Hardin v. Hardin

• Decision Date: 19 June 2017
• Docket Number: S17F0576
• Citation: 801 S.E.2d 774
• Parties: HARDIN v. HARDIN.
• Court: Georgia Supreme Court

801 S.E.2d 774

HARDIN

v.HARDIN.

S17F0576

Supreme Court of Georgia.

Decided: June 19, 2017

Michael Scott Waldrop, WALDROP & BOOTCHECK, LLC, 861 Commerce Drive, Conyers, Georgia 30094, for Appellant.

Stephen Lee Coxen, COXEN & WORTHINGTON, LLC, 5109 Highway 278, NE, Suite B, Covington, Georgia 30014, for Appellee.

HINES, Chief Justice.

Tracy Hardin ("Wife") was granted a discretionary appeal from the grant of partial summary judgment to John Hardin ("Husband") in this divorce case.¹ The issue on appeal is whether the trial court erred in concluding as a matter of law that certain disability benefits issued pursuant to an insurance policy are non-marital property and are not subject to equitable division. For the reasons that follow, we affirm.

The parties were married in 1989. AMEX Assurance Company issued an "Accident Protection Plan" insurance policy to Husband in 2006. The policy included an "Accidental Permanent Total Disability" benefit of $1,500,000 that would be paid if an accidental bodily injury directly caused the insured to be permanently totally disabled.² The policy also specified that it would "provide[ ] limited benefits which are supplemental and [would] not provide basic hospital, basic medical, or major medical coverage," and that it was "not in lieu of and [would] not affect any requirements for coverage by any Workers' Compensation Act or similar law."

Husband and Wife paid the policy premiums out of marital funds until Husband was catastrophically injured on March 24, 2011.³ At that time, he was 42 years old. One year after Husband's injury, AMEX determined that he was permanently and totally disabled, and it paid him the full policy benefit. The money was deposited into the parties' joint checking account and then transferred to two of the parties' joint investment accounts.

The parties separated in 2015, and Husband filed a complaint for divorce six weeks later in July. Wife answered the complaint and counterclaimed, and in a temporary order, the trial court required the parties to keep detailed lists of all expenditures from their financial accounts so that they could determine the purpose of those expenditures and have the opportunity to argue their claims on the funds in their accounts. Husband moved for partial summary judgment, claiming that the purpose of the insurance proceeds was to compensate him for his total disability and, therefore, that they are not marital assets and are not subject to equitable division. Relying on Dees v. Dees , 259 Ga. 177, 377 S.E.2d 845 (1989), the trial court granted Husband's motion, ruling that the insurance proceeds must be deemed non-marital property because they compensated Husband solely for his pain and suffering, disability, and disfigurement, and not for lost wages, lost earning capacity, or medical and hospital expenses.⁴ See id. at 177-178, 377 S.E.2d 845.

In Dees , this Court explained that, in many other equitable-distribution and community-property states, the characterization of workers' compensation awards and personal injury awards as either marital or separate property must be determined by an "analytical approach." 259 Ga. at 177, 377 S.E.2d 845. We noted that we had applied that approach to personal injury awards in Campbell v. Campbell , 255 Ga. 461, 339 S.E.2d 591 (1986), and we adopted that approach for workers' compensation awards. See Dees , 259 Ga. at 178, 377 S.E.2d 845. Indeed, that approach became and remains the one which is followed by the majority of jurisdictions. See 2 Brett R. Turner, Equitable Distribution of Property §§ 6:55, 6:59 (3d ed., updated November 2016). Under the analytical approach,

whether the award is marital property does not depend on a formalistic view which looks only to the timing of the acquisition of the award.^{[5 ]} Instead, the inquiry focuses on the elements of damages the particular award was intended to remedy or, stated another way, the purpose of the award. States subscribing to this approach acknowledge that damage awards may be separated into three different components: (1) compensation for the injured spouse for pain and suffering, disability, and disfigurement, (2) compensation for the injured spouse for lost wages, lost earning capacity, and medical and hospital expenses, and (3) compensation for the uninjured spouse for loss of consortium. Compensation paid to a spouse for non-economic and strictly personal loss under (1) and (3) is considered that spouse's personal property, while the portion of damages paid to the injured spouse under (2) as compensation for economic loss during the marriage is marital property.

Dees , 259 Ga. at 177-178, 377 S.E.2d 845 (citations and punctuation omitted).

