Our fictitious divorce client Eric Wolff was skiing down a slope at Aspen Highlands when someone hit him from behind. As a result of the accident, Eric was out of work for a substantial amount of time. Does Melanie have a right to any of his personal injury settlement?
Ryan Kalamaya and Philip Goldberg discuss what happens if there is a personal injury or workers comp claim in a divorce in Colorado.
About Philip Goldberg
Philip Goldberg is a family law attorney who focuses his practice on complex family law matters, and also has extensive experience in probate/estate litigation, real estate litigation, commercial litigation, and appellate practice. He is licensed to practice before all state courts of Colorado and Georgia as well as the United States District Courts for the District of Colorado and the Northern District of Georgia. Phil is rated AV-Preeminent® by Martindale-Hubbell, which is the highest attorney rating available.Phil is also included in The Best Lawyers in America© for Family Law. He is also included in The Best Lawyers in America© for Family Law.
Phil was also a U.S. Army Scholarship recipient. Upon graduation from VMI, Phil was named Distinguished Military Graduate “and served as an Army officer for eight years. He received the National Defense Service Medal (Desert Shield/Desert Storm) for his active duty service during the Persian Gulf War.
What is Divorce at Altitude?
Ryan Kalamaya and Amy Goscha provide tips and recommendations on issues related to divorce, separation, and co-parenting in Colorado. Ryan and Amy are the founding partners of an innovative and ambitious law firm, Kalamaya | Goscha, that pushes the boundaries to discover new frontiers in family law, personal injuries, and criminal defense in Colorado.
To subscribe to Divorce at Altitude, click here and select your favorite podcast player. To subscribe to Kalamaya | Goscha's YouTube channel where many of the episodes will be posted as videos, click here. If you have additional questions or would like to speak to one of our attorneys, give us a call at 970-429-5784 or email us at email@example.com.
DISCLAIMER: THE COMMENTARY AND OPINIONS ON THIS PODCAST IS FOR ENTERTAINMENT AND INFORMATIONAL PURPOSES AND NOT FOR THE PURPOSE OF PROVIDING LEGAL ADVICE. CONTACT AN ATTORNEY IN YOUR STATE OR AREA TO OBTAIN LEGAL ADVICE ON ANY OF THESE ISSUES.
Ryan Kalamaya (3s):
Hey everyone. I'm Ryan Kalamaya
Amy Goscha (6s):
And Amy, Goscha
Ryan Kalamaya (8s):
Welcome to Divorce at Altitude, a podcast on Colorado family law.
Amy Goscha (13s):
The force is not easy. It really sucks. Trust me. I know besides being an experienced divorce attorney, I'm also a divorce
Ryan Kalamaya (20s):
Client, Whether you are someone considering divorce or a fellow family law attorney listening for weekly tips and insight into topics related to divorce, parenting and separation in Colorado. Welcome back to another episode of Divorce at Altitude. This is Ryan Kalamaya this week. We are talking about injuries, specifically personal injuries and worker's comp claims and how those can matter for purposes of a collar. Other divorce. We are joined by Phillip Goldberg, who is a divorce attorney in Denver. Phil is an 80 rated trial lawyer.
Ryan Kalamaya (1m 0s):
He's tried multiple jury and bench trials and has argued cases in the Colorado Supreme court. The Colorado court of appeals, the Georgia court of appeals, the Illinois appellate court, as well as others. He is licensed to practice here in Colorado, as well as Georgia. He focuses his practice on complex family law matters and has extensive experience in probate and estate litigation as well as real estate commercial and appellate practice fees been named as the included in the best lawyers in America. And as I said before, he's been AB rated by Martindale Hubbell. He is also a member or has been selected to the national trial lawyers, top 100 civil plaintiff's trial lawyers, and he has a 10 out of 10 forum.
Ryan Kalamaya (1m 44s):
Abbo fill before I go on, welcome to the show.
Philip Goldberg (1m 47s):
Thanks Ryan. Appreciate you inviting me.
Ryan Kalamaya (1m 49s):
Well, we, I didn't mention in the intro, but you went to the Virginia military Institute and I thought we'd start off there because that was nearby where I went to college. So how did you end up at VMI?
Philip Goldberg (2m 2s):
So I needed a way to pay for college. I was not as good of an athlete as you. I think we're to play baseball. If I'm not mistaken to get an athletic scholarship, I wasn't smart enough for an academic scholarship. And so I was looking for ways that I could go to college and not have to pay out of pocket, or at least, you know, a hundred percent. And so a friend of mine, his older brother went to VMI and we were talking, it was over at the house and he was on an army scholarship. And so he persuaded me to try for a us army scholarship at BMI, which I did and I was accepted. And so I was able to attend college on a Army Scholarship. Now the trade off is you have to serve after graduation, which I did. And so that's how I ended up there.
