New York State Court of Claims

New York State Court of Claims

BLAKESLEY v. THE STATE OF NEW YORK, #2000-005-001, Claim No. 89609


Structured Judgment Decision - The Court rejected Defendant/s alternative methodology of the calculation of future damages for economic loss and determined the method of applying litigation expenses.

Case Information

Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

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

Cross-motion number(s):

Donald J. Corbett, Jr.
Claimant's attorney:
MORAN & KUFTA, P.C.By: James J. Moran, Esq.
Defendant's attorney:
Eliot Spitzer, Attorney General
Third-party defendant's attorney:

Signature date:
August 9, 2000

Official citation:
186 Misc.2d 239
Appellate results:

See also (multicaptioned case)

Liability in this claim was resolved by stipulation of the parties entered into on August 17, 1998. On September 30, 1999, I rendered a decision with respect to the amount of damages sustained by Claimant Robin Blakesley[1]
, and thereafter conducted a hearing pursuant to CPLR article 50-B.
This decision addresses the requirements of Article 50-B of the CPLR concerning the calculation of periodic payments and lump sum payment of past and future damages.

Four contested issues were presented for judicial determination: (1) the deduction of litigation costs from future damages that are not reduced to present value; (2) the proper methodology for the calculation for reduction of future damages to present value; (3) whether future economic damages should be subject to the annual 4% increase imposed by CPLR 5041(e), and (4) the proper rate of interest to apply. The Defendant raised several issues of first impression, in a most coherent and logical fashion. Irrespective of the rulings below, both parties offered comprehensive expert economists and provided vigorous, effective advocacy.

The Court has received Claimant's affidavit, sworn to on March 30, 2000, that she is not the recipient of any collateral source benefits. The Defendant allows that this is sufficient for a ruling that no collateral sources exist, and I so find. An issue was raised with respect to private health insurance purchased by Claimant's husband after the award of damages, indeed just prior to the instant hearing. This insurance is privately funded by Claimants, has no guarantees of continuity, and it has no legal impact on my determinations herein.

Defendant objects to Claimant's deduction of litigation expenses from the undiscounted future value of the future damages. It correctly notes that CPLR 5041(c) requires the proration of attorney's fees relating to future damages in excess of $250,000 after determination of the present value. Defendant then argues that since the legislature has directed that proration specifically, and since CPLR 5041 does not direct Claimant to prorate litigation expenses against future damages in excess of $250,000, overcompensation would result.

My review starts with the undisputed consensus that the statute is ambiguous. While the Defendant would have the court find that there was no affirmative statutory direction to prorate litigation expenses against future damages, since the legislature did give a specific direction with respect to proration of attorney's fees relating to future damages in excess of $250,000 after determination of present value, I find that it inferentially chose not to include litigation expenses in that statutory directive. Prior judicial reference to this question is sparse, and of limited guidance. In
O'Mara v Rochester Gas & Electric Corp., 206 AD2d 924, the Fourth Department alluded to the topic, but in Reliant Airlines, Inc. and Linda E. Hendricks v County of Broome, (90-CV-537 [1995 U.S. Dist. LEXIS 17603 ])[2], in the United States District Court for the Northern District, the Hon. Neil McCurn, noted, in footnote 5:
In O'Mara v. Rochester Gas & Elec. Corp., (citation omitted) which is apparently the only published case even touching on this issue, the court held that the supreme court ‘erred in providing that the lump sum payments for attorney's fees and litigation expenses ordered pursuant to CPLR 5041(c) be paid from the future damages portion of the judgment' (citation omitted). True, the court did go on to state, ‘Pursuant to CPLR 5041(c), a portion of those lump sum payments must be paid out of the corresponding portion of the verdict upon which that portion is based. . . .' (citations omitted). However, because the court then cites to two cases wherein the courts discussed payment of attorneys' fees under section 5041, it seems that in the just quoted sentence from O'Mara the court was referring to payment of attorneys' fees and not to litigation expenses.

