Monday, May 16, 2011

Judge Terrence R. Nealon of Lackawanna County Provides Framework for Presentation of Motion to Approve Settlement of Wrongful Death/Survival Action

On May 5, 2011, Judge Terrence R. Nealon of the Lackawanna County Court of Common Pleas issued a decision in the Galletti v. Taylor Longterm Care Center, Inc., et.al., No. 2008-CIV-3740 (Lacka. Co., May 5, 2011, Nealon, J.), in which the Court addressed new Lackawanna County Local Rule 2206, pertaining to the allocation of settlement proceeds between wrongful death and survival actions, and the Department of Revenue’s objections to the Plaintiff’s proposed allocation.

Addressing an issue of first impression with regards to the local rule, Judge Nealon sets forth a prescribed procedure to be followed when the Department of Revenue consents verses when it objects to the proposed allocation of settlement proceeds.

In Galletti, the Plaintiff’s decedent was fatally injured in an accident that occurred in a nursing home. After a professional liability action was commenced against the nursing home Defendants seeking to recover damages under the Survival Act and the Wrongful Death Act, the case settled for the global sum of $450,000.00.

Prior to requesting court approval of the settlement on behalf of the decedent’s estate, and in accordance with Lackawanna County Local Rule 2206, the Plaintiff’s requested the consent of the Pennsylvania Department of Revenue to a proposed apportionment of the settlement proceeds with 85% being allocated to the wrongful death claim and 15% being assigned to the survival claim.

By letter, the Department of Revenue advised the Plaintiff’s counsel that it objected to the 85%-15% apportionment and would agree only to a 50%-50% allocations of the settlement proceeds between wrongful death and survival claims.

Accordingly, the Plaintiffs filed a “Motion for Approval of Settlement” and provided the Pennsylvania Department of Revenue with notice of the Rule Returnable hearing date. Although the Pennsylvania Department of Revenue objected to the Plaintiff’s allocation of the settlement proceeds, they did not bother to show up at the hearing.

Judge Nealon noted that, under Pennsylvania law, whenever wrongful death and survival actions are settled for a single sum, the amounts apportioned to the survival claim and the wrongful death claim must be approved by a Court having jurisdiction.

The Court noted that such an apportionment has significant tax implications as only the monies apportioned to the survival action are subject to estate inheritance taxes. Since any amount allocated to the wrongful death claim passes outside of the decedent’s taxable probate estate, the decedent’s creditors cannot assert any claims against the wrongful death recovery.

Lackawanna County Local Rule of Civil Procedure 2206 entitled “Court Approval of Distribution of Proceeds,” requires that a Plaintiff in the settlement of claims under the Wrongful Death Act or the Survival Act shall present a Motion for Approval of the Proposed Distribution of Proceeds, which motion shall attach correspondence or some other form documented communication from the Pennsylvania Department of Revenue confirming whether or not that entity objects to the proposed apportionment.

In Lackawanna County, if the Department of Revenue concurs with the Plaintiff’s allocation, the Plaintiff may proceed in accordance with Local Rule 208.3(a) by simply presenting the Motion for Court Approval of the Settlement to the Motions Court judge.

However, if the Department of Revenue objects to the proposed apportionment, the Plaintiff shall proceed according to Pennsylvania Rule of Civil Procedure 208.4 by requesting the issuance of a Rule to Show Cause in the scheduling of an evidentiary hearing. The Plaintiff is required to serve the Department of Revenue with a copy of the Rule To Show Cause and must notify the Department of the date and time of the scheduled hearing.

The Court in Galletti noted that the Plaintiff complied with these Rules and provided the Department of Revenue with notice of the hearing. According to the Opinion, the basis for the Department’s objection is that Galletti (the decedent’s son) did not suffer any pecuniary loss as a result of his mother’s death so as to justify the allegation of 85% of the settlement proceeds to the wrongful death action.

At the hearing on the Motion for Approval of Settlement the decedent’s son presented evidence, through an interpreter, that he was a “death-mute” who frequently visited his mother approximately once a week and often resided with her on weekends and vacations, even though the son lived in New Jersey. At the conclusion of each visit, the decedent would provide the son with food she had made and froze for him in anticipation of the visit. Furthermore, it was testimony that the decedent frequently provided financial assistance to the son for renovations to the son’s home and for the son’s other personal expenses. The Opinion noted that the decedent’s financial assistance to the son continued even when the decedent was a resident in the nursing home.

As such, the son asserted that at least 85% of the settlement proceeds are attributable to damages that may be recovered under the Wrongful Death Act. The son maintained that most of the wrongful death damages related to the pecuniary value of the services and contributions that his mother would have provided to him.

Judge Nealon noted that, in terms of the damages under the Survival Act, such damages are designed to compensate the decedent’s estate for losses suffered by the decedent herself, including conscious pain and suffering and wage losses. If the decedent is retired at the time of her death, such as in this matter, a claim may also be advanced under the Survival Act for the loss of her future Social Security Benefits, less an appropriate personal maintenance expense.

In this matter, the decedent’s son presented evidence to show that the claim for conscious pain and suffering on behalf of the decedent could only have been for the time period of the less than 90 minute interval between 6:15 a.m. and 7:40 a.m., which was the last time the decedent was checked on before her death by the nursing home personnel and the time that the decedent was discovered thereafter in an unresponsive state with her head trapped between the mattress, the mattress frame and side rail and the bottom portion of the her body being upon the floor. The decedent’s son argued that, since that was the only possible timeframe for any conscious pain and suffering claim, the apportionment of only 15% of the settlement proceeds to the survival action was appropriate.

After reviewing the law governing damages which are recoverable under the Wrongful Death Act and the Survival Act and comparing it to what he found to be the credible evidence introduced by the son during the hearing, and with the Department of Revenue not even bothering to appear for the hearing despite their state objections to the apportionment of the settlement proceeds, Judge Nealon found that the Plaintiff’s suggested allocation of 85% of the settlement proceeds to the wrongful death action and 15% to the survival action to be equitable. Accordingly, the court granted the Plaintiff’s Motion for Approval of Settlement.

Although this Opinion is based somewhat upon Lackawanna County Local Rule 2206, the Opinion does provide a nice summary of the applicable law and a workable framework for the pursuit and presentation of a Motion to Approval a Settlement of a Decedent’s Estate with an apportionment of damages between the Wrongful Death Act and the Survival Act.


Anyone desiring a copy of this Opinion may contact me at dancummins@comcast.net.

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