Opinion ID: 1330394
Heading Depth: 1
Heading Rank: 4

Heading: Distribution of Personal Injury Award

Text: The sole question before this Court is whether Mr. Huber's personal injury settlement was properly classified as nonmarital property. We indicated in syllabus point 1 of Signorelli v. Signorelli, 189 W.Va. 710, 434 S.E.2d 382 (1993) that: `Equitable distribution under W.Va. Code, 48-2-1, et seq., is a three-step process. The first step is to classify the parties' property as marital or nonmarital. The second step is to value the marital assets. The third step is to divide the marital estate between the parties in accordance with the principles contained in W.Va.Code, 48-2-32. Syllabus Point 1, Whiting v. Whiting, 183 W.Va. 451, 396 S.E.2d 413 (1990).' Syllabus Point 2, Wood v. Wood, 184 W.Va. 744, 403 S.E.2d 761 (1991). Our review of the instant proceeding requires only that we analyze the first step of Signorelli, i.e., classification of property. In classifying property as separate or marital, the legislature has indicated a preference for classifying property as marital. In syllabus point 2 of Kapfer v. Kapfer, 187 W.Va. 396, 419 S.E.2d 464 (1992) we said that `W.Va.Code, 48-2-1(e)(1) (1986), defining all property acquired during the marriage as marital property except for certain limited categories of property which are considered separate or nonmarital, expresses a marked preference for characterizing the property of the parties to a divorce action as marital property.' Syllabus Point 3, Whiting v. Whiting, 183 W.Va. 451, 396 S.E.2d 413 (1990). See Syl. Pt. 1, Koontz v. Koontz, 183 W.Va. 477, 396 S.E.2d 439 (1990). In spite of the legislative preference for classifying property as marital, this Court has found some exceptions to the preference. One such exception is personal injury awards. This Court articulated in syllabus point 1 of Hardy v. Hardy, 186 W.Va. 496, 413 S.E.2d 151 (1991) that, [t]o the extent that its purpose is to compensate an individual for pain, suffering, disability, disfigurement, or other debilitation of the mind or body, a personal injury award constitutes the separate nonmarital property of an injured spouse. However, we also held that economic losses, such as past wages and medical expenses, which diminish the marital estate are distributable as marital property when recovered in a personal injury award or settlement. Id., 186 W.Va. at 501, 413 S.E.2d at 156. Additionally we stated in syllabus point 4 of Hardy that [a] loss of consortium claim is the separate nonmarital property of the uninjured spouse. Ms. Huber contends that Mr. Huber failed to carry his burden of establishing what part of the settlement proceeds was nonmarital. Therefore, Ms. Huber asserts that the circuit court should have ruled the entire settlement amount was marital property. As authority, Ms. Huber cites the case of Bandow v. Bandow, 794 P.2d 1346 (Alaska 1990). Ms. Huber argues that Bandow places the entire burden on Mr. Huber to prove all settlement proceeds are nonmarital property. Ms. Huber has misread Bandow as requiring only one burden. Bandow was a divorce case. The trial court ruled that the husband's medical malpractice settlement award was marital property. The trial court therefore awarded one-half of the entire settlement to the wife. The husband appealed. The Supreme Court of Alaska reversed the trial court's decision. The Bandow court ruled that both parties have a burden of proof when seeking to designate settlement proceeds as nonmarital and/or marital property. Under the Bandow analysis the noninjured spouse claiming money from a tort action as loss of consortium, must prove the same by a preponderance of the evidence. The injured spouse must prove noneconomic losses and post-divorce economic losses by a preponderance of evidence. Bandow also stated that to the extent that the parties do not provide sufficient evidence to make a reasonable allocation to a separate estate, the award should be classified as marital property. Id., 794 P.2d at 1350. See also Freeman v. Freeman, 107 N.C.App. 644, 421 S.E.2d 623 (1992) (allocating a dual burden); Landwehr v. Landwehr, 111 N.J. 491, 545 A.2d 738 (1988) (utilizing a dual burden of proof). We believe that Bandow's approach to dividing, in a divorce proceeding, monies from a settlement or verdict award is sound and fair. We believe that the Bandow analysis is consistent with our general analysis set forth in Hardy. In this Court's decision in Hardy we stated in syllabus point 3 that [t]he burden of proving the purpose of part or all of a personal injury recovery is on the party seeking a nonmarital classification. We believe that Bandow provides a more concise meaning of what was intended in syllabus point 3 of Hardy. Therefore, we hold that in a divorce proceeding a noninjured spouse who claims money from a tort settlement or verdict award as loss of consortium, [2] must prove the same by a preponderance of the evidence. [3] If the noninjured spouse carries his or her burden, the amount of monies designated as loss of consortium shall be the separate, nonmarital property of the noninjured spouse. The injured spouse who claims money for noneconomic loss [4] and post-divorce economic loss [5] must prove the same by a preponderance of evidence. [6] If the injured spouse carries his or her burden, the amount of monies designated for noneconomic loss and post-divorce economic loss shall be the separate, nonmarital property of the injured spouse. To the extent that the parties do not provide sufficient evidence to make an allocation of all of the tort settlement or verdict award under their respective burdens, such balance shall be classified as marital property and divided accordingly. [7] In the case sub judice the family law master imposed the burden of proof only on Mr. Huber, even though the decision in Hardy clearly provides that a loss of consortium claim is the separate nonmarital property of the noninjured spouseand therefore must be proven by the noninjured spouse. [8] While we make explicit today the dual burden in such cases, [9] Hardy implicitly recognized this point. The dual burden method is a more analytical approach [10] and has been adopted in a number of equitable distribution states. This analytical approach is consistent with the policy behind West Virginia's equitable distribution statute and provides a procedure by which the assets and debts of the marital estate must be established by well recognized procedural and evidentiary rules as opposed to mere guesswork. This Court clearly stated in Pearson v. Pearson, 200 W.Va. 139, 146, 488 S.E.2d 414, 421 (1997) that Evidence presented in a divorce case must be consistent with our Rules of Civil Procedure, Rules of Evidence and Rules of Practice and Procedure for Family Law. A divorce proceeding is not an opportunity for lawyers to circumvent our procedural and evidentiary rules. Those rules are applicable in divorce actions with the same force and vibrancy as in any other civil proceeding. For Ms. Huber to prevail in a loss of consortium claim and the same be awarded as her separate nonmarital property, it is incumbent on Ms. Huber to present appropriate evidence to support her loss of consortium claim. Such evidence can be reasonably presented by vocational experts, economists and accountants. [11] In fact, most of the evidence that this Court has outlined would have been secured by the personal injury lawyer in preparation for the personal injury trial. As such, in most instances, the categorization of damages would also be available as a result of the personal injury case. A final order must provide a factual and legal basis by which this Court can facilitate meaningful review. In this case the lower courts failed to make sufficient findings on the respective burdens of both parties. We therefore reverse the circuit court's ruling on the personal injury settlement.