Applying this analysis to the claim at hand, I find that it lends support to my ruling, without offending the substance or spirit of the Fourth Department's decision in
O'Mara, supra. I find that, since there is no mention in CPLR 5041 (b) or (c) of present value calculations in connection with either the first $250,000 of future damages, or fees or costs, that the legislature intended litigation expenses to be prorated and deducted from the future value of future damages. I make this finding cognizant that the parties need direction, and that the appellate courts need a trial level decision to affirm or reverse.[3]
The primary issues before me relate to Defendant's provocative arguments about calculations of future damages in the classroom, adhering to what one might characterize as the laws of basic economics. I concur that obeisance to textbook economics would result in a different, more defendant-friendly calculation. Of course, the Defendant urges that its method of calculation merely levels the playing field and does not result in skewed compensation favoring either party. However, we are not in a pristine classroom, working in the academic aura of pure and unencumbered economic theory. We are in a courtroom, working under a statute, divining the legislature's intent and following the judicial precedent of courts of higher jurisdiction, including the Court of Appeals which reiterated that the statutory structured judgment provisions have deservedly been labeled circuitous, vexing, every judge's nightmare, at best ambiguous possibly leading to inexplicable results (
Bryant v New York City Health & Hospitals Corp., 93 NY2d 592, 600-601), and which further noted that in parts CPLR 5041 contained patent ambiguity with the impossibility of applying the statute as written (id, at 604, citing Rohring v City of Niagara Falls, 84 NY2d 60, 67).
Defendant's expert attempts to show that the proper methodology for the calculation of the present value of the future awards, has not yet been determined judicially, that the Court of Appeals in
Bryant, supra, footnote 3, at 601-602, declined to announce a rule that was untested in the trial courts, and that the instant matter allows such initial consideration.
Defendant's expert would not include the 4% additur to any item of damage other than future pain and suffering, because he calculates each year of future economic damages to be a separate calculation, not subject to the heretofore traditional method (in the courtroom) of totaling the damages over the years after including an inflation factor (
Schultz v Harrison Radiator Div. Gen. Motors Corp., 90 NY2d 311, 317-320; cf. Kelly v State of New York, 259 AD2d 962), then taking the yearly average and thereafter adding the 4% additur included in CPLR 5041(c). By incorporating the inflation (growth) factor determined by the court to each year separately, Defendant believes that Claimant is made whole for each particular year of damage, and thus there is no remainder to which to apply the 4% additur. Defendant's expert, who testified that he was involved in one of the amicus briefs referenced in footnote 3 in Bryant, supra[4] acknowledges that future pain and suffering is based upon future life expectancy, is not quantified on an annual basis, and, in this case, is averaged over the ten year statutory maximum, and as such is subject to the 4% additur. Indeed, Defendant's expert believes that this is the only item of future damages to which the statutory additur should be applied. He argues that one should not take each year of economic damages, apply the inflation rate, then total all the years and take an average, to which you would then apply the additur. Defendant argues that this method of calculation would overcompensate the Claimant, just like the method of calculation in Silvestri v Smallberg, 165 Misc 2d 827, affd other grounds, 224 AD2d 172, affd, 88 NY2d 1004, undercompensated that plaintiff. Defendant argues that its methodology of calculation is consistent with all prior Court of Appeals rulings, including Rohring v City of Niagara Falls, supra, 84 NY2d 60, and Bryant v New York City Health & Hospitals Corp., supra, 93 NY2d 592.
Claimant, not surprisingly, suggests that the court simply follow the statute, albeit a mind-numbing task (
Bryant, supra, at 601), and adopt the testimony of its expert, who has applied heretofore accepted methods of calculation.
The following portion of 5041 (e) is the subject of the experts' scrutiny and has been analyzed on the record:

The annual payment for the first year shall be calculated by dividing the remaining amount of future damages by the number of years over which such payments shall be made and the payment due in each succeeding year shall be computed by adding four percent to the previous year's payment.

Needless to say, the contrasting methods of calculation result in a substantial monetary differential. Defendant cites the Court of Appeals in
Rohring, supra, at 67, to reiterate its full and fair compensation argument.
One of the more disturbing aspects of the testimony concerned the ability of expert economists to apply the Defendant's theory of the proposed methodology of the calculation of future damages. Generally speaking, it was conceded that in a trial by jury, where the damages are ascertained by the jury, and even though there may be the standard PJI special verdict sheet, the amount of damages for, say, lost future wages, are enumerated in a lump sum for the entire work life expectancy of an injured party, and an economist would be left to speculate as to the factual determination of the amount found in lost income for year one.[5]
In other words, an economist would not be able to make the year-by-year calculation of lost wages, which Defendant theorizes allows no remainder to which to add the 4% additur. Hence, urges the Defendant, it has the unique advantage of the specificity of my earlier decision[6] wherein the amount of money awarded in lost future earnings for year one, et seq., allowed Defendant to make its calculation which results in no remainder in each year, and therefore there would be no remainder to apply the 4% additur, and thus there would be no overcompensation to the injured parties.
Defendant's theory only works, leaving aside the question of whether it comports with the statutory scheme or intent, where the finder of fact provides actual year-one damages for each item of economic damage (damages for future pain and suffering are concededly entitled to the 4% additur). But since juries, apparently even using the standard PJI jury sheets, generally do not provide such specificity, economists are forced either to speculate, a taboo in the assessment and calculation of a judgment, or to take an average over the term of each aspect of damages. Taking such an average defeats the argument that each year is an item of damage unto itself (unless of course there is no growth factor whatsoever), as then it leaves a remainder to which, Defendant I believe would concede, the 4% additur applies. Again leaving aside the compatibility of the Defendant's economic methodology with the statute, its theory cannot survive in most trials by jury, but only in a non-jury setting.

