Tapping damages: Damages for pain and suffering can be tapped for child support

The 4th District Appellate Court rendered a recent opinion in In Re Marriage of Plowman v. Lawson (2018 IL App.4th 170665). In Plowman, the trial court set a child support order using a small portion of a personal-injury settlement as income available for child support. The portion of the settlement was only the amount attributable to lost earnings. The appellate court reversed and on remand directed the trial court to consider the entirety of the net proceeds from the payee’s personal-injury settlement as income for child support purposes. This opinion furthers the inconsistency between the appellate court districts in Illinois as to the portion of any lawsuit settlement that can be considered income for child support purposes.

The 2nd District in the 1996 case of Villanueva (668 N.E.2d 589) found that only the amount of a personal-injury settlement attributable to lost earnings is income for child support purposes. The 5th District’s recent decision in In Re Marriage of Fortner (2016 IL App.5th 150246) found that Villanueva was wrongly decided and held that damages awarded in a wrongful-death action for pain and suffering, disability and emotional grief and loss were income for child support purposes because they amounted to a gain that facilitated a parent’s ability to support his or her child.

Specifically, the 5th District found that Villanueva was at odds with the principle that the broad and expansive statutory definition of child support includes all benefits and gains received by a supporting parent unless such gains are excluded by statute. In addition, the 5th District Appellate Court found that the out-of-state case law cited by Villanueva did not support its holding.

On appeal, Larry Plowman argued that the entirety of the net proceeds from his ex-wife (Cara Lawson) payee’s personal-injury settlement should be income for purposes of setting child support. He acknowledged Villanueva but argued that the Illinois Supreme Court’s decision in Rogers (820 N.E.2d 386) in 2004 set forth an expansive definition of income which would include the entirety of the net proceeds from the ex-wife’s settlement because they amounted to a benefit or gain by her that enhanced her wealth.

Lawson contended that the court should follow Villanueva and find that compensation for pain and suffering should not be considered as income for child support because it is intended to compensate the injured party.

She also argued that the decision of whether or not to include any portion of the personal-injury award as income for child support purposes should be made on a case-by-case basis based on the severity of injuries, and therefore, the trial court’s decision did not amount to an abuse of discretion. As of the trial date, Lawson asserted that she had spent all of the money, and therefore, none of it was left to be considered income to pay child support.

The 4th District relied on Rogers and a subsequent case Mayfield (2013 IL 114665) which stated that the Supreme Court has broadly defined income to include “gains and benefits that enhance a non-custodial parent’s wealth and facilitates that parent’s ability to support a child or children.”

It also noted that “such gains and benefits are normally linked to employment or self-employment, investments, royalties and gifts.” The 4th District then gave examples where other courts have held that income for child support purposes is broad enough to include lump sum workers’ compensation awards, Individual Retirement Account distributions, military allowances, pensions, investment income and earnings from bonds and securities, severance pay, deferred compensation payments, distributions from a trust and gifts from parents.

Following Rogers and Fortner, the 4th District held that damages awarded for pain and suffering, disability and emotional grief and loss were income for child support purposes as they amounted to a gain that facilitated Lawson’s ability to support her child. The 4th District also held that only damages for future medical expenses and care do not constitute income for child support purposes.

The court further found that the determination of whether certain payments or awards are income for child support purposes requires a consideration of the effect those payments or awards have on the receiving party. The court found that the damages in the settlement amounted to a financial benefit to Lawson that had a positive impact on her ability to support her child. Therefore, the court held that the net proceeds from the personal-injury settlement attributable to damages for pain and suffering and disability are income for child support purposes.

The court noted that on remand the trial court could avoid an unfair result by deviating from the guidelines if it believes a deviation is required after considering the best interests of the child in light of the evidence presented. As an example, a parent who has already received and spent a personal-injury award may seek a deviation from the guidelines if he or she is able to show the award was used in any way benefiting the child.

This case is consistent with the trend of courts expanding the definition of income available to pay child support to virtually any monies or assets received or held by a payor of child support.