An injured firefighter’s entire federal September 11th Victim Compensation Fund award constitutes separate property for the purposes of equitable distribution, a state appeals court in Brooklyn has ruled.
A panel of the Appellate Division, Second Department, found that even though economic damages are typically considered part of a marital estate, lawmakers intended for both the economic and noneconomic portions of personal injury awards to be designated separate property.
“While the logic of the Equitable Distribution Law . . . suggests the conclusion that the economic portion of a personal injury award should be marital property, [the] legislative history compels the contrary result,” Justice Robert A. Spolzino wrote for the unanimous panel in Howe v. Howe, 07-07984.
The Second Department decision appears on page 17 of the porint edition of today’s Law Journal.
“[T]he inescapable conclusion is that the Supreme Court was correct in determining that the portion of the Victim Compensation award received by the plaintiff that constitutes compensation for economic loss during the marriage is the plaintiff’s separate property.”
But the four-judge panel also found that the lower court erred in failing to hold that a portion of the retired fireman’s disability pension was also separate property, notwithstanding the lack of evidence in the record distinguishing the pension’s economic and noneconomic proportions.
Justices Mark C. Dillon, Anita R. Florio and Daniel D. Angiolillo joined the opinion.
The parties, Kevin and Lucille Howe, married on Nov. 11, 1990.
In 1995, Mr. Howe became a New York City firefighter. He incurred severe injuries to his lungs in the aftermath of the 9/11 attacks, including scarring in both lungs and a cancerous nodule on his right lung. Mr. Howe also has hypertension and chronic obstructive pulmonary disease, according to a brief filed in support of this appeal.
Mr. Howe retired in 2005, and filed for divorce later that year.
In July 2007, Supreme Court Justice Andrew P. Bivona in Orange County awarded Mr. Howe 100 percent of the remaining funds from his 9/11 fund award. (Mr. Howe had already spent about one third of the $251,000 award fixing the couple’s flood-damaged Campbell Hall home.)
Justice Bivona also awarded Ms. Howe a so-called Majauskas share of Mr. Howe’s New York City Fire Department pension, finding that Mr. Howe had failed to sufficiently support his contention that a portion of his pension was compensation for his injuries.
Both sides appealed.
Ms. Howe asked the Se-cond Department to find that the portion of her ex-husband’s 9/11 award specifically designated by the fund’s administrator as compensation for economic loss does not constitute “compensation for personal injuries” under the Domestic Relations Law and, therefore, should be deemed marital property.
Mr. Howe asked the panel to determine that a portion of his FDNY pension is his separate property, despite the lack of evidence in the record distinguishing the pension’s disability and non-disability ratios.
The panel sided with Mr. Howe on both issues.
Regarding the 9/11 award, Justice Spolzino said that although the goal of the Domestic Relations Law is to “treat marriage…as an economic partnership”—and therefore consider economic awards, such as damages for lost income, as marital property—compensation for personal injuries constitutes an explicit ex-ception.
Personal injury awards, the panel ruled, cannot be divided into economic and noneconomic components for the purposes of equitable distribution. The entirety of the award constitutes separate property, Justice Spolzino wrote.
The panel relied on the Domestic Relations Law’s legislative history. Specifically, in an unusual twist, Justice Spolzino cited a treatise written by one of the law’s authors, which bemoaned his own bill’s designation of “compensation for personal injuries” as separate property.
In the treatise, former lawmaker Henry M. Foster wrote that he included the personal-injury-award exception solely to win additional votes.
But in criticizing the exception, Justice Spolzino wrote, Mr. Foster implicitly acknowledged that the Legislature intended for the exclusion to encompass the entire personal injury award, not just the non-economic component.
“Since the legislative intent must control, the inescapable conclusion is that the Supreme Court was correct in determining that the portion of the Victim Compensation award received by the plaintiff that constitutes compensation for economic loss during the marriage is the plaintiff’s separate property,” Justice Spolzino concluded.
The decision brings the Second Department in line with the state’s three other Appellate Division departments, which have all held that the Domestic Relations Law makes no distinction between the economic and noneconomic (such as pain and suffering) elements of personal injury awards. The Court of Appeals has yet to address the issue.
Barbara J. Strauss of Goshen represented Mr. Howe.
Ms. Strauss said the decision will reduce Ms. Howe’s annual share of her ex-husband’s pension to $11,000 from $30,000.
She also said the panel’s decision regarding the 9/11 award was both logical and straight-forward black-letter law.
“Mr. Howe is significantly disabled from working at the 9/11 site,” Ms. Strauss said. “He’s the one who is not going to be able to work another job because he has so many medical problems. The fact that he gets the benefit of this settlement is reasonable.”
Thomas R. Davis of Vergilis, Stenger, Roberts, Davis & Diamond in Wappingers Falls represented Ms. Howe.
“Looking at it from the point of view of what’s fair, a lot of families were shattered by 9/11, a lot of families ended up in a divorce situation,” Mr. Davis said. “Spouses and their children should have been awarded damages for their circumstances. They should share in that compensation. Congress’ intent was for the families. I think they did not think it through about what happens when this family is not intact.”
Mr. Davis said his client has yet to decide whether to seek leave to appeal.
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