Loss of financial support in a Michigan wrongful death case is an important element of the damages available to family members. These damages are available when the victim had a legal obligation to provide support. Even if the support was voluntary and it created an expectation of support on the part of the family member, it is recoverable as damages in a Michigan wrongful death case. There may also be a claim if a child dies and anticipated future support can be calculated.
Case law has certainly evolved in the area of financial support claims. Early court decisions stated that financial support damages could only be claimed if a legal obligation to provide support could be proven. Michigan court decisions have taken a more liberal approach to these claims and now permit a recovery by any blood relative who can prove they were dependent on the decedent.
A Michigan wrongful death claimant can recover loss of possible support if there is a reasonable expectation of support. This is especially true if the children are supporting the parents. In MacDonald v. Quimby, the Court of Appeals permitted a recovery where the adult son had provided support to his mother. However, cases have since held that there must be a history of support and testimony to prove that the parents were dependent upon the child. Therefore, it is very important for the wrongful death attorney to properly investigate and prove loss of financial support damages.
In Jenkins v Raleigh Trucking Servs, Inc, 187 Mich App 424, 468 NW2d 64 (1991), the court found that there was sufficient evidence for a jury to make a reasonable determination of loss of support in favor of the decedent’s minor son, based on the decedent’s earning history and testimony that he had regularly provided his son with support and gifts, even though specific amounts of support (presumably past support) were not mentioned. However, the court held that the jury award for loss of financial support was excessive and unsupported by the record where the amount awarded exceeded the amount of pretax earnings the decedent would likely have earned during his lifetime. The court remanded the case for remittitur of that portion of the verdict only. A decedent’s dependents may recover loss of financial support beyond the age of majority. Setterington v Pontiac Gen Hosp, 223 Mich App 594, 568 NW2d 93 (1997).
In child death cases, the parents may recover for loss of anticipated future support. In Thompson, the court permitted such recovery and, further, allowed for the loss beyond the decedent’s minority. As the plaintiff’s attorney, you must determine whether there is a reasonable basis for claiming a future loss beyond the age of majority of the decedent. For instance, in the case of the death of a 16-year-old who provided some support to the family, the support might have continued well into the future. If the decedent were extremely young or had provided no support at all, whether working or not, the element of future support could be subject to speculation. See generally 4 Am Jur Proof of Facts 134, 170. Also, the decedent’s plans to marry might affect the future support of the survivors. Annotation, Marriage of Child, or Probability of Marriage, as Affecting Right or Measure of Recovery by Parents in Death Action, 7 ALR 2d 1380. You should thoroughly analyze the circumstances of each particular case.
Under Michigan law, compensation awarded for loss of financial support must be distributed to those persons sustaining the damages rather than to the estate of the decedent. MCL 600.2922(6)(d).
2. Determining Economic Loss Based on the Decedent’s Available Income
§3.16 The WDA provides for recovery of loss of financial support, not for loss of earning capacity. To determine the amount of financial support recoverable, you should analyze the amount of the decedent’s income and determine the amount the statutory beneficiaries have lost. The source of the income may vary; possible sources may be private industry, retirement plans, or veterans’ pensions. The beneficiary’s loss of support is not measured by the cost to the source, but rather by the financial loss incurred by the beneficiary.
Some jurisdictions have held that profits arising from capital invested in a business are not recoverable in wrongful death actions. Annotation, Loss of Profits of a Business in Which Plaintiff Is Interested as a Factor in Determining Damages in Action for Personal Injuries, 12 ALR 2d 288. However, no Michigan court has faced this issue. The Court of Appeals for the Third Circuit has held that profits that are reduced by a wrongful death may be recoverable, especially when the profits were the product of the decedent’s loss of earnings and the invested capital is small or incidental. Blackburn v Aetna Freight Lines, Inc, 368 F2d 345 (3d Cir 1966). Although drawings from a partnership may constitute a return on invested capital, such drawings may be a measure of loss of earnings. Annotation, Admissibility of Evidence of Plaintiff’s or Decedent’s Drawings from Partnership or Other Business as Evidence of Earning Capacity, in Action for Personal Injury or Death, 82 ALR 2d 679. The decedent’s income may include benefits from pensions, union contracts, retirement plans, and Social Security. Miller v Tuten, 137 Ga App 188, 223 SE2d 237 (1976)
In In re Turner, 209 Mich App 66, 530 NW2d 487 (1995), rev’d on other grounds, 454 Mich 863, 560 NW2d 629 (1997), the court of appeals ruled that the minor son of the decedent’s girlfriend was not entitled to recover under the WDA because the statutory requirements relating to out of wedlock children were not met. Despite its ruling, the court discussed the trial court’s error in computing the distribution of proceeds to which the child would otherwise have been entitled. The court noted that a calculation for loss of financial support must take into account the amount that the decedent actually provided or could be expected to provide to the claimant. Therefore, the court concluded that it was improper for the trial court to rely on evidence of the average cost of raising a child to age 18 that applies to any deceased parent.
