Van Nostrand v. FroehlichVan Nostrand v. Froehlich
Lead Opinion
OPINION OF THE COURT
This appeal presents the issue of when prejudgment interest is to be computed under CPLR 5002 in an automobile-related personal injury action where the serious injury threshold is an issue. We have not previously discussed at the appellate level the interplay between a plaintiffs entitlement to prejudgment interest under CPLR 5002 and the threshold injury requirements of Insurance Law § 5102 (d). For reasons set forth below, we find that prejudgment interest is to be calculated from the date common-law liability attaches in favor of the plaintiff, either by default, summary judgment, or bifurcated liability trial, even though the plaintiff has yet to establish the existence of a serious injury under the Comprehensive Motor Vehicle Insurance Reparations Act (Insurance Law art 51 [hereinafter the No-Fault Law]).
Relevant Facts and Prior Proceedings
The vehicle driven by the plaintiff, Karen L. Van Nostrand, was rear-ended on September 2, 1999, while stopped at a red light on the eastbound portion of Hempstead Turnpike in East Meadow, Long Island. The offending vehicle was operated at the time of the collision by the defendant Rosario Froehlich. The Supreme Court issued an order dated March 8, 2002, granting the plaintiff summary judgment on the issue of common-law liability, and directed that there be a trial on the issue of damages. The order was served on counsel for the Froehlichs with notice of entry on April 17, 2002.
At the trial on the issue of damages, a jury awarded Van Nostrand $150,000 for past pain and suffering and $400,000 for future pain and suffering, as reflected by a judgment entered by the clerk of the Supreme Court, Nassau County, on January 17, 2004. On appeal, this Court, inter alia, ordered a new trial on the issue of damages unless Van Nostrand filed a stipulation agreeing to reduce the damages to the sums of $100,000 for
By order to show cause dated July 19, 2005, the Froehlichs moved to modify the amended judgment. The Froehlichs argued that prejudgment interest had been improperly computed from the common-law liability finding of April 17, 2002, and that in automobile actions such as this, interest should instead be computed from the date that Van Nostrand established both liability and the existence of a serious injury.
The Supreme Court granted the Froehlichs’ motion to correct the interest contained in the amended judgment. A second amended judgment was entered December 23, 2005, reflecting interest measured from the date of Van Nostrand’s damages verdict. The difference in the interest award was $3,500.
Van Nostrand appeals. We reverse the second amended judgment entered December 23, 2005, deny the motion, and reinstate the amended judgment entered June 21, 2005.
CPLR 5002 and Its Interpretive Case Law
The statute that entitles plaintiffs to prejudgment interest in civil proceedings is CPLR 5002. It is not to be confused with CPLR 5001, which speaks to preverdict interest for breach of contract measured from the date of breach (see De Long Corp. v Morrison-Knudsen Co.,
The language of CPLR 5002 measures interest from “verdict . . . report or decision” to the date of the entry of a final judgment. The terms “verdict,” “report” or “decision” generally refer to the date that liability is established, even though the damages verdict is reached at a later time (see Rohring v City of Niagara Falls,
The plaintiffs’ entitlement to compensation is determined at three potential times during litigations, triggering interest under CPLR 5002. The first is when the defendant is held liable to the plaintiff as a result of a bifurcated liability trial, subject to the conduct of a damages trial. When trials are bifurcated, prejudgment interest is computed from the date of the liability finding (see Love v State of New York, supra at 544; Gunnarson v State of New York, supra at 924; Trimboli v Scarpaci Funeral Home, supra at 389; Malkin v Wright, supra at 570). The second circumstance is when the defendant is found liable to the plaintiff by means of summary judgment under CPLR 3212 (see Lifshits v Variety Poly Bags,
The Serious Injury Threshold—a Question of Liability or Damages?
