Tuesday, October 25, 2011

Kaczkowski v. Bolubasz

Kaczkowski v. Bolubasz
Subject: Three dominant approaches to discounting future losses to present value.
-Automobile accident, Decedent Pl. riding as a passenger in vehicle operated by Def.
Did trial court error in excluding reliable economic testimony showing the impact of inflation and increased productivity on decedent’s future earning power?
Inflation - The increase in volume of money and credit relative to available goods resulting in a substantial and continuing rise in the general price level.

-Damages are to be compensatory to the full extent of the injury sustained.
-Rule: To give full compensation, graduating the amount of damages exactly to the extent of loss.
-Inflation and productivity are necessary to factor into such awards.
-A claim for damages must be supported by a reasonable basis for calculation; mere guess or speculation is not enough.
(Loss of future wages is discounted to its present value by using the 6% simple interest figure)
[Three approaches]
1. Traditional - Ignores inflation and future productivity, “too speculative”, previously adhered to.
2. Middle Ground - prohibits expert testimony. Up to the fact finder.
3. Evidentiary Approach - Allows fact finder to consider productivity and inflation. Many ways to incorporate economic data.
a) Feldman approach - extrapolation of deceased’s life: grades, employment history, opinion held by fellow workers, employment goals, potential jobs qualified for.
-Inflation component: Offset present value method:
[Discount rate - Inflation rate = “real” rate of interest], 1.5%
b) Alaska approach
*Calculate lost future earning capacity of victim over work-life expectancy.
“Automatic step increases keyed to the length of service are by their nature, certain and predicable at the time of trail.”
-Excludes non-scheduled salary increases/bonuses (speculative), in terms of skill, experience and value to the employer.
Total offset method -no need to discount. Inflation completely offsets interest.
[Court adopts]: Feldman’s approach to calculating lost productivity and Alaska’s total offset approach to inflation and discounting to present value.
-best computes a damage award that will fairly compensate victim and avoid unnecessary complexities.
[Total Offset Method]
-Greater accuracy
-If a variance, will fall in favor of the victim and not the tortfeasor.
-contribution to judicial efficiency.
Holding: New standard, Total offset method replaces discounting, new trial on damages.

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