Will California Courts Discount Future Damages Awards to Present Value?

In a California personal injury case, a plaintiff can seek various damages depending on the injuries they sustained and the effects those injuries are expected to have in the future. Common types of damages awards include those for lost wages, past medical expenses, and past pain and suffering. However, serious accidents often have lasting consequences on a plaintiff’s life, and, commonly, plaintiffs will suffer damages that occur well after the conclusion of the trial. In these cases, courts allow plaintiffs to seek future damages.

Types of future damages awards include amounts for lost future income, future medical expenses, and for any future pain and suffering. The award of future damages presents an interesting issue in that the future value of these damages award may not be equal to the present value of the same sum. This is because of the effect of compound interest. For example, if someone is promised $1,000 ten years from now, the present value of that $1,000 is less than $1,000.

The actual present value is the amount that, if invested today, will yield $1,000 in 10 years. Of course, this depends on the interest rate, but the effect can be significant. To illustrate the significance of this concept, the present value of $1,000 to be received in 10 years, at a discount rate of 5% is $614.

Given the impact that a present-value reduction can have on a future damages award, the concept of present value is important for California personal injury victims to understand. Recently, a state appellate court discussed a case in which the plaintiff was injured after being involved in a motorcycle accident that was caused by the defendant. In that case, after the case went to trial, the jury found in favor of the plaintiff, awarding him roughly $1.5 million in various types of future damages.

The defendant argued that because these expenses would be incurred in the future, the court should reduce the $1.5 million figure to its present value. However, the defendant did not offer any expert witness to provide the court with guidance on how to do so, including which discount rate to use. Thus, the court rejected the defendant’s request to reduce the future damages award amount, and the defendant appealed.

The California appellate court hearing the case affirmed the trial court’s refusal to discount the plaintiff’s future damages award. The court held that the party who seeks a present-value reduction needs to provide the court with expert witness testimony explaining the proper present value calculation, including the appropriate discount rate. The court explained the court should not be expected to make such a calculation on its own. In this case, because the defendant did not present any expert witness testimony, the defendant was not entitled to a present-value reduction of the future damages award.

Do You Need an Experienced California Injury Lawyer?

If you have been injured in a California motorcycle accident, or any other type of motor vehicle accident, contact the dedicated personal injury lawyers at the Sharifi Firm, APC. At the Sharifi Firm, we represent injury victims and their families in a wide range of California personal injury claims, including slip-and-fall accidents, wrongful death claims, and workplace injuries. Our attorneys are viewed as authorities in the area of California personal injury law, and look forward to meeting with you to discuss your case. To learn more, call 866-422-7222 to schedule a free consultation today.

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