New York State Court of Claims

New York State Court of Claims

AUER v. THE STATE OF NEW YORK, #2000-001-504, Claim No. 86167


Synopsis



Case Information

UID:
2000-001-504
Claimant(s):
SARAH E. AUER, as Guardian of MELODY DAWN AUER and SARAH E. AUER and FRANKLIN H. AUER, Individually
Claimant short name:
AUER
Footnote (claimant name) :

Defendant(s):
STATE OF NEW YORK
Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
86167
Motion number(s):

Cross-motion number(s):

Judge:
Susan Phillips Read
Claimant's attorney:
Ackerman, Wachs and Finton, P.C.
Rosenblum, Ronan, Kessler and Sarachan, Of CounselBy: Michael W. Kessler, Esq.
Defendant's attorney:
Hon. Eliot Spitzer, NYS Attorney GeneralBy: Risa Viglucci and Belinda A. Wagner, Assistant Attorneys General, Of Counsel
Third-party defendant's attorney:

Signature date:
August 30, 2000
City:
Albany
Comments:

Official citation:

Appellate results:
Affirmed - Third Dept., 12/6/01
See also (multicaptioned case)



Decision

The following papers have been read and considered on the parties' proposed article 50-B computations and orders, submitted in compliance with the Court's Decision and Order, dated June 21 and filed June 22, 2000: Letter from Michael W. Kessler, dated and received July 25, 2000, with its enclosures, a Letter Brief on behalf of claimants, dated July 24, 2000, including Tables 1-3, and the Affidavit of Thomas R. Kershner, sworn to July 25, 2000; Letter from Michael W. Kessler, dated and received July 26, 2000, with its enclosures, a Stipulation dated July 24, 2000 between the parties' attorneys and a proposed Judgment; a Letter Brief on behalf of defendant, dated and received July 26, 2000, and its Exhibit A, the Affidavit of Richard J. Goldstein, sworn to July 25, 2000, with its attachment, Charts 1-4; a second Letter Brief on behalf of defendant, dated and received July 26, 2000, addressing disputed language in the proposed Judgment; Stipulation dated March 12, 2000 between the parties' attorneys, which is Exhibit A to Defendant's Post-Trial Memorandum of Law, dated April 6 and received April 11, 2000; Affidavit of Michael W. Kessler, sworn to April 5 and filed April 7, 2000; and Letter Brief on behalf of claimants, dated April 10 and received April 11, 2000.

Pursuant to the Court's Decision and Order, dated June 21 and filed June 22, 2000, the attorneys for claimants Sarah E. Auer, as Guardian of Melody Dawn Auer, and Sarah E. Auer and Franklin H. Auer, Individually (collectively, "claimants"), and for defendant State of New York ("defendant" or "the State") have submitted proposed CPLR article 50-B computations. By stipulation dated July 24, 2000, the parties' attorneys have stipulated and agreed to all sums except the amount of post-decision (pre-judgment) interest (CPLR 5002) on the various components of future damages and on the portion of the award of attorneys' fees attributable to future damages: claimants' attorneys assert that in order to derive the amounts upon which to compute such post-decision interest, the Court should discount the relevant stipulated and agreed upon sums by 5.23% for the period between December 29 or 30, 1999 (the dates when the damages decision was rendered and filed, respectively)[1] and November 4, 1998 (the date the liability decision was rendered) (i.e., either 420 or 421 days); the State's attorneys assert that the Court should discount these sums by 6.25% for the period between the date of entry of final judgment pursuant to CPLR article 50-B (here, August 30, 2000) and November 4, 1998 (the date the liability decision was rendered) (i.e., 665 days). For the reasons discussed below, the Court holds that in a bifurcated case subject to CPLR article 50-B the amounts upon which to compute post-decision interest on future damages and on the attorneys' fees attributable to future damages are the figures obtained by discounting the relevant sums back from the date the damages decision was rendered to the date the liability decision was rendered (here, from December 29, 1999 to November 4, 1998, or 420 days); the Court further finds that 6.25% is the discount rate for determining these figures in this case.

I. The Discount Period

In Pay v State of New York (87 NY2d 1011), the Court of Appeals established that the future damages included in a structured judgment in a bifurcated case must be discounted back to the date of the liability determination for purposes of determining the prejudgment (CPLR 5002) interest on future damages. Claimants read Pay to require discounting back to the date of the liability determination from the date of the damages determination, while the State reads Pay to require discounting back to the date of the liability determination from the date of entry of judgment on the structured award (i.e., the CPLR 5002 time period).

The Court, for its part, is unable to winkle either holding out of Pay, a memorandum decision in which the Court of Appeals focused exclusively on the necessity to discount future damages and how far back to discount, not the length of the discount period. The Court notes, however, that upon remand the parties in Pay "agreed" to discount future damages back to the date of the liability decision from the date of the first damages decision (Pay v State of New York, 176 Misc 2d 540, 544). Moreover, courts in a bifurcated case engage in the "legal fiction" that damages are known and become a fixed obligation at the moment liability is determined by verdict or decision, even though damages are not determined until the later verdict or decision following the damages trial (see, Love v State of New York, 78 NY2d 540; Rohring v City of Niagara Falls, 84 NY2d 60). This suggests that future damages are properly discounted back from the date when they are, in fact, quantified; i.e., the date of the damages decision.

