GRACE LANDWEHR, PLAINTIFF-RESPONDENT, v. RAYMOND S. LANDWEHR, DEFENDANT-APPELLANT.
Supreme Court of New Jersey
Submitted January 20, 1987—Decided August 1, 1988.
111 N.J. 491
PER CURIAM.
This appeal requires us to determine whether all or part of the settlement proceeds that a spouse receives during a marriage for claims arising out of his or her personal injuries constitutes a marital asset subject to equitable distribution pursuant to
Grace Landwehr and Raymond Landwehr were married in 1959 and have three children. On July 31, 1978, Raymond Landwehr was injured in an automobile accident. As a result he sustained numerous personal injuries and was hospitalized for over a week and out of work for three months. During most of his recuperation, Mr. Landwehr collected weekly disability payments of one-hundred and thirty-eight dollars. (His weekly salary was two-hundred dollars.) All of his hospital and medical bills were paid by insurance.
Throughout his recuperation, Mr. Landwehr‘s wife, Grace, attended him, took care of their three children, and ran their household. She also worked outside the home. Shortly after his accident, while Mr. Landwehr was in the hospital, Mrs. Landwehr brought an attorney to him to discuss their legal rights with regard to the accident. During the attorney‘s initial interview with the Landwehrs, Mrs. Landwehr informed him that she wanted to pursue a per quod (loss of consortium or services) derivative action in connection with any lawsuit that might be brought. The attorney agreed to pursue all appropriate actions, and effected a settlement with the insurance carrier in May 1980 for twenty-six thousand dollars. No pleadings were ever filed.
The Landwehrs separated in June of 1981. On October 29, 1981, Mrs. Landwehr filed a complaint for divorce. On October 24, 1983, a final judgment of divorce was entered. At that time the court reserved judgment on whether the personal injury settlement was subject to equitable distribution under
Subsequently, the trial court decided that Mrs. Landwehr was entitled to the portion of the personal injury settlement that was intended to cover her per quod claim, and to one-half of the portion of the settlement that was intended to cover Mr. Landwehr‘s lost wages; and that Mr. Landwehr was entitled to keep the remainder of the settlement. The court held that the funds
The Appellate Division reversed that judgment. It held that the entire personal injury settlement was marital property subject to equitable distribution. Landwehr v. Landwehr, 200 N.J. Super. 56 (1985). Thereafter the trial court entered a second order holding that Mrs. Landwehr was entitled to forty percent of the settlement.
Mr. Landwehr appealed that order. He argued that the trial court lacked jurisdiction to make the award;1 that the award was so excessive that it constituted an abuse of discretion; and that personal injury settlement proceeds should not be subject to equitable distribution under
The “law of the case” doctrine sometimes requires a decision of law made in a particular case to be respected by all other lower or equal courts during the pendency of that case. State v. Reldan, 100 N.J. 187, 203 (1985). Under even the most rigorous application of that doctrine this court is not bound by
II
In 1971, the Legislature amended
Relying on our expansive definition of property in Painter, the Appellate Division decided that claims arising out of personal injuries are subject to equitable distribution under
In Kruger v. Kruger, 73 N.J. 464 (1977), we determined that military retirement pay and monthly disability benefits were eligible for equitable distribution. We relied on our decision in Painter that “all” property acquired during the marriage was eligible for equitable distribution. We did not address the distributability of personal injury claims. However we did, by way of dictum, cite the Appellate Division‘s decision in Di Tolvo for the proposition that lump sum personal injury awards are subject to equitable distribution. See id. at 472.
Nevertheless, the Di Tolvo rule did not enjoy unanimous approval. In Harmon, supra, the concurring opinion agreed with the majority that the portion of an award or settlement received in satisfaction of a personal injury claim that compensates for economic loss, i.e., lost earnings and medical expenses, should be subject to equitable distribution. 161 N.J. Super. at 213 (Botter, J., concurring). But it argued that the literal reading to which
[The] part of a settlement or award which represents compensation for pain and suffering and disability should be deemed the personal property of the injured spouse only, not subject to distribution. The principal reason is that the purpose of the payment is to make the injured person whole, to restore that person to the condition which preceded the injury to the extent possible by pecuniary means. The payment simply fills a gap or loss in the physical and mental well being of the injured spouse. It does not represent an accumulated asset or surplus of marital property. [161 N.J. Super. at 213-14 (Botter, J., concurring).]
