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Address: 3811 Turtle Creek
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Texas 75219 |
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George (Tex) Quesada
Sommerman, Moore, Mitchell & Quesada, L.L.P.
3232 McKinney Avenue, Suite 1160
Dallas, Texas 75204-2407
Special Thanks to Frank Costilla
September, 2002
TABLE OF CONTENTS
I. INTRODUCTION 1
II. LOST EARNINGS vs. LOST EARNING CAPACITY 1
III. DISCRETIONARY NATURE OF THE AWARD 2
IV. DAUBERT/ROBINSON ISSUES 4
A. Economic Testimony: Present Value 4
B. Vocational Experts 5
V. SPECIAL PROBLEMS. 6
A. Post-injury earning Increases 6
B. Children 6
TABLE OF AUTHORITIES
Baccus v. American States Ins. Co. of Texas, 865 S.W.2d 587
(Tex.App.-Fort Worth 1993, no writ) 1, 2
Bonney v. San Antonio Transit Co., 325 S.W.2d 117 (Tex. 1959) 3
Border Apparel-East, Inc. v. Guadian, 868 S.W.2d 894 (Tex. App. --
El Paso 1993, no writ) 4, 5, 6
Brockett v. Tice, 445 S.W.2d 20 (Tex. Civ. App.Houston [1st Dist.]
1969, writ. refd n.r.e.) 5
Carey v. Apfel, 230 F.3d 131 (5th Cir. 2000) 5
City of Cleburne v. Trussell, 10 S.W.3d 407 (Tex. App.Waco 2000,
no pet. h.) 3
City of Rosenberg v. Renken, 616 S.W.2d 292 (Tex. Civ. App.
Houston [14th Dist.] 1981, no writ) 3
City of San Antonio v. Mendoza, 532 S.W.2d 353 (Tex. App.
San Antonio 1975, writ refd n.r.e) 6
Culver v. Slater Boat Co., 722 F.2d 114 (5th Cir. 1983), cert. denied,
469 U.S. 819, 105 S.Ct. 90, 83 L.Ed.2d 37) 4
Dallas Railway & Terminal Co. v. Guthrie, 210 S.W.2d 550 (Tex. 1948) 1
Daubert v. Merrill Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786,
125 L.E 2nd 469 (1993) 4
Decker v. Latham, 446 S.W.2d 113, 116 (Tex. Civ. App.El Paso 1969,
writ refd n.r.e.) 3
Gainsco County Mutual Insurance Co. v. Martinez, 27 S.W.3d 97
(Tex. App. San Antonio 2000, pet. granted, dismd) 5
Home Indem. Co. v. Eason, 635 S.W.2d 593 (Tex.App. -- Houston
[14th Dist.] 1982, no writ) 2
Home Interiors &Gifts v. Veliz, 695 S.W.2d 35 (Tex. App. Corpus Christi
1985, writ refd n.r.e. 1
Household Credit Serv., Inc. v. Driscol, 989 S.W.2d 72 (Tex. App.
El Paso 1998, pet. denied) 2
Houston Belt & Terminal Ry. Co. v. Wherry, 548 S.W.2d at 743
(Tex. Civ. App. Houston [1st Dist.] 1976, writ refd n.r.e.) 1
Jones & Laughlin Steel Corp. v. Pfeifer, 462 U.S. 523 (1983) 4
Kelly v. Diocese of Corpus Christi, 832 S.W.2d 88 (Tex. App.
Corpus Christi 1992, writ dismd w.o.j.) 1
Lowery v. Berry, 269 S.W.2d 795 (Tex. 1954) 6
Lubbock Co. v. Strube, 953 S.W.2d 847 (Tex. App.Austin 1997, pet. denied) 5
McIver v. Gloria, 140 Tex 566, 169 S.W.2d 710 (1943) 2, 3
Metropolitan Life Ins. Co. v. Haney, 987 S.W.2d 236 (Tex. App.
