Fisher & Fisher
Huntington, West Virginia
Attorney for the Appellee
James W. St. Clair
St. Clair & Levine
Huntington, West Virginia
Attorney for the Appellant
JUSTICE BROTHERTON delivered the Opinion of the Court.
1. To 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.
2. 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
3. The burden of proving the purpose of part or all of
a personal injury recovery is on the party seeking a nonmarital
4. A loss of consortium claim is the separate nonmarital
property of the uninjured spouse.
The issue addressed in this case is one of first
impression in this State: whether a personal injury award is
marital property subject to equitable distribution under W.Va. Code
Larry and June Hardy were married on August 14, 1973.
Both had children from previous marriages who did not live with
them, and there were no children from this marriage.See footnote 1 June became
a licensed practical nurse, as well as a licensed real estate
agent. Larry was initially involved in sales and later worked as
an insurance adjuster. In August, 1982, June was working at the
Veteran's Hospital in Huntington as a licensed practical nurse and
Larry was an insurance salesman for Riverside Insurance Agency in
Huntington. They lived in a jointly owned home.
On August 22, 1982, Larry was mowing the lawn when the lawn mower's rotary blade broke and struck him in the leg. Both of the bones in his lower right leg were severed. The Hardys filed a lawsuit against the manufacturer, Western International Corp., about a year later. On November 19, 1986, separate judgments were
entered awarding Larry $573,000 damages for his injuries and
awarding June $13,000 for loss of consortium and nursing services.
The Hardys separated on March 17, 1987, and on March 31,
1987, June Hardy filed for divorce. She subsequently argued that
her husband's personal injury award was marital property subject to
equitable distribution. On April 21, 1987, June Hardy was granted
temporary possession of a 1985 Lincoln Continental and the marital
home, and Larry Hardy was ordered to make the mortgage payment and
pay all joint bills and obligations incurred prior to their
separation. The Hardys were granted a divorce on the grounds of
irreconcilable differences on August 10, 1988. A determination as
to the equitable distribution of property and other considerations
was stayed pending the final decision of the family law master.
On February 14, 1989, the family law master recommended
the following property division:
1. That Mrs. Hardy be granted the ownership
of the former marital residence and its
contents and she discharge the payments
2. That the Court declare that Mrs. Hardy's
proceeds from the personal injury claim be
her separate property, because these funds
were paid as compensation for a loss of
consortium and for her nursing services
provided to Mr. Hardy. (To the extent
that the nursing services might be
considered lost wages, I was unable to
determine what amount was claimed for
3. That the Court declare that Mr. Hardy's
personal injury proceeds are his separate
property, except for $22,000.00, the
amount that was claimed as lost wages;
4. That the Court allow Mr. Hardy to keep
those funds declared as marital property
as part of his equitable distribution;
5. That Mr. Hardy be granted the 1979
Lincoln, the 1982 Chevette and the 1982
Cavalier as his sole and separate
6. That Mrs. Hardy be granted the 1985
Lincoln as her separate property;
7. That Mrs. Hardy be granted alimony in the
sum of six hundred dollars ($600.00) per
month, to commence on January 1, 1989, and
continuing until Mrs. Hardy shall die or
remarry or until Mr. Hardy's death,
whichever shall first occur.
In commenting on these recommendations, the family law
master expressed uncertainty as to how this Court would be likely
to rule on the issue of the division of Mr. Hardy's personal injury
award, but acknowledged that Mr. Hardy's personal injury award had
never been commingled and that the parties had each kept their
respective awards as their separate property.
Both parties protested the family law master's
recommended findings. On April 7, 1989, the Circuit Court of Wayne
County reversed and instructed the family law master to treat the
proceeds of Mr. Hardy's personal injury award as marital property.
In a report dated May 12, 1989, the family law master
made recommendations "in reliance upon the opinion of the Circuit
Court of Wayne County, said ruling being that the assets of the
parties resulting from a personal injury action are marital
assets." Among these recommendations were the following:
1. That the ownership of the marital residence, jointly owned by the parties, be transferred to Mrs. Hardy. [Valued at approximately $100,000]
2. That Mr. Hardy make the payments on the marital home
as alimony in the amount of $530 per month.
[Approximately $35,000 due]
3. That Mrs. Hardy be awarded $90,000 of the proceeds
of Mr. Hardy's personal injury claim.
4. That Mrs. Hardy retain the $13,000 she received
through her husband's personal injury claim.
5. That Mr. Hardy be allowed to keep the rest of the
personal injury proceeds as his portion of the
equitable distribution. [$573,000 less one third
for attorneys fees and costs]
6. That no alimony be granted to either party.
In addition, the family law master noted that Mrs. Hardy would continue to have at her disposal the $877 per month she received from workers' compensation,See footnote 2 as well as over $7,000 per year in interest income from her $90,000 share of Mr. Hardy's personal injury award, to supplement her needs. The family law master stated that Mrs. Hardy "had a long and varied work history and she should be able to be employed again at some point in the
future." On August 31, 1990, the Circuit Court of Wayne County
affirmed the recommendations contained in the family law master's
report in spite of the exceptions filed by both parties. Mr. Hardy
appealed on November 5, 1990.
