Lost Earnings Case
John Doe versus Able Smith
Due at the beginning of class, November 24, 2009
Case Facts:
Doe was employed as a pile driver operator with General Construction. His gross pay during 2004 was $46,000 and was projected that it would have been about $48,000 for 2005 (if he had worked all year). It was about $44,000 in 2003 and 43,000 in 2002. Doe was 31 years old, single, and had a high school diploma. Fringe benefits paid by his employer in addition to his salary totaled 18%.
On July 1, 2005, his car was broadsided by a car driven by Able Smith who had failed to stop at a stoplight. Doe had his right knee seriously injured in the accident.
For the next six months, Doe was unable to work as he underwent three operations and rehabilitative physical therapy. During that time, his medical expenses totaled $86,500 after payments from his insurance company (out of pocket to Doe). It is now December 31, 2005. Out-of-pocket medical expenses are projected at $15,000 for 2006 and none after that. Doe was unable to return to his former job after rehabilitation because of a continuing partial disability as a result of his injuries.
1. As part of his therapy, he was evaluated by a certified vocational rehabilitation counselor. After extensive testing, consultation with Doe’s doctors and discussions with Doe, she determined that the best course of action for Doe would be to attend a local community college and obtain an Associate’s degree in travel and tourism. Upon completion of the two-year program, it was projected that Doe could start as a motel/hotel manager at $18,600 per year, with projected increases to $24,000 the second year, $27,000 the third year and $30,000 the fourth year as he gained experience in the field. As a motel/hotel manager, company-paid benefits would be about 15% of his pay. The academic program would cost $16,000 per year including all additional costs of attending school.
2. The defendant’s insurance company proposed that Doe return to work immediately in a position such as a cashier, security guard, or similar position which his physical condition allowed. These positions paid an average of $9.25 per hour (figure 2000 hours per year), with company paid fringes of 9%. The vocational rehabilitation counselor agreed that these were positions that could be adequately performed by Doe given his current physical condition and educational level.
Your task:
1. Assume that liability has been proven or admitted. Prepare two analyses of net damages for the prior six months (2005) and the next six years (2006-2011), using the facts above and the two alternative employment scenarios. Include a detailed loss of earning capacity calculation as well as adding all additional expenses.
2. Provide a detailed analysis and discuss each item fully as to why it was included and why the costs were calculated the way they were. Be clear, specific and complete. You also need to discuss why any “normally expected” items of damages were not included. Do not calculate any interest or discounts.
3. Provide a separate listing of any assumptions you used in each of your two analyses and justification for their appropriateness.
- R. S. Kulzick -
- updated 11/01/2007 -