Houston [14th Dist.] 1999, pet. denied) 2
Mikell v. LaBeth, 344 S.W.2d 702 (Tex. Civ. App.Houston 1961,
writ refd n.r.e.) 3
Missouri Pac. Ry. Co. v. Richmond, 73 Tex. 568, 11 S.W. 555 (1889) 1
Ortiz v. Furrs Supermarkets, 26 S.W.3d 646 (Tex. App. El Paso 2000,
no pet. h.) 3
Pipgras v. Hart, 832 S.W.2d 360 (Tex. App. Fort Worth 1992, pet.
denied) 6
Roberts v. Williamson, 52 S.W.3rd 343 (Tex. App. Texarkana 2001, pet.
granted) 6
Robinson v. E.I. DuPont De Nemours, 923 S.W.2d 549 (Tex. 1995) 4
Romero v. CMA, Inc.,808 S.W.2d 157 (Tex. App. El Paso 1991, pet.
denied) 6
Southern Pacific Transp. Co. v. Harlow, 729 S.W.2d 946 (Tex. App.
Corpus Christi 1987, writ denied) 3
State Parks & Wildlife Dept. v. Tidwell, 735 S.W. 2d 629 (Tex. App.
Texarkana 1987, no writ) 1
Strauss v. Contininental Airlines, Inc., 67 S.W.3rd 428, 435, n.2
(Tex. App. Houston [14th Dist] 2002, n.w.h.) 1
Texas Industrial Contractors, Inc v. Ammean, 18 S.W.3rd 828
(Tex. App. Beaumont 2000, pet. denied) 6
T. J. Allen Distributing Co. v. Leatherwood, 648 S.W.2d 773 (Tex. App.
Beaumont 1983, writ refd n.r.e.) 1
Union Carbide Corp. v. Mayfield, 66 S.W.3rd 354 (Tex. App.
Corpus Christi 2001, pet. denied) 5
U.S. E.E.O.C. v. Rockwell Intl Corp., 60 F.Supp.2d 791 (N.D. Ill. 1999),
affd, 243 F.3d 1012 (7th Cir. 2001) 5
Wal-Mart Stores, Inc. v. Berry, 833 S.W.2d 587, 595 (Tex. App.
Texarkana 1992, writ denied) 3
I. INTRODUCTION
This paper discusses various aspects proving lost earnings and lost earning capacity. Cases involving describing the general nature of the award and Daubert/Robinson issues are included. I have tried to include opinions concerning some of the special problems which arise in this area.
II. LOST EARNINGS vs. LOST EARNING CAPACITY.
Lost earning capacity is a form of special damages, Missouri Pac. Ry. Co. v. Richmond, 73 Tex. 568, 11 S.W. 555, 58 (1889); Houston Belt & Terminal Ry. Co. v. Wherry, 548 S.W.2d at 743, 753 (Tex. Civ. App. Houston [1st Dist.] 1976, writ refd n.r.e.), and must be specifically stated and proved. Kelly v. Diocese of Corpus Christi, 832 S.W.2d 88, 91 (Tex. App. Corpus Christi 1992, writ dismd w.o.j.).
Texas law requires the fact finder to award damages for lost earning capacity, rather than loss of actual earnings. Dallas Railway & Terminal Co. v. Guthrie, 210 S.W.2d 550, 552 (Tex. 1948); T.J. Allen Distributing Co. v. Leatherwood, 648 S.W.2d 773, 774 (Tex. App. Beaumont 1983, writ refd n.r.e.). Notwithstanding these pronouncements, some cases have allowed the issue to be submitted as lost earnings. Home Interiors & Gifts v. Veliz, 695 S.W.2d 35 (Tex. App. Corpus Christi 1985, writ refd n.r.e.), State Parks & Wildlife Dept. v. Tidwell, 735 S.W. 2d 629 (Tex. App. Texarkana 1987, no writ).
Earning capacity is defined as the "ability and fitness to work in gainful employment for any type of remuneration, including salary, commissions, and other benefits, whether or not the person is actually employed." Strauss v. Contininental Airlines, Inc., 67 S.W.3rd 428, 435, n.2 (Tex. App. Houston [14th Dist] 2002, n.w.h.); Baccus v. American States Ins. Co. of Texas, 865 S.W.2d 587, 588 (Tex.App. Fort Worth 1993, no writ); Home Indem. Co. v. Eason, 635 S.W.2d 593, 594 (Tex.App. -- Houston [14th Dist.] 1982, no writ). It does not necessarily mean actual wages, income, or other benefits received during the relevant time period. Baccus, 865 S.W.2d at 588; Eason, 635 S.W.2d at 594-95.
