Magazine article The CPA Journal

Economic Damages under New York Wrongful Death Statute

Magazine article The CPA Journal

Economic Damages under New York Wrongful Death Statute

Article excerpt

Under our system of laws, wrongful death is a civil wrong (tort), which is remedied by the courts with payment of compensation (damages). The intention of the guilty party's payment to the decedent's distributees is to right the wrong sustained.

Applicable Law

The New York State Constitution Article 1, S16, has made pecuniary recovery inviolate as follows: "The right of action now existing to recover damages for injuries resulting; and the amount recoverable shall not be subject to any statutory limitation" (Constitutional Convention, November 8, 1938; effective January 1, 1938).

The Estate Powers and Trust Law (EPTL), Article 5, Part 4, EPTL 213-217, is New York's wrongful death statute. The law provides that the personal representative of the estate has the right to sue for pecuniary loss on behalf of the distributees. Damages are determined by the court in an amount it deems to be fair and just compensation for pecuniary injuries resulting from the decedent's death. It calls attention to reasonable expenses for medical aid, nursing, and funeral expenses, "in addition to every other lawful element." Punitive damages, designed to punish the defendant in cases of recklessness or depravity, are allowed.

Consideration of personal income taxes that the decedent would have been required to pay must be considered by both the court and the jury. In Norfolk & Western Co. v. Liepelt [444 US 490 (198)], the Supreme Court went a step further by holding that lost earnings in a wrongful death action can be estimated on an after-tax basis.

Commentaries by David D. Siegel in McKinney's Consolidated Laws of New York (Thomson-West) note that New York State courts have expanded the narrow statutory language of the EPTL to include:

* Benefits that the distributee had a reasonable right to expect if the decedent had lived, including loss of support, voluntary assistance, and possible inheritance (Parrilis v. Feldman, 1980).

* Factual situations that take into account "decedent's working habits, her job and her income at the time of death, the likelihood of further advancement and increased earnings capacity" (Matter of Reynolds, Surrogate Court of Erie County, 1952).

* The age and life expectancy of the decedent and the distributees she was supporting (Brown v. Horn, 1992; Tenczar v. Milligan, 1975).

* In the event that the distributees are minor children, damages include loss of a parent's "nurture, intellectual and physical training and such instruction as only can proceed from a parent" (Tilley v. Hudson Railroad Co., 1862). Damages may include the loss of similar attributes provided by grandparents and may include the difficult question of lost inheritance (Sternfels v. Metropolitan Street Railroad Co., 1903).

The Valuation Process

To value the tort claim, one must hypothesize what would have happened had the decedent lived; accordingly, preinjury life expectancy must be determined. Collaterally, data is required as to the wage base at death and projected expected wage increases. As mandated by the statute, earnings projections are reduced by mandatory related federal and state tax liabilities. Consideration of fringe benefits is also necessary, as are reductions for the personal expenditures of the decedent.

Worklife expectancy estimates project lost earnings capacity. Worklife expectancy takes into account time during working years when the individual was not in the labor market If the decedent was not gainfully employed, the court must consider the value of a student, a homemaker, or a child's future gainful employment

Worklife Expectancy

Worklife expectancy is defined as the number of years of earnings an individual was expected to have before natural death or retirement. It is the starting point for the valuation process. Differences exist by education and occupation. Based on data compiled in 1979 (the Department of Labor last published tables in 1986), these "increment-decrement tables" include an allowance for interim periods of separation from the labor force. …

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