Attorney for Appellant Attorney for Appellee
Chris M. Teagle Robert G. Forbes
Muncie, Indiana Hartford City, Indiana
____________________________________________________________________________
__
In the
Indiana Supreme Court
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No. 05S02-0311-CV-498
Carolyn S. Beckley,
APPELLANT (PETITIONER BELOW),
v.
Jack D. Beckley,
Appellee (Respondent below).
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Appeal from the Blackford Circuit Court, No. 05C01-0009-DR-65
The Honorable Bruce C. Bade, Judge
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On Petition To Transfer from the Indiana Court of Appeals, No. 05A02-0211-
CV-929
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February 10, 2005
Rucker, Justice.
The question presented is whether an award of benefits under the
Federal Employers’ Liability Act (FELA) is a part of the marital estate
subject to distribution. We conclude: only that portion of the award
intended as compensation for losses incurred during the marriage is
included in the marital estate.
Facts and Procedural History
Jack D. Beckley (Husband) was injured in a work-related accident while
employed by the Norfolk Southern Railroad Company. Husband settled his
claim pursuant to FELA. The Act covers employees of common carrier
railroads. The total settlement equaled $250,000. After expenses and
attorney fees, Husband received a lump sum settlement in the amount of
$175,000. About four months after the settlement, Carolyn S. Beckley
(Wife) filed a petition for dissolution of marriage. Although the parties
stipulated to the division of some of their assets, they could not agree on
the treatment of the FELA settlement. In its distribution of assets, the
trial court included the entire settlement in the marital estate, awarded
three-fourths of the settlement to Husband, and awarded the remaining one-
fourth to Wife. In the end Husband received sixty-nine percent of the
marital property and Wife received thirty-one percent. As grounds for the
unequal distribution the trial court noted among other things Husband’s
ability to earn income was less than that of Wife, and “a portion of the
personal injury settlement was for future lost wages.” Appellant’s App. at
63 (Final Order on Division of Property). Both Husband and Wife appealed.
Wife complained the trial court erred in dividing the marital estate
unequally, and Husband complained the trial court erred in including the
FELA settlement in the marital estate. Noting this was a case of first
impression, the Court of Appeals reversed the judgment of the trial court
reasoning that an award under FELA is similar to workers’ compensation
benefits, which are excluded from the marital pot. See Beckley v. Beckley,
790 N.E.2d 1033, 1036-37 (Ind. Ct. App. 2003). Having previously granted
Wife’s petition to transfer we now affirm the judgment of the trial court.
Discussion
In an action for dissolution of marriage the trial court is required
to divide the marital property in a “just and reasonable manner.” Indiana
Code § 31-15-7-4(b). Our statutes define “property” as:
[A]ll the assets of either party or both parties, including:
(1) a present right to withdraw pension or retirement benefits;
(2) the right to receive pension or retirement benefits that
are not forfeited upon termination of employment or that are
vested (as defined in Section 411 of the Internal Revenue Code)
but that are payable after the dissolution of marriage; and
3) the right to receive disposable retired or retainer pay (as
defined in 10 U.S.C. 1408(a)) acquired during the marriage that
is or may be payable after the dissolution of marriage.
I.C. § 31-9-2-98(b). It has long been the law in this State that future
earnings are not considered part of the marital estate for purposes of
property division. Neffle v. Neffle, 483 N.E.2d 767, 769 (Ind. Ct. App.
1985), trans. denied; In re Marriage of McManama, 399 N.E.2d 371, 373 (Ind.
1980); Wilcox v. Wilcox, 173 Ind. App. 661, 365 N.E.2d 792, 795 (1977). In
Leisure v. Leisure, this Court held that workers’ compensation benefits
represent future earnings and thus are not vested property interests
subject to division in a marital estate. 605 N.E.2d 755, 759 (Ind. 1993).
“[I]t is now generally accepted that worker’s compensation is awarded in
lieu of lost wages and not as damages for pain, suffering, and monetary
loss caused by the fault of the employer.” Id. at 758 (citation omitted).
