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Cleveland v. Ward – Lost Income Proof for Self-Employed Crash Victim

Lost income and loss of employment benefits are among those factors taken into account when awarding damages to a car accident victim.brakes

In most cases, if you’re employed by someone else, you simply request a letter from your company indicating your position, rate of pay, hours typically worked, number of hours or days missed after the accident and whether you took sick leave, vacation time or a leave of absence.

However, when victims are self-employed (as an 26 million people in the U.S. are), proof of lost income gets trickier. It’s usually advisable to hire a forensic accountant to assist in studying past income and offer a forecast of potential future income and business growth rate (or lack thereof). 

It’s imperative for the self-employed to contact an experienced West Palm Car Accident Lawyer who can explore whether the business structure allows you to make claims pertaining to business losses. This is especially important for small businesses, where the owner may play an integral role in day-to-day operations. When personal injury claims involve small business owners, sole proprietors and other self-employed individuals, calculating and asserting damages can be confusing.

It’s important to note that damages to a business owner isn’t necessarily the same thing as lost profits to the company. Some questions that require exploring:

  • What type of business entity does plaintiff have an interest in?
  • Is the claimant the business or the injured person? Should it be both?
  • Was there a replacement manager hired to keep the business running in the owner’s absence?
  • How much of the injured person’s earnings can be attributed to his or her labor, and what amounts is from return on capital?

As the recent Montana Supreme Court case of Cleveland v. Ward shows, the corporate set-up is key to the approach.

In this case, plaintiff was injured in a crash in which defendant soon admitted she was at-fault. Plaintiff had been in her vehicle, stopped in traffic, when defendant’s vehicle struck from behind, causing plaintiff’s car to be pushed into the vehicle ahead. The impact of the crash caused plaintiff’s vehicle to be totaled.

Since defendant conceded liability, plaintiff didn’t need to go to court to prove that aspect. However, she did need to prove damages. She filed a lawsuit to collect, and alleged pain and suffering, medical costs, emotional distress and “business loss/ lost income.”

Plaintiff, a nurse, owns and operates a small, private assisted living facility on a property where she too resides. She manages a small staff who help manage doctors’ appointments, medication and hygiene and engage residents in social activities and, if necessary, hospice care.

She alleged there had been significant damage to the business as a result of her crash-related injuries. However, trial court ruled that evidence was inadmissible because the business was not a named party, and thus any damages it incurred were not relevant.

Jurors returned a verdict in favor of plaintiff, but only awarded $3,000 after a set-off for previously-made payments.

Plaintiff appealed arguing, among other things, she should have been allowed to collect damages the business incurred. She argued that as the sole shareholder, she was entitled to be compensated for the increase in payroll expenses she suffered as a result of the accident.

However, the Montana Supreme Court found that a corporation is a separate and distinct entity from its stockholders, and generally, shareholders can’t bring claims that belong to their corporation. This was no exception.

Call Freeman Injury Law — 1-800-561-7777 for a free appointment to discuss your rights. Now serving Orlando, West Palm Beach, Port St. Lucie and Fort Lauderdale.

Additional Resources:

Cleveland v. Ward , Jan. 12, 2016, Montana Supreme Court

More Blog Entries:

Fatal Car Accident in South Florida Stuns Equestrian Community, Jan. 4, 2016, West Palm Beach Injury Attorney Blog

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