3. Evidence of Changes in Income
§3.17 Past earnings are not conclusive evidence of loss of earnings because earnings vary over a lifetime. Consequently, evidence of changes in income is admissible. See, e.g., Olivier v Houghton County St-Ry Co, 134 Mich 367, 96 NW 434 (1903). Statistical or econometric evidence may be presented to prove changes—usually increases—in future earnings. Krohmer v Dahl, 145 Mont 491, 402 P2d 979 (1965).
Courts often do not permit evidence of a mere intention to enter a different occupation because the change may be too speculative or uncertain. Annotation, Admissibility, in Personal Injury or Death Action, of Evidence as to Injured Party’s Intention to Enter Occupation Other Than That Engaged in at Time of Injury or Death, 23 ALR 3d 1189. However, if one’s training, education, or skills reasonably indicate that the job at the time of death is only temporary, the intention may be admissible. In Nicholas v Maxwell Motor Corp, 237 Mich 612, 213 NW 128 (1927), the court permitted testimony that a 15-year-old was learning to be a carpenter and that he would have become a journeyman carpenter in the near future. See also Turrietta v Wyche, 54 NM 5, 212 P2d 1041 (1949).
4. Deduction for Personal Expenses
§3.18 The law is not clear on whether the personal living expenses of the decedent should be subtracted from the decedent’s income before the lost contributions are calculated. The court in Wycko v Gnodtke, 361 Mich 331, 105 NW2d 118 (1960), indicated that the cost of rearing a child should not be deducted. That portion of the Wycko decision was unaffected by the later decision in Breckon v Franklin Fuel Co, 383 Mich 251, 174 NW2d 836 (1970), or by the 1972 amendment to the WDA itself. See also Miller v State Farm Mut Auto Ins Co, 410 Mich 538, 302 NW2d 537 (1981), in which Justice Levin, in a concurring opinion, set forth the proposition that personal consumption should be deducted.
5. Deduction for Taxes
§3.19 Michigan law is not settled on the question of whether net income or gross income figures should be used to calculate loss of earnings. If net income is used, recovery would be reduced significantly because the proportion of tax payments is large, even in the lower income levels.
No Michigan cases have addressed the subject definitively. See generally O’Loughlin v Detroit & Mackinac RR Co, 22 Mich App 146, 177 NW2d 430 (1970). Most jurisdictions calculate loss of future earnings based on a gross income figure, without subtracting the amount of taxes. Annotation, Propriety of Taking Income Tax into Consideration in Fixing Damages in Personal Injury or Death Action, 16 ALR 4th 589. The basis for this holding is that the tax rates in the future are too speculative for jury consideration. Johnson v Penrod Drilling Co, 510 F2d 234 (5th Cir 1975). However, the Sixth Circuit Court of Appeals has permitted the consideration of the impact of income taxes. See Downs v United States, 522 F2d 990 (6th Cir 1975).
Because the loss is measured by what the beneficiaries would have received but for the death, it appears that, based on principles of compensation, net income should be the basis for calculating the loss. Since future changes in the tax laws are uncertain and speculative, it might be appropriate to base future losses on the tax rates at the time of death. Doing so would balance the interests of the parties to the litigation and prevent speculative calculations. As a practical matter, juries probably do not make finely tuned calculations. Furthermore, the difference between gross income and net income becomes less significant in the large-verdict cases.
Although Michigan law is still not settled on the issue of whether to use net or gross income figures in calculating damages for lost future earnings, it is clear that, once the plaintiff has introduced evidence of expected gross income, the defendant has the burden of providing evidence in support of a deduction for taxes, if a deduction is permitted. Longworth v Michigan Dep’t of Highways & Transp, 110 Mich App 771, 315 NW2d 135 (1981). If the defendant does not present competent expert testimony, a deduction for prospective income taxes is reversible error; tax tables alone will not suffice. Gorelick v Michigan Dep’t of State Highways & Transp, 127 Mich App 324, 339 NW2d 635 (1983).
