Serhan v. Besteder

CAVANAUGH, Judge,

dissenting:

I respectfully dissent. Following a jury verdict in her favor, Sandra Marie Serhan filed a motion for a new trial on the question of damages only. The lower court, sitting en banc, denied that motion. This appeal then followed wherein appellant raises two issues for our consideration:

(1) Whether the trial court erred in refusing to admit into evidence appellant’s income tax records?
(2) Whether the trial court erred in denying appellant’s request for jury instructions regarding loss of past earnings and reduction of earning capacity?

For the reasons which follow, I find no merit to appellant’s contentions and would affirm the order of the trial court.

Income Tax Returns

The accident in which the appellant was injured occurred on November 13, 1977. Ms. Serhan at that time was engaged as the sole proprietor of an interior decorating business, Sara Sheen Draperies, which she had started in August of 1976. She testified that until January, 1976, she had been employed by Bergman’s Department Store as an interior decorating consultant. At the trial in October 1982, the appellant sought to introduce copies of her federal income tax returns from 1973 through 1975 and 1977 through 1981 for the purpose of showing loss of earnings and reduction of earning capacity. The trial court sustained the appellee’s objection to this proferred evidence and refused to allow its admission.

It is an often-stated tenet of the law that “questions concerning the admission or exclusion of evidence are within the sound discretion of the trial court, whose decision will not be disturbed absent a clear abuse of that discretion.” *23Gallegor by Gallegor v. Felder, 329 Pa.Super. 204, 211, 478 A.2d 34, 38 (1984). See also Burch v. Sears, Roebuck and Co., 320 Pa.Super. 444, 467 A.2d 615 (1983); Lewis v. Mellor, 259 Pa.Super. 509, 393 A.2d 941 (1978). It is against this standard that this court should evaluate the trial court’s ruling on Ms. Serhan’s tendered proofs.

In order to support her claim for earnings lost between the time of the accident and the date of trial, the appellant proposed to introduce copies of her federal tax returns. During this period, the appellant was operating her sole proprietorship. The trial court, within its discretion, disallowed this evidence on the grounds that the appellant had not laid the proper grounds for its admission.

In order for an injured plaintiff to recover damages for lost past earnings, it must be proven that such a loss in fact was suffered and that it was the proximate result of the defendant’s act or omission. Moreover, these losses must be proven to a reasonable degree of certainty and not left to speculation and conjecture. Gordon v. Trovato, 234 Pa.Super. 279, 338 A.2d 653 (1975). In the case of a person employed on an hourly wage basis for example, it is frequently sufficient for the plaintiff to show that as a result of the injuries sustained in the accident, he was unable to perform his occupational duties and therefore unable to earn his hourly wage. There is a direct relationship in such a situation between hours lost and earnings lost.

However, in the present case the appellant operated her own business for which she did not receive a specific salary. Her earnings, or losses, were those of the business and, although they bore some relationship to the appellant’s labors, they were also influenced by outside forces. For example, as the appellant testified, she often relied upon the services of other non-employees. Certainly their work affected the profitability of Sara Sheen Draperies.

Due to the nature of Ms. Serhan’s employment her claim for loss of earnings is perhaps more akin to a claim for a loss of profits. The standard of proof in such a case has been defined as follows:

*24It is well settled that lost income or profit is recoverable in an action for the destruction or interruption of an established business, whenever they are not merely speculative or conjectural. In general, a court has the power to award damages up to the date of the ultimate judgment of the case. Rea v. Ford Motor Co., 560 F.2d 554, 557 (3d Cir.1977), cert. den. 434 U.S. 923, 98 S.Ct. 401, 54 L.Ed.2d 281. Where lost income is redeemable, however, “the testimony must show with a fair degree of certainty not only the diminution of income or profit but that it is fairly attributable to the wrong complained of. See Platou v. Swanton, 59 N.D. 466, 474-75, 230 N.W. 725, 728 (1930).

