Dalessio v. Dalessio

• Decision Date: 09 January 1991
• Citation: 570 N.E.2d 139,409 Mass. 821
• Parties: Steven W. DALESSIO v. Kathleen M. DALESSIO (and a companion case). 1
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 139

570 N.E.2d 139

409 Mass. 821

Steven W. DALESSIO v. Kathleen M. DALESSIO (and a companion case). ¹

Supreme Judicial Court of Massachusetts Plymouth.

Jan. 9, 1991.

April 29, 1991.

Stephen C. Maloney, Boston, for Steven W. Dalessio.

Michael J. Traft (Beverly Boorstein with him), Boston, for Kathleen M. Dalessio.

Before LIACOS, C.J., and WILKINS, NOLAN, O'CONNOR and GREANEY, JJ.

GREANEY, Justice.

After a trial on cross complaints for divorce, a judge in the Probate and Family Court entered judgments of divorce, and he divided the marital assets between the parties. Pursuant to motions of Kathleen M. Dalessio (wife), the judge later corrected the judgment, and still later amended the corrected judgment. Steven W. Dalessio (husband) appealed, and we transferred the cases to this court on our own motion. We affirm.

The relevant facts found by the judge are as follows. The parties were married in 1972. Two children were born of the marriage. The husband worked as a machinist; the wife was employed by a printing company. The family resided in a house owned jointly by the parties.

In 1980, the husband was involved in an industrial accident and lost his left arm. Suit was filed on behalf of the husband and the wife (for loss of consortium) against the manufacturer of the machine that caused the husband's injuries. This action was tried in 1986, and the jury (by a general verdict) awarded the husband $3,000,000 and the wife $1,000,000. With interest, the judgment totalled roughly $7,000,000. The manufacturer's liability insurance was insufficient to cover the entire judgment, however, so the parties accepted a structured settlement with a present cash value of approximately $3,000,000.

After providing for attorneys' fees, the workers' compensation subrogation claim, and expenses, the terms of the settlement were essentially as follows. In exchange for releases, the husband received: (1) an annuity of $6,000 monthly for life, with a present cash value of $801,363; and (2) a cash lump sum of $514,529. The wife received: (1) an annuity of $2,000 monthly for life, with a present cash value of $271,032; and (2) a cash lump sum of $200,000. The parties combined their lump sum payments (with the exception of $14,529 withheld by the husband) and opened a joint investment account. At the time of trial, this account was valued at $716,141.

In 1986, the wife began an extramarital affair that was ongoing at the time of the divorce trial. In November of 1986, the parties separated. The judgment of divorce nisi was entered on July 12, 1988.

The judge made a number of orders relating to the custody of the children, child support, and property division. At issue here, however, is the judge's division of the proceeds of the personal injury suit. The judge first concluded that the husband's interest in the proceeds of the lawsuit was part of his divisible estate under G.L. c. 208, § 34. ² The judge then assigned a portion of the husband's proceeds from the lawsuit to the wife. Specifically, the judge ordered that the wife was to retain her annuity and receive in addition $500,152 from the joint investment account. The husband was to retain his annuity and $286,456 from the joint investment account. Any interest on the value of the joint investment account above its $716,141 value was to be divided 60%-40% between the husband and wife respectively.

Both parties moved to amend the judgment. The husband requested a reduction of the award to the wife. The wife pointed out (as had the husband) that the sums awarded the parties from the joint investment account together exceeded the stated principal balance in the account.

In response to these motions, the judge on September 21, 1988, issued a "corrected judgment," in which he amended the relevant provisions of the judgment so as to bring it in line with the correct total for the joint investment account. The judge also issued a "division of tort proceeds breakdown," in which he explained the conceptual underpinnings of the awards. In essence, the award to the wife (beyond her annuity) consisted of 40% of the joint investment account plus 40% of two-thirds of the present value of the husband's annuity, for a total of $500,152. ³ This sum was to come from the joint investment account. The invasion of the husband's annuity, in other words, was theoretical only, and the annuity was not to be disturbed in any way.

The husband appealed from the corrected judgment and division of tort proceeds. On November 3, 1988, the judge issued his findings of fact and conclusions of law, detailing his consideration of the factors enumerated in § 34. After discussing the factors, the judge concluded that the wife was entitled to the award memorialized in the corrected judgment. Both parties filed motions to amend the judge's findings of fact and conclusions of law. Both parties also moved for an amendment to the corrected judgment, the wife filing her motion on December 15, 1988.

After a hearing, the judge allowed both of the wife's motions. The judge issued amended findings of fact and conclusions of law, as well as an amendment to the corrected judgment. In essence, the judge recalculated the division of the proceeds from the personal injury suit (pursuant to a formula implicit in the corrected judgment) and awarded the wife--instead of her annuity plus $500,152--her annuity plus $553,486. The judge indicated that the amendment to the corrected judgment was necessary "because of clerical error."

