Lanzano v. City of New York, 79 N.Y.2d 206 (1992)
In personal injury cases where damage awards are excluded from taxation under 26 U.S.C. § 104(a)(2), the jury should be instructed that such awards are not subject to income taxes and that they should not add to or subtract from the award based on income tax considerations.
Summary
Thomas Lanzano, a sanitation worker, sued the City of New York for personal injuries sustained during his employment. The trial court instructed the jury that any damages awarded would not be subject to income tax. The jury returned a verdict for Lanzano, but he appealed, arguing that the instruction was erroneous and led to a lower award. The New York Court of Appeals affirmed, holding that instructing the jury about the nontaxable status of the award was not error and, indeed, is the preferred practice to prevent juror speculation about taxes.
Facts
Thomas Lanzano, a New York City sanitation worker, was injured in the line of duty on February 20, 1980. He received disability retirement in June 1981. He sued the City of New York, seeking damages for pain and suffering and lost future income. His wife also sued for loss of services and companionship. The City’s liability was established and not subject to appeal. During the damages trial, the judge instructed the jury, over plaintiff’s objection, that any award would not be subject to income taxes.
Procedural History
The trial court entered judgment on the jury verdict. The Appellate Division affirmed the trial court’s judgment without opinion. Lanzano appealed to the New York Court of Appeals, arguing that the jury should not have been instructed on the tax-exempt status of the award.
Issue(s)
Whether it is error for a trial court to instruct a jury that any damage award will not be subject to income taxes in a personal injury case.
Holding
No, because it is better practice in cases where jury awards are excluded from taxation under 26 U.S.C. § 104(a)(2) for the jury to be instructed that such awards, if any, are not subject to income taxes, and that it should not add or subtract from the award on account of income taxes, but should follow the ordinary, specific instructions for measuring damages.
Court’s Reasoning
The Court of Appeals acknowledged the traditional rule that trial judges were not required to charge the jury about the nontaxability of awards. However, the Court noted a growing trend supporting such instructions, given the public’s increasing