Illinois Appellate Court Reverses Directed Verdict on Injured Parties’ Lost Profits and Lost Earning Capacity

Carol Keiser-Long’s claim for decreased earning capacity from an automobile accident she was involved in presented a question about her compensatory damages. She was never salaried or received dividends from her solely owned cattle-brokering business. The company, C-Bar, was set up as a separate entity, a C corporation.

She was the sole employee and left all of the profits in the company as retained earnings. She thought that the retained earnings would act as a retirement account that she would eventually start drawing on as income when she quit working. Retained earnings are generally taxable at the end of each calendar or fiscal year.

The car belonging to defendant Kirk Owens, alleged to have run through a stop sign while intoxicated, broadsided Keiser-Long’s vehicle on a rural road in Champaign County, Ill., and admitted liability before trial.

At the trial, Keiser-Long presented testimony about her lost income from her inability to continue working at her cattle-brokering business.

The defendant moved for directed verdict on the claim for impaired earnings capacity at the close of plaintiff’s case. Because C-Bar wasn’t an S corporation (where the company’s profits and losses would flow through to Keiser-Long’s tax returns), Owens argued Keiser-Long failed to prove she personally suffered any damage from diminished earning capacity.

The trial judge granted Owens’s motion directing verdict in its favor so that the jury’s verdict included nothing for loss of earning capacity.

In reversing the trial judge’s directed verdict on earning capacity, the Illinois Appellate Court stated:

“Evidence of the lost profits of a corporate entity are relevant to the determination of an individual’s lost earning capacity regardless of whether, (1) corporation is a C corporation or a Subchapter-S, and (2) plaintiff receives salary or wages from the corporation, when, as here (1) the corporation is closely held by the individuals, (2) the individual’s intellectual and physical labor is the predominant factor in earning its profits and (3) no risk of double recovery exists.”

In this case, the defendant argued the significance in the fact that the plaintiff, Carol Keiser-Long, never received the salary or a bonus from C-Bar. The defendant cited the case of Sezonov v. Wagner, 274 Ill.App.3d 511 (1975), where the court limited damages to the money plaintiff would have received from the corporation, i.e., the earnings or wages lost. However, Sezonov involved a claim for lost earnings in sales as opposed to, as we have here, a claim for lost earning capacity and is therefore inapposite. Therefore, the court found the fact that plaintiff never received a salary or a wage from C-Bar did not bar the jury from considering the claim for lost earning capacity. In Illinois, a plaintiff is entitled to recover all damages that naturally flow from the commission of the tort. A plaintiff’s impaired earning capacity is a proper element of damages to be considered by the trier effect.

In conclusion, the appeals panel found that C-Bar’s corporate form does not change the fact that Keiser-Long was so involved in C-Bar’s operations, she was akin to its alter ego and any loss to C-Bar was essentially her loss.

Moreover, the parties agreed there was no potential for a double recovery because C-Bar could not file suit for the injury to its sole shareholder. Given the fact C-Bar cannot recover for the loss of services or profits due to Owens’s negligence, if we were to bar plaintiff from recovering her lost earning capacity, defendant would receive a windfall, as no person or entity would be able to recover for the quantifiable damages incurred that were the direct result of defendant’s negligence. Such a result would be contrary to the long-standing public policy in favor of compensating tort victims for all damages which naturally flow from the commission of the tort. Accordingly, we reject defendant’s argument. We therefore reverse the trial court’s decision to direct a verdict and remand for a new trial solely on the issue of plaintiff’s lost earning capacity.

Keiser-Long v. Owens, 2015 IL App (4th) 140612 (July 30, 2015).

Kreisman Law Offices has been handling truck accident cases, bicycle accident cases, car accident cases and pedestrian accident cases for individuals and families who have been injured or killed by the negligence of another for more than 38 years, in and around Chicago, Cook County and its surrounding areas including, Cicero, Deerfield, Des Plaines, Evergreen Park, Fox River Grove, Geneva, Hinsdale, Joliet, Lincolnwood, Lincolnshire, Lisle, Glencoe, Lake Forest, Lake Bluff, Norwood Park, Palatine, Round Lake Beach, Schiller Park, St. Charles and Western Springs, Ill.

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