Chapter 11 - § 11.6 EVIDENCE OF A DECEDENT'S FUTURE INCOME TAX LIABILITY IS NOT ADMISSIBLE FOR PURPOSES OF CALCULATING NET PECUNIARY LOSS

• Jurisdiction: Colorado

§ 11.6 EVIDENCE OF A DECEDENT'S FUTURE INCOME TAX LIABILITY IS NOT ADMISSIBLE FOR PURPOSES OF CALCULATING NET PECUNIARY LOSS

In Hoyal v. Pioneer Sand Co., 188 P.3d 716 (Colo. 2008), in an original proceeding under C.A.R. 21, the court considered the question of whether evidence of a decedent's future income tax liability is admissible for purposes of calculating the net pecuniary loss sustained by the plaintiff. The court held that such evidence should not be considered when the net pecuniary loss is determined.

The case arose out of an incident that occurred on the premises of Pioneer Sand Company on August 21, 2004. Dawn Hoyal's husband was loading firewood into his pickup truck when a concrete block wall collapsed on him and caused his death. Hoyal brought a wrongful death action against Pioneer and claimed both economic and non-economic damages. Both sides retained experts to calculate Hoyal's economic loss. Hoyal's expert calculated that her losses were between $4,566,922 and $10,695,027. Pioneer's expert computed the losses at between $1,010,000 and $1,162,000. Pioneer's expert took into consideration the decedent's future income tax liability, but Hoyal's expert did not consider this factor. Hoyal then filed a motion in limine asking the trial court to preclude any evidence of the decedent's future tax liability. After the trial court granted the motion in limine, Pioneer sought review by the supreme court under C.A.R. 21. Pioneer asserted that Hoyal was only entitled to recover economic benefits she reasonably would have expected to obtain from the decedent. Since the decedent's future income would have been subject to income taxes, Pioneer argued that evidence of future tax liability was relevant and was improperly excluded by the trial court. The supreme court rejected this argument and agreed with Hoyal that Colorado law does not permit consideration of a decedent's future tax liability. Id. at 717.

The supreme court noted that, in addition to funeral expenses, the plaintiff in an action under the Wrongful Death Act "is entitled to compensation for the loss of financial benefits he or she reasonably would have expected to receive from the decedent had the decedent lived." Id. The measure of this category of damages is called the "net pecuniary loss." Id. Although the net pecuniary loss rule is not contained in the WDA, it has developed over the years through cases brought under the WDA. Id. Citing Pierce v. Conners, 20 Colo. 178, 37 P. 721, 722...