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Doucette v. Washburn, attorneys and footnotes

Attorney for plaintiff:

Ellyn C. Ballou, Esq.
P O Box 328
South Freeport, ME 04078-0328

Attorney for defendant:

Claudia C. Sharon, Esq.
P O Box 4570
Portland, ME 04112
FOOTNOTES******************************** {1} . The divorce decree provided that Jeanne Washburn may assume the name Jeanne Ellura Doucette. {2} . By the time of the trial, the account containing the lump sum award had grown to $292,748. The court determined that the increase in value of that account should be identified as marital or nonmarital in the same proportions as the original award. {3} . 19-A § 953(3) states: 3. Acquired subsequent to marriage. All property acquired by either spouse subsequent to the marriage and prior to a decree of legal separation is presumed to be marital property regardless of whether title is held individually or by the spouses in some form of coownership such as joint tenancy, tenancy in common, tenancy by the entirety or community property. The presumption of marital property is overcome by a showing that the property was acquired by a method listed in subsection 2. 19-A § 953(3) (1998). {4} . Other jurisdictions have taken a number of different approaches to lump sum workers' compensation and similar awards. One approach classifies the entire award as the separate property of the injured spouse because it is uniquely personal to that individual. See, e.g., Richards v. Richards, 283 P.2d 881, 881 (N.M. 1955). Other courts have held that, if a workers' compensation settlement award or a personal injury award accrued or was acquired during the marriage, it must be considered marital property unless it falls within an explicit statutory exception. See, e.g., Liles v. Liles, 711 S.W.2d 447, 452 (Ark. 1986); In re Marriage of Fjeldheim, 676 P.2d 1234, 1236 (Colo. Ct. App. 1983); In re Marriage of Dettore, 408 N.E.2d 429, 431 (Ill. App. Ct. 1980). A more flexible view looks to the nature of a workers' compensation or personal injury award to determine whether the property is marital property. See, e.g., Jurek v. Jurek, 606 P.2d 812, 814 (Ariz. 1980); Weisfeld v. Weisfeld, 545 So.2d 1341, 1346 (Fla. 1989); Campbell v. Campbell, 339 S.E.2d 591, 593 (Ga. 1986); Weakley v. Weakley, 731 S.W.2d 243, 244- 45 (Ky. 1987); Van de Loo v. Van de Loo, 346 N.W.2d 173, 176 (Minn. Ct. App. 1984); Johnson v. Johnson, 346 S.E.2d 430, 451 (N.C. 1986). {5} . Section 953(2) states: 2. Definition. For purposes of this section, "marital property" means all property acquired by either spouse subsequent to the marriage, except: A. Property acquired by gift, bequest, devise or descent; B. Property acquired in exchange for property acquired prior to 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 prior to the marriage. 19-A § 953(2) (1998). {6} . Although section 953(2)(B) addresses only property exchanged for nonmarital property acquired before or during the marriage, the concept embodied in this section must include those rare instances where property is received during a marriage "in exchange" for earnings that would have been received in the future, after the marriage had ended. See 19-A M.R.S.A. § 953(2)(B). {7} . Cf. Long v. Long, 1997 ME 171, ¶¶ 17-18, 697 A.2d 1317, 1324 (holding that if the nonmarital property is exchanged for real property held by the spouses jointly, it will lose its nonmarital status). {8} . The workers' compensation hearing officer allocated $200,000 of the award among the three components as follows: (1) $101,563.12 (45.1%) was allocated to future lost wages; (2) $56,988.88 (25.3%) was allocated to future medical expenses; and (3) $41,448 (18.4%) was allocated to permanent impairment. The court rejected the hearing officer's allocation because of its concerns that the allocation was unreliable. The court then substituted its own determination that the award should be allocated equally among the three components. Because the court's reallocation benefitted Washburn by increasing substantially the amount allocated to the nonmarital component of permanent impairment, we do not reach Washburn's assertion that the court erred in engaging in the reallocation. For reasons unclear to the parties and the court, the hearing officer left $25,000 of the award unallocated. Because the $25,000 had been spent before the divorce proceeding, the court did not attempt to allocate it to either of the parties. {9} . If the benefits are paid in a lump sum after the dissolution of the marriage, the marital presumption does not apply, see 19-A M.R.S.A. § 953(2)(C), and, to the extent that the award represents compensation for lost earnings that accrued after the divorce, the award is nonmarital. Cummings, 540 A.2d at 780. {10} . Washburn also argues that the court should have concluded that the entire component was nonmarital because the parties were living apart during the latter years of the marriage. There is no merit in that contention. See 19-A M.R.S.A. § 953(2)(C); see also Kaye v. Kaye, 538 A.2d 288, 289 (Me. 1988) ("In the absence of a judicially sanctioned separation, the parties' agreement to a de facto separation does not prevent the marital presumption from attaching to subsequently acquired property."). {11} . Permanent impairment and pain and suffering awards that do not arise from the loss of a marital asset are often considered to be nonmarital. See American Law Institute, Principles of the Law of Family Dissolution: Analysis and Recommendations § 4.08(2) (Proposed Final Draft, Feb. 14, 1997). See also Weakley, 731 S.W.2d at 245 ("A personal injury claim settlement, to the extent that it represents compensation for pain and suffering and loss of capacity is peculiarly personal to the party who receives it."). Injury to or loss of a specific body part may also be understood