Court Opinion

ID: 5117197
Source: CourtListenerOpinion
Date Created: 2021-10-08 14:06:28.797262+00
Date Added: 2024-06-11T08:22:01.113126
License: Public Domain

RENDERED: OCTOBER 1, 2021; 10:00 A.M.
                         TO BE PUBLISHED

                Commonwealth of Kentucky
                          Court of Appeals

                             NO. 2020-CA-1446-MR

ANITA BOND                                                           APPELLANT

                  APPEAL FROM CARTER CIRCUIT COURT
v.                 HONORABLE DAVID D. FLATT, JUDGE
                        ACTION NO. 15-CI-00255

JIMMY BOND                                                             APPELLEE

                                    OPINION
                                   AFFIRMING

                                  ** ** ** ** **

BEFORE: COMBS, JONES, AND McNEILL, JUDGES.

JONES, JUDGE: Anita Bond (“Anita”) appeals from the Carter Circuit Court’s

order denying her motion to classify Jimmy Bond’s (“Jimmy”) medical

malpractice settlement proceeds as marital property. Following a review of the

record and all applicable law, and being otherwise sufficiently advised, we affirm.
                                  I.    BACKGROUND

              Jimmy and Anita were divorced on October 30, 2015. At the time the

dissolution decree was entered, Jimmy had a personal injury claim pending in

Boyd Circuit Court against King’s Daughters Medical Center (“King’s

Daughters”). Jimmy’s claim against King’s Daughters alleged that certain of his

medical providers performed unnecessary medical procedures on him. These

procedures were performed during Jimmy’s and Anita’s marriage.1 As such, the

trial court reserved judgment on what portion, if any, of a future award to Jimmy

would be classified as marital property. As part of the decree, Jimmy was ordered

to report to Anita any award he received as a result of his lawsuit so that Anita

could determine whether to pursue classification of the award as marital property

by way of a motion to reopen the dissolution action.

              Jimmy’s personal injury claim against King’s Daughters was

consolidated with approximately 125 other similar claims. Eventually, the parties

entered into a global settlement. As part of the global settlement, King’s

Daughters agreed to pay a lump sum into a settlement fund to be distributed

amongst the various claimants by a Special Master. The Special Master was

appointed by the Boyd Circuit Court; he had sole discretion in allocating the global

1
 On various occasions in 2005, and once in 2009, King’s Daughters performed five cardiac
procedures on Jimmy consisting of a single bypass surgery, two pacemaker implementations, and
two cardiac catheterizations.
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settlement. The Special Master allocated the proceeds by phase. Phase 1

compensated the claimants for the unnecessary procedures. To determine the

amount of compensation, each claimant received various points based on the

type(s) of unnecessary procedures that were performed on him. There was no

accounting for any medical bills or lost wages, etc. The number of points each

claimant received in Phase 1 was then compared against the whole to determine

that person’s percentage of the whole settlement award, entitling him to that

percentage of the whole as his Phase 1 award. A certain portion of the settlement

was set aside to provide additional, Phase 2 compensation to claimants who

suffered extraordinary damages not captured in the award for having had the

unnecessary procedures. Phase 2 damages included things such as allergic

reactions, disability, lost wages, aneurysms, and death. The excess funds not

dispersed from the extraordinary injury fund were reallocated proportionally to all

claimants.

             Jimmy received a gross settlement award of $357,415.50. According

to Jimmy’s personal injury attorney, Hans Poppe, this entire amount represented

Jimmy’s share of the Phase 1 fund and the remaining excess Phase 2 funds that

were reallocated after all Phase 2 claimants were compensated. Jimmy did not

apply for any Phase 2 recovery.

             After Anita was apprised of Jimmy’s settlement, she filed a motion to

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reopen the dissolution action claiming that all or a portion of Jimmy’s settlement

should be classified as marital property. Jimmy countered that the settlement was

in the nature of compensation for his pain and suffering for having undergone the

unnecessary medical procedures, and therefore, was his nonmarital property. To

support his position, Jimmy filed an affidavit from Attorney Poppe.