Implicit in Leisure is that an award of damages for pain and suffering may
be included as a part of the marital pot. Cf. Dusenberry v. Dusenberry,
625 N.E.2d 458, 462 (Ind. Ct. App. 1993) (“[A] tort claim for personal
injury which has not been reduced to a judgment has no readily
ascertainable value and is not marital property capable of division at the
time of dissolution.”).
In the case before us Husband contends that the similarities between
FELA and Indiana’s Workers’ Compensation Act dictate that his lump sum FELA
settlement should not be included as a part of the marital estate subject
to distribution. It is true that both FELA and Indiana’s workers’
compensation statute are similar in some respects. Congress enacted FELA
in 1908 creating a federal remedy designed to shift the cost of the
inevitable death and injuries from railroad employment from the employee to
the employer. Consol. Rail Corp. v. Gottshall, 512 U.S. 532, 542 (1994).
In similar fashion the policy underlying Indiana’s Workers’ Compensation
Act is to shift the economic burden for employment-connected injuries from
the employee to the employer. Sims v. United States Fidelity & Guar. Co.,
782 N.E.2d 345, 351 (Ind. 2003).
Nonetheless there are important distinctions between the two systems.
First, FELA is not a workers’ compensation statute. Davis v. Illinois
Cent. R.R. Co., 359 F.2d 780, 781 (6th Cir. 1966) (“Congress has not . . .
seen fit to provide a work[ers’] compensation statute for railroad
employees.”); Barrett v. Toledo, Peoria & W. R.R. Co., 334 F.2d 803, 804
(7th Cir. 1964) (“The Supreme Court . . . has through the years steadfastly
maintained that [FELA] is neither an insurance nor work[ers’] compensation
Act but a negligence statute.”). Second, under Indiana’s workers’
compensation statute, regardless of fault, an employee is entitled to
damages if the employee suffers an accidental injury arising out of and in
the course of employment. Sims, 782 N.E.2d at 352. By contrast, FELA
“imposes liability only for negligent injuries.” Wilkerson v. McCarthy,
336 U.S. 53, 61 (1949); see also Bethlehem Steel Corp. v. Consol. Rail
Corp., 740 N.E.2d 900, 907 (Ind. Ct. App. 2000) (“FELA is not a no-fault
statute and damages are not owed because an employee is injured.”), trans.
denied. Third, and most important for our purposes here, an award under
FELA may also include damages for pain and suffering. See Norfolk and W.
Ry. Co. v. Ayers, 538 U.S. 135, 141 (2003) (holding that under FELA,
railroad workers who developed the disease asbestosis were entitled to
recover for fear of developing cancer as a part of pain and suffering
damages); Nairn v. Nat’l R.R. Passenger Corp., 837 F.2d 565, 568 (2nd Cir.
1988) (finding a jury award of $400,000 for pain and suffering excessive in
case prosecuted under FELA for a work-related injury).
In this case the trial court found that although a portion of
Husband’s FELA settlement represented an award for future wages, and thus
not a part of the marital estate subject to distribution, the court also
found that a portion of the settlement included an award for pain and
suffering. Relying on Smith v. Smith, 676 N.E.2d 388 (Ind. Ct. App. 1997),
trans. not sought, the trial court included the entire FELA settlement in
the marital estate. In Smith, Husband sued his employer for an on-the-job
injury and eventually entered a settlement agreement that included a lump
sum payment. Upon dissolution of the parties’ marriage the trial court
included the lump sum payment within the marital estate and divided it
accordingly. On appeal Husband argued error claiming the payment should be
treated similarly to workers’ compensation benefits and thus excluded from
the marital pot. Noting that the settlement agreement did not specify
whether the payments represented reimbursement for pain and suffering, lost
wages, or future income, the Court of Appeals observed: (i) the parties
signed a release of all claims which implied that the settlement included
an award for pain and suffering, and (ii) with the exception of a modest
payment made to Wife, the record was unclear as to what the remaining
payments represented. Id. at 391. The Court then concluded, “We will not
undertake to divide the settlement into separate and marital parts with
only the latter being subject to division. Because the settlement for the
personal injury action represents compensation for more than any decreased
working capacity, Leisure does not preclude us from affirming the trial
court’s division.” Id. (citations omitted). It is the quoted language on
which the trial court in this case relied in concluding that the entire
FELA settlement should be included in the marital estate.[1]
A FELA settlement may be awarded in lieu of future lost wages only, or
may also include an award for pain and suffering. Where the settlement is
in lieu of future lost wages only, then it is not “property” within the
meaning of the dissolution statute and thus is not subject to distribution.
