Proving Difficult Lost Wage Claims
March 28, 2008
Mike A. D'Amico, Esq.
D'Amico & Pettinicchi, LLC
For a simple summary of applicable law in this area, see Robert B. Yules, Connecticut Practice Series: Trial Practice, 5:4 (2006).
The Supreme Court in a recent wrongful death case gave a general overview of the evidentiary issues involved in proving lost wages and earning as damages. Carrano v. Yale-New Haven Hospital, 279 Conn. 622, 904 A.2d 149 (2006). In Carrano, in the only evidence of the decedent's earnings, the decedent's widow testified at trial that her husband had received disability payments from his employer, reduced by the amount of his Social Security disability payments. The widow testified that the decedent received a net payment of $140-146 per week and that the full amount of disability payments had equaled two-thirds of the decedent's annual income of $40,000.
After a sizeable verdict for the plaintiff, including $738,029 in economic damages, the defendant appealed. The defendant contended in part that the plaintiff presented insufficient evidence of economic damages to support the jury's verdict. The defendant also contended that the trial court should have required the plaintiff to adduce evidence of the decedent's personal income taxes and living expenses to reduce the amount of the award.
First, the Supreme Court held that the widow's testimony alone, without documentary evidence such as check stubs, deposit slips, or the like, could be sufficient to support the jury's verdict of economic damages because in civil cases the testimony of a single witness is sufficient to establish any fact, including the amount of damages, even if the witness is a party or otherwise interested in the action. 279 Conn. at 646-47, 904 A.2d at 167. The court stated that while mathematical certainty is not required, 'the plaintiff must nevertheless provide sufficient evidence for the trier to make a fair and reasonable estimate' of damages. 279 Conn. at 650, 904 A.2d at 169. 'Proof of damages should be established with reasonable certainty and not speculatively and problematically. Damages may not be calculated on contingency and conjecture.' Id. (quotation marks and citations omitted).
Second, the court held that there was insufficient evidence of economic damages in this case because the plaintiff did not produce any evidence of the decedent's income taxes and personal living expenses:
Thus, if the plaintiff seeks to recover damages for the loss of the decedent's wages or for the destruction of the decedent's earning capacity, the inquiry in the first instance is as to probable net earnings, in the ordinary sense of that phrase as used in accounting practice, during the probable lifetime of the decedent.. Net earnings are calculated by deducting the decedent's income taxes and personal living expenses from his gross earnings . . . It would be difficult to conceive of a more unjust, unrealistic or unfair rule than one which would lead a jury to base their allowance of reasonable compensation for the destruction of earning capacity on the hypothesis that no income taxes would be paid on net earnings. For all practical purposes, the only usable earnings are net earnings after payment of such taxes . . . [I]f fair compensation is to be made in the case of a decedent who was subject to the expense of maintaining himself there must be deducted from what would otherwise be fair compensation the reasonable expense of personal living during the probable duration of his lifetime. Personal living expenses include those personal expenses which, under the standard of living followed by a given decedent, it would have been reasonably necessary for him to incur in order to keep himself in such a condition of health and well-being that he could maintain his capacity to enjoy life's activities, including the capacity to earn money. Personal living expenses do not include, however, recreational expenses, nor that proportion of living expenses properly allocable to the furnishing of food and shelter to members of the decedent's family other than himself.
279 Conn. at 650-51, 904 A.2d at 170. Furthermore, the court held that the amount of the decedent's taxes and personal expenses was not something a jury could estimate based on their own common knowledge and experience because the taxable income and living expenses of individuals vary greatly. 279 Conn. at 651-52, 904 A.2d at 170.
