Understanding Non Economic Damages in California
Sep 18 2017

Understanding Non Economic Damages in California

Typically, when a victim incurs damages from another party, the victim is entitled to financial compensation due to the other party’s negligence. The legal purpose behind recovering damages is not only to reimburse victims for the money they spend rectifying their situation, but to place them in the position they would be if the accident had never occurred. This financial reimbursement includes both economic and non economic damages. Additionally, some victims may also be entitled to additional punitive damages, which are designed to punish the tortfeasor (negligent actor) and deter future wrongdoing. Both these kinds of non economic damages are discussed in detail below.

Establishing Non Economic Damages in Settlement Negotiations

The vast majority of negligence cases (well over 85 percent) settle out of court. Often, that settlement occurs before a lawsuit is even filed. But how do attorneys come up with an accurate settlement amount in the first place? Two factors can be considered: The victim’s economic damages, and their non economic damages.

What Are Economic Damages?

Economic damages are relatively easy to establish with expenses like medical bills, income tax returns, and property damage. Property damage is a little more subjective. This is because the victim/plaintiff is entitled to both the monetary value of the lost property, as well as compensation for the additional emotional value of that incidence.

What Do Non Economic Damages Include?

Non economic damages, however, are almost completely subjective. This category includes items like:

  • Understanding Non Economic Damages In CaliforniaPain and suffering,
  • Loss of consortium (companionship),
  • Emotional distress, and
  • Loss of enjoyment in life.

These damages typically MUST be related to a physical injury. So while a “near miss” auto accident may cause substantial amounts of emotional distress and other such losses, there is no such tort under California law.

The exception is, in some cases, the zone of danger rule expands. For example, assume that two parents are in a car crash with their child. The child is seriously injured, but the parents are uninjured. But because the parents have a strong emotional attachment to the victim (their child), because they saw the injury occur, and because they themselves were in danger, the parents are legally entitled to money for emotional distress and other non economic damages.

How Will Your Attorney Value Non Economic Damages?

To establish a ballpark value, some attorneys use a per diem method and calculate non economic damages based on the number of days that the victim/plaintiff physically suffers. Other lawyers multiply the medical bills, perhaps by four or five, based on the severity of the accident. While both methods have their pros and cons, either is usually sufficient to set a reasonable amount of non economic damages.

Establishing Non Economic Damages at Trial

If the case goes to trial, a jury will probably demand more precision than is provided in one of the rough estimates given above.

To determine the amount of non economic damages, the jury will expect to hear testimony regarding the degree of physical suffering that the victim/plaintiff encountered. That can mean calling treating physicians to the stand, as well as nurses, neighbors, friends, co-workers, and others who can testify about the physical challenges of recovery.

The appropriate strategy varies, but it’s usually best to give the jurors both a per diem (or multiplier) estimate of non economic damages, and considerable leeway to determine the value for themselves.

Punitive Damages

If the tortfeasor displayed reckless or outrageous conduct, additional punitive damages may be available according to California Civil Jury Instruction 3949. This could include driving with an extremely high Blood Alcohol Content, or leaving the scene of an injury collision. These additional non economic damages are available if the victim/plaintiff presents clear and convincing evidence of their appropriateness.

Punitive damages are only available in rare and certain kinds of personal injury cases. Examples may include those involving outrageous individual conduct, or a defective product. In some cases, a punitive damages cap may apply.

Non Economic Damages and Income Taxes

As a rule of thumb, if tort damages are related to personal injury or property loss, they are income tax free. That designation applies to economic damages like medical bills, as well as non economic damages related to pain and suffering as a result of the accident. Under this analysis, punitive damages may be subject to income tax.

It’s a good idea for you to consult with an income tax professional to determine the tax basis of the non economic damages received in a tort lawsuit, if any.

Reach Out to an Experienced Non Economic Damages Lawyer

At Russell & Lazarus, APC, we fight for the maximum available non economic damages and we are not satisfied with anything less than the best result. If you live in the Newport Beach, Long Beach, or Riverside area and have been injured, contact us today for a free consultation.