III. THE DISCRETIONARY NATURE OF THE AWARD
Loss of earning capacity that an injured person will suffer in the future is always uncertain and is left largely to the jurys sound judgment and discretion. Household Credit Serv., Inc. v. Driscol, 989 S.W.2d 72, 90 (Tex. App. El Paso 1998, pet. denied). Each case is judged on its own particular facts and the damages for loss of earning capacity need be proved only to the degree to which they are ascertainable. Id. Texas courts have consistently upheld judgments for loss of earning capacity, even when the plaintiff was making as much money after the accident as before, when it was shown that pain, weakness, diminished functional capacity or the like indicated that the plaintiffs capacity to get and hold a job, or his capacity for duration, consistency, or efficiency of work was impaired. Metropolitan Life Ins. Co. v. Haney, 987 S.W.2d 236, 244 (Tex. App. Houston [14th Dist.] 1999, pet. denied). Damages for loss of earning capacity need not be based on any specific degree of physical impairment, but can be based on a composite of all the factors affecting earning capacity. Id.
On the other hand, case law does require proof that the reasonable degree of certainty to which the case is susceptible... . McIver v. Gloria, 140 Tex 566, 169 S.W.2d 710, 712 (1943). Past lost earnings are the actual loss of income due to an inability to perform a specific job a party held from the time of injury to the date of trial. This differs from loss of earning capacity, which is a plaintiffs diminished ability to work after the date of trial... The burden of proof for lost earnings is greater than that for loss of earning capacity. Ortiz v. Furrs Supermarkets, 26 S.W.3d 646, 654 (Tex. App. El Paso 2000, no pet. h.).
Loss of past earnings is merely evidence of the ultimate issue, loss of earning capacity. See, McIver v. Gloria, 169 S.W.2d 710 (Tex. 1943); Southern Pacific Transp. Co. v. Harlow, 729 S.W.2d 946 (Tex. App. Corpus Christi 1987, writ denied). Evidence which the jury can consider includes
proof of the plaintiffs weakness, lack of capacity to endure work or diminished efficiency. Mikell v. LaBeth, 344 S.W.2d 702, 707 (Tex. Civ. App. Houston 1961, writ refd n.r.e.). But, there must have been some earning power in the particular field prior to injury. See, Decker v. Latham, 446 S.W.2d 113, 116 (Tex. Civ. App. El Paso 1969, writ refd n.r.e.).
There are some limitations on the fact finders discretion in this area. For instance, the plaintiff is required to show enough evidence so that the jury can reasonably estimate his loss of earnings or earning capacity. A jury cannot award a greater amount than that proved. City of Rosenberg v. Renken, 616 S.W.2d 292, 293 (Tex. Civ. App. Houston [14th Dist.] 1981, no writ).
Specific proof of actual loss of earnings and income is relevant evidence of loss of earning capacity. See, Wal-Mart Stores, Inc. v. Berry, 833 S.W.2d 587, 595 (Tex. App. Texarkana 1992, writ denied) (permissible to compare actual earnings before and after injury to show loss of earning capacity).
To recover loss of future earning capacity, the injured person must demonstrate not only that he lost wages in the past due to the defendants tort, but his injuries are severe enough to impair his ability to earn wages in the future. Bonney v. San Antonio Transit Co., 325 S.W.2d 117 (Tex. 1959). City of Cleburne v. Trussell, 10 S.W.3d 407, 411 (Tex. App. Waco 2000, no pet. h.) (lost wages and loss of earning capacity are personal injury damages recoverable under the TTCA).
III. DAUBERT/ROBINSON ISSUES.
Some types of evidence related to lost earning capacity may be required to meet the standards for admissibility of Daubert v. Merrill Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S. Ct. 2786, 125 L.E 2nd 469 (1993) and Robinson v. E.I. DuPont De Nemours, 923 S.W.2d 549 (Tex. 1995).
A. Economic Testimony: Present Value
The Fifth Circuit requires economists to follow the below market discount rate method enunciated in Culver v. Slater Boat Co., 722 F.2d 114 (5th Cir. 1983), cert. denied, 469 U.S. 819, 105 S.Ct. 90, 83 L.Ed. 2d 37). (Culver II). There is no case which mandates the use of the Culver II method, in state law cases, but it was discussed favorably in Border Apparel-East, Inc. v. Guadian, 868 S.W.2d 894 (Tex. App. -- El Paso 1993, no writ).