The court in Nunez v. Palmer, 96 Conn. App. 707, 902 A.2d 660 (2006), outlined the factors to be considered in determining a plaintiff's loss of earning capacity due to the defendant's negligence. The court made it clear that past wages or income are merely evidentiary facts than can form the basis for an award:
In determining whether there is a loss of earning capacity the essential question is whether the plaintiff's capacity to earn [has been] hurt. Wages before and after an accident are only material as guides to the trier. The assessment of such damages does not depend on the plaintiff's receipt of any wages at all because it is the capacity to earn that governs the amount of damages to which a plaintiff is entitled. Recovery of damages for loss of earning capacity is not merely a recovery of wages lost. Salary or wages earned at the time of the injury are merely evidential facts, relevant but not conclusive, in the inquiry as to the pecuniary value of the impairment of earning capacity which an injured person has sustained.
96 Conn. App. at 709, 902 A.2d at 661; see also Jerz v. Humphrey, 160 Conn. 219, 276 A.2d 884 (1971). Earnings of a person are merely evidence in aid of the establishment of value of earning capacity and do not themselves fix the value thereof for the purposes of an award of damages based in part on impairment of earning capacity. Davis v. P. Gambardella & Son Cheese Corp., 147 Conn. 365, 161 A.2d 583 (1960), overruled on other grounds, Petriello v. Kalman, 215 Conn. 377, 576 A.2d 474 (1990).
The court in Nunez then cited the Restatement (Second) of Torts to describe a jury's proper formulation of damages:
In 4 Restatement (Second), Torts 920A, comment (b) (1979), it is noted that the plaintiff is entitled to damages for the future loss or the impairment of earning capacity. A plaintiff is entitled to the difference between the value of the impairment, given the injury, and what it would have been if there had been no harm to the plaintiff by the defendant. Id., at 924, comment (d). That sum should be reduced to its present value. Id., at 913A, comment (a). In evaluating the loss, the fact finder should take into account the type of work the plaintiff had done before the accident and the type of work he will be able to do after the accident in view of his physical condition, education, experience and age. Id., at 924 comment (d).
96 Conn. App. at 710, 902 A.2d at 662.
When a plaintiff is alleging a diminution in earning capacity or a complete loss of earning capacity, his claim of proof should be based on the market value of his services. Berndston v. Annino, 177 Conn. 41, 411 A.2d 36 (1979). Where the evidence of diminished earning capacity is so speculative that a jury could do no more than surmise as to the amount of damages, loss of earnings claims should not be submitted to the jury. Bombero v. Marchionne, 11 Conn. App. 485, 528 A.2d 396, cert. denied, 205 Conn. 801, 529 A.2d 719 (1987).
Even where there are discrepancies between a plaintiff's testimony on her loss of wages and her employer's records, it is for the jury to determine what credit should be given the plaintiff's testimony and as to whether any inaccuracy on a given aspect should affect their consideration of her testimony on other phases of the case. Kapinos v. Shartenberg Co., 18 Conn. Supp. 313, 1953 WL 662 (Com. Pl. 1953). A plaintiff's testimony as to the losses to his business incurred because of his absence due to his injury can support a verdict for such losses even if the plaintiff conducted solely a cash business and kept no books of account. Goldberg v. Mertz, 122 Conn. 308, 194 A.2d 721 (1937). The assessment of damages is peculiarly within the province of the trier of fact. Seguro v. Cummiskey, 82 Conn. App. 186, 844 A.2d 224 (2004); Seymour v. Carcia, 24 Conn. App. 446, 589 A.2d 7 (1991).
Ordinarily, loss of earnings do not necessarily follow an injury, and a defendant is entitled to notice of such losses by special allegation. Varley v. Motyl, 139 Conn. 128, 90 A.2d 869 (1952).
Where there is a claim for loss of earnings, evidence of an injured person's income recovery from loss-reducing sources is ordinarily barred by the collateral source rule. Hammer v. Mount Sinai Hospital, 25 Conn. App. 702, 596 A.2d 1318, cert. denied, 220 Conn. 933, 599 A.2d 384 (1991) (evidence of the plaintiff's income from disability insurance was barred by the collateral source rule). And disability income benefits are not included in the definition of collateral source in C.G.S. 52-225b and thus are not deducted from lost wages. See Hassett v. New Haven, 49 Conn. Sup. 7 (2004)(J. Blue); Sizemore v. Panda No. CV00-0161497S (Aug. 30, 2002) 2002 Ct. Sup. 11341.
