Wrongful Death Act Claim for Estate Tax Impact of Premature Death May Go Forward

Beim v. Hulfish, 427 N.J. Super. 560 (App. Div. 2012).  The first paragraph of this very interesting opinion by Judge Harris, in an auto accident case, well encapsulates the novel issue presented:

“This appeal arises in connection with the Wrongful Death Act, N.J.S.A. 2A:31-1 to -6.  The novel issue presented is whether an heir’s loss of a prospective inheritance resulting from the imposition of increased estate taxes– incurred due to the premature death of a decedent– is recoverable in a wrongful death action.  Because such a tangible, readily-calculable diminishment in an heir’s expectancy is in the nature of ‘pecuniary injuries resulting from such death,’ N.J.S.A. 2A:31-5, we conclude that it is an element of damages for the jury to consider in this case.”  Accordingly, the panel reversed, as to the Wrongful Death Act claim only, the summary judgment that had been granted to the driver of the car that had collided with the vehicle in which the decedent, John Kellogg, had been riding.

The auto accident occurred on January 25, 2008.  Kellogg, who was then 97 years old, died about two weeks later.  His heirs presented expert testimony that Kellogg’s death was caused by his injuries from the collision.

The estate tax issue arose because Congress had adopted legislation in 2001 that reduced estate taxes in 2009, eliminated them entirely in 2010, and restored the estate tax in its pre-2001 form beginning after December 31, 2010.  On December 17, 2010, Congress passed new legislation that extended the estate tax reductions of the 2001 law until 2012.

The Law Division granted summary judgment to defendants on December 8, 2010, nine days before the new legislation was passed.  The Law Division found the estate tax claim too speculative, since the 2001 law was designed to apply only to 2009 and 2010, and the actuarial table contained in Rule 1:13-5 indicated that Kellogg was likely to live beyond 2010, so that determining the estate tax would be purely speculative.  Plaintiffs, Kellogg’s heirs, sought reconsideration, which was heard in 2011, after the 2010 bill had been passed.  The Law Division adhered to its prior ruling.  Plaintiffs appealed after their non-Wrongful Death Act claims had all been dismissed by motion or stipulation.

Judge Harris began with a useful discussion of the Wrongful Death Act, using Tenore v. Nu-Car Carriers, Inc., 67 N.J. 466 (1975), as the jumping-off point.  The statute has long been “recognized as remedial legislation,” but is limited to “pecuniary injuries” and to “a survivor’s calculable loss.”  Future earnings and the loss of companionship, care, advice, and the like have all been held to come within the Wrongful Death Act.

Cases on whether estate tax consequences likewise could be claimed had come out adversely to the plaintiffs in several other jurisdictions.  But Judge Harris observed that those opinions lacked detailed supporting reasoning and/or involved wrongful death statutes that were not comparable to New Jersey’s in statutory language or previous judicial construction.

For example, a New York case had rejected the plaintiffs’ claim to avoid turning trials into “a parade of tax experts” speculating on future tax liabilities.  But, in Tenore, the Supreme Court of New Jersey had shown willingness to provide expert tax opinions to juries on the question of pecuniary injuries, despite any speculativeness that might be associated with such a course of action.  Judge Harris concluded, quoting Tenore, “we decline to give simplicity paramount significance in fashioning the law of damages.  Such an approach might aid the judiciary but hardly justice.”

Though this estate tax claim differed from a conventional lost inheritance claim, which Judge Harris noted had been upheld before, both reflect “a deprivation of a reasonable expectation of a pecuniary advantage which would have resulted by a continuance of the life of the deceased.”  Juries regularly consider life expectancies.  There was nothing improper or unseemly in a jury doing so here.  This was especially so since, by the time of the motion for reconsideration, federal estate law had been rescued from uncertainty, and Kellogg’s life expectancy as a 97-year old made it “not unduly speculative” to determine that he might have lived long enough for his estate not to be taxed, absent defendant’s alleged misconduct.  The Rule’s mortality table is merely prima facie evidence, and the parties could call experts to flesh out the issue of life expectancy.

As a question of first impression, the case might be one for the Supreme Court to review if defendants seek such review.  Judge Harris persuasively explained why the several out-of-state cases that favored defendants did not apply in New Jersey, based in part on Tenore and other New Jersey cases.  The Supreme Court may wish to weigh in, however, either to reaffirm Tenore, or to determine whether that case calls for this result in this context, particularly on the unique facts (a 97-year old decedent and the oscillations in federal estate tax liability) here.