You just got in a car accident. You have been out of work for three months and you have thousands of dollars in hospital and medical bills. You’ve met with numerous personal injury attorneys that have already informed you that you can expect an award of over $150,000. You also want a divorce from your spouse and you wonder, “will I have to split that personal injury settlement award with my future ex?” The response is… it depends.
In the seminal case, Landwehr v. Landwehr, Husband was in an automobile accident – he sustained numerous personal injuries, was hospitalized for over a week and was out of work for three months. He had thousands of dollars in hospital and medical bills, however all were paid by his insurance company. Throughout his recovery, his Wife attended him, took care of their three children, and ran their household – all while maintaining a full-time job as well. She even brought a personal injury attorney to the hospital to meet with Husband so he could be informed of his legal rights with regard to the accident. The personal injury attorney commenced action and effected a settlement for Husband. One year later, the parties separated and Wife wanted a piece of Husband’s personal injury settlement. The question on everyone’s mind, is a personal injury settlement subject to equitable distribution under N.J.S.A. 2A:34-23? The response is – yes, the portion intended to compensate the Husband for lost earnings and medical expenses IS subject to distribution; however, the portion that is intended to compensate the Husband’s personal pain, suffering, and his mental / physical disabilities is not subject to equitable distribution.
It is, however, important to note that the accident occurred before the parties were separated (specifically, before a Complaint for Divorce was filed). Husband was injured, he asserted his claim, and he settled the personal injury matter during the marriage. In Pandya v. Shah, Husband and Wife were married in 2010 and divorced in 2012. In May 2013, Wife signed a retainer agreement with an attorney, who filed a sexual harassment suit on her behalf. Less than two months later, the attorney reached as settlement for Wife in the amount of $400,000. Husband filed a post-judgment motion, seeking a portion of Wife’s settlement proceeds and demanding that the funds received be considered income for purposes of child support. The trial court rejected both arguments submitted by Husband. Husband, therefore, appealed to the Appellate Division, which confirmed the lower court’s decision. The Appellate Division distinguished the within case from Landwehr, stating the Wife did not assert her claims and receive the settlement monies until after the marriage was dissolved. Further, the Court concluded that Wife’s settlement proceeds will not be included as income for purposes of computing child support since (1) they are not recurring income; and (2) Wife had an actual income of $60,300, which was accurate and one-half the amount that the Husband earned on a yearly basis.