Cause of Action

See also Worker’s Compensation in this index.

The seminal precedent in Michigan is Heilman v. Heilman, 95 Mich App 728 (1980). In that case Defendant lost his eye in a work-related accident. A products liability lawsuit was filed during the Defendant’s marriage and, when his wife filed for divorce, the damages case had not yet been resolved. Defendant argued to the trial court that the cause of action was not "marital" and should be excised from any consideration in the divorce action. The divorce court did not agree and made any award in the tort litigation a part of the properties to be divided, pending the ultimate disposition in the damage case. Defendant appealed, arguing the injury claim was "personal" to him and, hence, should be considered his exclusive property. The appellate court did not agree and held, to the contrary, "we are in full agreement with the (trial) judge’s conclusion". 95 Mich App at 731.

It is not disputed that the trial court in a divorce proceeding

is authorized to divide the parties’ personal property between them.

[Citations omitted.] It is also clear that a right of action is "as much

property as any tangible possession." Dunlop v. Toledo, Ann Arbor

& Grand Trunk R Co., 50 Mich 470, 474 (1883). We concur with the

trial court’s determination that the following principle set forth in

DiTolvo v. DiTolvo, 131 NJ Super 72, 79; 328 A 2d 625, 629 (1974)

is valid and appropriate in Michigan:

 

"We***hold that for purposes of equitable distribution incident

to a divorce, a spouse’s chose in action for personal injuries and the

other spouses per quod claim constitute property subject to such

distribution.

Id. A key to this result for the higher court is the fact that, even if the damages are "personal" to the injured party, the injury may have impacted the assets that would otherwise be available for distribution. The Michigan Court argues:

Defendant’s injuries, however, affected his earning capacity during the

marriage and, therefore, possibly reduced the amount of assets that may

have become a part of the marital estate if the injury had not occurred.

The court, therefore, did not abuse its discretion in ruling that plaintiff had

some possible interest in defendant’s future recovery in the personal

injury action.

Id. Heilman is a 1980 opinion but it remains the law of the jurisdiction. See Postill v. Postill, 116 Mich App 578, 590 (1982); Bywater v. Bywater, 128 Mich App 396, 399 (1983) and Gramer v. Gramer, 207 Mich App 123, 126 (1994). Moreover, there is nothing in any published opinion that casts doubt on Heilman’s continuing vitality. In Bywater v. Bywater, for example, an attempt was made to limit the breadth of the Heilman ruling. In Bywater both parties were injured in an automobile accident. Prior to the filing of a divorce complaint the plaintiff initiated an action for damages arising out of the accident. Plaintiff eventually received $ 51,711 in (net) damages and defendant sought declaratory relief that these monies were subject to equitable distribution in the divorce case. The trial court disagreed, "to the extent that such award represents compensation for pain and suffering." 128 Mich App at 398. Defendant appealed. The appellate court began its analysis with the predicate of Heilman, that the "right of action" is a generally divisible item of property. The Court then discounts the notion that "an award for pain and suffering is of such a uniquely personal nature that it can belong only to the spouse receiving it". Id. Citing Postill v. Postill, supra, it is held that the nature of the lawsuit does not distinguish Heilman principles.

As the Postill court points out, the trial court’s authority to reach

a party’s right of action arises from the fact that such a right may be

characterized as property. Characterization of the of the right of action

as personal does not affect its divisibility in divorce proceedings

because the trial court retains discretion to distribute both jointly held

and individually held property pursuant to MCL 552.23.

Id. The Bywater court goes on to explain that the nature or etiology of the asset only bears on "how" the asset should be divided. This consideration is "equitable" and does limit the authority of the court to exercise its reasonable discretion as based upon the historical criteria as established in the case law.

The trial court here, by ruling that plaintiff’s settlement award was

not subject to division as a matter of law, impermissibly restricted

its power to equitably distribute assets. While plaintiff’s pain and

suffering award was undeniably his personal property, it was subject

to the trial court’s jurisdiction for purposes of the divorce proceeding.