Utilizing this method, economists will reduce to present value the future economic losses, an approach expressly countenanced by the United States Supreme Court in Jones & Laughlin Steel Corp. v. Pfeifer, 462 U.S. 523 (1983). The Court explained that the calculation of an appropriate award representing the present value of a lost stream of earnings in an inflation-free economy is comprised of two elements: 1) the amount that the employee would have earned during each year that he could have been expected to work after the injury; and 2) the appropriate discount rate, reflecting the safest available investment. Pfeifer at 537-38. With respect to the discount rate, the Court discouraged the use of specific forecasts of future price inflation, instead favoring the use of an appropriate below-market interest rate chosen, on the basis of the same factors that are used to estimate the lost stream of future earnings: If full account is taken of the individual and societal factors (excepting price inflation) that can be expected to have resulted in wage increases, then all that should be set off against the market interest rate is an estimate of future price inflation. Id. at 548. The Court specifically approved a rate between 1 and 3%. Id. at 548-49.
Under Texas substantive law, future damages awards must be discounted back to their present value. Lubbock Co. v. Strube, 953 S.W.2d 847 (Tex. App. Austin 1997, pet. denied) (lost earning capacity in retaliation claim); Brockett v. Tice, 445 S.W.2d 20 (Tex. Civ. App. Houston [1st Dist.] 1969, writ. refd n.r.e.) (personal injury action). There is no specified discount rate which the court must use. In Border Apparel-East, Inc. v. Guadian, 868 S.W.2d 894 (Tex. App. -- El Paso 1993, no writ), the concurring opinion confirmed, Our courts are in agreement that damages for losses that will occur in the future must be discounted at the time of judgment . . . This discount includes damages for lost earning capacity. Id. at 899 (Osborn, C.J., concurring).
B. Vocational Experts.
Vocational evaluations can be used as a basis for economic projections of lost earning capacity. A number of cases have discussed the admissibility of such evidence. For instance in U.S. E.E.O.C. v. Rockwell Intl Corp., 60 F.Supp.2d 791 (N.D. Ill. 1999), affd, 243 F.3d 1012 (7th Cir. 2001), the trial court excluded the EEOCs expert testimony because it was not reliable. Using the Daubert standard, the court found that the expert had failed to follow his own preferred methods and reliability standards and that the findings were too general to be of use to the jury. A Texas federal court discussed this type of evidence in Carey v. Apfel, 230 F.3d 131 (5th Cir. 2000), a non-jury proceeding. The Social Security Administrations five-step sequential evaluation analysis was followed to determine that the claimaint had residual vocational capacity.
Texas cases discussing and approving the use of vocational experts include Union Carbide Corp. v. Mayfield, 66 S.W.3d 354 (Tex. App. Corpus Christi 2001, pet. denied); Gainsco County Mutual Insurance Co. v. Martinez, 27 S.W.3d 97 (Tex. App. San Antonio 2000, pet. granted, dismd); and Romero v. CMA, Inc.,808 S.W.2d 157 (Tex. App. El Paso 1991, pet. denied).
IV. SPECIAL PROBLEMS.
There are a couple of problems which frequently arise in the areas of projecting future lost earning capacity.
A. Post-injury earning increases.
One of the most difficult problems comes when the plaintiff is earning more at the time of trial than at the time of injury. Texas law clearly allows recovery for economic losses even when plaintiffs have bettered themselves after an injury. Commonly cited cases approving such a recovery include Texas Industrial Contractors, Inc v. Ammean, 18 S.W.3d 828, 836 (Tex. App. Beaumont 2000, pet. denied), Border Apparel-East Inc. v. Guadian, 868 S.W.2d 894, (Tex. App. -- El Paso 1993, no writ), and City of San Antonio v. Mendoza, 532 S.W.2d 353, 361 (Tex. App. San Antonio 1975, writ refd n.r.e)
B. Children.
Proof of a childs lost earning capacity was the subject of Roberts v. Williamson, 52 S.W.3d 343 (Tex. App. Texarkana 2001, pet. granted). The case is a good summary of the law in this area, and quotes Pipgras v. Hart, 832 S.W.2d 360, 366 (Tex. App. Fort Worth 1992, pet. denied): Where plaintiff is a child, who has never earned any money, the jury must determine the value of its lost earning capacity altogether from their common knowledge and sense of justice.
This approach is consistent with old Texas Supreme Court precedent: Lowery v. Berry, 269 S.W.2d 795, 797 (Tex. 1954).
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