What Is the Shabby Millionaire Rule?

The “shabby millionaire” rule, also known as the “true value” rule, is a principle of recovery in personal injury law. When a defendant injures or kills a plaintiff, they are liable in civil court for damages resulting from the plaintiff’s loss of income—no matter how much that income was. It does not matter if the defendant could not foresee that they would injure a high-earning person.

The shabby millionaire rule is a counterpart to the thin skull rule. Under the thin skull (or “eggshell skull” rule), a defendant is liable for the extent of the injuries they caused, even if the plaintiff suffered unexpectedly heavy physical trauma. Both of these principles state that the defendant must take the plaintiff as they come and face liability for injuries they caused due to their breach of duty.

This is a very old common-law principle. A Victorian judge once wrote that “if a person fires across a road when it is dangerous to do so and kills a man who is in receipt of a large income, he will be liable for the whole damage … and cannot set up that he could not have reasonably expected to have injured anyone but a laborer.” Smith v. London & S.W. Railway, L.R. 6 C.P. 14 (1870).

A more modern example might deal with a car accident. A driver runs a stop sign out in the country late at night, assuming no one much will be around. He is wrong—and he T-bones a car driven by a surgeon. This surgeon is a leader in the field and highly compensated. The accident renders him unable to practice for months and leaves him with nerve damage. In settlement negotiations, the driver cannot claim that no one could have expected to hit a person like that under the circumstances. He is still liable for the losses that the surgeon suffered.

Recovery for Lost Wages and Earning Opportunity

In a personal injury case, an injured claimant typically seeks to recover not only their medical expenses but the earnings they lost out on due to their recovery. This can include:

•         Hourly wages missed during the time the claimant could not work
•         Salary lost by a claimant who could not keep their job due to their injuries
•         Contracts that an independent worker could no longer fulfill
•         Earning opportunities (such as sales and conventions) that a professional could not pursue
•         Earning capacity loss for a disabled claimant who cannot go back to their previous line of work

Wrongful death cases seek recovery for the spouse and/or children of the deceased, including loss of income and loss of the earnings they could reasonably have expected.

In order to establish the amount of damages owed for lost income, a personal injury attorney will ask their client to bring evidence of their earnings, such as tax returns, pay stubs, and documentation of contracts that could not be carried out or missed earning opportunities.

Loss of earning capacity is trickier to measure. The claimant’s skills, education, and experience are taken into account, together with the expected compensation level for someone in their field and in the area where they live. Their age—that is, the number of working years they had left—will also determine the size of the claim they can make. The attorney will prepare an estimate of their future earnings, adjusted for inflation and other factors, sometimes with the assistance of an accountant. Even if the claimant is not totally disabled and can find some other type of work, they may be entitled to an award for loss of earning capacity.

The shabby millionaire rule ensures that if a defendant is found liable in court, they cannot reduce liability because of who the plaintiff was. But in practice, there are roadblocks to the recovery of large awards. An insurance policy carries limits—if a policy has a $100,000 liability limit, the company will spend no more than that. And although a defendant would still be personally liable for a judgment against them, they are unlikely to be able to pay it as quickly as an insurance company, if at all. An experienced attorney may be able to find other policies or claims that allow a plaintiff to recover more.

However, a plaintiff cannot recover their full damages if they are found to be partly at fault for the incident. Under Wyoming law, the court determines the amount of fault between the parties as a percentage, then reduces the award accordingly. If a plaintiff is found to be 20% at fault for the incident, their damage award is reduced by 20%. And if the plaintiff is more than 50% at fault, they cannot recover any award at all.

Since most car accident and personal injury cases settle without going to court, the percentages of fault are largely determined by insurance adjusters and investigators. They produce reports on accidents and the apportionment of fault, usually with an eye to saving money on payouts or avoiding them entirely. But when claimants hire personal injury attorneys, their attorneys can investigate the accident and contradict those reports. An attorney’s job is to defend their clients’ rights and maximize their recovery.

At Platte River Injury Law, a Cowboy Country Law firm, we deal with insurance companies on a regular basis, and we understand how the process works. If you or a loved one has suffered a personal injury in Wyoming, we would be glad to talk to you. Our office serves the communities of Casper, Cheyenne, Gillette, Rawlins, Riverton, and Sheridan. Call us at 307-215-9724 to schedule an appointment in our Casper offices.