A defendant is not entitled to a reduction of the plaintiff's loss of earning capacity damages simply because the plaintiff suffered another injury after the first that rendered him 100 percent disabled. Nunez v. Palmer, supra, 96 Conn. App. at 711-12, 902 A.2d at 663.
A loss of earning capacity is not limited to wages; a loss of net profits from a plaintiff's business, whether a corporation or partnership, can be an appropriate measure of determining the amount of the loss. Delott v. Roraback, 179 Conn. 406, 426 A.2d 791 (1980); Panaroni v. Johnson, 158 Conn. 92, 256 A.2d 246 (1969); Lashin v. Corcoran, 146 Conn. 512, 152 A.2d 639 (1959); Dowling v. Herbert, 146 Conn. 516, 152 A.2d 642 (1959); Moiger v. Connecticut Ice Cream Co., 146 551, 152 A.2d 925 (1959); P. Gambardella; Mihalek v. Cichowski, 4 Conn. App. 484, 495 A.2d 721 (1985); Paul v. Caporossi, 42 Conn. L. Rptr. 347, 2006 WL 3317021 (Super. Ct., Oct. 30, 2006) (containing a detailed synopsis of the applicable Connecticut law concerning the recovery of lost wages and lost earning capacity).
B. Case Synopses
1. Nunez v. Palmer, 96 Conn. App. 707, 902 A.2d 660 (2006). A menial laborer was injured in a car accident, and he was later disabled when a tree limb fell on him while he was working for a tree trimming company. He received worker's compensation benefits for the tree accident. The plaintiff's evidence in his suit against the driver showed that he had suffered a 5% permanent disability in his lower back as a result of the car accident.
The defendant claimed that the plaintiff's subsequent disability and receipt of worker's compensation benefits should preclude any recovery. The court reiterated the collateral source rule and then held that the jury's award of economic damages to the plaintiff was not unreasonable:
It was not unreasonable for the jury to award $31,000 to the plaintiff, without deducting anything from that sum for workers' compensation benefits paid to him for two reasons. One reason is that there was no evidence as to what that sum was or for how long it would be payable or its connection to the impairment of the plaintiff's earning capacity. The second reason is that we do not see a logical reason to treat sums of money received by a plaintiff from a second non-concurrent source any differently from money due or received from a second concurrent source. In both cases, the question is whether a defendant, who has harmed the plaintiff, should receive a credit for sums paid by another source or whether he should pay the entire sum proximately caused by his negligence.
96 Conn. App. at 714-15, 902 A.2d at 664-65.
2. Seguro v. Cummiskey, 82 Conn. App. 186, 844 A.2d 224 (2004). In a dram shop action, the plaintiff made a loss of wages claim based on his inability to continue delivering papers for his wife's newspaper carrier business. The defendant argued that the plaintiff was not entitled to such a recovery because it was the plaintiff's wife's business, and it was she who terminated it after the plaintiff's injury. The court held that the plaintiff had presented evidence that the deliveries were his primary responsibility and that he had received the wages therefrom. The court found that the plaintiff's losses did not stem from the wife's post-accident termination of the business but from the plaintiff's injuries proximately caused by the defendant's negligence.
3. Daigle v. Metropolitan Property and Casualty Co., 60 Conn. App. 465, 760 A.2d 117 (2000). In an uninsured motorist action, the plaintiff alleged a loss of earning capacity and presented past income tax returns as evidence of his losses. The court held that because the plaintiff's tax returns showed an increase in net income after the accident the returns could not provide a basis for a reasonable estimate by the jury of the alleged loss in wages or earning capacity due to his injuries.
4. Eisenbach v. Downey, 45 Conn. App. 165, 694 A.2d 1376 (1997). In this auto accident case, the court upheld the instruction that defined lost wages as 'time away from work due to sickness or doctor or therapy appointments and the like that may cause one to lose some earnings.' 45 Conn. App. at 183, 694 A.2d at 1386.