Philip Goldberg (2m 42s):
And I'll tell you, in hindsight, I'm really glad I went there. Not just because it was able to get a scholarship. I really enjoyed my time there. And my best friends today are still my friends from BMI because we went through some hardships together. And I think that really created its bonds of brotherhood and comradery that I 30 plus years later, I still hold very dear
Ryan Kalamaya (3m 2s):
Well, and I'm sure you would agree that also I loved going to UVA and as a kid from Colorado, it was a cultural shock, but I really value my time here in Colorado or living here in Colorado because it just the contrast and nothing against Virginia, but it just reinforces in my mind how wonderful Colorado is from, you know, a variety of standpoints.
Philip Goldberg (3m 28s):
I totally agree. We moved here. I'm an east coast kid grew up in Maryland college in Virginia law school, university of Georgia. So I mean, I'm an east coast guy and we moved down here in oh seven, my wife and I, we had our kids were, we got, I got three. There were very little at the time, you know, six, four and two. And we moved down here for the lifestyle. We knew it would be a once in a, not lifetime, but once in a decades type of a move, we know we're not going to pick up with three kids and move again. And I knew that know I was in Atlanta prep and practicing for over 10 years there. And we came out here and I knew I would take a few steps back professionally, but it was well worth the exchange for what we consider to be the lifestyle benefits of living out here.
Philip Goldberg (4m 10s):
And we love it. So I've been out here now for almost 15.
Ryan Kalamaya (4m 13s):
Well, I think a lot of our clients have a similar stories in the sense of there's a lot of transplants and a lot of people that are here in Colorado and they're here for the lifestyle as just an aside. I don't know if you're a big football fan, but I imagine that you're kind of on cloud nine, if you are being from the university of Georgia winning the national championship.
Philip Goldberg (4m 33s):
Yeah. Well, let me show you a sit here on my desk, if you can see this.
Ryan Kalamaya (4m 38s):
Yeah. And that's a little Hammad for those that can't see, he's got at Georgia helmet back from the Herschel Walker.
Philip Goldberg (4m 43s):
That was a season ticket holder until we moved here from Atlanta. I'm a huge Georgia fan been watching since I started law school in 1989. So 31 years, and finally reached the mountaintop this week. It was fantastic. Thanks for mentioning it.
Ryan Kalamaya (4m 58s):
Well, you know, football, you can have some injuries and you talked about lifestyle. Those can come into play when you get injured. So let's jump into personal injury awards and the reason they I'd reach out to you about talking on this is that you had written an article for the trial talk, which is the trade journal for the Colorado trial lawyers association is Mike dad was a personal injury lawyer. So I would go up to convention when I was a young kid go into Steamboat or Vail, and they would have a convention for CTLA. And it would just be a bunch of plaintiff's trial lawyers. And you wrote an article on this issue, which I thought was interesting. And you and I talked before offline about just the experience of being in Personal Injury and the relationship with divorce.
Ryan Kalamaya (5m 44s):
So for those that don't know, can you start off, what is Personal Injury like w what is a claim of personal injury? And we can then jump off from there and maybe distinguish that from a workers' compensation claim. Sure.
Philip Goldberg (5m 57s):
So a personal injury claim is when a third-party negligently or intentionally causes an injury to we'll call it the injured, the injured party. Now it could be anything from a negligent driver who's switches lanes when they weren't checking their mirrors and they caused an accident. It could be perhaps a store who didn't shovel the snow, and we got a slip and fall on ice when there is a Seusical injury. And I believe in Colorado that you can correct me on this. I think you've got to have a physical injury in order to claim emotional damages as well. I could be wrong on that. I don't practice personal injury anymore, but when you've got that physical injury, you can bring a claim against what we call the tortfeasor, the person who wrongfully negligently or intentionally harm you.
Philip Goldberg (6m 48s):
And the compensation that you can receive from them is a money award, or you can settle the case as well. And so it's money in exchange for the fact that the injured had to go through not only physical pain, but perhaps rehabilitation, perhaps they lost income, they have medical expenses. So it compensates not on the economic losses, but up to a cap in Colorado non-economic loss losses as well, such as pain and suffering.
Ryan Kalamaya (7m 13s):
Yeah. To further explain that in Colorado emotional damages, they don't necessarily need to be accompanied by physical injuries, but there needs to be some sort of counseling or treatment really in order for there to be a valid claim. And so for members that or listeners that might recognize Eric Wolf in our hypothetical divorce client, when he finds out that his wife, Melanie is going to file for divorce, he goes and hits the slopes and he's skiing. And so another example would be if Eric was out skiing and somebody else clipped him from behind and he had an injury, or he was driving up to Keystone at Brooklyn, your edge on <em></em> was hit.
Ryan Kalamaya (7m 53s):
And so for you, Phil, you wrote an article about how unique Colorado has, why don't we set aside the Workers Comp we'll come back to that, but how does Colorado approach personal injury claims? And maybe in explaining that for listeners, you could also get into what other states do because Colorado is pretty unique. Yeah,
Philip Goldberg (8m 14s):
For sure. So the question is, how do we deal with Personal Injury, either claims that are unliquidated or awards in a divorce. And so stepping back a nationally there's three primary approaches that various states states take one approach. At least two states take New York and Delaware that I'm aware of is what we call it, the unitary approach. And that is an approach where, to the extent a spouse is injured during the marriage and receives awards, or has a claim. Those funds proceeds from any award or settlement are considered the separate non-marital property of the injured spouse.
