RENDERED: OCTOBER 1, 2021; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2020-CA-1446-MR
ANITA BOND APPELLANT
APPEAL FROM CARTER CIRCUIT COURT
v. HONORABLE DAVID D. FLATT, JUDGE
ACTION NO. 15-CI-00255
JIMMY BOND APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: COMBS, JONES, AND McNEILL, JUDGES.
JONES, JUDGE: Anita Bond (“Anita”) appeals from the Carter Circuit Court’s
order denying her motion to classify Jimmy Bond’s (“Jimmy”) medical
malpractice settlement proceeds as marital property. Following a review of the
record and all applicable law, and being otherwise sufficiently advised, we affirm.
I. BACKGROUND
Jimmy and Anita were divorced on October 30, 2015. At the time the
dissolution decree was entered, Jimmy had a personal injury claim pending in
Boyd Circuit Court against King’s Daughters Medical Center (“King’s
Daughters”). Jimmy’s claim against King’s Daughters alleged that certain of his
medical providers performed unnecessary medical procedures on him. These
procedures were performed during Jimmy’s and Anita’s marriage.1 As such, the
trial court reserved judgment on what portion, if any, of a future award to Jimmy
would be classified as marital property. As part of the decree, Jimmy was ordered
to report to Anita any award he received as a result of his lawsuit so that Anita
could determine whether to pursue classification of the award as marital property
by way of a motion to reopen the dissolution action.
Jimmy’s personal injury claim against King’s Daughters was
consolidated with approximately 125 other similar claims. Eventually, the parties
entered into a global settlement. As part of the global settlement, King’s
Daughters agreed to pay a lump sum into a settlement fund to be distributed
amongst the various claimants by a Special Master. The Special Master was
appointed by the Boyd Circuit Court; he had sole discretion in allocating the global
1
On various occasions in 2005, and once in 2009, King’s Daughters performed five cardiac
procedures on Jimmy consisting of a single bypass surgery, two pacemaker implementations, and
two cardiac catheterizations.
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settlement. The Special Master allocated the proceeds by phase. Phase 1
compensated the claimants for the unnecessary procedures. To determine the
amount of compensation, each claimant received various points based on the
type(s) of unnecessary procedures that were performed on him. There was no
accounting for any medical bills or lost wages, etc. The number of points each
claimant received in Phase 1 was then compared against the whole to determine
that person’s percentage of the whole settlement award, entitling him to that
percentage of the whole as his Phase 1 award. A certain portion of the settlement
was set aside to provide additional, Phase 2 compensation to claimants who
suffered extraordinary damages not captured in the award for having had the
unnecessary procedures. Phase 2 damages included things such as allergic
reactions, disability, lost wages, aneurysms, and death. The excess funds not
dispersed from the extraordinary injury fund were reallocated proportionally to all
claimants.
Jimmy received a gross settlement award of $357,415.50. According
to Jimmy’s personal injury attorney, Hans Poppe, this entire amount represented
Jimmy’s share of the Phase 1 fund and the remaining excess Phase 2 funds that
were reallocated after all Phase 2 claimants were compensated. Jimmy did not
apply for any Phase 2 recovery.
After Anita was apprised of Jimmy’s settlement, she filed a motion to
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reopen the dissolution action claiming that all or a portion of Jimmy’s settlement
should be classified as marital property. Jimmy countered that the settlement was
in the nature of compensation for his pain and suffering for having undergone the
unnecessary medical procedures, and therefore, was his nonmarital property. To
support his position, Jimmy filed an affidavit from Attorney Poppe.
The family court held a hearing on August 26, 2020, at which
Attorney Poppe was the sole witness. Consistent with his affidavit, Attorney
Poppe testified that Jimmy did not file a Phase 2 claim; all of Jimmy’s settlement
proceeds came from Phase 1 and the reallocation of excess Phase 2 funds. These
funds were awarded to compensate Jimmy for the unnecessary procedures he
underwent. Anita did not present any evidence or call any witnesses. Ultimately,
the family court classified Jimmy’s entire award as nonmarital property after
having determined that it was for pain and suffering. The family court’s order
provides in relevant part:
The testimony of Attorney Poppe clearly sets forth that
the award for personal injury was a global settlement of
damages arising from unnecessary cardiac procedures
performed upon him by medical treatment providers.
The settlement did not delineate exactly what damages
the award was to compensate. There is no separation of
the award between pain and suffering or lost wages.
Poppe testified [Jimmy] did not submit a claim for lost
wages or earnings, or for impairment in his ability to earn
monies. The settlement excludes earning capacity as a
potential basis for recovery. [Anita] was unable to
provide any evidence suggesting the settlement was
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based upon loss of earnings or impairment in the ability
to earn. From the evidence presented this [c]ourt is
unable to reach any conclusion other than the award was
for pain and suffering. Pain and suffering damages are
nonmarital in nature and not subject to division as a
marital asset.
Record (R.) at 107-08.
This appeal followed.
II. STANDARD OF REVIEW
“When property distribution is at issue in a dissolution proceeding, the
trial court must undertake three steps: (1) the trial court must categorize each piece
of disputed property as marital or nonmarital; (2) the trial court must assign each
party’s nonmarital property to that party; (3) the trial court must equitably divide
the parties’ marital property in just proportions.” Roper v. Roper, 594 S.W.3d 211,
225 (Ky. App. 2019), as modified (Jan. 17, 2020) (citing Smith v. Smith, 235
S.W.3d 1, 5 (Ky. App. 2006)). The trial court’s assessment of whether an item is
marital or nonmarital is reviewed under a two-tiered scrutiny in which the factual
findings made by the court are reviewed under the clearly erroneous standard and
the ultimate legal conclusion denominating the item as marital or nonmarital is
reviewed de novo. Smith, 235 S.W.3d at 6.