In Denio v State of New York (
The leading authority on when prejudgment interest is to be computed under CPLR 5002 is Love v State of New York (supra). In Love, the Court of Appeals held that prejudgment interest is to run from the point in a litigation “when the plaintiffs right to be compensated for the damages he or she sustained becomes fixed in law” (Love v State of New York, supra at 544). The Court of Appeals then explained that the right to compensation becomes fixed “[i]n a bifurcated trial . . . when the verdict holding the defendant liable is rendered,” with the “only remaining question [being] the precise amount that is due” (Love v State of New York, supra at 544).
The essence of whether prejudgment interest should be computed from a finding of common-law liability in favor of the plaintiff, or from a finding of serious injury, is therefore inescapably dependent upon whether proof of serious injury is considered by law to be “liability” or “damages.” If a question of liability, the running of prejudgment interest would need to
There has been a lack of unanimity among the four departments of the Appellate Division as to whether serious injury is a matter of liability or damages, which necessarily implicates CPLR 5002. The differences between the departments on this issue are not found in decisions addressing CPLR interest awards. Instead, the split between the departments is exposed in the automobile cases dealing with whether or not plaintiffs who have been granted summary judgment on liability are required to nonetheless establish serious injury at their damages trials. The Second and Third Departments took one position on this issue, while the First and Fourth Departments took a different position, although more recently the First Department appears to have switched sides and has left the Fourth Department standing alone.
This Court has determined that the serious injury threshold is decidedly an issue of damages, not liability. The seminal cases are Perez v State of New York (
Seven years later, in Zecca v Riccardelli (supra), this Court held that when a finding is rendered in favor of a plaintiff on liability by means of summary judgment, even upon default of the defendant in opposing the motion, the plaintiff is nevertheless required to establish the existence of a serious injury at the
If anything, this Court’s discussions in Perez and Zecca failed to address an additional conceptual reason that the serious injury threshold is properly categorized as a question of damages, not liability. The well-accepted reasons for the enactment of the No-Fault Law were to promote the prompt resolution of injury claims, limit costs to insurers, and alleviate unnecessary burdens on the courts (see Pommells v Perez, 4 NY3d 566, 570-571 [2005], citing Comprehensive Automobile Insurance Reparations Act, added by L 1973, ch 13; Governor’s Mem approving L 1973, ch 13, 1973 McKinney’s Session Laws of NY, at 2335). To control the pressing volume of automobile litigation within the state, the Legislature divided the universe of claims arising out of the use and operation of motor vehicles into two broad categories objectively defined in Insurance Law § 5102 (d); namely, plaintiffs whose injuries qualify as “serious,” and hence, are
Decisions of the Third Department also treat the serious injury threshold as an issue of damages (see e.g. Kelley v Balasco,
In 2001, the First Department took an opposing view in Porter v SPD Trucking (
The Fourth Department walks a fine line apart from the other departments. Successful fault-based motions for summary judgment in favor of motor vehicle plaintiffs are considered partial summary judgments on the issue of “negligence,” as distinguished from “liability” which includes both negligence and serious injury (see Ruzycki v Baker,
We hold, consistent with our prior rulings in Perez v State of New York (supra) and Zecca v Riccardelli (supra) that serious injury is quintessential^ an issue of damages, not liability. In the event a plaintiff at a damages trial fails to sustain the burden of establishing serious injury, the plaintiff is not entitled to any recovery despite proof of common-law liability. If the serious injury threshold is established by a plaintiff at a damages trial, the jury will render a monetary award that fairly and justly compensates the plaintiff for all loss (see PJI 2:277; see generally McDougald v Garber,
Our dissenting colleagues argue that proof of serious injury must be presented before the right to compensation becomes fixed at law (see Love v State of New York, supra) so as to trigger interest under CPLR 5002. We disagree with this argument and maintain that interest must be calculated from the date that common-law liability is determined in favor of the plaintiff. Four compelling reasons support our conclusion.