5. Delott v. Roraback, 179 Conn. 406, 426 A.2d 791 (1980). In another auto accident case, the plaintiff had begun operating her own Tupperware business three months prior to the accident and testified that the accident curtailed her ability to demonstrate products. Her income tax returns for the year in which the accident occurred and the next year, though, each showed a net loss, but she testified that she would have earned a net profit in those years if the accident had not happened. The court held that even though there was no track record of earnings the evidence was sufficient to allow the jury to arrive at a reasonable approximation of her losses.
6. Wesson v. F.M. Heritage Co., 174 Conn. 236, 386 A.2d 217 (1978). In a slip and fall case, the plaintiff was self-employed and claimed an impairment of earning capacity. The plaintiff presented his tax returns into evidence and the trial court instructed the jury that the plaintiff's average weekly income was $1,351 prior to his disability arising from his fall. The court found that instruction was error because the plaintiff also testified to (1) his substantial capital investments, (2) the lack of any dividends from his corporation, (3) the corporation's accumulation of profits, and (4) the plaintiff's total control over his salary as he needed money.
7. Hoadley v. University of Hartford, 176 Conn. 669, 410 A.2d 472 (1979). In a slip and fall case, the plaintiff presented evidence that she suffered a continuing inability to perform some aspects of her job as a bus driver, that she had incurred a 30 percent permanent disability in her right leg that would diminish her ability to earn extra income-producing bus driving jobs, and that she would have requested and received a pay raise from her employer if not for her injury. The court held that this evidence was a sufficient foundation to support the jury's verdict.
8. Mazzucco v. Krall Coal and Oil Co., 172 Conn. 355, 374 A.2d 1047 (1977). In a slip and fall case, the plaintiff was unable to testify as to a specific dollar figure representing the amount of his lost earning capacity. This lack of specificity, combined with evidence that the illness of the plaintiff's wife took him away from work and evidence that the plaintiff's mechanic could not work due to illness, made the evidence too speculative to support a jury award for loss of earnings.
9. Jerz v. Humphrey, 160 Conn. 219, 276 A.2d 884 (1971). The plaintiff in an automobile accident case suffered at least a 10% disability of the right leg and a 20% disability of the left leg. While stating that evidence of a diminishment of earning capacity, rather than direct evidence of wage loss, can be sufficient to support an award of lost earnings, the court noted that the plaintiff was earning more in a less physically demanding job at the time of the trial and that he could continue in that position despite his disabilities. Under these facts, the court held that the jury had a reasonable basis to find that the plaintiff's earning capacity had not been diminished.
10. Panaroni v. Johnson, 158 Conn. 92, 256 A.2d 246 (1969). In a slip and fall case, the trial court's instructions to the jury concerning lost earnings included a statement regarding the inalienable right to the pursuit of happiness and reviewed a number of activities, which, if interfered with through someone's negligence, required the person responsible to respond to the plaintiff in damages. On appeal, the supreme court held that these instructions were error because instructions regarding damages (1) should be confined to matters of damages in issue by virtue of the pleadings and the evidence in the case, (2) must be sufficiently definite to authorize the assessment of damages to which the party is entitled, and (3) cannot be left entirely to the discretion of the jury without reasonable guidelines for them to find damages to which they think the plaintiff may be entitled.
11. Lashin v. Corcoran, 146 Conn. 512, 152 A.2d 639 (1959). The plaintiff was struck by a car. She was a partner in grocery business with her husband and son, and the evidence showed that she drew $60 per week against her share of partnership profits both before and after the accident, and she was entitled to a one-third share of partnership profits at the end of the year. The court held that, while she drew net profits and a weekly share of those profits, the value of her earning capacity was to be measured by the market value of her services to the grocery business, without any reduction for her continued draw of the same $60 per week after the accident, due to the collateral source rule.