II. The Discount Rate

Although claimants argue that the discount period is not coextensive with the period for which post-decision interest is payable pursuant to CPLR 5002, they advocate a discount rate identical to the post-decision interest rate. The State counters that claimants stipulated through their attorneys to a discount rate of 6.25% for purposes of making the calculations required by CPLR article 50-B (see, CPLR 2104; Stipulation dated March 12, 2000 between the parties' attorneys, which is Exhibit A to Defendant's Post-trial Memorandum of Law, dated April 6 and received April 11, 20000), and the Court finds that the parties entered into a valid and enforceable stipulation establishing 6.25% as the all-purpose discount rate in this proceeding.

Moreover, the Court harbors no doubt that claimants' attorneys clearly intended by this stipulation to agree to 6.25% as the discount rate for all CPLR article 50-B calculations in this proceeding. The stipulation of this rate was unqualified and without reservation. After the stipulation was executed, the parties briefed all disputed issues requiring resolution by the Court before the CPLR article 50-B calculations could be made. The post-decision interest rate (CPLR 5002) was a (hotly) disputed issue; the discount rate for purposes of determining post-decision interest on future damages was not. Indeed, claimants' attorneys argued that "the State may seek to argue that since, by agreement, a rate lower than the statutory nine percent rate of interest is utilized in ascertaining the 50-B discount rate to determine present value in this case, something similar to that rate should be used as the rate of interest on the judgment" (Affidavit of Michael W. Kessler, sworn to April 5 and filed April 7, 2000, p. 4, n 4), and subsequently chided the State for arguing for a post-decision interest rate[2] below the agreed upon discount rate: "Ironically, the State having agreed that the discount rate applicable to determining present value is 6.25%, now claims the interest rate on the judgment should be even lower than that!" (Letter Brief on behalf of claimants, dated April 10 and received April 11, 2000, p. 2).

The State also argues for a single discount rate in this proceeding on policy grounds: to avoid further complicating the already decidedly complex set of determinations and calculations required by CPLR article 50-B. At some point, determining and applying different discount and/or interest rates in a single CPLR article 50-B proceeding may, indeed, sacrifice comprehensibility for delusive rigor and precision. The Court, however, has applied 6.25% as the discount rate for purposes of calculating post-decision interest on future damages in this case on the basis of the stipulation of the parties: she expresses no view as to whether different discount rates may or, in a particular case, reasonably should apply (see, e.g., Rodgers v 72nd Street Assocs., 179 Misc 2d 798 [in CPLR article 50-B proceeding, court applies a discount rate of 4.39% for award of future lost wages, to be structured over two years, and a 6.0% discount rate for future pain and suffering]; Liriano v Hobart Corp., 960 F Supp 43 [in structuring a judgment pursuant to CPLR article 50-B, federal court applies discount rates of 5.82% for future lost wages, 6.2% for future pain and suffering and 6.48% for future medical expenses]); or as to the relationship, if any, between the post-decision interest rate and the discount rate for purposes of determining post-decision interest on future damages in light of her analysis of Rodriguez v New York City Housing Auth. (91 NY2d 76), or more generally (see, e.g., In re Connecticut Bank, 928 F2d 39).

III. Conclusion

In the Order filed contemporaneously with this Decision, the Court has therefore (1) taken the amount provided by claimants' attorneys for the first $250,000.00 of future damages; the present value of net future periodic payments for pain and suffering, lost wages and employment benefits and medical and other care; and attorneys' fees attributable to future damages, each discounted by 6.25% from December 29, 1999 to November 4, 1998 (see, Letter Brief on behalf of claimants, dated July 25, 2000, Table 1); (2) multiplied each such amount by .0523 (the post-decision interest rate) to determine an annual amount of interest; (3) divided each resulting annual amount by 365 to determine a daily rate of interest; and (4) multiplied each daily rate by 665 (the number of days from the date of the liability decision to entry of judgment) to determine the total amount of post-decision interest due. At the request of defendant, the Court has also modified the award of post-judgment interest to make post-judgment interest on the present value of periodically paid damages (and concomitant post-decision interest) payable from entry of judgment until the annuity to fund the periodic payments is purchased.


August 30, 2000
Albany, New York

HON. SUSAN PHILLIPS READ
Judge of the Court of Claims




[1]
Claimants' attorneys and expert tend to treat these dates as fungible, which they obviously nearly are for purposes of establishing the length of time over which to discount.
[2]
The State proposed setting the post-decision interest rate between 5% and 5.25%. The Court set the rate at 5.23%, albeit not for exactly the reasons offered or the basis put forward by the State.