First, as already noted, the Court of Appeals expressly determined in Love v State of New York (supra at 542) that in personal injury actions, interest under CPLR 5002 runs from the date fault liability is established. While Love did not specifically address no-fault insurance implications, the Court of Appeals’ decision in Denio v State of New York (supra) was automobile-related and incidentally measured CPLR 5002 interest from the date that common-law liability was resolved in the
Second, our dissenting colleagues, in concluding that prejudgment interest in a no-fault action is not triggered until the serious injury threshold is established, admittedly rely upon the Fourth Department’s reasoning in Ruzycki v Baker (supra) and Manzano v O’Neil (supra). Implicitly, our dissenting colleagues depart from the stare decisis of this Department by which they are bound, wherein this Court has held the serious injury threshold to be a matter of damages that is litigated during the damages phase of an action (see e.g., Sheehan v Marshall,
Our dissenting colleagues also suggest that the no-fault threshold is “[m]ost telling[ly]” grounded in liability rather than damages since, if an automobile plaintiff’s verdict is overturned on appeal for insufficient proof at trial of serious injury, the remedy is dismissal of the complaint instead of a reduction of damages to $0 (dissenting op at 71). Such an argument raises a distinction without a difference. In any action where plaintiffs’ verdicts on appeal are reversed on the grounds that damages were not established at trial, whether automobile-related or not, the appellate remedy is the dismissal of the plaintiffs’ complaints rather than a reduction of damages to $0 (see e.g. Pattison-Bolson Rug Serv. v Sloane,
Third, there are various defenses to damages within and without the motor vehicle context which affect whether the plaintiffs, with common-law liability in their favor, are entitled to any monetary award or to no award. One such defense is the plaintiffs nonuse of available seatbelts (see Vehicle and Traffic Law § 1229-c [8]), which is strictly limited to the jury’s determination of damages and is not considered in resolving issues of liability (see Spier v Barker,
Fourth, if prejudgment interest is not awardable in automobile actions until after the serious injury threshold is established, an untenable dichotomy would exist between those plaintiffs and all nonautomobile plaintiffs whose interest computations commence upon receiving a liability finding in their favor either as a result of default, summary judgment, or verdict from a trier of fact. If this Court were to accept the defendants’ interpretation of CPLR 5002, it would be placing motor vehicle personal injury plaintiffs on an unequal footing from all other plaintiffs who seek damages for personal injuries not involving automobile ac
For all of the foregoing reasons, we conclude that the second amended judgment entered December 23, 2005, which calculated interest from the date of Van Nostrand’s damages verdict, is in error. The earlier amended judgment entered June 21, 2005, which measured prejudgment interest from the order granting Van Nostrand summary judgment on common-law liability, was correct. Accordingly, the second amended judgment entered December 23, 2005, is reversed, on the law, the defendants’ motion to modify the date of accrual of interest is denied, and the amended judgment entered June 21, 2005, is reinstated.
Notes
. The order to show cause invoked CPLR 5015, which authorizes a court to relieve a party of a judgment on the ground of excusable default, in this case the default being the Froehlichs’ failure to object to the amended judgment prior to its settlement. The order to show cause also invoked CPLR 5019, which authorizes the court to cure mistakes, defects, or irregularities that appear in judgments. While Van Nostrand opposed the order to show cause on the ground, inter alia, that the Froehlichs did not establish an excusable default and merit in the settlement of the amended judgment, these issues are outside the scope of the instant appeal.