Delahanty v. First Pennsylvania Bank, N.A., 318 Pa.Super. 90, 126, 464 A.2d 1243, 1261 (1983). (emphasis added).

At trial, the appellant testified that she had been hospitalized several times between November 1977 and October 1982 to receive treatment for injuries suffered in the automobile accident. She also stated that, at least during the first eight-day hospitalization, she was unable to “conduct her business”. Otherwise, the record indicates that Ms. Serhan returned to work shortly after the accident. Beyond this the only evidence relating to lost earnings were the prof erred tax returns.

I note initially that, with the possible exception of appellant’s 1977 income tax return, we have no indication as to what the excluded evidence would have revealed. Accordingly, I do not believe that we can properly conclude that the tax returns would have demonstrated that the appellant (or Sara Sheen Draperies) actually lost income following the accident. The burden is on the appellant to show “with a fair degree of certainty” the diminution of income. Dela-hanty, supra. On the record before us, I would not find that the trial court acted improperly in refusing to admit the 1977-1981 tax returns.

Moreover, notwithstanding whether the tax returns would have evinced a loss, the appellant also failed to introduce any testimony that the claimed losses were “fairly *25attributable to the wrong complained of.” Delahanty, supra. Although Ms. Serhan stated that she was hospitalized and, on one occasion, unable to work, she never testified that as a result she was unable to secure new business or fulfill prior contracts. Unlike the hourly wage earner, Ms. Serhan’s absence from work would not necessarily translate into a loss of earnings. Because the appellant failed to satisfy this prerequisite of laying an adequate foundation for her claim, in my opinion the trial court did not abuse its discretion in rejecting the proferred tax returns.

In order to support her claim for reduction of earning capacity, the appellant proposed to introduce into evidence her federal tax returns for 1973 through 1975, when she was employed by Bergman’s Department Store, and for 1977 through 1981, when she was self-employed. The trial court also refused to admit this proof.

At trial, the appellant presented evidence of the injuries which she suffered as a result of the motor vehicle accident: continuous neck and back problems; pain in her right leg and arm; bladder injury necessitating regular medical attention, including the continuous use of prescription medications; and the likelihood of long-term surgical and drug treatments for her bladder condition. The jury, in answer to a special interrogatory, found that the appellant’s injuries were both serious and permanent.

It is the law of this Commonwealth that “[i]n order to collect for the loss of future earnings, a plaintiff must establish that his economic horizon has been shortened.” O’Malley v. Peerless Petroleum, Inc., 283 Pa.Super. 272, 280, 423 A.2d 1251, 1255 (1980). In satisfying this burden of proof, more is required than simply showing permanent injury. See, e.g., Kmiotek v. Anast, 350 Pa. 593, 39 A.2d 923 (1944); Carroll v. Pittsburgh Rys. Co., 200 Pa.Super. 80, 187 A.2d 293 (1962). Rather, the plaintiff’s burden has been outlined as follows:

The loss of earning power and its amount must appear by proper and satisfactory proof and not left to mere conjecture: Frysinger v. Phila. R.T. Co., 249 Pa. 555, 560 [95 *26A. 257, 259 (1915)]. The value of such services as plaintiff performed prior to the accident and of such as she could perform thereafter, was the subject of proof, without which no recovery for diminution thereof can be sustained (Kost v. Ashland Borough, 236 Pa. 164 [84 A. 691 (1912) ] for, before an allowance can be made for loss of earning power, it must be fairly proved: Helmstetter v. Pitts. Rys. Co., 243 Pa. 422 [90 A. 203 (1914) ]. “Earning power which is to be compensated in such cases must necessarily be the subject of substantive proof.” (Bog-gess v. B. & O. Railroad Co., 234 Pa. 379, 390 [83 A. 356, 360 (1912)]), without which it is error to submit the question to the jury: McKenna v. Citizens’ Natural Gas Co., 198 Pa. 31 [47 A. 990 (1901) ].