Philip Goldberg (8m 56s):
So the non-injured spouse has no claim whatsoever to any of the proceeds from a personal injury settlement or award again in New York. And Delaware are the two that I'm aware of. I don't believe there's any additional states, although frankly, I don't keep up with other state's laws, but at least as of recently, those were the two states that adopt the unitary approach. The second approach is also a minority approach, but a larger minority, and then the unitary approach. And it's the exact opposite of the unitary approach. It's called the mechanistic approach under the mechanistic approach. If the injury occurred during the marriage, then any proceeds received by the injured spouse, compensating him or her for that injury is entirely marital property.
Philip Goldberg (9m 41s):
Okay. That doesn't mean that the award necessarily the funds necessarily get split 50 50. We'll talk about that in a minute. But as far as the classification of those proceeds are funds they're 100% merit. If the injury occurred during the marriage, regardless of when the proceeds were received, we're just looking at timing of the injury third approach, which is the majority position is called the analytic approach. And under the analytic approach, courts have to do a deeper dive and they have to look at the loss to the injured spouse that the proceeds are intended to compensate for. So for example, if the proceeds are intended to compensate the injured spouse for lost wages during the marriage or for medical expenses that were incurred during the marriage, or that portion of the proceeds are considered Marital, to the extent the proceeds are intended to compensate for say, post force losses, for example, you know, you've seen it, Ryan, maybe there's a life care plan.
Philip Goldberg (10m 38s):
Someone's very seriously injured and they've got plan in place that is supposed to help them rehabilitate and live their life for the remainder of their, on their life based on their life expectancy. And so to the extent, those proceeds are intended to compensate that injured spouse for post divorce losses, such as the life care component that occurs after the divorce and that's going to be separate property. So in your example, Eric is on the ski slope. Somebody clips him, he's injured very severely. He can no longer work. And he attains let's say a $1 million personal injury award from the party who clipped him to the extent that a portion of that 1 million is intended to compensate her for lost wages during the marriage and medical expenses during the marriage that's is going to be classified as Marital, the marital assets, marital funds, to the extent those, a portion of that million dollars in that example is for post divorce compensation, that's going to be considered separate.
Philip Goldberg (11m 39s):
So it really requires the court to do a pretty deep dive, but it also requires the injured spouse when they're receiving or negotiating a settlement to ensure that the different components are spelled out in that settlement agreement. Because if it's just a lump sum, it's going to be potentially difficult for that injured spouse to argue that any portion was intended for post divorce compensation, it's tougher to do most people don't think of that. Whether when they're negotiating the Personal Injury settled,
Ryan Kalamaya (12m 7s):
Right, and in Colorado. So what is Colorado? How do they handle it? So,
Philip Goldberg (12m 12s):
Oh, Conrad, it takes the mechanistic approach, which is the second approach I discussed. It's a minority approach, but it's a larger minority than the unitary approach. So in Colorado, the courts look entirely at the timing of the injury. And if the injury occurred during the marriage, regardless of when the proceeds are received, it is a 100% marital assets. So it's classified as Marital. And then the court has discretion to allocate that marital asset in the manner in which the court believes is true.
Ryan Kalamaya (12m 40s):
And you and I were talking before that in, when you compare it to Colorado in how they handle Workers Comp, it just is really unique. And if not, it just doesn't make sense to me from an analytical standpoint or logical standpoint. But these are the sorts of things that lawyers we don't allow. We help try to change the law, but the judges and, and we had a separate podcast, Phil with Paige Mackey Murray up talking about appellate law and how laws developed by the, you know, usually the Colorado Supreme court. But this is one of those things where we're kind of handed these cards are dealt these cards, and then we just have to know how to play them. But as you said, it doesn't mean it's equal.
Ryan Kalamaya (13m 23s):
And you know, you and I have had different experiences or heard about different ways that this is handled. But I think to, for listeners that may have a hard time understanding this. If Eric is out skiing, if Eric Wolf's skiing and he gets injured, then my firm does a fair amount Personal Injury. So we see this a fair amount and where Eric will come and we'll explain to Eric, there are two types of damages that you are looking at. One is economic damages, and then the other is non-economic damages. And if you look at the economic damages, it's going to be lost wages as well as your medical expenses. And that gets really tricky because the medical expenses, you get paid based on what, the amount that was billed.
Ryan Kalamaya (14m 9s):
And there might be, oh, or subrogation claims. What they're called is we have to pay back the health insurance. So it's not explicit in Colorado law, but the core has to be looking at the net amount, how much the person is actually collecting, because if they get in your example, a million dollars, they have to pay their health insurance company back $200,000. I mean that that's real money and that's going to really change the economics. But what you and I are kind of referring to is, is the lost wages in particular, because there may be lost wages where if Eric is injured, he has a brain injury. He can't make money in the same manner.
