Rohring v. City of Niagara Falls, 84 N.Y.2d 60 (1994)
When calculating attorney’s fees and interest on future damages in structured settlements under CPLR Articles 50-A and 50-B, the present value of attorney’s fees should be subtracted from the present value of the future damages award, and interest on the present value of future damages accrues from the date liability is established.
Summary
This case addresses the proper method for calculating attorney’s fees and interest on future damages in structured judgments under CPLR Articles 50-A and 50-B. Eric Rohring, injured at a construction site, received a substantial jury award. The court structured the future damages portion. The dispute centered on whether attorney’s fees should be deducted from the gross or present value of future damages and when interest on future damages begins to accrue. The Court of Appeals affirmed the Appellate Division’s ruling that attorney’s fees should be calculated based on the present value of the annuity contract and deducted from the present value of future damages, and that interest accrues from the date liability was established.
Facts
Eric Rohring sustained a severe foot injury at a construction site due to a broken safety belt, falling 20 feet. He was employed by Falls Steel Erectors, Inc., on a project for the City of Niagara Falls. The court granted Rohring summary judgment on liability. A subsequent trial awarded him $2,501,311 in damages, which the trial court then structured pursuant to CPLR article 50-B.
Procedural History
The Supreme Court determined the present value of attorney’s fees and subtracted that amount from the gross (undiscounted) value of future damages before structuring periodic payments. The Appellate Division disagreed, holding that the present value of attorney’s fees should be subtracted from the present value of future damages. The Court of Appeals granted leave to appeal.
Issue(s)
1. Whether attorney’s fees based on future damages should be calculated and deducted from the gross amount of future damages or from the present value of future damages when structuring a judgment under CPLR Article 50-B?
2. Whether interest on future damages should accrue from the date liability is established or only as future damages are incurred or periodic payments become overdue?
Holding
1. No, because the proper methodology is to determine the present value of future damages before attorney’s fees and then reduce that amount by the present value of attorney’s fees. This prevents defendants’ combined payment to plaintiff and counsel from exceeding the jury award.
2. Yes, because future damages are a debt owed entirely as of the date of the liability verdict, and interest is properly charged against the present value of future damages from that date under CPLR 5002.
Court’s Reasoning
Regarding attorney’s fees, the Court recognized the ambiguity in CPLR 5041(c) and (e). It reasoned that Articles 50-A and 50-B are administrative schemes that should not increase defendants’ underlying liability. Plaintiffs are entitled to be made whole, not overcompensated. The Court noted, “Articles 50-A and 50-B are technical administrative schemes intended to regulate and structure payment, and they should not be construed in such a way as to increase the underlying liability owed by defendants.” Subtracting the present value of fees from the present value of damages ensures defendants pay no more than the jury awarded.
On the issue of interest, the Court relied on the plain language of CPLR 5002, which states that interest shall be recovered “upon the total sum awarded * * * from the date the verdict was rendered”. The Court rejected the argument that interest should only accrue as damages are incurred, stating that the structured judgment schemes of articles 50-A and 50-B do not delay liability, only payment. The Court emphasized, “A defendant’s obligation to a personal injury plaintiff encompasses both past and future damages and becomes fixed as of the date of the liability verdict.”