July 31, 2012

Lawsuit Settlement Funds and Equitable Distribution in PA

MARITAL PROPERTY – Tort Claims Focht v. Focht, 32 A.3d 668 (Pa. 2011).

The wife sought review of an order from the Superior Court that vacated a trial court’s equitable distribution award in the parties’ divorce action. The trial court had affirmed a special master’s equitable distribution award, based on a determination that proceeds from an accident settlement were marital property under 23 Pa.C.S. § 3501(a). The trial court award was vacated by the Superior Court, due to the fact that the settlement in the negligence action was reached after the parties’ final separation. On April 1, 1999, the husband sustained a serious injury in an accident.

On September 8, 2000, the husband and wife both filed suit based on their claims for personal injury and loss of consortium. The case was settled on November 23, 2004. Between the date of the accident and the settlement, specifically on August 1, 2001, the parties separated by mutual consent and the wife filed a divorce complaint in February 2004. A divorce decree was entered on January 23, 2009.

Subsection 3501(a)(8) must be interpreted in the context of the well-established understanding of the concept of accrual of a cause of action. Thus, when a cause of action accrues (that is, when an injury has been inflicted, leading to the right to institute and pursue a suit for damages) after the date of the marriage and before the date of final separation, any settlement proceeds resolving from that cause of action are marital property, regardless of when the settlement actually occurs. There was no question that the husband’s cause of action in negligence accrued during his marriage, which occurred one to two years before the parties’ final separation. Thus, because the husband’s cause of action accrued during the marriage, and before the parties’ final separation, the proceeds from the settlement of the suit were marital property. The order of the Superior Court was reversed and remanded. Focht v. Focht, 32 A.3d 668 (Pa. 2011).