Friday, March 3, 2006

Case Law Development: Lump Sum Personal Injury Award not Income for Purposes of Calculating Child Support

In an action to modify child support, the trial court denied mother's request that the court allocate to Father's income a portion of the $2,364,500 lump sum settlement of the personal injury lawsuit he had filed after having become disabled from dentistry after an accident in a store. The California Court of Appeal affirmed the trial court's order. The court held that the entirety of an unallocated, lump sum personal injury settlement or award is not income for purposes of calculating child support.  Recognizing that that portion of a personal injury award that is intended to be compensation for loss of income and loss of earning capacity may be considered as income.  However, the court recognized the fact-driven nature of the trial court's findings as to the purpose of the award and the allocation between that designed to compensate for earnings and that portion designed to compensate for pain and suffering.  Thus, the decision is "best left to the discretion of the trial court, considering all the evidence before it."  Here, the court noted that "any attempt to allocate the father's recovery among all the elements of his damages would have been pure speculation.... The mother offered to the trial court from the personal injury proceedings only the father's expert testimony on loss of profits and loss of net income. This presented such an incomplete picture of the father's total damages, that anything other than an arbitrary apportionment would have been impossible."

In re Marriage of Heiner, 2006 Cal. App. LEXIS 263 (February 27, 2006)

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