Ryan Kalamaya (14m 50s):
And that could extend after Eric and Melanie get divorced. And that is not supposed to be considered. If we're talking, it's supposed to be separate property, but Colorado does dive into that, which is certainly, I think you would agree that you could get into that in terms of that dynamic, when you're arguing for a disproportionate allocation of that million dollars or whatever the net amount is to Eric.
Philip Goldberg (15m 17s):
So the rationale that Colorado appellate courts use for treating Personal Injury proceeds under the mechanistic approach, it's based on a strict reading of the property statute in the domestic relations statute, do things 14, 10, 1 13, that specifically lists the four categories of property that are considered separate. And it's, I don't have it in front of me, but it's, you know, gifted property inherited property property exchanged for property that you may have own prior to the marriage property you own prior to the marriage, et cetera. And since Personal Injury proceeds are not specifically set forth in the statute and the appellate court courts have determined that Personal Injury proceeds do not constitute separate property.
Philip Goldberg (16m 1s):
If the injury occurred during the marriage, it, it simplifies things in one way, because we're not, we'll talk about the analytic approach, a little in a little more detail in a moment, but the courts aren't required necessarily to go into the settlement or the award itself to try to determine which portion of the award or proceeds are intended to compensate which loss it's all going to be Marital. But we then we'll get into the scenario where the parties are arguing for just as you mentioned, it, disproportionate allocation of those funds and the court absolutely has discretion to award a disproportionate meaning other than 50 50, a portion of those proceeds or all of those proceeds to the injured spouse or hypothetically to the non-injured spouse as well.
Philip Goldberg (16m 47s):
The court should look at those factors, the physical condition of the injured spouse, post decree injury-related expenses. Those are things the court should consider meaning post dissolution injury related expenses, of course, should absolutely be looking at those in determining the allocation of the proceeds, but they are 100% Marital. There was a recent story. Justin Ross is a pretty well-known attorney in Denver. You probably know M Ryan. I heard a story in, and just as listening and I get any of this wrong apologies, but he was in court within the last few years. And the husband had experienced a devastating injury and he lost his leg.
Philip Goldberg (17m 31s):
And during this court proceeding, wife's attorney was arguing. It was a personal injury claim. And I believe he received proceeds from the settlement wife's attorney was arguing that the judge should award wife in that case, a 50% allocation of those proceeds because she incurred losses as well as she took care of him during his injury. She nursed him back to health, as best as she could. She was there for him. You know, there were medical expenses that out of pocket that the parties had to incur together. And so the argument was at least in that case, that wife wanted a 50% allocation of those proceeds. And the judge, according to Justin Ross, I wasn't there listened very attentively to wife's attorney's argument.
Philip Goldberg (18m 13s):
And when the argument was concluded, I looked at wife's attorney and said, yeah, but he ain't got no leg and awarded a hundred percent interest of those proceeds to the husband. So the court does have discretion. And I think most judges use that discretion wisely under the analytic approach. The court would have less discretion. And again, we're doing the deeper dive and we're looking at the individual components of the proceeds and what lost those individual components are intended to compensate for. And then we'll base the classification of merit or separate based on whether the loss was lost to the marital estate.
Philip Goldberg (18m 52s):
What's important to remember though, is even if it is determined by the judge to be a loss to the marital estate, the judge still has discretion to allocate those proceeds on equally. Meaning the court still doesn't have to award a 15, 50, 50, or any other allocation simply because the classification of those proceeds are merit overs,
Ryan Kalamaya (19m 12s):
Right? I mean, there are variety of ways that we can go about this in terms of what implication these cases can have because you get into the non-economic. So that loss of the leg, that person receiving the injured party, that is, you know, there's pain and suffering, which you can understand from a logical standpoint, the wife, there is some damages to her, or, you know, the compensation that would be awarded, you know, there is a separate claim of loss of consortium and that is being done, or that would be done by Melanie. If she's taking care of Eric at home, he gets in a ski accident and she takes care of him. There can be claim of loss of consortium what's is for her.
Ryan Kalamaya (19m 52s):
I actually, I had a case where there was a common law marriage claim and the parties filed a lawsuit and they claimed a loss of consortium. You can only do that if you're married. So the judge just as an aside, determined that that date of filing was when they determined that they were married because you can't be a boyfriend and girlfriend, but the principle was still the same. And we deal with it a lot. It's tricky because you're getting into with the loss of consortium claim about how often are you having sex, what the health of your marriage is. And when you're in a divorce, you're kind of now you're on the flip side, talking about maybe why, the reasons that you are getting divorced because of this injury that, you know, substantively change the relationship.
