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  • Writer's pictureLeitner Varughese Warywoda

The Case for Pre-Verdict Interest in New York Personal Injury Cases: Fairness and Expediency


interest on judgment

It's time for a change. Currently, personal injury actions in New York do not allow for the recovery of pre-verdict interest. But that needs to change.


Proposed amendments to CPLR 5001 (a) and (c) would finally allow interest to be recovered in "bodily injury" actions. This would bring New York in line with most other states and ensure that injury victims receive the full and fair compensation they deserve.


Summary:

• Pre-verdict interest in personal injury actions is increasingly being recognized as an essential factor for achieving fair outcomes and ensuring meaningful compensation for victims.

• The proposed amendments to CPLR 5001 (a) and (c) would bring New York in line with other states, reducing court congestion, promoting timely resolutions, and providing justice for victims.

• The proposed amendments would provide clearer guidelines for interest recovery, stipulating that interest can be awarded on damages determined by the factfinder from the date or approximate date the damage was incurred until the date of judgment.

• This legislation is justified by the need for fairness in personal injury claims and equity in regards to delays caused by litigation.

• Several cases, such as Kosarko v. Padula and Greensleeves, Inc. v. Smiley, have highlighted the importance of compensating plaintiffs for impacts of litigation delay through prejudgment interest awards.

• According to Restatement of the Law Third Torts: Remedies TD 1 §14 (Draft), plaintiffs are entitled to reasonable market rate interest from when damages were incurred until entry of final judgment, allowing for a more comprehensive approach to pre-judgment awards in tort cases.


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By allowing pre-verdict interest in personal injury cases, we can encourage the prompt settlement of these matters, reducing calendar congestion and providing justice for victims.


Under the current law, pre-verdict interest is awarded in other types of actions, such as breaches of contract or property disputes. It's time to extend this fairness to personal injury cases as well.


Furthermore, wrongful death actions already allow for the recovery of interest under EPTL 5-4.3. It's only fair that personal injury cases receive the same treatment.


The time has come for New York to step up and ensure that injury victims are fully compensated for their losses. Let's support the proposed amendments to CPLR 5001 and bring fairness and justice to personal injury actions.


CPLR 5004 states that interest is typically set at a rate of nine percent per year, unless otherwise specified by statute.


CPLR 5002 states that interest will be awarded on the amount recovered, starting from the date of the verdict or decision until the final judgment is entered. The court clerk will calculate the interest and include it in the judgment.


CPLR 5003 allows for interest to be applied to money judgments starting from the date of entry or docketing of the final judgment.


There are proposed amendments to CPLR 5001 currently being reviewed in committee for the year 2023, known as Assembly Bill A436 and Senate Bill S3031. These amendments would modify subdivisions (a) and (c) of section 5001 to provide clearer guidelines for interest recovery.


Subdivision (a) clarifies that interest can be awarded for breaches of contract, acts or omissions that interfere with property rights, bodily injury claims, and other similar cases. However, in equitable actions, the court has discretion in determining the interest rate and the date from which it will be calculated.


Subdivision (c) specifies that the date from which interest is calculated should be indicated in the verdict, report, or decision. For bodily injury cases, interest will be calculated from the date of the injury or loss. If the jury does not specify a date, the court will determine it, unless the date is clear and not in dispute, in which case the court clerk can fix it based on an affidavit. The court clerk will calculate the interest amount up until the date of the verdict, report, or decision, and include it in the total amount awarded.


This act will take effect immediately.


Justification for these amendments is based on the need for a fair outcome in personal injury cases. Currently, a plaintiff suing for breach of contract receives interest from the date of the breach, while a plaintiff suing for negligence causing bodily injury only receives interest from the date of the judgment. This is unfair considering the immediate expenses incurred by the victim. Calculating interest from the date of the injury ensures a more equitable outcome and helps plaintiffs who have waited years for resolution.


Treating personal injury cases differently from breach of contract, real property, and wrongful death claims is inequitable. It is only fair for a successful personal injury plaintiff to receive interest from the date of the injury, as that is when the harm began affecting them. This proposal also promotes efficiency in the judicial system and encourages timely resolution of cases pending appeal.


Pre-verdict interest in personal injury actions is also justified by the unfair advantage insurers, corporations, and individuals gain from earning compound interest on reserves during litigation delays. Delays often result in a significant financial benefit to these parties, while the plaintiff is further burdened. Including pre-verdict interest as part of compensatory damages aligns with principles of equity.


Opponents argue that pain and suffering damages are not clearly ascertainable until a jury makes an award. However, economic losses like lost earnings and medical bills can be determined at different points in time, making pre-verdict interest justifiable.


Experience and common practice in the legal field underscore the value and settlement of personal injury claims. Attorneys, insurance adjusters, corporations, and judges regularly assess these claims based on established legal precedents, prior settlements, and jury verdicts. While each case is unique and past outcomes cannot guarantee future results, these factors play a crucial role in evaluating personal injury claims.


One counterargument suggests that pain and suffering damages may not occur simultaneously and can extend throughout the duration of a lawsuit and beyond. Under the current version of CPLR 5001(b), interest can be calculated on past damages from a reasonable intermediate date between the injury and the verdict.