             The family court held a hearing on August 26, 2020, at which

Attorney Poppe was the sole witness. Consistent with his affidavit, Attorney

Poppe testified that Jimmy did not file a Phase 2 claim; all of Jimmy’s settlement

proceeds came from Phase 1 and the reallocation of excess Phase 2 funds. These

funds were awarded to compensate Jimmy for the unnecessary procedures he

underwent. Anita did not present any evidence or call any witnesses. Ultimately,

the family court classified Jimmy’s entire award as nonmarital property after

having determined that it was for pain and suffering. The family court’s order

provides in relevant part:

             The testimony of Attorney Poppe clearly sets forth that
             the award for personal injury was a global settlement of
             damages arising from unnecessary cardiac procedures
             performed upon him by medical treatment providers.
             The settlement did not delineate exactly what damages
             the award was to compensate. There is no separation of
             the award between pain and suffering or lost wages.
             Poppe testified [Jimmy] did not submit a claim for lost
             wages or earnings, or for impairment in his ability to earn
             monies. The settlement excludes earning capacity as a
             potential basis for recovery. [Anita] was unable to
             provide any evidence suggesting the settlement was
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             based upon loss of earnings or impairment in the ability
             to earn. From the evidence presented this [c]ourt is
             unable to reach any conclusion other than the award was
             for pain and suffering. Pain and suffering damages are
             nonmarital in nature and not subject to division as a
             marital asset.

Record (R.) at 107-08.

             This appeal followed.

                          II.   STANDARD OF REVIEW

             “When property distribution is at issue in a dissolution proceeding, the

trial court must undertake three steps: (1) the trial court must categorize each piece

of disputed property as marital or nonmarital; (2) the trial court must assign each

party’s nonmarital property to that party; (3) the trial court must equitably divide

the parties’ marital property in just proportions.” Roper v. Roper, 594 S.W.3d 211,

225 (Ky. App. 2019), as modified (Jan. 17, 2020) (citing Smith v. Smith, 235

S.W.3d 1, 5 (Ky. App. 2006)). The trial court’s assessment of whether an item is

marital or nonmarital is reviewed under a two-tiered scrutiny in which the factual

findings made by the court are reviewed under the clearly erroneous standard and

the ultimate legal conclusion denominating the item as marital or nonmarital is

reviewed de novo. Smith, 235 S.W.3d at 6.

                                   III. ANALYSIS

             Pursuant to statute, marital property is defined to include “all property

acquired by either spouse subsequent to the marriage except”:
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                (a) Property acquired by gift, bequest, devise, or descent
                during the marriage and the income derived therefrom
                unless there are significant activities of either spouse
                which contributed to the increase in value of said
                property and the income earned therefrom;

                (b) Property acquired in exchange for property acquired
                before the marriage or in exchange for property acquired
                by gift, bequest, devise, or descent;

                (c) Property acquired by a spouse after a decree of legal
                separation;

                (d) Property excluded by valid agreement of the parties;
                and

                (e) The increase in value of property acquired before the
                marriage to the extent that such increase did not result
                from the efforts of the parties during marriage.

KRS2 403.190(2).

                Personal injury awards and settlements do not fit neatly within one of

the above-mentioned exceptions. Accordingly, in Weakley v. Weakley, 731

S.W.2d 243 (Ky. 1987), the Kentucky Supreme Court supplied additional guidance

to assist the lower courts in determining how personal injury awards to a married

person should be classified in the event of a dissolution of the marriage. The Court

first noted that workers’ compensation benefits awarded for lost income that

accrued during the marriage were considered marital property but that such

benefits should be considered nonmarital property if they were intended to

2
    Kentucky Revised Statutes.
                                            -6-
compensate the injured employee for lost income following the dissolution of

marriage. Weakley, 731 S.W.2d at 244. However, the workers’ compensation

cases were not dispositive with respect to personal injury awards because “[t]he

award in workers’ compensation cases is limited to recovery for disability and

medical expenses, while in tort cases an additional element of recovery for damage

is allowed for pain and suffering.” Id.