12 Moiger v. Connecticut Ice Cream Co., 146 Conn. 551, 152 A.2d 925 (1959). In an automobile accident case, the plaintiff was a self-employed owner of a garbage business who sustained a permanent injury which kept him from work for nine months. During that time, the plaintiff had to pay others to continue his business while he recovered. The evidence also established that it was reasonably probable that he would have to have a future operation that would set him back three months and cause similar damages. The court held that the plaintiff was entitled to recover for the added expenses his business incurred in hiring others to do his work.
Having examined some of the leading cases on wage loss and loss of earning capacity the single most important lesson is to only pursue those wage loss and earning loss claims that are clearly provable. This requires a searching, open, honest and forthright discussion("interrogation") of your client. I have too often heard a client claim that an injury has kept them from working, or caused the loss of their business or stopped them from obtaining certain lucrative contracts, etc. Never take their word for. A weak earnings claim in front of a jury can kill your entire claim because the jury will quickly conclude that your client is milking a legal claim and lying about the severity of his injuries......the end result, a very low verdict, or worse, a defense verdict.
If your client claims he can't work due to an injury, get a note or report stating this from the primary treating doctor. Be sure to update the doctors opinion periodically if your client is out of work for an extended period of time. Be sure that the doctor knows what your client is doing for work and your client's day-to-day responsibilities so the doctor's opinion makes sense. It always helps to speak with the doctor in a phone conference to be sure the doctor understands your client's job and the physical demands of the job. And always tell your client to get back to work as soon as he feels capable of doing so. I always tell my clients never to live their life around the uncertainty of a legal claim. I encourage them to do the best they can to get back to their jobs and into the work force as soon as possible. Juries don't like malingerers. Better that your client tries to get back to work and fails than not to have tried at all. The jury will appreciate your client's effort and compensate him accordingly.
If your client is self-employed a thorough review and understanding of her business is necessary. You must be sure to understand the money trail. What exactly does she do? How is she paid? What are her expenses? What is the demand and economic climate for her type of work? What do her books of account and tax returns show? Is all her income claimed on the books? What did the future of the business look like? Was the business growing? Or slowing? To answer these questions YOU must look at the books and tax returns and thoroughly discuss them with your client to be sure you understand all the entries and what they mean in terms of income and expenses. You are looking for a FAIR understanding of the revenues coming in, of the expenses incurred and the net income available to your client. In this regard a forensic accountant is invaluable and should be retained. Be sure to tell the accountant that you are not looking to exaggerate losses but instead to get a fair estimate of income loss erring on the CONSERVATIVE side. The last thing you want to do is give the defense lawyer an argument that you are being greedy. If you do the jury will not like you and their verdict will reflect it.
If your client claims they lost certain customers or contracts because they were disabled from working, speak with the customers and be sure there are no other reasons your client lost their business. You will be surprised what you learn sometimes but better to be surprised before trial than during trial.
Earning capacity claims generally require the help of a vocational consultant. A vocational consultant will meet with your client and discuss their work history, education and physical abilities in detail; then review their medical records; speak with their doctors; schedule residual functional capacity tests if necessary; determine what jobs they can still do, if any, and the wages for these jobs as compared to the wages for prior job(s); and then help them find these jobs. The report of the vocational consultant can then be reviewed by an economist who can express the earnings loss in present value and include appropriate considerations for work-related benefits and income taxes.
Wage loss and earning capacity claims come in all shapes and sizes and are seldom similar. If YOU believe they are true after a thorough examination, then you should pursue them despite some proof hurdles. Remember this quote from Mazzucco v. Krall Coal & Oil Co., 172 Conn. 355, 360 (1977) that proof of wage loss or lost earning capacity only requires "such certainty as the nature of the particular case may permit" that will "lay a foundation which will enable the trier to make a fair and reasonable estimate." Juries typically believe that everyone should be compensated for their medical bills and wage loss at a minimum. The more economic losses you can prove the better your verdict is likely to be.