Doucette v. Washburn

• Citation: 766 A.2d 578,2001 ME 38
• Parties: Jeanne E. DOUCETTE v. Carl P. WASHBURN.
• Decision Date: 22 February 2001
• Court: Maine Supreme Court

766 A.2d 578

2001 ME 38

Jeanne E. DOUCETTE v. Carl P. WASHBURN.

Supreme Judicial Court of Maine.

Submitted on Briefs: December 20, 2000.

Decided: February 22, 2001.

Ellyn C. Ballou, Esq., South Freeport, for plaintiff.

Claudia C. Sharon, Esq., Portland, for defendant.

Panel: WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, SAUFLEY, ALEXANDER, and CALKINS, JJ.

SAUFLEY, J.

[¶ 1] Carl Washburn appeals from the judgment of the Superior Court (Cumberland County, Delahanty, J.) affirming a divorce judgment entered in the District Court (Portland, Sheldon, J.). Washburn challenges the court's conclusions regarding the identification and distribution of the parties' marital property. Primarily at issue is the nature of the proceeds of a lump sum workers' compensation settlement received by Washburn during the marriage. We affirm the judgment.

BACKGROUND

[¶ 2] At the time of the divorce hearing, Carl Washburn and Jeanne Doucette had been married for almost twenty-eight years.¹ Washburn was forty-eight years old and Doucette was forty-six. Neither of the parties has any education beyond high school. They have three adult daughters. Throughout much of the marriage, Washburn worked for S.D. Warren. Doucette worked in the home raising the children and in occasional retail jobs while their daughters were growing up.

[¶ 3] Doucette left the family residence in 1992 or 1993. No decree of legal separation was ever issued. Washburn remained in the family home during the separation and maintained control of the marital assets. Doucette received no spousal support from Washburn during the separation. Doucette now works as an assistant manager for a retail store and earns $8 per hour. She cannot afford a car. She will have to pay $17.60 per week for health insurance through her employer, is earning no pension benefits, and lives with her mother, whom she pays $50 per week for room and board.

[¶ 4] Washburn was injured in several work-related accidents at S.D. Warren. He retired in 1994 with a workers' compensation lump sum settlement of $225,000, and a pension that had a present value of $102,078 at the time of the hearing. Most of the lump sum award still exists and is in an account in Washburn's name only. The account increased in value during the marriage.

[¶ 5] Doucette filed for divorce in August 1996, but the matter was not heard until December 1998. In the divorce judgment, the court determined that Washburn's pension was entirely marital because it was a benefit that Washburn had earned entirely within the period of the marriage. Addressing the lump sum workers' compensation award, the court found that a portion of the award was marital and a portion was nonmarital.² It set apart the nonmarital component to Washburn, and went on to divide the parties' marital property. The value of the marital property totalled $331,407 and the nonmarital property totalled $267,019. Ultimately, Washburn received $267,019 in nonmarital property and $58,639 in marital property, totalling $325,658. Doucette owned no nonmarital property. She received $272,768 in marital property. The court denied her request for spousal support.

[¶ 6] Washburn appealed to the Superior Court, and the Superior Court affirmed the judgment of the District Court. Washburn then filed this appeal, and Doucette cross-appealed. Among other things, Washburn contends that the court should have found the entire lump sum workers' compensation award to have been a nonmarital asset and argues that the court erred in awarding a greater proportion of the marital property to Doucette. In her cross-appeal, Doucette contends that the court erred in its treatment of the lump sum workers' compensation award, challenges the court's distribution of marital property, and challenges the court's refusal to award her alimony. Doucette presses her cross-appeal, however, only in the event that the trial court's judgment is vacated as a result of Washburn's appeal.

DISCUSSION

[¶ 7] When the Superior Court acts as an intermediate appellate court, we review the decision of the District Court directly. Kapler v. Kapler, 2000 ME 131, ¶ 6, 755 A.2d 502, 506. We will disturb a divorce judgment only if (1) the court's factual findings are clearly erroneous, (2) the court has erred as a matter of law, or (3) the court has abused its discretion in crafting the judgment. Nolette v. O'Neil, 679 A.2d 1084, 1085 (Me.1996); Craigue v. Craigue, 617 A.2d 1027, 1029 (Me.1992). The court's determination of the marital or nonmarital nature of the property owned by the parties is reviewed for clear error. Sewall v. Saritvanich, 1999 ME 46, ¶ 14, 726 A.2d 224, 227. We will "not disturb the [marital property] determination if there is competent evidence in the record to support it." Id. ¶ 14, 726 A.2d at 227-28.