             Accordingly, the Weakley Court determined that a court must

determine whether any portion of the award was for “loss of earnings and

permanent impairment of ability to earn money[.]” Id. If so, the court must next

determine whether the award for lost income is “applicable to the years while the

marriage existed[.]” Id. If so, it is marital property; however, “[t]o the extent that

the award can be prorated to the remaining years of life expectancy following the

dissolution of the marriage, it is nonmarital.” Id.

             The same rule does not apply to awards for pain and suffering because

such awards are “in no sense the replacement of earnings that otherwise would

have accrued during the marriage.” Id. at 245. “As a matter of fairness it does not

seem right that upon the dissolution of the marriage one of the parties should be

rewarded because the other party had the misfortune to suffer painful injuries as a

result of an accident [or tort].” Id. “[A]s to pain and suffering resulting from an

injury sustained during the marriage, the injured party has simply exchanged

                                          -7-
property acquired before the marriage, i.e., good health, free from pain, for the

money received as compensation for the loss.” Id. As such, the pain and suffering

award should be treated as nonmarital property pursuant to KRS 403.190(2)(b). Id.

             While Weakley added significant clarification to the law surrounding

the classification of personal injury awards, the Court did not address “the proper

procedure for the allocation between marital and nonmarital property of a personal

injury award for an injury sustained during the marriage where the settlement or

judgment does not indicate what portion of the award applies to earning capacity

and what portion is allocated to pain and suffering.” Id. In the present case, we

are presented with the very situation contemplated, but left unresolved, in Weakley,

where it is unclear from the face of the settlement documents what portion of a

settlement is for personal injury and what portion, if any, is for lost wages or

impairment of earning capacity.

             While the Weakley Court did not adopt a test for trial courts to follow

where the settlement was silent, we reject that it intended all proceeds from a silent

settlement to be classified as marital property. Otherwise, we can see no reason for

the Court to have referred to “the proper procedure” to be used in such cases. In

subsequent unpublished cases, we have held that the burden is on the spouse

receiving the settlement to prove it is nonmarital and that he may do so by

presenting additional evidence to the trial court as occurred in this case. Holbrook

                                          -8-
v. Holbrook, No. 2003-CA-002725-MR, 2005 WL 497229, at *3 (Ky. App. Mar. 4,

2005). The trial court’s ultimate findings on the issue then must be reviewed by

this Court under the “clearly erroneous” standard. Reichle v. Reichle, 719 S.W.2d

442, 444 (Ky. 1986); CR3 52.01.

                Contrary to Anita’s assertions otherwise, we do not believe the trial

court placed the initial burden on her to prove the settlement was marital property.

Instead, we conclude that the language in the trial court’s order was meant as an

affirmation that Jimmy had produced sufficient evidence based on the testimony of

Attorney Poppe that the settlement proceeds were intended to compensate Jimmy

for his pain and suffering for having undergone the unnecessary medical

procedures, and that Anita had failed to present any contradictory evidence.

Attorney Poppe testified that Jimmy did not apply for Phase 2 funds and that the

Phase 1 funds were meant to provide compensation to Jimmy for the injuries he

suffered for having undergone the unnecessary medical procedures. This was

sufficient evidence from which the trial court was able to find that the proceeds

Jimmy received were in the nature of pain and suffering compensation. Having

done so, the trial court properly categorized them as nonmarital property.

3
    Kentucky Rules of Civil Procedure.
                                            -9-
                               IV. CONCLUSION

          For the foregoing reasons, we affirm the order of the Carter Circuit

Court.

          ALL CONCUR.

BRIEF FOR APPELLANT:                   BRIEF FOR APPELLEE:

Justin Criswell                        Will J. Matthews
Grayson, Kentucky                      Grayson, Kentucky

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