Ryan Kalamaya (20m 37s):
And those are compensated in how parties argue over that can really matter. But when we send out a demand letter to the insurance company, it will have these particular topics or issues, line item for particular amounts. So the loss wages will be ax, but loss of, of your limb. I mean, that's a, it's another category of damages, physical impairment. But when we get a check to pay for our client's injuries, it just has a number and they're just re releasing the full amount or the full claim. It doesn't line item, how much a particular check is made out for there used to be with personal injury lawyers.
Ryan Kalamaya (21m 18s):
We would have an incentive to itemize it because the IRS used to tax the lost wages portion. Now the IRS has just they've considered it generally to be non-taxable as of the date of this recording, but it, you can get into really tricky territory. And then what you brought up in your article is structured settlements because oftentimes what will happen is someone will get a million dollars, but they'll get payments over time. And no one has really addressed necessarily some of those, as well as putting the money into a trust. So for people that don't understand the, what we're talking about, how could theoretically a party avoid the personal injury claim, being bare they'll property, if they put it into a trust, this episode is brought to you by our law firm.
Ryan Kalamaya (22m 7s):
Kalamaya negotia Amy. And I describe our law firm as an innovative and ambitious trial team that pushes the boundaries to discover new frontiers in family law, personal injuries, and criminal defense in Colorado. We currently have offices in Aspen, Glenwood Springs, Edwards, Denver, and Boulder. If you want to find out more, visit our website, Kalamaya dot law. Now back to the show.
Philip Goldberg (22m 33s):
Yeah, so that, that is a common scenario, especially with larger settlements for more serious and substantial injuries. So under Colorado law funds in an irrevocable trust that or over which the beneficiary spouse has no control, meaning the benefits that that spouse may receive from the trustee are entirely in the trustee's discretion. And the injured spouse has no legal right to demand or any distribution or any benefit. That's a pretty common way to handle substantial personal injury proceeds. As you mentioned, as long as the funds were placed into an irrevocable trust, and it is not determined by the judge, the judge does not determine that the placement of those funds into the trust was for him proper purpose.
Philip Goldberg (23m 24s):
It's not considered dissipation of marital assets. I'll give you an easy example. Let's use Eric. He received what to say proceeds of 1 million, that that was the net. And he placed this into a irrevocable discretionary trust, and the parties get divorced five years later. It's going to be pretty hard for, for Melanie in that example, to argue that Eric's purpose, his intent, placing the funds into this irrevocable discretionary trust was for purposes of not allowing Melanie to reach those funds in event of a divorce. It's going to be a hard argument to make. So as long as there's not a finding of dissipation, then that is an effective way to remove these proceeds.
Philip Goldberg (24m 4s):
These funds from the marital state, because once any funds are placed into an irrevocable discretionary trust, and there's no finding of dissipation, wrongful intent, wrongful motive, then those funds are effectively removed from the marital estate. However, court can still consider those funds as an economic circumstance when allocating the other marital property of the estate. And so in this example, Eric's got $1 million sitting in an irrevocable discretionary trust. The court can absolutely consider that in the overall as an overall economic circumstance and arriving at an equitable distribution of the marital property that the court does have discretion to allocate. And another important thing to remember is any income from the funds that are in this trust is still considered income to the injured spouse for purposes of maintenance and child support.
Philip Goldberg (24m 54s):
So it is possible to remove funds from the marital state. It's not possible under Colorado law to remove them from the judge's consideration or to remove the income component for purposes of, of spouse or a child's.
Ryan Kalamaya (25m 8s):
Yeah. Speaking of income, Phil was in your Justin Ross example of the million dollars for a loss leg. What are your thoughts on the income from that million dollars? That goes a hundred percent to the husband that lost his leg, which makes sense. But if they have children in terms of child support, what do you think is happening to that million dollars for child support purposes?
Philip Goldberg (25m 31s):
The court is going to have, have to look at what is the actual income that the injured spouse is receiving from the Corpus, you know, from the body of the $1 million here, let's say, just use easy math. Let's say husband's generating 10% interest a year. So that'd be a hundred thousand dollars. In that example, that a hundred thousand dollars is going to be considered income for purposes of the child support calculation. And if we are still in the pre dissolution stage, you know, post filing decree, the court can consider and should consider that as income to the husband for purposes of deciding whether either party should be paying maintenance to the other party, spousal maintenance,
Ryan Kalamaya (26m 9s):
I've seen some chatter on that. There's a listserv for CTLA, the Colorado trial lawyers association, which I'm a member of about someone receiving a Personal Injury award. And there is a lien or something against them for child support that they haven't paid child support and whether or not the personal injury lawyer has an obligation to pay out that lien. So there's these interrelated issues and you and I, before we were talking, or before we started recording, we're talking about Marital Torts. And so when I say Marital Torts, can you explain a little bit about that for listeners that may not know what a Marital Torts,
Philip Goldberg (26m 47s):
It would be a, an injury that one spouse inflicts on the other spouse? So an easy example is in the unfortunate circumstance of domestic violence, for example, the injured spouse has the right in Colorado to bring a lawsuit against the spouse. The took off tortfeasor that the spouse who caused the injury, even if they're still married, the fact that they're married does not prevent the injured spouse from bringing a lawsuit. Just if you know, that that injured spouse was walking down the street and somebody just, just, you know, came out of nowhere and caused injury to that person, struck them. Coldcocked them. The injured spouse absolutely has a rider in under Colorado law to bring a suit against the tortfeasor spouse.