See Leisure, 605 N.E.2d at 759. In those instances where the settlement
incorporates an award for both pain and suffering and future lost wages,
then only that portion which is awarded for pain and suffering may be
included as a part of the marital estate. We thus disapprove of language
in Smith suggesting an entire lump sum settlement is included in the
marital pot on the basis that a portion of the settlement is subject to
distribution.
In summary, we hold that any part of a FELA award representing future
losses is not marital property subject to distribution. Rather, only that
portion of the award intended as compensation for past losses, that is,
losses incurred during the marriage, is included in the marital estate.
This does not mean that the trial court’s judgment in this case
should be reversed. True, there was evidence before the trial court
indicating that the FELA award was “based upon [Husband’s] lost future
earnings and earning capacity” and also took into account Husband’s “pain
and suffering.” Appellant’s App. at 57. However, it is also true that
there was no evidence presented to the trial court indicating which amounts
were attributable to past pain and suffering – a marital asset subject to
distribution—versus the amounts attributable to lost wages or future income
– non assets not subject to distribution.
The presumption of our dissolution statute is that “all the assets of
either party or both parties” are property subject to division. I.C. § 31-
9-2-98(b). The party who seeks to rebut the presumption, i.e., the party
who seeks to have property not included (or at least not divided), bears
the burden of demonstrating that the statutory presumption should not
apply. This is so because an exclusion from the marital estate directly
implicates whether the marital property will be equally divided. And our
dissolution statute provides that a party seeking to rebut the presumption
of equal division of marital property bears the burden of proof in doing
so. I.C. § 31-15-7-5; see also, Hyde v. Hyde, 751 N.E.2d 761, 765-66 (Ind.
Ct. App. 2001) (holding that wife seeking to exclude property from the
marital estate bore the burden of rebutting the presumption of an equal
distribution of marital property); Wilson v. Wilson, 732 N.E.2d 841, 847
(Ind. Ct. App. 2000) (declaring that if Husband wanted to have the extent
of his pre-marital employment contribution to his pension considered as
rebutting the presumption of an equal division of marital property, he
should have introduced some evidence during the hearing of the pension’s
value.)
It was Husband in this case who sought to exclude the FELA award as
marital property. Although that portion of the FELA award based upon lost
future earnings and earning capacity, similar to workers’ compensation
benefits, is “not a vested property interest subject to distribution as a
present marital asset. . . .”, Leisure, 605 N.E.2d at 759, here, Husband
failed to carry his burden of proof demonstrating that a portion of the
award should not have been included in the marital estate. Therefore we
cannot say that the trial court erred by including the entire award in the
marital pot and distributing it accordingly.
Conclusion
We affirm the judgment of the trial court.
Shepard, C.J., and Sullivan and Boehm, JJ., concur.
Dickson, J., concurs in part and dissents in part with separate opinion.
Dickson, J. concurring and dissenting.
I concur with the majority's conclusion that any part of an FELA
settlement representing future losses is not marital property, and that any
portion intended as compensation for losses incurred during the marriage is
included in the marital estate. I disagree, however, with the majority's
decision to create a presumption that all assets of either or both parties
in a dissolution case are marital property subject to division.
The applicable statute specifies with particularity those assets that
are included in the marital estate subject to division. It provides:
In an action for dissolution of marriage under IC 31-15-2-2, the
court shall divide the property of the parties, whether:
(1) owned by either spouse before the marriage;
(2) acquired by either spouse in his or her own right:
(A) after the marriage; and
(B) before final separation of the parties; or
(3) acquired by their joint efforts.
Indiana Code § 31-15-7-4(a). This marital estate statute does not
establish any presumption that property individually acquired after final
separation is subject to distribution. To the contrary, it excludes from
distribution all property acquired by either spouse in his or her own right
after final separation.