. One narrow exception recognized by this Court exists when a defendant opposes a default motion and fails to include the serious injury threshold among the meritorious defenses discussed (see Beresford v Waheed,
. The case of Manzano v O’Neil should be familiar to personal injury practitioners. It was one of the three serious injury actions examined by the Court of Appeals for other legal propositions in the often-cited Toure v Avis Rent A Car Sys. (
Dissenting Opinion
Prejudgment interest pursuant to CPLR 5002 runs from the date on which “the plaintiffs right to be compensated for the damages he or she sustained becomes fixed in law” (Love v State of New York,
The issue before us is presented in a rather ordinary automobile liability case that has a somewhat complex procedural history. The plaintiff was injured when her vehicle was struck from behind by a vehicle driven by the defendant. The plaintiffs motion for summary judgment was granted in March 2002. Although the record before us on this appeal does not include the motion for summary judgment, there is no dispute
In April 2003, a jury awarded the plaintiff the sum of $550,000 in damages. On appeal, we found that the award of damages for pain and suffering deviated materially from what would be reasonable compensation and therefore reversed the judgment entered on the jury’s verdict and ordered a new trial unless the plaintiff agreed to a reduction in those damages (see Van Nostrand v Froehlich,
The plaintiff accepted our invitation to resolve the matter and an amended judgment was entered in June 2005. The amended judgment provided for interest from the date on which summary judgment had been granted, more than three years earlier. Arguing that prejudgment interest was not available from that date, the defendant moved for an order “amending and correcting” the judgment to provide for interest only from the date of the verdict. The Supreme Court granted the motion, to the detriment of the plaintiff in the amount of $3,500, a second amended judgment conforming to the order was entered in December 2005, and this appeal ensued.
Initially, the Supreme Court correctly considered the merits of the defendant’s motion. Where the rate of interest is not litigated prior to the entry of judgment, the calculation of interest does not affect a substantial right of a party and an error in the calculation may be corrected by the court on a motion pursuant to CPLR 5019 (see Kiker v Nassau County’ 85 NY2d 879 [1995]). Consequently, the defendant’s failure to raise any objection to the proposed amended judgment at the time it was noticed for settlement does not defeat his right to such relief or require that his motion be treated as an application to vacate a default pursuant to CPLR 5015. The issue, therefore, is whether prejudgment interest was properly calculated from the date on which summary judgment was granted.
CPLR 5002 provides that “[i]nterest shall be recovered upon the total sum awarded, including interest to verdict, report or decision, in any action, from the date the verdict was rendered or the report or decision was made to the date of entry of final judgment.” The calculation of prejudgment interest in an action to recover damages for personal injuries is thus simple when the plaintiffs judgment is the result of a single jury verdict. The plaintiff is entitled to interest from the date of the verdict
It was in addressing this latter problem that the Court of Appeals defined the critical point at which prejudgment interest commences as the date on which “the plaintiff’s right to be compensated for the damages he or she sustained becomes fixed in law” (Love v State of New York,
In reaching this conclusion, the Court of Appeals had no occasion to consider whether the determination of liability that initiates the plaintiff’s entitlement to prejudgment interest requires, in the context of the No-Fault Law, a finding that the plaintiff sustained a serious injury. The more recent decision of the Court of Appeals in Denio v State of New York (
We, of course, are obligated to follow the holdings of the Court of Appeals. Our duty in that regard, however, extends only to issues necessarily decided by that Court (see Robinson Motor Xpress, Inc. v HSBC Bank, USA,
The No-Fault Law altered the automobile liability dynamic dramatically. Prior to the adoption of the No-Fault Law, a plaintiff in an automobile liability action was treated no differently from a plaintiff in any other negligence case. After establishing the elements of a negligence claim, i.e., that the defendant owed a duty of care to the plaintiff, that the defendant breached that duty, and that the defendant’s breach was a proximate cause of the plaintiff’s injuries, the only burden remaining upon the plaintiff was to establish the amount of his or her damages (see Pfaffenbach v White Plains Express Corp.,
My colleagues read this statutory requirement as having little, if any, effect upon when “the plaintiffs right to be compensated for the damages he or she sustained becomes fixed in law” (Love v State of New York, supra at 544). As a result, they conclude that even in a no-fault case, the determination that the defendant was negligent marks the commencement of prejudgment interest, without regard to when the serious injury threshold is satisfied. This conclusion, however, misperceives the nature of the plaintiffs case under the No-Fault Law and is inconsistent with both the language of the statute and the manner in which the statute has been consistently interpreted.