Philip Goldberg (27m 31s):
And so the question that is unresolved is in that example, if the injured spouse receives an award or settlement, or, you know, work from the quarter of jury for those injuries and the parties are now getting divorced, how would the court allocate first off classify? And secondly, allocate those proceeds. So in Colorado using a mechanistic approach, if the parties were still married, let's just use, you know, the, one of the spouses committed domestic violence on the other spouse that occurs during the marriage, the proceeds of the injured spouses injury claim are 100% Marital. But then again, we get back to the issue of the court, potentially allocating those proceeds in an unequal manner.
Philip Goldberg (28m 16s):
The common sense would probably say, you know, in that circumstance, the judge very well may award the entire amount of those proceeds to the injured spouse. Colorado is not a 50 50 state. And to the extent the tortfeasor spouse has incurred a debt for this judgment, the court could award 100% of that debt to the tortfeasor spouse. So that's one way courts can deal with it. But as far as classification goes, in that example, that's a 100% marital asset, meaning that the funds that are owed from one spouse to
Ryan Kalamaya (28m 48s):
Right, and you, we were talking about, I had a case where we filed a separate lawsuit and there was certainly some discussion with my client in terms of, this is certainly a marital asset where in, you know, if we use Eric and Melanie, Melanie is sexually assaulted or there's some sort of battery or something in that context as the most common. And unfortunately it's, it's far more common than it should be, but there was a separate lawsuit and Colorado law says you, you're not actually dealing with that claim in the divorce, although it will certainly be discussed, but that is an asset where Melanie may be awarded and we'll get into, does it actually have to settle during the divorce or during the marriage, Phil, but then there's also this debt where Eric, he's going to have this judgment or this liability in owing Melanie for the damages that he caused.
Ryan Kalamaya (29m 45s):
And that also is a marital debt. But to your point, the judge could look at it. And I think is more likely to look at that in terms of really the equities or the reasoning behind that particular lawsuit. And we can't get into fall in Colorado unless it's economic fall. And what you referenced is dissipation. I do think that the court really is going to look at what the circumstances were for that particular claim, but I referenced, does it have to settle? What happens, Phil, with an open ended, you know, claim that someone was injured and the is still going, or there may not even be a lawsuit. There just could be this potential claim.
Ryan Kalamaya (30m 27s):
What happens in that circumstance here in Colorado?
Philip Goldberg (30m 29s):
So under the mechanistic approach, declassification of the asset as marital or separate is based solely on the timing of the injury. So you're in the example you just gave the injury occurred during the marriage, that the asset that is resulting from that injury, meaning a personal injury claim that potentially a proceeds later would be considered 100% Marital because the injury occurred during the marriage. When the funds are received under Colorado law is not a relevant situation in as far as classification of marital or separate property. So in that example, it is a 100% marital asset. It's also, as you mentioned correctly, a 100% marital debt, and then it's going to be up to the judge to use their discretion in allocating potentially on equally both the asset and the debt.
Philip Goldberg (31m 19s):
But there's a case I don't remember the case may have been felled home or another case, but under Colorado law, again, the timing of the, of the received the proceeds is irrelevant. There's a case where one of the parties just received a settlement offer that I think she accepted and then the parties got divorced. So what does the judge do with that? You know, the judge can either reserve jurisdiction and say, Hey, if, and when you receive funds, come back and we'll determine how to allocate that marital asset or the court can in a personal injury claim, but not so much for Workers Comp, which we'll talk about in a minute, a court can allocate a certain percentage of whatever funds are received to both spouses. The court has wide discretion on how to deal with that.
Philip Goldberg (31m 59s):
I think often the court will simply reserve jurisdiction, but the court doesn't have to, the court can say, okay, whatever's received injured. Spouse gets 70% of their spouse gets 30% or any other percentage that the judge thinks is just the judge would just have to make sure, I think in that example to set forth the factors, supporting the decision, if the court's not going to reserve jurisdiction, justifying the allocation that the court ultimately decides on one issue that, you know, this was an easy example. If we're talking about a battery tougher cases, what if a spouse negligently injures the other spouse? It's not intentional. Let's say, you know, they're on their way to the mountains. Eric and Melanie are driving from Denver to go skiing.
Philip Goldberg (32m 39s):
Eric accidentally ran, you know, T-bones Melanie on the road and she's severely injured and is her claim would be against Eric. In that example, how would, it's a 100% marital asset, a hundred percent marital debt. If, if they're married, as we talked about, it's a tougher case. I think in that example, because the court would be looking at what is an equitable distribution and what the court wants to stick Eric with that entire debt and Melanie, with all of those proceeds, if we're not dealing with intentional conduct or an attentional wrong, especially if doing so would render Eric unable to meet his own needs. And so I think in that circumstance, it's a little bit of a tougher call for the judge, but I'm not aware of any appellate case that has addressed that issue directly.
