Virginia Lawyers Weekly//September 19, 2023
Virginia Lawyers Weekly//September 19, 2023//
Where plaintiff was receiving wrongful death annuity payments arising from her mother’s death in a traffic accident, the payments should not be included in plaintiff’s gross income “for purposes of calculating child support[.]”
“The Plaintiff asserts that her annuity payments should be excluded as income because the settlement compensated her for the loss of her mother. She argues that a wrongful death claim is based on the negligence of a tortfeasor and sounds in tort and, therefore, any settlement payments are not capital gains, but are capital recoupment.
“She further argues that Virginia Code§ 20-108.2(C) and case law excludes tort claim settlement proceeds as income. The form of the payment, such as annuity payments, does not change the status as capital recoupment.
“The Defendant asserts that the Plaintiff’s annuity payments should be included in the computation of her gross income. The Defendant argues the wrongful death claim is not a personal injury claim and the annuity payments are a capital gain constituting income for purposes of child support.
“While both parties concede that the annuity payments are compensating the Plaintiff for the loss of her mother, the Defendant argues that the Plaintiff did not suffer a personal injury herself.”
“Virginia Code §20-180.2 states that gross income ‘means all income from all sources and shall include … annuities …’
“This definition is expansive enough to encompass many forms of proceeds. While the statute does not exclude annuities, case law establishes that settlement proceeds from personal injury claims should be excluded in whole, or in part, from the computation of gross income depending on the circumstances.
“The reasoning is that the settlement proceeds are compensation for personal pain and suffering and are restorative. The Court in Oley v. Branch, 63 Va. App. 681, 692 (2014) found that ‘the evidence must prove that a defined portion of the settlement generates income to the recipient rather than merely compensates for past injury.’
“This Court finds that wrongful death claims are analogous to personal injury claims. While the Plaintiff did not personally suffer an injury to her person, as a minor child, she suffered the traumatic and devastating loss of her mother.
“A settlement under these circumstances would not have compensated the Plaintiff for lost wages, loss of earning capacity, expenses, etc.
“In considering the specific facts of this case, the Court finds that the Plaintiff was compensated for ‘[s]orrow, mental anguish, and solace which may include society, companionship, comfort, guidance, kindly offices and advice of the decedent’ pursuant to Virginia Code § 8.01-52(1).
“No evidence presented in this case has persuaded this Court that the wrongful death settlement was for any other purpose than making ‘the recipient whole from damages incurred.’ …
“Under this analysis and relying on Whitaker v. Colbert, 18 Va. App 202 (1994), the Court finds that the wrongful death annuity payments in this case should be excluded from the Plaintiff’s gross incomes for purposes of calculating child support and are not income within the scope of Virginia Code § 20-108.2(C).
“It is the Court’s position that the annuity payments are more akin to an asset or an inheritance, which is also excluded from gross income for child support purposes.
“The Defendant argues in the alternative, that the annuity payouts to the Plaintiff are capital gains although there is an argument that the initial settlement was a capital recoupment. It is well settled that the form of the settlement payment does not alter the underlying character of the source. …
“Additionally, the Court is also of the opinion that despite being excluded from gross income, nothing precludes the Court from considering any other factors enumerated in Virginia Code § 20-108.1 for deviation purposes. …
“The Court denies the Plaintiff’s motion for attorney’s fees as this case was unique. The Defendant’s objection was not frivolous as the issue needed to be decided by the Court.
Horn v. Smith, CL-23-615, Aug. 24, 2023. In the Henrico County Circuit Court (Herman). Robert L. Isaacs for plaintiff. Ryan T. Spetz for respondent. VLW 023-8-059, 4 pp.