The explicit language of the No-Fault Law is sufficient to resolve this debate. As noted, the statute provides that “there shall be no right of recovery for non-economic loss, except in the case of a serious injury, or for basic economic loss” (Insurance Law § 5104 [a]). The statute thus, by its terms, abolishes the plaintiff’s right of recovery; it does not merely limit the damages that the plaintiff may recover. If a plaintiff has no
Even if the statutory language in this regard can be considered ambiguous, however, any doubt as to the effect of the statute has been removed by the fact that from the statute’s earliest days, the Court of Appeals has described it as a bar to liability, rather than as a limitation on damages. Just two years after the enactment of the No-Fault Law, the Court of Appeals upheld the statute’s constitutionality against a due process challenge, holding that “the law now challenged provides more than an adequate substitute for the cause of action it abrogates” (Montgomery v Daniels,
In line with these repeated characterizations of the statute as depriving a plaintiff of a right to recover in the absence of proof of serious injury, the Court of Appeals has consistently treated the failure to establish serious injury as barring claims, not merely as limiting damages. Thus, in Licari v Elliott (supra at 240), the Court of Appeals held that in the absence of proof of serious injury, the No-Fault Law requires dismissal of the claim for failure to establish a prima facie case, thereby precluding submission of the matter to the jury. In reaching this conclusion, the Court found that “[t]acit in this legislative enactment is that any injury not falling within the new definition of serious injury is minor and a trial by jury is not permitted under the no-fault system” (Licari v Elliott, supra at 235) and that satisfaction of the serious injury threshold is necessary to “permit a plaintiff to maintain a common-law cause of action in tort” (Licari v Elliott, supra at 237). Following Licari, the Court
My colleagues in the majority ignore these decisions. Instead, they focus on the dichotomy between “liability” and “damages,” concluding that because serious injury is tried in the damages phase of a bifurcated trial, the plaintiffs entitlement to interest, accruing upon “liability,” has already been established. Such analysis, however, ignores the reasoning of Love in preference for its phraseology.
Outside the context of a no-fault case, it is entirely consistent to say that “the plaintiffs right to be compensated for the damages he or she sustained becomes fixed in law” (Love v State of New York, supra at 544) upon a jury verdict on common-law liability, as the Love court did. To read Love as holding that interest runs from the same point in a no-fault case simply because that determination is labeled “liability” and serious injury is tried with damages ignores the fact that under the clear language of the No-Fault Law and the consistent holdings of the Court of Appeals the failure to satisfy the no-fault threshold defeats not just the plaintiffs damages, but the plaintiffs claim.
The cases decided under the No-Fault Law draw a clear distinction between the usual elements of a plaintiffs negligence case—duty, breach, and proximate cause—and the serious injury threshold. Consistent with this distinction, we held in Pena v Castillo (
Most telling, however, where the issue does reach the jury, but we find on appeal that the jury’s verdict in favor of the plaintiff on the issue of serious injury cannot stand, we do not reduce the amount of the verdict to $0 but, rather, we dismiss the complaint (see Rodriguez v Virga,
This distinction drives the analysis with respect to the accrual of prejudgment interest. Where the plaintiffs action is subject to the No-Fault Law, the determination that the defendant has been negligent does not, in itself, establish the plaintiffs entitlement to recovery because the No-Fault Law additionally requires proof that the plaintiff suffers from a serious injury (see Licari v Elliott, supra; Star v Badillo, supra). As a result, the plaintiffs right to recover is not “fixed in law” on the date of the negligence determination, but, rather, on the date on which both negligence and serious injury are established.
Our holdings in Perez v State of New York (
Perez held only that the trial court, having advised the claimant that no medical testimony would be permitted during the liability phase of the trial, erred in granting the State’s motion to dismiss at the close of the claimant’s case because of the plaintiff’s failure to establish serious injury. To be sure, we noted that “[a]s a general principle, the liability phase of a bifurcated trial is not the proper juncture at which to adjudicate issues regarding the severity of the injuries” and that “[i]ssues which pertain to the extent of the injuries suffered by a plaintiff, including whether a plaintiff suffered a serious injury . . . should generally be left for the damages phase of the trial” (Perez v State of New York, supra at 741-742). What these comments address, however, is the manner in which a no-fault trial is to be conducted. Absent from the analysis is any conclusion that serious injury is conceptually an element of damages, rather than liability, or that the plaintiff’s entitlement to recovery can be “fixed in law” prior to the offer of such proof.