McCaulif v. Griffith, 110 Pa.Super. 522, 532, 168 A. 536, 540 (1933) (quoting Zimmerman v. Weinroth, 272 Pa. 537, 540, 116 A. 510, 511 (1922)). Thus, while the plaintiff need not prove the extent of his loss to a degree of mathematical certainty, “there must be some evidence from which a jury can reasonably infer that earning power will probably be reduced or limited in the future.” Kearns v. Clark, 343 Pa.Super. 30, 42, 493 A.2d 1358, 1364 (1985).

A fair degree of latitude is often afforded to the jury in this regard. For example, in a case where a claim for loss of future earning capacity was made on behalf of an eighteen year old college student, this court opined: “Where, as here, the evidence discloses the age, physical and mental conditions, and habits of the injured person, a determination of future earning capacity may be made by the fact-finder in reliance upon the knowledge and common sense acquired through the experiences of life.” Marinelli v. Montour R. Co., 278 Pa.Super. 403, 419, 420 A.2d 603, 611 (1980) (citations omitted). Similarly in other instances the court has allowed impairment of earning capacity to go to the jury on evidence of the nature of the plaintiffs occupation and his injuries. See, e.g., Gary v. Mankamyer, 485 Pa. 525, 403 A.2d 87 (1979) (lay evidence concerning the nature of plaintiffs duties as a practical nurse and the *27difficulties which she experienced in performing those duties following the accident was sufficient to take the question of the extent of her disability and its impact on her earning capacity to the jury); DiChiacchio v. Rockcraft Stone Products Co., 424 Pa. 636, 225 A.2d 913 (1967) (evidence that carpenter would suffer indefinitely from nervousness and dizziness and that as part of his occupational duties he was required to climb ladders and scaffolds was sufficient to allow jury to find reduction of earning power); Fish v. Gosnell, 316 Pa.Super. 565, 463 A.2d 1042 (1983) (plaintiffs own testimony that he could no longer perform his job as a print press operator due to permanent injury to his knees was sufficient to afford the jury a reasonably fair basis on which to determine loss of earning capacity). In those cases, the evidence was such that the jury could reasonably infer a reduction in earning capacity based on their own knowledge and experiences.

In other instances, however, it is necessary for the plaintiff to produce more direct evidence that the injuries suffered will effect a reduction in earning capacity. For example, in Powell v. Montgomery, 27 Ohio App.2d 112, 272 N.E.2d 906 (1971), the plaintiff sustained a variety of personal injuries including permanent damage to his wrist. At the time of the accident, the plaintiff was employed as a factory worker for General Motors, although the specifics of his duties were apparently not disclosed at trial. In considering his claim for loss of earning capacity, the Ohio court analogized to claims for future pain and suffering:

The general rule appears to be that if the injury is of an objective nature (such as the loss of an arm, leg, or other member) the jury may draw their conclusions as to future pain and suffering from that fact alone (the permanency of such injury being obvious); whereas there must be expert evidence as to future pain and suffering or permanency where the injury is subjective in character.

Id. at 119, 272 N.E.2d at 911-12 (quoting Day v. Gulley, 175 Ohio St. 83, 86, 191 N.E.2d 732, 734 (1963)). The court continued, holding that “if the injury is such that by its *28nature, impairment of earning capacity must necessarily follow, additional evidence would be unnecessary to establish such impairment. We are of the view, however, that the evidence of injury in this case [where a general factory worker suffers permanent injury to his wrist] is not of that nature.” Powell, 27 Ohio App.2d at 122, 272 N.E.2d at 913. In certain circumstances, therefore, the plaintiffs burden in establishing a reduction of earning capacity requires more than showing the nature of the injury and the general nature of the plaintiffs occupation; rather, there must be specific evidence showing that the injury will prevent the plaintiff from engaging in a particular type of work.1 Cf. *29Janson v. Hughes, 309 Pa.Super. 399, 455 A.2d 670 (1982) (requirement satisfied by evidence from plaintiff’s experts that plaintiffs injury would preclude his engaging in work involving heavy lifting).