The majority infers a presumption that all assets are subject to
division from the language of Indiana Code § 31-15-7-5, which begins "The
court shall presume that an equal division of the marital property between
the parties is just and reasonable." This presumption, however, favors
only equal division "of the marital property" eligible for distribution
under Indiana Code § 31-15-7-4(a). But it does not establish a presumption
of equal division of property not subject to such distribution. Thus, as
to property acquired by either party in their own right after final
separation, there is absolutely no presumption of equal division. Such
property is simply not part of the marital estate and is not subject to
division at all.
The majority correctly observes that "a party seeking to rebut the
presumption of equal division of marital property bears the burden of
proof." [Slip opin. at 6] (emphasis added). But this presumption applies
only to marital property, not to property outside the marital estate--
property acquired in a party's own right after final separation. I.C. 31-
15-7-4(a).
By creating a presumption that all property owned by either or both
spouses is within the marital estate notwithstanding the marital estate
statute, the majority also creates risks of uncertainty as to various other
types of property outside the marital estate. If the presumption applies
here to the FELA award, will it also apply to a personal injury settlement
intended to provide compensation for future losses and/or suffering; to an
unvested interest in an employee pension plan; or to various other property
interests received after final separation and before the final dissolution
decree such as an inheritance, an investment that realizes substantial
appreciation, or lottery winnings?
Today's creation of the artificial presumption as a tool of appellate
review is unnecessary. Our review of a trial court's determination as to
the extent of the marital estate is properly guided by Indiana Trial Rule
52(A), not by evaluating whether one spouse or another adequately overcame
a presumption. The Rule states that "the court on appeal shall not set
aside the findings or judgment unless clearly erroneous, and due regard
shall be given to the opportunity of the trial court to judge the
credibility of the witnesses." Id.
Among the trial court's extensive findings of fact regarding the
husband's FELA settlement, the court noted that the husband was seeking a
$750,000 settlement based upon lost future earnings and earning capacity,
loss of hospitalization and medical benefits, pain and suffering, and
disability. Finding of Fact ¶6 in order of September 10, 2002. It further
found that the $250,000 settlement ultimately reached included an agreement
not to return to work/resignation, and a release of claims "for hearing
loss (known or unknown), any and all occupational claims, claims under the
ADA and all other claims." Id. at ¶8. The court did not, however, make
any findings identifying which portion of the settlement represented losses
incurred during the marriage and which was for future losses.
The trial court concluded that "due to the fact that the eventual
$250,000.00 settlement that was reached includes more tha[n] future lost
wages, the settlement is in fact a marital asset," and thus subject to
division. Conclusions of Law ¶4 in order of September 10, 2002. This
conclusion was based on the trial court's belief that "if a personal injury
settlement includes pain and suffering and is not limited to future lost
wages, the settlement is a marital asset. Smith v. Smith [676 N.E.2d 388
(Ind. Ct. App. 1997)]." Id.at ¶2. But this Court today expressly
disapproves Smith and holds instead that any part of the settlement
"representing future losses is not marital property subject to
distribution" and that "only that portion of the award intended as
compensation for past losses, that is, losses incurred during the marriage,
is included in the marital estate." [Slip opin. at 5.] Because the trial
court's conclusions are thus clearly erroneous as a matter of law, its
judgment should be vacated and this cause remanded for a redistribution of
marital property.
Instead of remanding for further consideration, however, the majority
creates an evidentiary presumption and finds that the husband failed to
sustain his burden of proof to rebut this new presumption—one that did not
exist at the time the parties presented their evidence and the trial court
evaluated it. At the least, the parties and the trial court should be
given an opportunity to apply this new presumption to the facts of this
case. I believe that remand is appropriate.
-----------------------
[1] Specifically the trial court concluded, “That if a personal injury
settlement includes pain and suffering and is not limited to future lost
wages, the settlement is a marital asset. . . . That due to the fact that
the eventual $250,000.00 settlement that was reached includes more than
future lost wages, the settlement is in fact a marital asset pursuant to
Indiana Code 31-9-2-98.” Appellant’s App. at 61.