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In re Air Crash Disaster Near Chicago

decided: October 9, 1986.

IN RE AIR CRASH DISASTER NEAR CHICAGO, ILLINOIS, ON MAY 25, 1979; LORA LUX, WIDOW AND PERSONAL REPRESENTATIVE OF WALTER H. LUX, DECEASED, PLAINTIFF-APPELLEE,
v.
MCDONNELL DOUGLAS CORPORATION, DEFENDANT-APPELLANT



Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 79 C 2487, Nicholas J. Bua, Judge.

Author: Eschbach

Before WOOD, Circuit Judge, ESCHBACH, Senior Circuit Judge, and CAMPBELL, Senior District Judge.*fn*

ESCHBACH, Senior Circuit Judge.

Defendant McDonnell Douglas Corp. ("MDC") appeals from a judgment of $3,000,000 for plaintiff Lora Lux in this wrongful death action governed by Arizona law. The primary issues presented in this appeal are: (1) whether evidence relating to the plaintiff's receipt of insurance proceeds should have been admitted; (2) whether evidence of the decedent's income tax liability should have been admitted; and (3) whether the jury should have been instructed that its award would not be subject to taxation. For the reasons stated below, we will reverse and remand for a new trial on damages.

I

The facts, as set forth in the district court's opinion, are as follows:

On May 25, 1979, Walter Lux was killed while piloting American Airlines Flight #191, which crashed shortly after takeoff at Chicago's O'Hare International Airport . . . .

On the date of the accident, Walter Lux was 52 years old; [his wife] Lora Lux was 49 years old, and their only son, Michael, was 22 years old . . . . Walter Lux' income from American Airlines as a captain pilot was $78,954 in 1978. In addition to his annual income, Walter Lux enjoyed various fringe benefits from his employment with American Airlines. These benefits included life insurance, medical and dental insurance, and pension benefits. At trial, plaintiff claimed a total of $1,589,930 in economic loss, of which approximately $1,000,000 represented lost income . . . .

Walter and Lora Lux had been married 24 years at the time of the accident . . . . The Luxes had bought a summer home in Wisconsin and later remodeled the home into a year-round residence. Walter performed all of the electrical and plumbing work on the house. The Lux family lived year-round in the Wisconsin residence from 1965 until 1972. In 1972, they moved to Phoenix, Arizona . . . . [but] continued to use the Wisconsin home for vacations and holidays.

On the morning of Walter's death, Lora accompanied her husband to work at the airport in Phoenix. Walter was scheduled to pilot a plane from Phoenix to Chicago. Lora understood that Walter would fly to Chicago and then travel to the Wisconsin home to spend the Memorial Day weekend putting up wallpaper and carpeting the house. At about 1:00 p.m. that afternoon, Lora received a call at work from Walter's sister. Walter's sister informed Lora that a plane had crashed in Chicago. Lora responded that Walter was safe because he was on his way to the Wisconsin home. Unknown to Lora, however, Walter had been reassigned at the last minute to pilot Flight #191 from Chicago to Los Angeles. Minutes after Lora spoke with Walter's sister, a friend called and told Lora that American Airlines had just informed her that Walter was the pilot on the airline which crashed. Lora immediately went home and was met by a sale representative of American Airlines.

At the house, Lora took a tranquilizer and watched reports of the crash on the television. Michael soon arrived and the sale representative then drove Lora and Michael to the Phoenix airport. Michael and Lora flew to Chicago, arriving at 6:30 a.m. on Saturday. They were met by the chief pilot for American Airlines and immediately they were introduced to the pilot originally scheduled to pilot Flight #191. Later that morning Lora and Michael traveled to their Wisconsin home.

In Wisconsin, Lora made plans for a memorial service for Walter because she understood that Walter's body had been burned in the crash. The evening before the scheduled service, however, the funeral director informed Lora that American Airlines had sent Walter's remains for burial. Upon such short notice, Lora decided to have Walter's remains cremated.

About one month after the funeral, Lora returned to her work in Phoenix as a realtor. During this period Lora became depressed and began grinding her teeth. Lora's dentist first prescribed braces for her teeth and later surgery was required. After the surgery, however, Lora continued to grind her teeth. Lora was also treated by a psychiatrist for about one year. The psychiatrist prescribed tranquilizers in an effort to control Lora's depression.

On one occasion after the accident, Lora was flying from Chicago to Phoenix and was seated next to the Chicago fireman who first arrived at the scene of the crash. Not knowing Lora's identity, the fireman mentioned that he was the first fireman at the crash and that he "found the captain's body." On several occasions since the accident, Lora has been reminded of the crash by news reports and conversations with friends and acquaintances.

Since the accident, Lora has incurred about $13,000 in dental expenses and $1,900 in psychiatric expenses. She also has incurred the expense of hiring outside help for maintaining the Wisconsin house.

Lux v. McDonnell Douglas Corp., 608 F. Supp. 98, 100-2 (N.D. Ill. 1984).

Lora Lux, acting as Walter Lux's widow and the personal representative of his estate, brought suit against MDC. MDC agreed not to contest liability for compensatory damages. The parties stipulated that the case would be governed by the law of Arizona, which was the place of residence of Walter Lux and his survivors. From February 21 to February 27, 1984, the case was tried to a jury on the issue of compensatory damages only. On February 28, 1984, the jury returned a verdict in the plaintiff's favor. It allocated $4,000,000 in damages to Lora Lux and $150,000 in damages to Michael Lux.

The district court found that, although the jury's verdict was not the result of passion, prejudice, or caprice, it was excessive. It ordered a remittitur of $1,000,000 with respect to the damages allocated to Lora Lux, which the plaintiff accepted. Lora and Michael Lux and MDC have agreed that MDC will pay $150,000 in full satisfaction of that portion of the judgment allocated to Michael Lux. MDC thus appeals from only that portion of the judgment in favor of Lora Lux.

II

A. Evidence of Insurance Payments

1. Pecuniary Damages

The district court excluded evidence regarding the plaintiff's receipt of approximately $425,000 in insurance proceeds. MDC argues that the evidence should have been admitted as substantive evidence to reduce the ...


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