Although Wife questions the trial court's reliance on Dees , she concedes that this Court should use the analytical approach to classify disability insurance proceeds. Indeed, "[p]roceeds from private disability ... insurance policies are generally treated like personal injury and workers' compensation awards." 2 Turner, supra at § 6:90. See also Principles of the Law of Family Dissolution § 4.08 (2) (a) (2002) (American Law Institute treats insurance proceeds and personal injury recoveries in the same way when determining whether they are marital or separate property). Thus, the majority of courts have "focuse[d] on the nature and purpose of the specific disability benefits at issue" and applied such analytical approach "both to disability benefits paid in connection with insurance coverage maintained by the disabled spouse's employer and to disability benefits paid in connection with a private policy of disability insurance acquired with marital funds during the marriage." Gragg v. Gragg , 12 S.W.3d 412, 417 (Tenn. 2000) (citations omitted). See also Principles of the Law of Family Dissolution § 4.08 cmt. b (2002) ("Under Paragraph (2) (a), insurance proceeds are properly classified according to the nature of the property they replace rather than by the source of the funds used to pay the insurance premium."); 2 Turner, supra at § 6:52 ("Privately-purchased and employer-provided disability insurance are identical benefits financed by slightly different means, and the same rules of classification should apply to both situations."), § 6:90 (analytical approach applies even if marital funds were used to pay the disability insurance premiums because benefits are paid only to those who both pay the premiums and suffer a personal injury, total proceeds are always vastly greater than the almost "de minimis" premium payments, and the marital estate has already received at least some return on its investment).

Husband heavily relies on Dees 's specific inclusion of the word "disability" in the component of compensation that must be considered the injured spouse's separate property under the analytical approach.⁶ But, the application of the analytical approach to disability insurance proceeds is not that simple. Dees used the term "disability" in a narrow sense to refer, like "pain and suffering" and "disfigurement," to "non-economic and strictly personal loss." 259 Ga. at 178, 377 S.E.2d 845. Indeed, it quoted that language from Weisfeld v. Weisfeld , 513 So.2d 1278, 1281 (I) (Fla. Dist. Ct. App. 1987), and the Supreme Court of Florida, in affirming that decision, explained that "the separate property of the injured spouse includes the noneconomic compensatory damages for pain, suffering, disability , and loss of ability to lead a normal life...." Weisfeld v. Weisfeld , 545 So.2d 1341, 1345 (Fla. 1989) (emphasis supplied). Insurance proceeds or benefits that are received on account of disability, however, generally compensate for a much broader variety of economic and non-economic losses. "[D]isability benefits have varied characteristics and purposes which make the task of classification problematic." Gragg , 12 S.W.3d at 416. Like personal injury awards, such benefits often have various component parts. Hatcher v. Hatcher , 188 Ariz. 154, 933 P.2d 1222, 1225-1226 (Ariz. App. 1996). Disability benefits

may compensate for the loss of earnings resulting from compelled premature retirement and from a diminished ability to compete in the employment market. Disability benefits may also serve to compensate the disabled person for personal suffering caused by the disability. Finally, disability benefits may serve to replace a retirement pension by providing support for the disabled worker and his family after he leaves the job.

Gragg , 12 S.W.3d at 416 (citation omitted). When the relevant insurance policy or settlement does not allocate the compensation among these different purposes, it is for the trial court in the divorce case to make such an allocation. See Principles of the Law of Family Dissolution § 4.08 (2) (a) (2002) ("The dissolution court may make a reasonable allocation of an undifferentiated award between its marital- and separate-property components."); 2 Turner, supra at § 6:55 (discussing allocation of personal injury awards). A prior failure "to anticipate the later [divorce] should not deprive the injured spouse of any claim on what is in principle his or her separate property." Principles of the Law of Family Dissolution § 4.08, reporter's note to cmt. c (2002).

We recognize that allocation of undifferentiated compensation generally is a question of fact that may not be susceptible to summary judgment. See 2 Turner, supra at § 6:55. Nevertheless, the grant of partial summary judgment to Husband is appropriate if he has shown that the disability insurance proceeds at issue are his separate property as a matter of law. "To prevail at summary judgment under OCGA § 9-11-56, the moving party must demonstrate that there is no genuine issue of material fact and that the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law. OCGA § 9-11-56 (c)." Lau's Corp. v. Haskins , 261 Ga. 491, 491, 405 S.E.2d 474 (1991). Because summary judgment is a matter of...