It was the trial court’s function to weigh the factors relevant to the

parties needs and circumstances and determine whether any portion

of the settlement proceeds should be distributed to defendant.

 

128 Mich App at 400.

Bywater is followed, at least implicitly, in Wilson v. Wilson, 179 Mich App 519 (1989). In Wilson defendant lost his eye as a result of an accident with a lawn mower. The net proceeds of a litigation against the manufacturer of the mower was $ 49,500. After this recovery defendant’s wife filed for divorce and claimed a share of the tort settlement. The trial court denied the claim, concluding that the marriage had functionally "ended" prior to the time when the injury occurred. On appeal, the higher court reversed, finding the de facto construction of the marriage’s "end" to be erroneous. The court, as opposed to a simple remand, ordered that the trial court "erred in not distributing the personal injury settlement money between the parties." 179 Mich App at 524. The appellate court went ever further, ordering a 50/50 distribution of the "$ 28,000 balance which both parties agreed remained in the settlement funds." Id. The "personal" nature of the injury---the fact that defendant lost an eye---did not deter the appellate court in the exercise of its equitable discretion.

There is, at least arguably, a line of cases that cuts a portion from the Bywater and Heilman holdings. In Lee v. Lee, 191 Mich App 73 (1991) a property distribution was remanded to the trial court. A part of the property in the case was a $ 10,000 automobile accident settlement. In the course of the remand there is dicta that suggests that any "pain and suffering" element of these damages are not "joint marital property", at least "to the extent plaintiff was the sole claimant in the automobile accident case." What the "to the extent" language means is unclear. It might mean, for example, that if a spouse is a joint plaintiff in a liability case then he/she is entitled to the inclusion of all damages in the marital estate. Or it might only intend to distinguish provable "pain and suffering" damages and make them "subject to invasion" (as opposed to lost wages or other economic damages) as based upon the (as construed) statutory notions of "contribution" or "insufficiency of the estate". Beyond this, after referencing the opinion that "pain and suffering" as opposed to "lost wages" is not a "joint marital property", the opinion cites Bywater v. Bywater, supra, and MCL 552.23 for the proposition that "pain and suffering" awards "could still be distributed pursuant" to statute. 191 Mich App at 79. This is confusing, to be sure, since Bywater specifically disavows any distinction on the nature of the award, for "pain and suffering" or otherwise. In other words, Lee cites a statute and a case that are at specific odds with its arguable dicta.

Lee v. Lee, by itself, is a blip on the landscape of the issue. However, as sometimes happens, the precedent was "picked up" by a later case and denominated the law of the jurisdiction. Though, in this denomination, it is a complete aside, since the disposition of tort assets was not before the court. In Byington v. Byington, 224 Mich App 103 (1997) the court was faced with the issue of whether assets earned by a husband after divorce was filed and he had moved to another state were subject to distribution. In reversing a trial court opinion that held these assets were not "marital", the appellate panel considered the meaning and implications of Wilson v. Wilson, supra. In considering this case the Byington court’s review is:

First, the asset at issue in Wilson was a settlement for personal injury

suffered by the defendant, which, to reiterate, this Court concluded to

be marital property. However, this Court has since held that the personal

injury action of one spouse, to the extent that it represents pain and

suffering as opposed to lost wages, is not marital property. Lee v. Lee…

224 Mich App at 112. As noted, calling this a "holding" of Lee seems a true exaltation of construction. Even more confusing is the footnote attached to the foregoing, reading as follows:

Of course, the separate property of one spouse may be awarded

incident to a divorce to the other spouse under appropriately

compelling circumstances. MCL 552.23; see also Bywater v.

Bywater…

Id. There are, accordingly, two arguable strains in the law. It seems, however, the Bywater "strain" is more compelling where (a) it represents an express holding and (b) the Lee/Byington precedents cite Bywater as a proposition underpinning their statements of the law. However, even Lee and Bywater recognize that all elements of economic damage arising out of tort actions are "marital" and subject to ordinary distribution. And, while these precedents indicate "pain and suffering" awards are not "marital", it is certain they are divisible "under appropriately compelling circumstances." See the above footnote.