In the case at bar, the appellant presented testimony regarding the nature and permanency of her bladder condition. That evidence disclosed that Ms. Serhan must monitor her daily intake of fluids and that she must take Urecholine four times daily, a drug designed to stimulate the bladder for urination. She also stated that at the time of trial she felt soreness in her neck and back and pain in her right arm and leg. One of her experts, Dr. Groblewski, testified that “she [appellant] has a chronic back injury, which is going to last her, and then she has a bladder dysfunction.”

With respect to her business, the appellant offered only a general description of her occupational duties. She testified that she consults with clients in their homes concerning decorating ideas (she was the “chief salesperson”) and only that she owns several “machines for the ocnstruction of the draperies and slipcovers.”2 Appellant failed to articulate, beyond what has been stated, any of the physical demands of her work from which the fact-finder could infer an impairment of capabilities in light of her injuries. Moreover, appellant failed to introduce any direct evidence in the form of either her own testimony or that of an expert, that her ability to perform her occupational chores was in any way curtailed by her injuries or would be hindered in the future.3 Absent some proof, either direct or by reasonable *30inference, that the appellant’s physical condition affected her ability to produce an income, Ms. Serhan failed to sustain her burden of proof, thereby removing from the case any issue of reduced earning capacity.4 Accordingly, any evidence of her earnings to show such loss was properly excluded by the trial judge within the just exercise of his discretion.

Additionally, even if the evidence was sufficient to support a finding of loss of earning capacity, the tax returns for 1977-1981 proferred by the appellant would nevertheless have remained inadmissible. Inasmuch as the appellant was operating her sole proprietorship during those years, the tax returns would indicate the profits or losses of the business.

The pertinent rules are that profits realized from a business with invested capital or which employs the labor and skill of several individuals may not be shown to establish loss of the owner’s earning power. This is the general rule: James v. Ferguson, 1960, 401 Pa. 92, 162 A.2d 690; Bell v. Yellow Cab Co., supra, 399 Pa. 332, 160 A.2d 437; Dempsey v. City of Scranton, 1919, 264 Pa. 495, 107 A. 877; Baxter v. Philadelphia and Reading Railway Co., 1919, 264 Pa. 467, 107 A. 881, 9 A.L.R. 504. The reason, of course, is that profits are generally speculative, may come from sources other than the owner, and are usually dependent on other factors, such as the condition of the market, the value of labor, the availability of credit, and the like. In such cases the measure of loss of earning power is the value of the owner’s services in the business.
On the other hand there are exceptional cases of small, personal businesses where little capital or labor is needed *31and where in consequence the profits are the direct result of the owner’s labor and so are the best available measure of his earning power: see cases cited just above.

Sherin v. Dushac, 404 Pa. 496, 172 A.2d 577, 578 (1961).

I do not believe that the record supports a finding that the appellant falls into the latter category of “exceptional cases.” On the contrary, the evidence presented at trial revealed as the en banc lower court noted:

Plaintiff’s business utilizes nine machines; an improved workshop; “paraphenalia” related to a “drapery, slipcover upholstering” business; “quite a lot of things to handle, samples, a very, very immense amount of displays;” and a large work area “for all the machinery and equip-ment____” Likewise Plaintiff stated she must “sublet” her work when she “cannot fulfill” her obligations.

Lower court op. at 3.5 Accordingly, it appears that the appellant’s business is one which is “invested with capital or which employs the labor and skill of several individuals.” Sherin, supra. The profits of this business, as reflected on Ms. Serhan’s tax returns, therefore could not be shown to establish loss of earning power.6 Hence, the trial court properly refused to admit that evidence.