Painter, Kruger, Di Tolvo, Harmon, and Hughes all were decided before 1980, when the Legislature amended
To permit a compulsory division of the asset between the recipient and his spouse is contrary to the natural expectations of the recipient and the giving parent or relative. Since the efforts of neither spouse resulted in the gift, devise or bequest, it need not be regarded as a marital asset under the partnership concept of marriage. [Governor‘s Statement On Assembly Bill 762 (2nd OCR) (emphasis added).]3
Thus the legislative history, sparse as it may be, indicates that the Legislature did not intend as expansive an interpretation of “property” as we gave it in Painter and Kruger. The amendment reflects a legislative policy that some assets may belong to only one spouse, and not both. Accordingly, in our subsequent constructions of
In Amato v. Amato, 180 N.J. Super. 210 (1981), the wife had a potential malpractice action at the time of her divorce, and the husband wanted to share in the proceeds of it. The court followed the concurrence in Harmon. It held that the right to reimbursement of marital assets that were lost because of the personal injuries of one spouse is marital property subject to equitable distribution, explaining that “[w]hen, and if, such sums are recouped from a tortfeasor there is no equitable reason why the recovery of these joint losses should benefit only the spouse who receives them.” Id. at 215. But the court “[could not] view the right to sue for personal injury or to sue for loss of consortium as personal property “acquired during the marriage.” Id. at 216. It reasoned that it is unfair to distribute the money received in settlement of these claims because that money represents the legal substitute for pain, suffering, and the mental and physical disabilities endured by the individual spouse, rather than by the spouses jointly.
In the present case, the Appellate Division declined to follow Amato because it is inconsistent with dictum in our 1977 decision in Kruger, supra, 73 N.J. 464. The court did not consider the effect of the 1980 amendment on the issue. Indeed, the “purpose approach” adopted by the Appellate Division in Amato v. Amato, supra, 180 N.J. Super. at 219, and in the concurring opinion in Harmon v. Harmon, supra, 161 N.J. Super. at 213, is consistent with the underlying rationale of the
III
“Compensating for the noneconomic inequities in life is a task daunting in its complexity,” Lukhard v. Reed, 481 U.S. 368, 107 S.Ct. 1807, 1816, 95 L.Ed. 2d 328, 341 (1987). It is, of course, impossible to cure personal injuries by awarding money damages to the victim. Nevertheless, the inscrutable link between damage awards and the noneconomic losses effected by physical injuries is firmly entrenched in our legal system. See Botta v. Brunner, 26 N.J. 82, 92-94 (1958). We administrate this imperfect mode of compensation because in most personal injury cases damage awards are the only remedy that we can fashion.
Our acceptance of the translation of corporal inviolability into currency does not blunt our sensitivity to the unique, discrete sufferings of individuals who have been the victims of personal injuries. It is entirely clear that a spouse receives compensation for pain and suffering and physical and mental disabilities for excrutiatingly personal reasons, wholly apart from the labors or efforts of economic transactions of the marital partners. As the Appellate Division stated in Amato v. Amato, supra, 180 N.J. Super. at 218:
Nothing is more personal than the entirely subjective sensations of agonizing pain, mental anguish, embarrassment because of scarring or disfigurement, and outrage attending severe bodily injury. Mental injury, as well, has many of these characteristics. Equally personal are the effects of even mild or moderately severe injury. None of these, including the frustrations of diminution or loss of normal body functions or movements, can be sensed, or need they be borne, by anyone but the injured spouse. Why, then, should the law, seeking to be equitable, coin these factors into money to even partially benefit the uninjured and estranged spouse? In such case the law would literally heap insult upon injury.