A. Workers' Compensation Lump Sum Award

[¶ 8] Washburn's lump sum award was allocated by the workers' compensation hearing officer among three separate components; permanent impairment, wage replacement, and medical costs. After hearing the parties' testimony, the court set apart the permanent impairment component to Washburn as his nonmarital property and determined that approximately 87% of the wage replacement and medical cost components were nonmarital because they represented a replacement of assets that Washburn would have received after the divorce was final. The resulting calculation designated approximately 13% of the wage and medical cost components as marital property. Washburn contends that the District Court erred by finding that any part of his workers' compensation lump sum award was marital property. Alternatively, he argues that the court incorrectly calculated the marital components of the award.

[¶ 9] Because workers' compensation benefits usually represent a replacement for lost earnings, they relate to "the earning power of the [marital] community" if received during the marriage, and therefore, will be determined to be marital property unless proven otherwise. Cummings v. Cummings, 540 A.2d 778, 779 (Me.1988).³ The fact that the benefits are received in the form of a lump sum award does not result in an analysis different from any other asset.⁴ The spouse urging the nonmarital status of any or all of the award must prove the existence of the nonmarital component. Craigue, 617 A.2d at 1028.

[¶ 10] There is no dispute here that the award was received during the marriage. It is also evident that the lump sum does not readily fall into one of the specific exceptions to the marital property presumption set out at 19-A M.R.S.A. § 953(2) (1998).⁵ It was not acquired before the marriage or after a legal separation; it was not excluded by agreement of the parties; it does not represent the increase in value of property acquired before the marriage; and it certainly was not acquired by gift, bequest, devise or descent. See id. Thus, unless Washburn demonstrates that the award represents, in whole or in part, a direct replacement of nonmarital assets pursuant to section 953(2)(B),⁶ the award must be treated as marital property. See Sewall, 1999 ME 46, ¶ 17,726 A.2d at 228 (holding that property acquired from the proceeds of nonmarital property is nonmarital).⁷

[¶ 11] The court accepted Washburn's evidence that the lump sum award contained the three distinct types of compensation: permanent impairment, wage replacement, and medical costs.⁸ It then went on to determine which, if any, of those components represented compensation for, or replacement of, nonmarital assets. We address each component in turn.

1. Wage Replacement Component

[¶ 12] The wage replacement component of a workers' compensation benefit is designed to replace earnings lost to the employee resulting from a work injury. Cummings, 540 A.2d at 779. When those benefits are received as weekly or periodic compensation, they are treated as ordinary earnings for purposes of a marital property analysis. See id. If received during the marriage, they are marital property. Id. When received after the marriage, they are not included in the marital estate. Id. at 780.

[¶ 13] A more complex analysis may be necessary when the benefits are received, not in the form of periodic compensation, but in a lump sum award. As always, the analysis must start from the understanding that when the lump sum award is received during the marriage, it will be presumed to be marital unless proved to be otherwise.⁹ That proof may be accomplished by demonstrating that the award is intended to compensate the recipient for earnings that would not have accrued during the marriage. See id.

[¶ 14] Washburn received the lump sum award in November of 1994. The divorce judgment was entered on January 5, 1999. Washburn offered evidence that, in allocating the award, the hearing officer assumed that Washburn had a life expectancy of 31.1 years. From the hearing officer's allocations, the court concluded that the wage replacement component was intended to compensate Washburn for lost earnings throughout his remaining lifetime, that is, from receipt of the lump sum award in November of 1994 through approximately November of 2025.

[¶ 15] The court found that Washburn met his burden of proving that part of the wage replacement component was not marital property because it represented earnings that would have accrued to Washburn after the divorce. The court therefore apportioned the wage loss component between the years of marriage and the post-divorce years through 2025, using the date of the divorce judgment as the end point of the marriage. The marital component of the wage replacement was determined by applying the ratio of marital years (4.1 years of marriage following receipt of the award — November 1994 to January 1999) to Washburn's life expectancy as of November 1994 (31.1 years). That ratio yielded a marital property component of approximately 13%.

[¶ 16] In sum, the court determined that the amount of the wage replacement award attributable...