III. ANALYSIS
Pursuant to statute, marital property is defined to include “all property
acquired by either spouse subsequent to the marriage except”:
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(a) Property acquired by gift, bequest, devise, or descent
during the marriage and the income derived therefrom
unless there are significant activities of either spouse
which contributed to the increase in value of said
property and the income earned therefrom;
(b) Property acquired in exchange for property acquired
before the marriage or in exchange for property acquired
by gift, bequest, devise, or descent;
(c) Property acquired by a spouse after a decree of legal
separation;
(d) Property excluded by valid agreement of the parties;
and
(e) The increase in value of property acquired before the
marriage to the extent that such increase did not result
from the efforts of the parties during marriage.
KRS2 403.190(2).
Personal injury awards and settlements do not fit neatly within one of
the above-mentioned exceptions. Accordingly, in Weakley v. Weakley, 731
S.W.2d 243 (Ky. 1987), the Kentucky Supreme Court supplied additional guidance
to assist the lower courts in determining how personal injury awards to a married
person should be classified in the event of a dissolution of the marriage. The Court
first noted that workers’ compensation benefits awarded for lost income that
accrued during the marriage were considered marital property but that such
benefits should be considered nonmarital property if they were intended to
2
Kentucky Revised Statutes.
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compensate the injured employee for lost income following the dissolution of
marriage. Weakley, 731 S.W.2d at 244. However, the workers’ compensation
cases were not dispositive with respect to personal injury awards because “[t]he
award in workers’ compensation cases is limited to recovery for disability and
medical expenses, while in tort cases an additional element of recovery for damage
is allowed for pain and suffering.” Id.
Accordingly, the Weakley Court determined that a court must
determine whether any portion of the award was for “loss of earnings and
permanent impairment of ability to earn money[.]” Id. If so, the court must next
determine whether the award for lost income is “applicable to the years while the
marriage existed[.]” Id. If so, it is marital property; however, “[t]o the extent that
the award can be prorated to the remaining years of life expectancy following the
dissolution of the marriage, it is nonmarital.” Id.
The same rule does not apply to awards for pain and suffering because
such awards are “in no sense the replacement of earnings that otherwise would
have accrued during the marriage.” Id. at 245. “As a matter of fairness it does not
seem right that upon the dissolution of the marriage one of the parties should be
rewarded because the other party had the misfortune to suffer painful injuries as a
result of an accident [or tort].” Id. “[A]s to pain and suffering resulting from an
injury sustained during the marriage, the injured party has simply exchanged
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property acquired before the marriage, i.e., good health, free from pain, for the
money received as compensation for the loss.” Id. As such, the pain and suffering
award should be treated as nonmarital property pursuant to KRS 403.190(2)(b). Id.
While Weakley added significant clarification to the law surrounding
the classification of personal injury awards, the Court did not address “the proper
procedure for the allocation between marital and nonmarital property of a personal
injury award for an injury sustained during the marriage where the settlement or
judgment does not indicate what portion of the award applies to earning capacity
and what portion is allocated to pain and suffering.” Id. In the present case, we
are presented with the very situation contemplated, but left unresolved, in Weakley,
where it is unclear from the face of the settlement documents what portion of a
settlement is for personal injury and what portion, if any, is for lost wages or
impairment of earning capacity.
While the Weakley Court did not adopt a test for trial courts to follow
where the settlement was silent, we reject that it intended all proceeds from a silent
settlement to be classified as marital property. Otherwise, we can see no reason for
the Court to have referred to “the proper procedure” to be used in such cases. In
subsequent unpublished cases, we have held that the burden is on the spouse
receiving the settlement to prove it is nonmarital and that he may do so by
presenting additional evidence to the trial court as occurred in this case. Holbrook
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v. Holbrook, No. 2003-CA-002725-MR, 2005 WL 497229, at *3 (Ky. App. Mar. 4,
2005). The trial court’s ultimate findings on the issue then must be reviewed by
this Court under the “clearly erroneous” standard. Reichle v. Reichle, 719 S.W.2d
442, 444 (Ky. 1986); CR3 52.01.
Contrary to Anita’s assertions otherwise, we do not believe the trial
court placed the initial burden on her to prove the settlement was marital property.
Instead, we conclude that the language in the trial court’s order was meant as an
affirmation that Jimmy had produced sufficient evidence based on the testimony of
Attorney Poppe that the settlement proceeds were intended to compensate Jimmy
for his pain and suffering for having undergone the unnecessary medical
procedures, and that Anita had failed to present any contradictory evidence.
Attorney Poppe testified that Jimmy did not apply for Phase 2 funds and that the
Phase 1 funds were meant to provide compensation to Jimmy for the injuries he
suffered for having undergone the unnecessary medical procedures. This was
sufficient evidence from which the trial court was able to find that the proceeds
Jimmy received were in the nature of pain and suffering compensation. Having
done so, the trial court properly categorized them as nonmarital property.
3
Kentucky Rules of Civil Procedure.
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IV. CONCLUSION
For the foregoing reasons, we affirm the order of the Carter Circuit
Court.
ALL CONCUR.
BRIEF FOR APPELLANT: BRIEF FOR APPELLEE:
Justin Criswell Will J. Matthews
Grayson, Kentucky Grayson, Kentucky
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