We agree with the Appellate Division in Amato that
Our holding does not denigrate the suffering and struggles that Mrs. Landwehr endured as a result of her husband‘s accident. Husbands and wives are inescapably and intimately affected by the crises that befall their spouses. Thus the law allows spouses to sue derivatively in order to recover for some of the personal distress they suffer as a result of an injury to their husbands or wives. The per quod claim is the logical counterpart of the claim for pain and suffering that accrues to the spouse who is injured in the first instance. As the Court stated in Amato v. Amato, supra, 180 N.J. Super. at 218:
The uninjured spouse has his or her separate and equally personal right to an action for loss of consortium. Just as there is no equitable reason for that spouse to profit from his or her ex-mate‘s recompense for suffering there is no justification for allocation of a share in the right to loss of consortium.
Because the pain and suffering that the per quod claim seeks compensation for is just as personal as the pain and suffering at issue in the primary action—albeit usually less severe—we hold that a per quod claim is also non-distributable under
As a per quod claimant, Mrs. Landwehr could recover for the “deprivation of her husband‘s aid, society and conjugal fellowship.” Ekalo v. Constructive Serv. Corp., 46 N.J. 82, 84 (1965). Under the facts of this case, however, it appears that she could not recover for the emotional distress she suffered
We share the dissent‘s sensitivity to the noncompensable distress that Mrs. Landwehr endured. But that does not prompt us to equate Mr. Landwehr‘s need for compensation with that of his wife‘s. An injured party‘s pain and disabilities and the emotional suffering they engender persist unaffected by the breakup of a marriage. On the other hand, an uninjured party‘s emotional distress over a spouse‘s injuries are unlikely to continue with the same intensity after a divorce.
Nevertheless, the portion of a personal injury award or settlement that simply reimburses marital assets that were lost because of a spouse‘s injury should be subject to equitable distribution. Marital income and marital assets, by definition, belong to both marriage partners. Therefore, to the extent that a personal injury causes such income to be lost and such assets to be expended for medical expenses, both partners are entitled to recover. Accordingly, the portion of Mr. Landwehr‘s settlement that was intended to compensate for his lost wages is subject to equitable distribution. Reimbursed medical expenses likewise would be distributable.4
Our holding is supported by the majority of community property states. See 4A Powell, Law of Real Property ¶ 625.2(2) at 53-53; cf. Kruger, supra, 73 N.J. at 470, 472 n. 1 (looking to community property states for guidance). Moreover, numerous equitable distribution jurisdictions have taken the same approach. See, e.g., Gloria B.S. v. Richard G.S., 458
We recognize that the method of allocating the components of an award for settlement that was received prior to the distribution of marital assets pursuant to a divorce will be different from the allocation made after a divorce. After a divorce,
[s]pecial jury interrogatories may be utilized to delineate the separate factors of recovery. See
R. 4:39-1 and2 . Thereafter if the divorced spouses cannot agree to a reasonable allocation a matrimonial judge will resolve the dispute including a determination of a pro rata responsibility for attorneys’ fees and suit expense. The same procedures should be employed should the matter be settled. [Amato, supra, 180 N.J. Super. at 220].5
In the case of an award or settlement prior to the parties’ contemplation of divorce, the money will almost certainly be unallocated when it is received. Upon the subsequent division of the spouses’ property, a matrimonial judge can allocate the lump sum received into the three categories explained above, as the trial court did in this case.
We do not expect that the allocation of such awards will present any serious problems. Trial courts are used to
Accordingly, we reverse the judgment of the Appellate Division and reinstate the trial court‘s original order, which awarded Mrs. Landwehr the proceeds of her per quod claim and one-half of the proceeds of Mr. Landwehr‘s claim for lost wages, and Mr. Landwehr the proceeds for his pain and suffering and physical and mental disability and one-half of the proceeds of his claim for lost wages.
O‘HERN, J., dissenting.
Toward the end of their twenty-two-year marriage, this couple received a twenty-six thousand dollar settlement for personal injury and per quod claims that arose from an automobile accident involving the husband. It was a lump-sum settlement without any itemization, and thus presumably covered all aspects of the husband‘s claim of personal injury and lost wages, as well as the wife‘s derivative claims. While the husband recuperated, the wife cared for him, worked, and ran the household; the parties stipulated that their attorney in the tort action had assured her that he “would take care of things” concerning her per quod claim. Landwehr v. Landwehr, 200 N.J. Super. 56, 58 (App.Div.1985).
