Personal Injury Settlements and Divorce
Over the decades, Clarkston Legal has handled several divorce proceedings where one spouse was involved as the plaintiff in a personal injury lawsuit. These cases can be tricky to the extent that any injury settlement may be treated as part of the marital estate and thus, subjected to the divorce.
There are several types of personal injury cases: vehicle accidents are the most common way a person suffers compensable inuries; dog bites are common; medical malpractice leads to tortious claims; and slip and fall cases are back thanks to a recent ruling by the Michigan Supreme Court.
Here are some statistics from the Michigan State Police relating to vehicle injuries to give you an idea of how many injury cases are generated by these crashes.
Of course, the counties that have Michigan's major population centers lead the way. Here is the MSP breakdown for vehicle crashes in the year 2022.
Wayne County had the most vehicle crashes at over 50,000; of those crashes, 201 were fatal and another 11,248 involved injuries.
Oakland County was next with just over 34,000 vehicle crashes; 76 fatalities and 6490 injuries.
Macomb County had over 22.000 crashes; 55 of which were fatalities; 4879 of the crashes involved injuries.
Kent County rounds out our list with just over 20,000 crashes; 50 of those were fatalities; 3768 involved injuries.
With these high numbers of vehicle crashes, it is easy to understand the omnipresence of advertisements from injury lawyers attempting to claim the injured among their clientele. This post examines the intersection of these injury cases with divorce.
Settlement proceeds from an injury law suit are often divided into two catergories: "pain and suffering" and economic damages. Generally, the pain and suffering portion of the settlement is considered the separate property of the injured party. The economic damages component, however, is considered to be part of the marital estate if the injured party is married.
This distinction is important and has implications for the divorce property settlement. In an injury case, economic damages include things like lost wages and medical bills. These items are imbued with the character of a marital asset. A spouse's earnings, for example, are marital property and do not stand separate from the marital estate. The same can be said of medical bills; they are marital are often apportioned between the spouses on a 50/50 basis in most divorce proceedings.
Compensation for "pain and suffering" or "bodily injury" however are distinct. The pain and the suffering a spouse experiences due to a bodily injury resulting from an accident is uniquely personal to the injured spouse.
The Michigan Supreme Court's definition of "bodily injury" includes "pain and suffering" within its scope:
'Bodily injury' was understood to be a category of injury for which damages that were the natural consequence flowed, including both damages resulting from an inability to work, as well as pain and suffering, so long as those damages were properly pleaded.
Earlier this year, the Michigan Court of Appeals affirmed the general rule that such "pain and suffering" damages are the separate property of the divorcing spouse.
Injury lawyers come in all stripes; some are diligent and meticulous; others are downright sloppy. The competence of the injury lawyer is crucial to the injured party going through a divorce.
The injured party's divorce lawyer should be actively involved in the structure of the injury settlement. Often, when an injury case nears a settlement, especially when that settlement is less than seven figures, the injury lawyers and the insurance company sometimes do not bother to break-out the injury settlement into its component parts. In the divorce, this can be problematic.
When there is no breakdown for a cash settlement, the non-injured spouse can claim that the proceeds are marital. Whenever possible, the injured spouse must insist on apportioning the settelment between economic and non-economic damages.
Loss of Consortium
A loss of consortium claim is another way injury proceeds make their way into the marital estate. If a loss of consortium claim is lodged, an injury settlement can include damages specifically designated for loss of consortium; those damages are generally considered marital. Therefore, the injured party that is contemplating divorce should take care not to encourage such a claim in their injury litigation.
If the settlement check is made payable to both spouses and a loss of consortium claim is lodged, the entire settlement is considered a marital asset. In any event, an injured party going through a divorce should clearly identify and characterize the injury settlement in any divorce settlement agreement.
Invasion of Separate Property
In Michigan, the equitable powers of the family court allow a judge to make findings such that the separate property of one spouse can be invaded. Such an invasion could be aimed at the injured spouse's injury settlement.
When a family court determines that equity in a divorce property settlement requires the invasion of separate property, then the court must weigh the factors relevant to the parties’ needs and circumstances and determine whether any portion of the settlement proceeds should be distributed to the other party.
The factors considered by the family court in making a property award are: 1) the duration of the marriage; 2) contributions of the parties to the joint marital estate, i.e. the sources of the property; 3) the ages of the parties; 4) the health of the parties; 5) their station in life; 6) the necessities and circumstances of the parties; and 7) the earning ability of the parties.
Thus, if the family court judge concludes that the injured spouse will experience a windfall when the injury settlement comes in, that judge can invade what would otherwise have been the injured spouse's separate property.
We Can Help
If you have suffered a personal injury and are contemplating divorce, contact our law firm to discuss your options. We offer a free consultation for this purpose.