to represent the loss of a "nonmarital asset." See 19-A M.R.S.A. § 953(2)(B). But see Heilman, 291 N.W.2d at 185 (holding that a personal injury claim awarded to the husband for the loss of an eye was marital property because the injury occurred during the marriage). However, damage awards in personal injury actions are not always easily identified as compensating for any particular component of the plaintiff's alleged damages. See, e.g., American Law Institute, supra § 4.08 cmt. c. Comment c states: Because personal injury awards do not often specify the relative amounts allowed for pain and suffering, lost wages, and reimbursement of expenses, the allocation necessary to apply the rule of this section will usually need to be made at the time of dissolution. A dissolution court presented with this question must resolve it on the basis of the evidence then available, recognizing that precisely accurate allocations are often not possible. Id. {12} . Permanent impairment awards have not always been separable from wage loss benefits. Prior to 1965, both permanent impairment benefits and incapacity benefits were intended to compensate employees for lost earning capacity. Campbell v. Bates Fabrics, Inc., 422 A.2d 1014, 1015 n.5 (Me. 1980); Phillip's Case, 124 A. 211, 212-13 (Me. 1924); Foster's Case, 121 A. 89, 90 (Me. 1923). In 1965, the Legislature amended former section 56 to provide that permanent impairment benefits could be awarded "[i]n addition to" benefits for incapacity. P.L. 1965, ch. 408, § 5. See, e.g., 39 M.R.S.A. § 56 (Pamph. 1986), repealed and replaced by P.L. 1987, ch. 559, Pt. B, § 31 ("Compensation under this section is in addition to any compensation under section 54-B or 55-B received by the employee."). Until recently, and since 1965, the award for permanent impairment had no relation to work incapacity or wage replacement. Delorge v. NKL Tanning, Inc., 578 A.2d 1173, 1174 (Me. 1990). Rather, such an award was "based on the loss of function of part of the body due to work-related injury." Id. This approach has been revised again, however. The Legislature recently abolished permanent impairment compensation and replaced it with a schedule that establishes periods of presumptive total incapacity, thus changing the nature of the award from a separate compensation for the lost use of the body to a long term earnings replacement. 39-A M.R.S.A. § 212 (Pamph. 2000). See also Boehm v. Am. Falcon Corp., 1999 ME 16, ¶ 9, 726 A.2d 692, 693; Clark v. Int'l Paper Co., 638 A.2d 65, 67 (Me. 1994). This change does not apply here because the amendments do not retroactively abolish permanent impairment benefits for pre-1993 injuries. See Clark, 638 A.2d at 67. {13} . Because this component, when clearly established, will routinely be set aside as nonmarital, we recognize the potential for manipulation of the component parts of a lump sum award to the possible detriment of the marital estate. We need not address that issue here. {14} . Ultimately, the court set aside one-third of the award ($97,582.67) entirely to Washburn, as nonmarital property for permanent impairment. Applying the 4.1/31.1 ratio (approximately 13%) to the remaining two-thirds of the award (292,748- 97,582.67=195,165.33), the court determined that $25,728.64 (195,165.33 x .13183) was marital property and that the remainder was the nonmarital property of Washburn. Thus, the nonmarital portion of the workers' compensation settlement award totaled $267,019.36. Because we reject Washburn's claim that the entire lump sum award was nonmarital, we also reject his assertion that the increase in value of the account containing the lump sum award should have been determined to be entirely nonmarital. The court's calculations allocated any increase in value in approximately the same proportions as its marital versus nonmarital allocation of the award itself. {15} . Section 953(1) states, in relevant part: 1. Disposition. [T]he court shall set apart to each spouse the spouse's property and shall divide the marital property in proportions the court considers just after considering all relevant factors, including: A. The contribution of each spouse to the acquisition of the marital property, including the contribution of a spouse as homemaker; B. The value of the property set apart to each spouse; and C. The economic circumstances of each spouse at the time the division of property is to become effective, including the desirability of awarding the family home or the right to live in the home for reasonable periods to the spouse having custody of the children. 19-A § 953(1) (1998). {16} . Cf. Marquis v. Chartier, 592 A.2d 169, 172 (Me. 1991) (holding that the court did not abuse its discretion in awarding a lump sum of $10,000 in lieu of alimony). {17} . When the earning capacity of the parties is significantly disparate, fairness may require a different approach. Cf. Sewall v. Snook, 687 A.2d 234, 236 (Me. 1996); Noyes v. Noyes, 662 A.2d 921, 923 (Me. 1995); Bayley v. Bayley, 611 A.2d 570, 571 (Me. 1992). Contrary to Washburn's contentions, however, our holding in those cases do not preclude the court from considering post-divorce need in its allocation of marital property. Bayley actually directs the court to consider the division of marital property and award of alimony as related in order to assess the "fairness of all the economic provisions of the judgment." Bayley, 611 A.2d at 571. The court must be cautious in identifying the nature of the award, however. See Ketchum v. Ketchum, 1998 ME 62, ¶¶ 4, 6, 707 A.2d 803, 804-05 (remanding the case because the $50 per week spousal support award was actually in the nature of a property distribution). {18} . Because we have rejected Washburn's arguments on appeal, we do not address Doucette's cross-appeal.

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