1. Status of the husband's interest in the proceeds of the lawsuit. During the trial, the wife offered as evidence a letter from a consulting actuary that stated the present cash value of the husband's and the wife's annuities. The parties stipulated that, if called to testify, the actuary would testify consistent with the contents of the letter. The husband objected to its admission, however, on the ground that the information it contained was irrelevant because his annuity was not part of his divisible estate under § 34. After a hearing, the judge admitted the letter, and, as noted above, he assigned to the wife a portion of the husband's annuity. Here, the husband renews his argument that the annuity was not an asset of his estate divisible under § 34.

We recently reaffirmed that "[t]he purpose of § 34 is to 'empower[ ] the courts to deal broadly with property and its equitable division incident to a divorce proceeding,' " and that the term "estate" as used in § 34 means "all property to which [a spouse] holds title ... whenever and however acquired" (citations omitted). Lauricella v. Lauricella, 409 Mass. 211, 213-214, 565 N.E.2d 436 (1991), quoting Davidson v. Davidson, 19 Mass.App.Ct. 364, 371, 474 N.E.2d 1137 (1985). Consistent with these principles, we have held that interests in lawsuits merely pending can be part of a party's divisible estate upon divorce. See Lyons v. Lyons, 403 Mass. 1003, 1003, 526 N.E.2d 1063 (1988); Hanify v. Hanify, 403 Mass. 184, 186-190, 526 N.E.2d 1056 (1988). Interests in retirement pensions also are within a spouse's assignable estate. See Dewan v. Dewan, 399 Mass. 754, 755-757, 506 N.E.2d 879 (1987).

Regarding the proceeds of personal injury suits, we recognized in Hanify that "[a] majority of jurisdictions that have considered the issue of legal damages recovered during marriage hold [that] such recoveries, at least to the extent of recovery for income lost and expenses added during marriage, constitute marital property" (emphasis in original). Hanify v. Hanify, supra 403 Mass. at 189-190 & n. 7, 526 N.E.2d 1056. See In re Marriage of Fjeldheim, 676 P.2d 1234, 1236 (Colo.Ct.App.1983); Campbell v. Campbell, 255 Ga. 461, 462, 339 S.E.2d 591 (1986); In re Marriage of Powell, 13 Kan.App.2d 174, 176-180, 766 P.2d 827 (1988); Gonzalez v. Gonzalez, 689 S.W.2d 383, 385-386 (Mo.Ct.App.1985); Johnson v. Johnson, 317 N.C. 437, 445-454, 346 S.E.2d 430 (1986); Platek v. Platek, 309 Pa.Super. 16, 21-23, 454 A.2d 1059 (1982); Bero v. Bero, 134 Vt. 533, 535, 367 A.2d 165 (1976); In re Marriage of Mack, 108 Wis.2d 604, 607-609, 323 N.W.2d 153 (1982) (construing Wisconsin statute since repealed).

Moreover, three courts have drawn the same conclusion even though, as in this case, some of the proceeds from the personal injury suits had been in the form of annuities. See Bandow v. Bandow, 794 P.2d 1346, 1347-1350 (Alaska 1990) (holding that at least part of annuity given in settlement was divisible; remanded for reapportionment); Zimmer v. Zimmer, 770 S.W.2d 514, 515 (Mo.Ct.App.1989); In re Marriage of Burt, 144 Ill.App.3d 177, 183, 98 Ill.Dec. 746, 494 N.E.2d 868 (1986). Two other courts have assumed that an annuity benefiting a party to a divorce is at least in part subject to division. See Johnson v. Johnson, 259 Ga. 658, 661, 386 S.E.2d 136 (1989) (to be allocated by the finder of fact); Richmond v. Richmond, 144 A.D.2d 549, 534 N.Y.S.2d 413 (N.Y.1988). See also Sedwick v. Sedwick, 446 N.E.2d 8, 10 (Ind.Ct.App.1983) (annuity payable to attorney husband for his representation of personal injury claimant subject to equitable division of assets).

The husband argues, however, that we should distinguish between disability annuities and retirement pensions and conclude that the former are not part of a spouse's divisible estate for purposes of § 34. The husband relies in this regard on Florida precedents holding that, while benefits received as compensation for pain, suffering, disability, disfigurement, and loss of consortium are not subject to equitable distribution, benefits received as compensation for economic losses like lost wages, lost earning capacity, and medical expenses are divisible marital assets. See Brogdon v. Brogdon, 530 So.2d 1064, 1065-1066 (Fla.Dist.Ct.App.1988); Weisfeld v. Weisfeld, 513 So.2d 1278, 1280-1282 (Fla.Dist.Ct.App.1987), aff'd, 545 So.2d 1341, 1346 (Fla.1989); Freeman v. Freeman, 468 So.2d 326, 328 (Fla.Dist.Ct.App.1985). We...