Before the Gorelick decision, the Michigan Supreme Court had ruled on this issue in a no-fault automobile accident case. In Miller v State Farm Mut Auto Ins Co, 410 Mich 538, 302 NW2d 537 (1981), the supreme court held that no-fault survivor’s benefits were to be calculated on net (after-tax) income, without deducting expenses for personal consumption. However, the Gorelick opinion treated Miller as limited to the language of the no-fault statute, and the significance of Miller is questionable in wrongful death cases.
6. Work-Life Expectancy
§3.20 Using life expectancy as a basis for projecting loss of financial support is not a totally accurate technique because the amount of future earnings depends on the length of time a person is employed, which is less than the length of time he or she is expected to live. Further, income usually does not cease at retirement because a retired worker typically receives annuity benefits, pensions, or Social Security payments, and may yet find other work. Be sure to consult statistics of work-life expectancy to help place mortality tables in a proper perspective. See generally Bromfield v Seybolt Motors, Inc, 113 NH 525, 309 A2d 914 (1973); Krohl & Wolfe, Work-Life Expectancy, 26 Ins Counsel J 190 (1959); Immel, Actuarial Tables and Damage Awards, 19 Ohio St LJ 240 (1958). For example, in cases involving the death of an employed spouse, premature death may have a significant negative impact on benefits (e.g., retirement, Social Security, health insurance) available to a surviving spouse.
7. Lost Wages Before Death
§3.21 If there is a long period of time between the decedent’s accident and death, the decedent’s lost wages during that interval might be large. Although these damages might be included with damages for loss of financial support, a distinction might be made between past lost wages during the period of disability and loss of future financial support. Olivier v Houghton County St-Ry Co, 134 Mich 367, 96 NW 434 (1903). If past lost wages are determined to be separate damages, these damages would go to the estate instead of being distributed directly to those who have suffered a loss. See MCL 600.2922(6).
F. Loss of Services
§3.22 Loss of services is an important element of damages that is frequently overlooked. See generally 4 Am Jur Proof of Facts 160, 170. For example, the husband-father and wife-mother may perform innumerable services for the family, including cooking, housekeeping, painting, plumbing, chauffeuring, and gardening. See generally 13 Am Jur Proof of Facts 193, 203.
In Thorn v Mercy Mem’l Hosp Corp, 281 Mich 1122, 761 NW2d 414 (2008), the court of appeals held that the statutory language of MCL 600.2922(6) does not provide an exhaustive list of available damages in wrongful death cases and, thus, does not preclude a claim for damages for loss of services. The court further held that loss of services is not a component of a claim for noneconomic damages such as loss of consortium or loss of society and companionship. Rather, loss of services damages are economic damages, which are not subject to the damages cap of MCL 600.1483.
The law clearly permits recovery for loss of services of the husband-father and wife-mother. Sceba v Manistee Ry Co, 189 Mich 308, 155 NW 414 (1915); Gorton v Harmon, 152 Mich 473, 116 NW 443 (1908). In Gorton, the court held that the cost of the wife’s support had to be deducted from the amount of the loss. This deduction is probably no longer applicable because the cost of maintenance has nothing to do with the amount of lost services. The support that family members give each other is a positive noneconomic element, the loss of which is itself recoverable. Thus, you should urge the court not to deduct the cost of maintenance.
In child death cases, the parents can recover for the value of the decedent’s services. Thompson v Ogemaw County Bd of Rd Comm’rs, 357 Mich 482, 98 NW2d 620 (1959); Dauer’s Estate v Zabel, 19 Mich App 198, 172 NW2d 701 (1969). That value, presumably, is at least equal to the amount the parents have paid for support, maintenance, and education. Rohm v Stroud, 386 Mich 693, 194 NW2d 307 (1972). In calculating the loss, you should consider the following factors: the cost of the birth, food, clothing, medicine, education, shelter, and transportation. Rohm v Stroud, 35 Mich App 257, 192 NW2d 388 (1971), aff’d, 386 Mich 693 (1972).
In proving loss of services, you will need testimony on the cost of replacement services. You should ask expert witnesses, such as economists, Michigan Unemployment Insurance Agency personnel, or labor department personnel, to testify about such costs.