Hardy v. Hardy, 19936

• Court: Supreme Court of West Virginia
• Citation: 413 S.E.2d 151,186 W.Va. 496
• Decision Date: 19 December 1991
• Docket Number: No. 19936,19936
• Parties: Margie Isabell June HARDY, Plaintiff Below, Appellee, v. Larry Vernon HARDY, Defendant Below, Appellant.

Page 151

413 S.E.2d 151 186 W.Va. 496 Margie Isabell June HARDY, Plaintiff Below, Appellee,
v.
Larry Vernon HARDY, Defendant Below, Appellant. No. 19936. Supreme Court of Appeals of
West Virginia. Submitted Sept. 17, 1991.
Decided Dec. 19, 1991.

Page 152

[186 W.Va. 497] Syllabus by 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 settlement.

3. The burden of proving the purpose of part or all of a personal injury recovery is on the party seeking a nonmarital classification.

4. A loss of consortium claim is the separate nonmarital property of the uninjured spouse.

Kenneth Fisher, Fisher & Fisher, Huntington, for appellee.

James W. St. Clair, St. Clair & Levine, Huntington, for appellant.

BROTHERTON, Justice:

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 § 48-2-1.

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. 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 thereon;

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

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[186 W.Va. 498] what amount was claimed for those services);

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 property;

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, 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...