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Maryland Appellate Court Adopts “Analytical Approach” in Determining Whether Damages Award Constitutes Marital Property

Published on Feb 23, 2010 at 3:12 pm in General Blogs.

The Maryland Court of Special Appeals today ruled in Murray v. Murray (No. 2432, Sept. Term 2007 (reported)) that a determination of whether a plaintiff’s recovery for employment discrimination constitutes marital property for divorce distribution purposes hinges on the classification of the damages awarded by the judge orjury. The Court embraced the “Analytical Approach,” under which a judge must determine “what the award, settlement, or judgment was intended to replace” and must consider “the nature of the personal injury award or settlement to explain why the property is the separate asset of a spouse or why it should be considered marital subject to equitable distribution.” The Court rejected other approaches that consider the timing of the underlying claim or settlement/award.

In adopting the analytical approach, the Court reviewed four appellate decisions adopting the same approach: Blake v. Blake, 341 Md. 326, 346-47 (1996 (damage award for personal injuries arising during the marriage); Queen v. Queen, 308 Md. 574 (1987) (workers’ compensation benefit payment received during the marriage for injuries occurring during the marriage); Lowery v. Lowery, 113 Md. App. 423 (1997) (workers’ compensation lump sum benefit payment received during the marriage for injuries occurring prior to the marriage); and Newborn v. Newborn, 133 Md. App. 64 (2000) (proceeds of a personal injury settlement received by the husband for injuries occurring during marriage).

Ultimately, the Court concluded that the “portion of such claim proceeds which compensates the claimant spouse for lost wages or earning capacity during the marriage, medical expenses paid from marital funds, or for joint loss of consortium, is marital property subject to equitable distribution.” By contrast, the Court held that any proceeds awarded or intended “to compensate the injured spouse for future postmarital wages, bodily injury, or pain and suffering [. . .] constitute the non-marital property of the recipient spouse.”

Because the trial court did not apportion its award under one or more of the categories of economic or non-economic damages, the Court remanded the case to the trial court for additional proceedings to “closely examine” the type of loss at issue and to determine those damages that represent marital and nonmarital property.” The Court noted that the trial court’s allocation is an issue of fact and shall not be disturbed on appeal unless “clearly erroneous.” Thus, the likelihood that the trial court’s allocation analysis will be reversed on appeal is very low, although the case is of such public importance that certiorari may be granted by the Court of Appeals of Maryland, our state’s supreme court, before the matter is remanded to the trial level.

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