This Court must now determine whether Larry Hardy's
personal injury award should be considered marital property. West
Virginia Code § 48-2-32(a) (1986) provides that "upon every
judgment for annulment, divorce or separation, the court shall
divide the marital property of the parties equally between the
parties." Marital property is defined as "all property and
earnings acquired by either spouse during a marriage . . . except
marital property shall not include separate property." W.Va. Code
§ 48-2-1(e). West Virginia Code § 48-2-1(f)(1) and (2) defines
"separate property" to mean "property acquired by a person before
marriage; or property acquired by a person during marriage in
exchange for separate property which was acquired before the
marriage . . . ." Neither statute contains any presumption with
regard to the characterization of personal injury awards.
Addressing our statutory definition of marital property, the appellant, Larry Hardy, argues that he did not "acquire" the personal injury claim during marriage because it did not arise from the labor or industry of the parties. Instead, the appellant maintains that his personal injury award is his separate property because it represents property which he acquired during the
marriage in exchange for separate property which he had acquired
before the marriage, in this case at birth. The appellant explains
that he entered into his marriage with two good legs, employable
skills, and the right to be free from pain, suffering and
disability. However, during the marriage his right leg was
practically severed, and thereafter he suffered pain, mental
anguish, disability, disfigurement, and the loss of a substantial
portion of his employable skills. Consequently, the appellant
reasons that the right leg which he brought into his marriage
represents separate property which was "taken" from him by the
negligence of the lawn mower manufacturer, and that this loss was
replaced by the Wayne County jury with an award of $573,000.
A number of early decisions involving equitable distribution concluded that a personal injury award was marital property which should be divided between the parties. See, e.g., Liles v. Liles, 289 Ark. 159, 711 S.W.2d 447 (1986); In re Marriage of Dettore, 86 Ill.App.3d 540, 42 Ill.Dec. 51, 408 N.E.2d 429 (1980); Gan v. Gan, 83 Ill.App.3d 265, 38 Ill.Dec. 882, 404 N.E.2d 306 (1980); Gonzalez v. Gonzalez, 689 S.W.2d 383 (Mo.App. 1985); Landwehr v. Landwehr, 200 N.J.Super. 56, 490 A.2d 342 (1985); Bero v. Bero, 134 Vt. 533, 367 A.2d 165 (1976). Such decisions were generally based upon a purely mechanical reading of statutory definitions of marital and separate property. "The mechanistic approach is literal and looks to the general statutory definitions of marital and separate property and concludes that since the award
was acquired during the marriage and does not fall into the
definition of separate property or into any enumerated exception to
the definition of marital property, it must be marital property."
Johnson v. Johnson, 317 N.C. 437, 346 S.E.2d 430, 435 (1986).
More recently, however, an increasing number of states
have classified personal injury settlements under a framework
referred to as the analytical, or purpose, approach, which draws a
distinction between the economic loss suffered by the marital
partnership and the economic and personal loss suffered by each
individual spouse and asks what a personal injury award was
intended to replace.See footnote 3 The appellant maintains that the analytical
approach to a personal injury award, which recognizes personal
injury awards as non-marital property, is the most enlightened and
equitable solution to the problem because:
Serious, debilitating injuries continue for a lifetime. Unfortunately many marriages do not. Compensation received for a lifetime injury should not be dissipated or substantially reduced because of the termination of the marriage. The award is the only compensation that an injured party will ever receive. To require its division with an uninjured spouse defies logic or justice.
The appellant's arguments echo the reasoning of the
courts which have adopted the analytical approach. For example,
the Court of Appeals of Minnesota stated that "[w]e are persuaded
that the purpose of the recovery rather than the timing of the
recovery controls its characterization." Van De Loo v. Van De Loo,
346 N.W.2d 173, 176 (Minn.App. 1984).
In Van De Loo, that court held that money obtained for
injuries personal to a spouse is nonmarital property, but affirmed
a trial court's determination that a personal injury recovery
should be treated as marital property under the specific facts of
that case. The court stated that "[w]hile appellant's personal
injury recoveries may have been his nonmarital property, it would
have been an unfair hardship not to apportion the assets purchased
with those proceeds." Id. at 178.