Zecca was a summary judgment case. The issue in Zecca was whether summary judgment in favor of the plaintiff on the issue of “liability” necessarily included summary judgment in the plaintiff’s favor as to serious injury. Rejecting what was then the position of our colleagues in the First Department (see Maldonado v DePalo,
Thus, neither Perez nor Zecca addresses, let alone establishes, that serious injury is an element of damages, rather than liability. In order to reach the conclusion that they do, and then to extrapolate that our Court is “committed” by these decisions to finding that a no-fault plaintiffs entitlement to recovery is “fixed in law” before he or she offers any proof of serious injury, requires a reading of these cases that is beyond expansive. Stare decisis depends upon a careful exegesis of our decisions to determine what we have necessarily held in light of the issues required to be decided by the particular case. Such a reading of Perez and Zecca compels the conclusion that they are related tangentially, at best, to the issue that is before us here. To say, in the absence of any attempt to rebut this conclusion, that the refusal to read these cases otherwise is a violation of our stare decisis obligation, is simply incorrect. It is no offense to our stare decisis obligation, therefore, to disregard Perez and Zecca in reaching, on the basis of the analysis that has been set forth, the same conclusion as our colleagues in the Fourth Department, that prejudgment interest in a no-fault case does not commence until serious injury is established (see Ruzycki v Baker;
The conclusion that a no-fault plaintiff has not established that his or her right to recover is “fixed in law,” and consequently is not entitled to prejudgment interest, until he or she has satisfied the serious injury threshold does not, of course, prevent a plaintiff from recovering interest prior to the damages verdict. A plaintiff in a no-fault case can establish serious injury prior to trial in the same manner as any other element of his of her case. If the defendant fails to appear or answer, the plaintiff is entitled to a default judgment (see CPLR 3215 [a]). Where the issue of serious injury has been resolved by the mo
I do not see the existence of issues with respect to the seat-belt defense or proximate cause as requiring a different result. The seat-belt defense (see Vehicle and Traffic Law § 1229-c [8]) is, by its terms, only an issue of damages (see Spier v Barker,
The contention that no-fault plaintiffs will be treated differently than other personal injury plaintiffs if they are not entitled to prejudgment interest upon establishing the defendant’s common-law liability also provides no cogent reason, in my view, to depart from the rule established in Love. The distinction with respect to the elements necessary to fix a defendant’s obligation to pay damages was drawn by the Legislature when it enacted the No-Fault Law. The conclusion that prejudgment interest does not accrue until serious injury is established follows directly from the application of the rule established in Love to that distinction. We are not at liberty to disregard it (see Patrolmen’s Benevolent Assn. of
Moreover, I am not persuaded that no-fault plaintiffs in a jurisdiction such as ours, where bifurcation is the rule in negligence cases (see Martinez v Town of Babylon,
In any event, the issue here is not the date on which it is fair for a plaintiff’s prejudgment interest to commence in a no-fault case. The issue is what that date is in accordance with the undisputed legal standard. That standard defines prejudgment interest as running from the date on which “the plaintiff’s right to be compensated for the damages he or she sustained becomes fixed in law” (Love v State of New York, supra at 544). Here, my colleagues in the majority would hold that standard to have been met on the date summary judgment was awarded to the plaintiff, despite the fact that the plaintiff had not yet introduced any evidence demonstrating that she had suffered a serious injury. Since, in the absence of such proof, the plaintiff could not prevail, her entitlement to recover cannot have “become fixed in law” at that time and, under Love, prejudgment interest was not then available to her. The second amended judgment should therefore be affirmed.
Ordered that the second amended judgment entered December 23, 2005, is reversed, on the law, with costs, the defendants’ motion to modify the date of accrual of interest is denied, and the amended judgment entered June 21, 2005, is reinstated.