What Happens after the Legal Malpractice Settlement?
Husband suffers personal injury in a fall from a scaffold. He resolves the case for $1M. Even at that number, he and wife then succeed in a legal malpractice case for an additional $ 297,000. What happens then? Burnett v Burnett 2012 NY Slip Op 08850 Decided on December 20, 2012 Appellate Division, Third Department tells the sad but familiar story of everything unraveling.
"The parties were married in 1974 and raised six grown children. During the course of the marriage, plaintiff (hereinafter the wife) worked within the home and defendant (hereinafter the husband) was the primary wage earner, excluding a period during the marriage — described by Supreme Court as "significant" in duration — when the husband left the wife and children dependant upon public assistance benefits and charity from her family. In 2002, in the course of his employment, the husband suffered personal injuries in a fall from a scaffold. In 2006, the parties settled their claims for personal injury and loss of consortium in the combined net sum of $1 million and deposited the funds into a joint investment account managed by their son, with the stated intention of drawing $4,000 monthly from the account for their household expenses and support. In 2007, they jointly obtained a settlement payment upon a legal malpractice action (arising from the underlying personal injury and consortium claims) in the sum of roughly $297,000. The husband deposited this check into his separate account. Thereafter, the husband engaged in extensive and habitual gambling, depleting the accounts. After learning of an adulterous affair in 2009, the wife withdrew the remaining balance of just under $140,000 from the joint investment account. The husband has never accounted for the funds from the malpractice settlement and Supreme Court found, based upon this failure and upon his "less than forthcoming testimony," that the possibility remained that he had secreted or transferred assets.
Supreme Court awarded the wife title to the marital residence, the remaining balance of [*2]the investment account, and the household furnishings and farm equipment. The husband received his checking account, plumbing business and equipment, and a motor boat and trailer. The husband appeals.
We reject the husband's contention that Supreme Court erred in determining that the settlement funds were marital property. Although the governing statute provides that compensation for personal injury constitutes separate property (see Domestic Relations Law § 236 [B]  [d] ), here, Supreme Court noted the complete lack of any evidence upon which the funds might have been allocated as between the husband's personal injury claim and the wife's consortium claim, and the substantial evidence supporting the legal presumption that the parties wished to treat the proceeds as joint assets of the marriage (see Cameron v Cameron, 22 AD3d 911, 912 ; Garner v Garner, 307 AD2d 510, 512 , lv denied 100 NY2d 516 )."