About three years after the accident, the marriage dissolved. Though at trial the parties stipulated that the husband had
“[A]ll property, regardless of its source, in which a spouse acquires an interest during the marriage shall be eligible for distribution in the event of divorce.” Painter v. Painter, 65 N.J. 196, 217 (1974). “Regarding equitable distribution, this Court has frequently held that an ‘expansive interpretation [is] to be given to the word “property.““” Mahoney v. Mahoney, 91 N.J. 488, 495 (1982) (quoting Gauger v. Gauger, 73 N.J. 538, 544 (1977)). In Mahoney, we specifically noted, but did not resolve, the differing decisions concerning the inclusion of personal injury claims in the marital estate. 91 N.J. at 496 (citing Di Tolvo v. Di Tolvo, 131 N.J. Super. 72, 80-82 (App.Div.1974), and Amato v. Amato, 180 N.J. Super. 210 (App.Div.1981), both of which involved inchoate claims for personal injury). In this case we do not deal with a pending personal injury claim but with the distribution of settlement proceeds received before the marriage was terminated.
No case has held that such proceeds acquired during a marriage are excluded from the marital estate. With but two exceptions, our courts have subjected “a broad range of assets and interests to equitable distribution including vested but unmatured private pensions, Kikkert v. Kikkert, 88 N.J. 4 (1981); military retirement pay and disability benefits, Kruger v. Kruger [73 N.J. 464 (1977)]; [and] unliquidated claims for benefits under workers’ compensation, Hughes v. Hughes, 132 N.J. Super. 559 (Ch.Div.1975).” Mahoney, supra, 91 N.J. at 495-96 (footnote omitted). The only exceptions to this mandate arise from the 1980 and 1983 legislative amendments that exclude from equitable distribution gifts not from a spouse and inheritances, primarily because it was thought that neither the donor nor the marital partners would have intended these
It is difficult for me to determine whether the majority is creating a sui generis rule requiring the tracing of all personal injury settlements no matter when received or a more generic rule limiting the doctrine of equitable distribution to assets shown to have been earned or acquired in replacement of earned income. I am concerned that the judgment of the Court will reinforce stereotypical or regressive views of the marriage relationship. If the point is that the proceeds of the settlement are applicable only to reconstitute financially the “corporal inviolability” of the injured spouse through currency, supra at 500, what can be said of the spouse who wastes assets of body and mind in furtherance of the marital estate? Would the proceeds of that effort represent a conversion of the bodily identity; is that spouse entitled to an increased share of marital assets to reconstitute the wasted body?
All such views are to my mind too metaphysical for the practical realities of modern marriage, which belie any generalization that an accident victim‘s spouse does not share in the pain and suffering. The endless hours of encouragement and support that make the injured spouse whole again can never be fully repaid by damages awarded under the law of torts. Only the fair sharing inherent in marriage itself should provide such compensation.
In Mahoney v. Mahoney, supra, we emphasized that marriage, although “not a business arrangement in which the parties keep track of debits and credits * * *, [] is a shared enterprise, a joint undertaking * * * in many ways [] akin to a partnership.” 91 N.J. at 500 (quoting Rothman v. Rothman, 65 N.J. 219, 229 (1974)). Like every joint undertaking, mar-
In sum, I would hold that the liquidated proceeds of the undifferentiated settlement of a personal injury claim received during marriage that represent compensation for all aspects of the claim, including a spouse‘s derivative claim, should be considered part of the shared enterprise of the marriage, especially when the caring spouse has participated in the course of recovery. I would therefore affirm the judgment of the Appellate Division.
The Chief Justice joins in this opinion.
For affirmance—Chief Justice WILENTZ and Justice O‘HERN—2.
For reversal—Justices CLIFFORD, HANDLER, POLLOCK, GARIBALDI and STEIN—5.