Requested Jury Instructions

The second issue raised by the appellant is whether the trial court erred in refusing to charge the jury on loss of *32past earnings and reduction of earning power, as requested by the appellant. (Again, however, this court does not have the benefit of reviewing the specific charges proposed by the appellant in the trial court.) As detailed above, (1) the appellant failed to offer sufficient evidence to raise an issue of lost past wages and (2) the appellant failed to offer sufficient evidence to raise the question of diminished earning capacity. The trial court therefore properly refused to instruct the jury on these claims for damages.

For the foregoing reasons, I would find that the appellant is not entitled to a new trial.

. Proof of a loss or impairment of earning capacity has been described as follows:

The extent of future harm to the earning capacity of the injured person is measured by the difference, viewed as of the time of trial, between the value of the plaintiff's services as they will be in view of the harm and as they would have been had there been no harm. This difference is the resultant derived from reducing to present value the anticipated losses of earnings during the expected working period that the plaintiff would have had during the remainder of his prospective life, but for the defendant’s act. (On the determination of the prospective length of life, see Comment e). Accordingly, the trier of fact must ascertain, as nearly as can be done in advance, the difference between the earnings that the plaintiff probably would or could have received during his life expectancy but for the harm and the earnings that he will probably be able to receive during the period of his life expectancy as now determined. In this computation, there are considered the type of work that the plaintiff has done and the type of work that, in view of his physical condition, education, experience and age, he would have been doing and will be likely to do in the future during the working period of his life, together with all other matters reasonably relevant.

Restatement (Second) of Torts § 924 comment d (1979) (emphasis added). Thus, in showing reduction of earning capacity, the plaintiff may attempt to prove an impairment of his ability to perform the requirements of an occupation in which he has been employed and/or an occupation in which he likely would have been employed, but for the accident. Compare Pratt v. Stein, 298 Pa.Super. 92, 444 A.2d 674 (1982) (loss of earning capacity based on plaintiff's prior employment as truck driver) with Hall v. George, 403 Pa. 563, 170 A.2d 367 (1961) (lost earning capacity of 18 year old student based on evidence of his ambitions to be a school teacher). See also Lewis v. Pruitt, 337 Pa.Super. 419, 487 A.2d 16 (1985) (where plaintiff had not been regularly employed as beautician for 16 years prior to the accident, but had maintained her license and skills as a beautician, practiced her trade on a casual, part-time basis, and engaged in *29discussions pointing toward a return to that occupation, question of impairment of earning capacity was properly submitted to the jury); Gottlob v. Hillegas, 195 Pa.Super. 453, 171 A.2d 868 (1961) (issue of reduced earning capacity properly excluded where plaintiff offered no evidence that she had ever been gainfully employed or that she would be employed in the future).

. With respect to appellant's prior employment at Bergman’s Department Store, she stated simply: "At Bergman’s I was responsible for the custom drapery department and getting to many, many customers as an interior decorating consultant with draperies, heavy clientele.”

. Additionally, while appellant testified that certain of her social activities were restricted as a result of the accident, she did not *30suggest that she had inténded or was prepared to enter into a profession or occupation in which she would have been similarly restricted. See note 2 supra.

. I do note, however, as did the court in Massman v. City of Philadelphia, 430 Pa. 99, 241 A.2d 921 (1968), that the appellant's injuries and the inconvenience they may cause are not to be disregarded. Rather, those factors ought to have been taken into consideration by the jury in determining appellant’s pain and suffering.

. Ms. Serhan also explained on cross-examination:

There’s a system in the drapery business where you arrange to have work sewn, like slipcovers, installation work. In the business, I can’t do everything myself that I’m not equipped to do. I have a person who does installation of drapery rods, I have another person who does the slipcover sewing....

N.T. at 225.

. Cf. DeFulvio v. Holst, 272 Pa.Super. 221, 414 A.2d 1087 (1979). In DeFulvio, the plaintiff was engaged as a partner in a commercial refrigerator and air conditioning repair business. The business employed no workers other than the two partners and it required little capital investment. Accordingly, that court concluded that the case was within the exception to the general rule and evidence of the partnership’s earnings was admissible to show the plaintiff’s impaired earning capacity.