What would Daubert say about those economic damages? 7.28.04

Case background:

A 52 year old male construction worker, Mr. Tom Moore, is killed while dismantling a large above ground storage tank.   The family has filed a wrongful death suit against the city and the construction company.

At the time of his death, the construction worker was earning about $30,000 a year.  He was divorced and paying child support of $150 per week to his ex-wife.  His youngest child was 13 at the time of his death.  He did not live with the children at the time of his death.

The defense expert has claimed that the economic damages are equal to the present value of the remaining 5 years of child support payment which total about $38,000. 

Q1: What would Daubert say about the defense expert's claim? 

A. The defense expert has correctly estimated the deceased economic damages?
B. The defense expert has missed the boat with his economic damage estimate?

Answer:

B. The defense expert has missed the boat!  In this case, a more accurate analysis would have considered the economic value of the money and/or assets that Mr. Moore's could have left to his family or estate.

In this case, the economic damage calculation should be done in two parts.

Part I: The economic value of the child support payments
 
Clearly the family has lost the child support payments that he was making to the mother of his children.  The present day value of these lost payments, equal to about $38,000, should be figured in to the analysis.   Monthly compounding should be used to make the calculation.

Part II: The economic value of  Mr. Moore's assets
 
Even though Mr. Moore was not living with his children, he would have in all statistical certainty, would not have personally consumed all his assets before he died.  The amount left upon his death would have been relatively small.  This is because given his income level he would have most likely have spent the majority of income on his personal needs.  However, there would have been in all likelihood some assets that should have been incorporated into the defense expert's analysis.

There are two scenarios that should be considered when calculating the value of the assets Mr. Moore could have left to his children had he not been killed.  The first scenario calculates the economic value of the money that Mr. Moore would have NOT consumed on himself.  Conceivably, the money not spent on himself could have been spent on his children or alternatively by his estate.  For Mr. Moore it is estimated that given his income level and family structure,  about 30% of his income, or about $9,000 per year, would be available to his children or the estate.

The second scenario calculates the economic value of the total sum of money and/or assets that Mr. Moore could have had at the time of his natural death.  Instead of calculating the annual present day value , i.e. in each year of the analysis, of the money that he could have accumulated, the analyst calculates the present day value of the accumulated assets at the time of his death.  In other words, the present value of all his possible 'savings' at the time of his natural death. 

In both analyses, you must account for changes in spending during retirement.