Philip Goldberg (33m 23s):
And so I don't know how the judge on the court,
Ryan Kalamaya (33m 25s):
Right. Well, and you get into a couple issues there in that insurance of Eric and Melanie are driving up by 70 and she gets injured. She can make a claim against the insurance, and, but there could be an excess, or there could be damages beyond that. Certainly the judge is going to take into consideration her physical condition and mental condition when dealing with spousal support or division of property, because if she is permanently disabled, it may not have been Eric's intent or fault. But the reality is that she may need more property or she may need spousal support because she can't work as a result of this accident.
Ryan Kalamaya (34m 9s):
The other issue is that I think divorce lawyers and personal injury lawyers need to be aware in terms of the releases and the documents that they sign, because if there is an exclusion in or a mutual release, which is pretty boiler plate for us in a separation agreement, there may not be a claim. And in terms of really reserving jurisdiction, I certainly, I saw a case where another lawyer handled day and they didn't disclose this injury and it was because, or this claim. And then there became this disclosure issue of, you know, and I don't think a lot of divorce lawyers think about that, where there might be this claim and that that is it's property here.
Ryan Kalamaya (34m 51s):
It's an asset under the way that Colorado treats property. It's the reasoning behind the mechanistic approach, but there's just so many issues that can arise in these circumstances while we we've referenced it in terms of worker's comp. So what is workers' comp and how was it different in Colorado for purposes of divorce?
Philip Goldberg (35m 12s):
So Workers Comp is intended to be a substitute for work-related injuries, as far as the injured employee, being able to bring a claim against the employer. And so if there is a work-related injury, the exclusive remedy of the injured employee is to bring a workers' compensation claim. Meaning the employee, generally speaking, is not entitled to bring a personal injury lawsuit against the employer. Their sole remedy is a workers' compensation claim. Now there may be exceptions. I'm just speaking very generally. And so workers' compensation is a statutory substitute for work-related injuries.
Philip Goldberg (35m 55s):
And there's a trade off there. You know, on the one hand, the injured employee may not be receiving every penny of what they may have been able to recover in a personal injury claim. But at the same time, the idea is that workers' comp is a more of a streamlined type of a system where the injured employee is going to get something, to help them economically, to compensate for loss of earnings, diminished, earning capacity, medical expenses faster, and may not be as much, but they're going to have something that they can fall back on. I'll tell you, I practice workers' comp in Georgia. I don't practice it in Colorado. And that theory sounds great, but I will tell you we litigated everything.
Philip Goldberg (36m 36s):
And so, you know, in practice, it may not be as fast and efficient a system as it is intended to be, but at least, at least that's the intent of the system. And so under workers' comp, you've got, let's say an employee is injured on the job. They've got to bring a workers' comp claim and there are certain categories of, of I'll call it. I don't want to call it damages, but let's just call it damages for lack of a better word. So there's temporary and permanent or permanent damages and there's partial or total disability damages. So there's four different categories of damage. So you've got partial, temporary partial disability. You've got temporary total disability. You've got permanent partial disability and permanent total disability.
Philip Goldberg (37m 17s):
And these are various components of loss that workers' compensation benefits are intended to compensate for. And at least in Georgia, I'm, I'm certain, it's the same in Colorado. The allocation of benefits to the injured employee is going to be classified under one of those four types of disability benefits, temporary partial, temporary, total permanent partial, permanent total. And what we look at in the context of a divorce, oh, actually before I get to this, an injured employee can with the employer agree on a lump sum settlement of the workers' comp claim. And so while normally workers comp are often workers' comp benefits can be a weekly or a monthly benefit.
Philip Goldberg (38m 0s):
The parties can agree for it. One lump sum payment, and that lump sum settles all of the claims that the agent employee has against the employer under workers' comp. And so what we get into then is let's say Eric is injured on the job and he settles his work-related injury for the million dollars that we were talking about. So now there's, there's that million dollars. How does Colorado classify that for purposes of divorce and Colorado looks at Workers Comp differently than Personal Injury benefits, Colorado uses the analytic approach for Workers Comp. So Colorado is really one of a very small minority of states that treats personal injury benefits differently than workers' comp benefits, as far as the classification of those benefits in a divorce as marital or separate.
Philip Goldberg (38m 52s):
So under the analytic approach, the court must determine the loss that the Workers Comp either weekly benefits or the lump sum settlement payment is intended to remedy. And the portion, if any of the benefits that is intended to compensate the injured employee for loss of earning capacity and medical expenses incurred during the marriage, that's going to be classified as marital property, but any compensation for premarital, but usually it's going to be post dissolution lost earning capacity or medical expenses, for example, a permanent partial disability benefit or a permanent total disability benefit. The portion that is intended to compensate the employee post dissolution post-divorce that is classified as that injured employee spouses separate property.