In spite of its decision on the facts, the Van De Loo
court quoted extensively from the New Jersey appellate court
opinion in Amato v. Amato, 380 N.J. Super. 210, 434 A.2d 639
(1981), which adopted the views expressed in a concurring opinion
in Harmon v. Harmon, 161 N.J.Super. 206, 212-18, 391 A.2d 552
(1978), as dispositive of the issue of how to characterize personal
The literal language of the statute ought not limit our inquiry to the time when the compensation is received. The purpose for which the property is received should control. Insurance funds, for example, paid to replace
property destroyed by fire would remain the
separate property of a spouse if the destroyed
property had been owned by the spouse before
marriage. So, too, we must look at the
purpose for which the compensation was
received during the marriage to determine if
it is subject to distribution. If we view the
recovery here simply as the replacement or
restoration, so to speak, of the physical and
mental health a spouse brought to the
marriage, it is like an exchange for property
possessed before the marriage. Under both the
common law and community property systems an
injured spouse should keep funds which replace
assets brought to the marriage.
Amato, 434 A.2d at 643 (emphasis added). In Amato, the court
concluded that a personal injury award received as compensation for
pain, suffering, disfigurement, disability, or other debilitation
of the mind or body is the nonmarital property of the injured
spouse. The court explained:
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. 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. The only
damages truly shared are those discussed
earlier, the diminution of the marital estate
by loss of past wages or expenditure of money
for medical expenses. Any other apportionment
is unfair distribution.
Amato, 434 A.2d at 643. A similar discussion is found in Johnson
v. Johnson, 317 N.C. 437, 346 S.E.2d 430, 438 (1986), wherein the
Supreme Court of North Carolina concluded that "[a]fter weighing
the relative strengths and weaknesses of both the mechanistic and
the analytic approaches, we are of the opinion that the latter is
the better reasoned."
After reviewing the above-cited cases and others, and
considering as well the arguments of both parties to this case, we
also conclude that the analytical approach provides the appropriate
treatment of personal injury awards in the context of an equitable
distribution of property. "Characterizing a personal injury
recovery based on the purpose for which it was received permits
separate treatment of the various components of the recovery." Van
De Loo v. Van De Loo, 346 N.W.2d 173, 176 (Minn.App. 1984).
Thus, to 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, 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.
The burden of proving the purpose of part or all of a personal
injury recovery is on the party seeking a nonmarital
In this case, we are unable to ascertain from the record
exactly what portion of the appellant's $573,000 award might have
been for lost wages, medical expenses, or perhaps future loss of
income as a result of a diminished earning capacity.See footnote 4 Our best
evidence comes from the family law master's first recommended
property division dated February 4, 1989, which was rejected by the
circuit court. In that report, the family law master recommended
that the appellant's personal injury award be treated as his own
separate property, except for $22,000, which was the amount claimed
as lost wages.See footnote 5
We also recognize that the uninjured spouse may have a
claim for loss of consortium which is considered to be that
spouse's own nonmarital property. In this case, Mrs. Hardy
recovered $13,000 for loss of consortium and for nursing services
she provided for her husband. This award was distinct and separate
from Mr. Hardy's $573,000 award and, in fact, the parties
themselves treated their awards as separate property, never
commingling them in joint accounts.
For the reasons discussed above, we remand this case to
the Circuit Court of Wayne County for a property division
consistent with the findings contained in this opinion.
Footnote: 1In her reply brief, the appellee states that at the time of the hearing in this case she was 57 years old and her soon-to-be ex-husband was 39. In his response, the appellant states that "at the time of and throughout their marriage, appellant was unaware that his wife was approximately eighteen years older than he."
Footnote: 2In March, 1984, June Hardy was injured while working at the Veteran's Hospital. As a result, she receives workers' compensation benefits in the amount of $877 per month.
Footnote: 3Although the majority of states that have adopted this approach are unlike West Virginia in that they are community property states, we believe, as the Court of Appeals of Maryland stated in Unkle v. Unkle, 305 Md. 587, 505 A.2d 849, 853 (1986), that "the principle involved is the same -- it focuses upon the costs incurred by the couple as a result of the injury and any diminution to either the community or marital property. Such diminution, if any, will occur in the same manner whether the couple resides in a community property or equitable distribution state."
Footnote: 4In Amato v. Amato, 380 N.J.Super. 210, 434 A.2d 639, 644 (1981), the Superior Court of New Jersey stated that "[t]here is no immutable rule in negligence cases requiring a plaintiff to receive a lump sum verdict encompassing pain, suffering, medical expenses and lost wages. Special jury interrogatories may be utilized to delineate the separate factors of recovery."
Footnote: 5According to the appellant, $45,000 of the $573,000 award he recovered represented lost wages during marriage. The appellant argues that "[u]nder the analysis in Johnson, the recovery of $45,000 constitutes marital property subject to equitable distribution, thus entitling June Hardy to $22,500 of the lost wages. None of the medical expenses were paid out of marital funds and therefore should not be considered marital property. Therefore, June Hardy should only be entitled to $22,500 of the $573,000 received by Mr. Hardy in his personal injury claim."