That would create a two-tiered system, adopting differing methods of calculating future damages, and wreak havoc in the courts. Thus utilizing the Defendant's approach, the statutory 4% would never be applied to future economic damages in non-jury trials, but it would be applied in jury trials. As mind-numbing as CPLR articles 50 A and B are, such an inequitable result could hardly have been in the legislature's mind. Of course, were I to permit such an accounting, which would lead to lower amounts of money to those injured persons prevented by statute (i.e., Court of Claims Act) or by court rule (see CPLR 4102 and 4103) from having a jury, perhaps then the legislature would be more likely to accept the invitations extended by many trial judges and the Court of Appeals (
Bryant, supra) to revisit these statutes. That, of course, is mere judicial wishfulness and speculation.
Thus, I am compelled to reject Defendant's argument in this regard on two bases. First, I could not adopt a methodology which discriminates against those appearing in non-jury settings, but second, and more significantly, I cannot accept that methodology as being consistent with the statutory intent. Irrespective of the pure economic theory that each year of damages is a separate item of damage which is fully compensated annually and is not subject to the 4% additur, the statute cannot be read as suggesting such a result. CPLR 5041 (e) directs in relevant part that:

The period of time over which such periodic payments shall be made and the period of time used to calculate the present value of the annuity contract shall be the period of years determined by the trier of fact in arriving at the itemized verdict .... [t]he annual payment for the first year shall be calculated by dividing the remaining amount of future damages by the number of years over which such payments shall be made ... adding four percent to the previous year's payment. Where payment of a portion of the future damages terminates in accordance with the provisions of this article, the four percent added payment shall be based only upon that portion of the damages that remains subject to continued payment. (emphasis supplied)

Defendant would have me read the last sentence of the statute as support for its theory, but I cannot agree. I interpret this provision of the statute to limit the 4% additur only on an item-by-item calculation, and thus when damages for future pain and suffering are fully paid after ten (or fewer years), then the additur as to that item is terminated. The statute must be read in a manner that allows it to be internally consistent, and where it says that when a portion of future damages "terminates in accordance with the provisions of this article" the four percent is added only to the remaining damages, it is referring to the period of years determined by the trier of fact in arriving at the itemized verdict, not the termination on an annual basis of any remaining damages for that year. I find that the legislature did not contemplate and intend such a methodology of calculation. I am well aware that the Defendant sees this issue as crystallized before me, with a theoretically adequate record [7]
and perhaps ultimately to provide the Court of Appeals with the opportunity it declined in Bryant, supra (footnote 3). Accordingly, I adopt the calculations set forth by Claimant's expert, and decline Defendant's invitation noted to venture into the classroom of pure economic theory. The statute which I am obliged to apply speaks in the courtroom.
Finally, as to the rate of interest, the Defendant has failed to persuade me that a reduction of the interest rate from the statutory maximum of 9% (State Finance Law §16) may be warranted. The Court of Appeals in
Rodriquez v New York City Hous. Auth., 91 NY2d 76, converted this from a matter of law to one of judicial discretion. The Defendant has not provided a single decision in which pre-judgment or post-judgment interest rates have been modified, and I am familiar only with matters where the 9% interest rate has remained applicable (e.g., Pay v State of New York [176 Misc 2d 540]; Audino v State of New York [Benza, J., Motion No. M-58646, Claim No. 87749, filed February 3, 1999], and Washington v State of New York, [Corbett, J. Claim No. 84421, dated February 26, 1999] currently on appeal). But see the recent decision to the contrary in Auer v State of New York (Read, P.J., Motion Nos. M-61490 and M-61491, Claim No. 86167, dated June 21, 2000).[8] I therefore decline to exercise my discretion to modify the interest rate.
An order incorporating and applying the foregoing decision is filed herewith.

August 9, 2000
Rochester, New York

Judge of the Court of Claims

[1] Damages were awarded only to Robin Blakesley (Claimant).
[2] This was affirmed by the Second Circuit Court of Appeals, albeit in an unpublished decision, reported at 122 F.3d 1057 and 1997 U.S. App. LEXIS 19237 (decided, July 25, 1997).
[3] Hearing transcript (HT) p 114.
[4]HT, pp 139 to 141.
[5] HT, pp 181 to 182.

[6] HT, p 194.
[7] HT, pp 193 - 194.
[8]A personal injury award totaling near 19 million dollars in damages