Philip Goldberg (39m 41s):
So the court has to do a much deeper dive and in determining how to classify benefits under workers' comp as either Marital or separate. Now, having said all of that, even if I mentioned this earlier, even if workers' comp benefits are determined by the court to be Marital, it still doesn't mean that the court is required to allocate a specific percentage to the injured employee spouse versus the non-injured spouse. The court still has to use its discretion to allocate those marital benefits, according to the statute in the manner that the court deems most, just,
Ryan Kalamaya (40m 12s):
But the, give another example to show how unique or how I think weird or illogical. This is, if Eric is injured on the job, he has a worker's comp claim. And as you said, it's fairly formulaic. It's like if you lose an arm or you, you know, your other example, you lose your leg. There's a rating service, and there's a particular amount for how much does a leg cost in workers' comp and how much it's compensated. But there could, if he lost, if Eric lost his leg in, when he was at work by somebody else coming in and assaulting him or something of that variety, he had his exclusive remedy is worker's comp against the employer, but he has a separate claim against a third party.
Ryan Kalamaya (40m 58s):
And that is a personal injury claim. So the core could be employing two different analytical approaches to the same incident. And there's going to be two different sources of income one's going to be from Workers comp and then the other is going to be from the tortfeasor I guess the other thing too, to mention that you were referencing earlier is that generally insurance does not cover intentional torts or intentional acts. So if we're talking about the Eric and Melanie situation where someone injures permanently, or, or it's generally not going to be covered by insurance, but oftentimes when insurance is involved, it's going to be from a negligence.
Ryan Kalamaya (41m 40s):
And it goes to the point of Workers Comp and that that's coming form essentially a state run insurance fund for a worker.
Philip Goldberg (41m 48s):
Right? Exactly. And then the rationale that Colorado appellate courts use for differentiating between personal injury benefits and workers' comp benefits and why it uses a different approach. And I'll be honest, I don't necessarily find it very persuasive personally, but the, the rationale is as follows workers' compensation is a statutory system, a statutory remedy for injured workers. The legislature presumably has conducted an exhaustive cost benefit analysis and has determined that the workers who were injured in this state, their exclusive remedy is against the state, but we want to have a more guaranteed type of payment.
Philip Goldberg (42m 30s):
And so since it is a statutory benefit, that's intended to provide the injured employee with a readily available wage substitute then to classify post dissolution, post divorce benefits as Marital would be contravening, the legislative intent, whereas Personal Injury proceeds don't hold that special statutory status. And so that some, the courts used a mechanistic approach is that persuasive, maybe, maybe not, but either way the court, in your example, where there's a lost leg due to the tortfeasor that happens at work. You're exactly right. The court would have to look at, look at the classification of proceeds in a, in a different way, depending on whether those proceeds are workers' comp benefits or personal injury benefits and allocate them whether the allocation made maybe the same, but the court would have to classify the marital versus separate component before it even gets to the allocation.
Philip Goldberg (43m 26s):
So you're right. The same injury could result in two different analysis by the judge, depending on which source of, of proceeds the courts got to out.
Ryan Kalamaya (43m 35s):
Well, Phil, I really enjoyed the conversation and it gets it's. It was tactical, but it crossed over into some territory that I at least find very interesting. Cause you know, both my firm does both personal injury and family law and these cases can come up on occasion. They're pretty rare, but, and I've really enjoyed your I. One thing I forgot to mention at the beginning was you presented at the family Institute on cross-examination, which I thought was a brilliant, I really enjoyed your presentation. So I don't know if you've got plans to present this year, other things, but thank you again for joining us on the pod for people that are interested in finding out more about you, where can they contact you or find out more about you fell Goldberg,
Philip Goldberg (44m 20s):
Casey.com, that's our firm's
Ryan Kalamaya (44m 22s):
Website and you specialize in complex family law, anything in particular that particular niche, other than Personal Injury awards in and family
Philip Goldberg (44m 31s):
Law. So one, a one little niche area that I do practice in is divorce cases that involve complex family trusts, complex estate planning, such as family limited partnerships. I do a fair amount of work sifting through those issues for
Ryan Kalamaya (44m 48s):
Well, for anyone that has a personal injury case, woo, and a divorce or some sort of complex trust issue, you know, where you can find Phil. But again, thanks Phil for joining us on Divorce at Altitude. Brian,
Philip Goldberg (45m 1s):
Thanks so much. I enjoyed it. Take care,
Ryan Kalamaya (45m 3s):
Everyone. This is Ryan again. Thank you for joining us on Divorce at Altitude. If you found our tips, insight or discussion, helpful, please tell a friend about this podcast for show notes, additional resources or links mentioned on today's episode. Visit Divorce at Altitude dot com. Follow us on apple podcasts, Spotify, or wherever you listen in. Many of our episodes are also posted on YouTube. You can also find Amy and me at Kalamaya dot law or 9 7 3 1 5 2 3 6 5 that's K a L a M a Y a.law.