Marsh v. Marsh

Citations: 308 S.C. 304; 417 S.E.2d 638; 1992 S.C. App. LEXIS 85Docket: 1817

Court: Court of Appeals of South Carolina; May 11, 1992; South Carolina; State Appellate Court

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The central issue in this case is the classification of the husband's personal injury settlement as marital property subject to equitable distribution. The trial court determined it was marital property, a decision the husband appealed. The appellate court affirmed this ruling. The couple separated in March 1989, leading to a legal action for separate maintenance by the wife. A pendente lite order was issued in April 1989 to maintain the status quo regarding property matters. The husband filed for divorce and equitable division of marital property in April 1990, with the wife responding with a counterclaim for divorce and property division. They were divorced in July 1990, with the court citing a one-year continuous separation as grounds, despite both parties having committed adultery.

The marital property division included the husband's personal injury settlement stemming from a 1984 accident, which resulted in a jury verdict of $300,000 and a later settlement of $325,000. The husband received $179,881 from this settlement, while the wife settled a legal malpractice claim against the husband's attorney for $10,000, netting $6,000. The trial court classified both settlements as marital property. The husband contended that the personal injury settlement was not compensation for economic losses to the marital partnership but rather for personal losses, citing case law from North Carolina and New Jersey to support his argument. 

The appellate court noted that while prior rulings in their jurisdiction had classified personal injury awards as marital property, they had not specifically analyzed the classification based on the award's purpose. The legal landscape on this issue is evolving, with varying approaches among jurisdictions: some courts view all personal injury awards as personal to the injured spouse, others differentiate between economic losses and pain and suffering, and some classify all awards as marital property. The trend is moving toward an analytic approach that distinguishes between losses suffered by the marital partnership and those incurred by the injured spouse.

New Jersey was among the first jurisdictions to adopt a specific analytical approach regarding personal injury awards in marital property disputes. The New Jersey Supreme Court, in Landwehr v. Landwehr, referenced the Amato case, emphasizing that allowing an uninjured spouse to share in the injured spouse's compensation for pain and suffering would be inequitable. However, in jurisdictions with equitable distribution statutes, personal injury awards are generally classified as marital property, unless explicitly exempted by law. This principle is supported by cases from various states, including Arkansas, Colorado, Illinois, and others.

In a related case, the South Carolina Supreme Court's Orszula decision was discussed, with the husband arguing that it recognized a distinction between economic and non-economic losses in personal injury awards. The court interpreted Orszula differently, citing Gan v. Gan, which maintained that personal injury awards should be treated as marital property in full. The court expressed reluctance to adopt a more analytical approach due to the complexities involved in separating the components of such awards and the practical difficulties faced by trial courts. It asserted that classifying the entire award as marital property does not necessitate that a specific portion be awarded to the non-injured spouse, as judges have discretion to adjust distributions based on the nature of the injuries.

The court affirmed the classification of the husband's personal injury settlement as marital property, noting that all other issues raised were either abandoned or lacked merit. The wife did not contest the inclusion of certain legal malpractice settlement proceeds in the marital estate. The ruling also referenced that while later North Carolina cases adopted an analytical approach to personal injury awards, the Little case did not, as it simply followed prior rulings that included awards compensating for lost wages as marital property.