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In re Marriage of Smith8/29/1991
This case presents a question of first impression in Colorado: Whether an unliquidated workers' compensation claim is marital property subject to distribution upon dissolution. The trial court ruled that since the husband's entitlement to workers' compensation benefits arose as a result of his employment during marriage, the claim is divisible as marital property. We reverse.
The dispositive facts are not in dispute. In July 1987, after 15 years of marriage, the marriage of Minerva M. Smith and Bruce L. Smith was dissolved. At the time of permanent orders, the husband was unemployed and receiving $800 per month in temporary total disability benefits for an industrial injury sustained in 1981. The husband's entitlement to permanent disability benefits under the Colorado Workers' Compensation Act, § 8-42-110 or § 8-42-111, C.R.S. (1990 Cum. Supp.), had not then been determined.
In addition to workers' compensation benefits, husband was receiving $758 per month in veterans disability benefits for military injuries sustained prior to the parties' marriage and $479 per month in social security disability benefits.
In classifying the husband's pending claim for permanent disability benefits as a marital asset, the trial court analogized the claim to a vested retirement pension, such as was at issue in In re Marriage of Grubb, 745 P.2d 661 (Colo. 1987). The court reasoned that since the claim accrued, or vested, during the parties' marriage, the claim is divisible as marital property. The court awarded the wife thirty-five percent of any permanent disability benefits payable under the claim. The court also granted the wife $500 per month in maintenance until such time as the permanent disability award is determined, at which time the court intended to reevaluate the wife's qualification for spousal maintenance under § 14-10-114(1), C.R.S. (1987 Repl. Vol. 6B).
Husband contends that the trial court's reliance upon In re Marriage of Grubb, supra, is misplaced. He argues that workers' compensation benefits are distinguishable from retirement benefits, particularly insofar as workers' compensation benefits indemnify a person for future loss of earning capacity. We agree.
In In re Marriage of Grubb, supra, our supreme court cautioned that: " rule directed to the disposition of property in a dissolution proceeding can only be as sound as the economic reality which it attempts to service."
We find that caveat instructive in distinguishing between a retirement pension and workers' compensation benefits. A retirement pension constitutes deferred compensation for past services rendered, and to the extent that a pension is attributable to employment during marriage, it is properly includable in the marital estate. See In re Marriage of Beckman, 800 P.2d 1376 (Colo. App. 1990).
Workers' compensation benefits, however, indemnify an employee for loss of earnings, future diminished earning capacity, and medical expenses arising out of an occupational injury or disease. See Allee v. Contractors, Inc., 783 P.2d 273 (Colo. 1989).
Although the issue of whether workers' compensation benefits constitute marital property is a matter of first impression in Colorado, it has been litigated extensively in other jurisdictions. The majority view is that benefits awarded prior to a dissolution for a compensable injury occurring during the marriage are marital property. See, e.g., Queen v. Queen, 308 Md. 574, 521 A.2d 320 (Md. 1987). However, if the benefits extend beyond the dissolution of marriage or a lump sum award is made after dissolut
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