In cases involving future damages awarded in wrongful death actions, these awards must first be discounted to the date of death before interest can be allowed. This principle is upheld in notable cases such as Milbrandt v. A.P. Green Refractories Co., Rohring v. City of Niagara Falls, and Toledo v. Iglesia Ni Cristo.


The Restatement of the Law, Third, Torts: Remedies TD 1§14 (Draft) provides valuable guidance on the matter. According to the current draft (2022), plaintiffs who establish a defendant's liability in tort are entitled to prejudgment interest at a reasonable market rate. This interest should be calculated on the amount of damages determined by the factfinder, from the date or approximate date the damage was incurred until the date of judgment.


Moreover, a plaintiff who obtains a judgment awarding damages in tort is entitled to post-judgment interest as specified by statute or rule of court.


This section of the Restatement reflects the significant evolution in legal standards, aiming for a more comprehensive approach to prejudgment interest in tort cases. Although statutes now govern this issue in many states, the Restatement remains essential for maintaining consistency with previous versions and accurately representing current law. Interest plays a crucial role in achieving complete compensation for plaintiffs and the integration of interest on past damages with the calculation of future damages' present value is a critical consideration.


It is important to recognize that the injuries resulting from a tort do not occur simultaneously. Elements such as lost earnings, lost profits, medical expenses, and pain and suffering accrue over time. While calculating interest for each individual item of damage from the date it accrues would be impractical, courts and litigants simplify the process by selecting one or a few dates as the starting point for interest calculations. These dates may include the initial injury, plaintiff's first demand, or the filing date of the lawsuit. For damages that accrue on a regular basis, such as lost earnings, interest can be awarded based on an average basis, such as interest from the midpoint between the date when the plaintiff became unable to work and the date they returned to work. The primary focus, as emphasized in the Restatement, is on approximating the date when the damages were incurred.


In summary, the assessment of personal injury claims relies on a comprehensive evaluation of legal precedents, prior settlements, and jury verdicts. Prejudgment interest at a reasonable market rate is integral to ensuring complete compensation for plaintiffs, and interest on past damages must be carefully considered in conjunction with the present value of future damages. The Restatement of the Law, Third, Torts: Remedies TD 1§14 provides valuable guidance on the matter, taking into account the practical complexities associated with the timing of injuries and accruing damages.


Title: The Case for Pre-Verdict Interest in Personal Injury Cases: Achieving Fairness, Efficiency, and Compensation


Introduction:

A significant number of states still refuse to award prejudgment interest on pain and suffering, causing inequity for victims in personal injury cases. However, there is a growing trend among approximately 20 states to adopt stringent versions of the ascertainability rule, which allows for interest on medical expenses and lost earnings, but not on damages for pain and suffering. This inconsistency undermines the principle of fair compensation, as many other damages are equally ascertainable.


Awarding Prejudgment Interest:

Contrary to the aforementioned states, around 30 states recognize the importance of awarding prejudgment interest in tort, including personal injury cases. Some states do so as a matter of right, while others leave it to the discretion of the court. However, even in the latter group, the courts exercise caution when making such awards. Approximately 10 or possibly 11 states consider the history of settlement offers before granting prejudgment interest, acknowledging its value in promoting settlements and preventing unfair benefits from litigation delay.


The Impact of Litigation Delay:

By awarding prejudgment interest, the true cost of money damages is accounted for, compensating the claimant for the lost time value due to unreasonable delays in the legal process. The aim is not only to provide fair compensation to the victim, but also to incentivize prompt resolution of disputes and encourage settlements. This approach has been supported by various court cases, such as Kosarko v. Padula, Hayes v. Price, and Greensleeves, Inc. v. Smiley, which confirm the importance of compensating plaintiffs for the impact of litigation delay.


Historical Perspective:

In 1956, the Committee on State Legislation of the Association of the Bar of the City of New York approved a bill advocating for pre-verdict interest in negligence cases. Despite initial opposition, the Committee recognized that the twin goals of full indemnity for victims and reducing court congestion outweighed any counterarguments. Over the years, a national trend has emerged in favor of such legislation, prompting renewed discussions and efforts to implement similar rules across various states.


The Fairness Argument:

The fundamental rationale for Pre-Verdict Interest in Personal Injury Cases (PVIPIC) is rooted in fairness. The defendant's tortious conduct not only causes physical harm but also deprives the plaintiff of health, enjoyment of life, and financial stability. A verdict merely acknowledges that the defendant should have compensated the plaintiff at the time of the injury. Therefore, it is only fair that the plaintiff be awarded interest on the amount owed, as it is an inherent principle in American jurisprudence that those who have benefited or delayed payment should pay interest.


Conclusion:

In conclusion, the issue of calendar congestion in negligence actions remains significant. In an effort to address this ongoing problem, it is crucial for the legal community to reevaluate the availability of PVIPIC, consistent with the goal of making plaintiffs whole. By doing so, we can achieve fairness, efficiency, and appropriate compensation for personal injury victims while also promoting swift resolutions and reducing court congestion.

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