law of the place of the wrongful act, but are limited to compensatory damages. 28 U.S.C. § 2674. California law, applicable in this case, also limits damages to compensatory damages. In re Paris Air Crash, 622 F.2d 1315 (9th Cir.), cert. denied, 449 U.S. 976, 101 S.Ct. 387, 66 L.Ed.2d 237 (1980); Cal.Civ.Proc.Code § 377.
Shortly thereafter, the Supreme Court indicated that this tax on the income generated by the lump sum award should be included in the calculation. Norfolk and Western Ry. Co. v. Liepelt, 444 U.S. 490, 495, 100 S.Ct. 755, 758, 62 L.Ed.2d 689 (1980). In Liepelt, the plaintiff had contended that the decedent's income taxes on his future earnings should not be deducted from the lump sum award. The court rejected this contention and noted that since the income taxes on the decedent's future earnings should be deducted, properly offered estimates of the income taxes on the earnings generated by the lump sum damage award should correspondingly be added:
"The interest that Hollinger will earn on the discounted principal in a safe investment, however, will also be taxable. The effective interest rate for an investor is equal to the stated interest rate reduced by the product of the stated interest rate and the investor's tax rate. The principal amount necessary to produce a given after tax yield per month is the principal amount that would be necessary to produce that amount if there were no tax divided by the percentage of his income that the investor retains after taxes. Thus an award of $600,000, not taking the tax on interest into effect, would be increased to $1,000,000 for a 40% tax bracket recipient. Clearly, then, the possible adjustments involved in taking this aspect of taxes into account are significant. Although we have found no cases in our court where such a calculation was made, other courts have properly made such an adjustment. McWeeney v. New York, N. H. & H. R. R. Co., 282 F.2d 34, 37 (2d Cir. 1960). This Supreme Court has also recently suggested that the tax on the discounted principal might properly be considered. Norfolk & Western Ry. Co. v. Liepelt, 444 U.S. 490, 495 (100 S.Ct. 755, 758, 62 L.Ed.2d 689) (1980)."
31 U.S.C. § 724a clearly overrides § 2411(b), and applies to this case. The differing language regarding interest and appropriation acts in § 2411(b) is vestigial, remaining from pre-1977, when § 724a only applied to judgments less than $100,000. Before 1977, "an individual who recover(ed) (an amount in excess of $100,000) must await a special appropriation, during which period interest accumulates" pursuant to 28 U.S.C. § 2411(b). United States v. Maryland, 349 F.2d 693, 695 (D.C.Cir.1965). With the 1977 amendments to § 724a removing the $100,000 limitation, the provision regarding interest in § 724a completely overrides the contrary provision in § 2411(b).