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Ruff v. Weintraub

Decided: January 29, 1987.


On certification to the Superior Court, Appellate Division.

For reversal and remandment -- Chief Justice Wilentz, and Justices Clifford, Handler, Pollock, O'Hern, Garibaldi and Stein. Opposed -- none. The opinion of the Court was delivered by Stein, J.


[105 NJ Page 234] We granted certification, 104 N.J. 416 (1986), to decide whether a jury in a personal injury action should be instructed that the proper measure of damages for lost future wages is net income after taxes. Since evidence of lost income is often introduced in the form of gross rather than net wages, we must also determine whether evidence of the plaintiff's future tax liability is admissible. In addition, this case presents the issue,

decided today in Bussell v. DeWalt Products Corp., 105 N.J. 223 (1986), whether a trial court must instruct the jury that personal-injury damage awards are not subject to federal or state income taxes.

In this case, the trial court refused to instruct the jury that personal-injury damage awards are not taxable, and declined to instruct the jury that net rather than gross income was the appropriate measure of damages. The court also barred defense counsel from cross-examining plaintiff's economist on the issue of taxes. The Appellate Division held that the trial court's rulings were proper. We disagree. Accordingly, we reverse the Appellate Division and remand for a new trial on damages.

The other issue raised is whether it is appropriate to award prejudgment interest on damages for future losses. The trial court awarded prejudgment interest on the entire damage award, pursuant to Rule 4:42-11(b). The Appellate Division affirmed. Since we agree that this issue is governed by Rule 4:42-11(b), we affirm this portion of the Appellate Division's decision.


This case arises out of a four-car accident that took place in January, 1981, on Route 80 West in Rockaway. The plaintiff, Monica Ruff, was driving in the center lane when she came upon the car of defendant David Weintraub. Weintraub's car was moving very slowly and was apparently disabled. Unable to pass due to heavy traffic, Mrs. Ruff remained in the center lane until the Weintraub vehicle stalled, coming to a complete stop. Mrs. Ruff exited her car, and walked forward to Weintraub's car to offer assistance. She then returned to her vehicle. Immediately after, a car driven by defendant Theresa Ogar and another driven by defendant Jessie Williams collided with Mrs. Ruff's car, which in turn collided with the Weintraub vehicle.

Mrs. Ruff suffered serious injuries, requiring multiple operations. At the time of the accident, she was 49 years old and had been working full-time as a tri-lingual secretary. She is no longer able to work due to her injuries.

Mrs. Ruff and her husband, Jack Ruff, filed suit against David Weintraub, Emanuel Weintraub Associates, Weintraub's employer and owner of the car he was driving, Theresa Ogar, and Jessie Williams. The trial was held in March, 1984. During the trial, plaintiffs offered the testimony of Dr. Richard Ruth, an economist, as to the computation of the present value of Mrs. Ruff's lost earnings. Employing the total-offset method,*fn1 Dr. Ruth testified that to compute the present value of lost future wages, the jury should multiply the number of years remaining in the plaintiff's work-life by her annual income.*fn2 Testimony had previously been elicited as to Mrs. Ruff's gross earnings at the time of the accident. Subsequent to Dr. Ruth's testimony, a personnel officer from Lutheran World Ministries, Mrs. Ruff's employer, testified that at the date of trial Mrs. Ruff's gross salary would have been $19,200.

Defense counsel, apparently concerned about the combined effect of Dr. Ruth's testimony with the prior testimony as to Mrs. Ruff's gross income, asked Dr. Ruth whether he had taken into account the fact that various federal and state taxes would have to be deducted from Mrs. Ruff's gross income. The trial court refused to allow the defense to pursue this line of questioning, and later ruled that gross rather than net income was the proper measure of damages. Although the court did allow plaintiff's W-2 form to be admitted as an exhibit, it was admitted only to show plaintiff's gross income.

Near the end of the trial, defense counsel made several requests to charge. Among them was the following:

You should consider the net earnings of the Plaintiff after taxes as the measure of damages to be awarded for future loss of income. The reason for considering net income, rather than gross income, is that Plaintiffs have suffered a loss of income only to the extent of the portion of Plaintiff, Monica Ruff's salary received after taxes.

Defense counsel requested that if the court did not give this charge, the following charge be given:

You are to assume that any award made to Plaintiff as damages in this case, whether in compensation for past or future loss of income found by you to have resulted from the negligence of the Defendants or in compensation for personal injuries sustained by her, is not subject to income tax or other tax. Should you find that Plaintiff is entitled to an award of damages, then you are to follow the instructions already given by the Court on measuring ...

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