Love v. State of New York, 78 N.Y.2d 540 (1991)

In a bifurcated personal injury action, prejudgment interest should be calculated from the date of the liability determination, regardless of which party is responsible for delays in assessing damages.

Summary

This case concerns the calculation of prejudgment interest in a bifurcated personal injury action against the State of New York. The Court of Appeals held that interest should accrue from the date liability was established, even though the delay in determining damages was not the State’s fault. The Court reasoned that interest is intended to compensate the plaintiff for the use of money rightfully theirs from the moment liability is fixed, not to penalize the defendant. The key issue is when the right to compensation becomes fixed, which, in a bifurcated trial, is at the liability verdict.

Facts

The claimant, Love, sued the State of New York for personal injuries. The trial was bifurcated, with liability decided in Love’s favor on November 4, 1988. The State did not appeal this liability determination. However, the decision on damages was delayed until November 29, 1989, more than 10 months after the damages trial concluded, through no fault of either party. The final judgment included prejudgment interest calculated from the date of the liability determination.

Procedural History

The Court of Claims initially awarded prejudgment interest from the date of the liability determination. The Appellate Division affirmed, holding that interest should generally be calculated from the liability adjudication date, regardless of fault for delays in fixing damages. The New York Court of Appeals granted the State leave to appeal.

Issue(s)

1. Whether, in a bifurcated personal injury action against the State, prejudgment interest should be calculated from the date of the decision establishing liability, even if the State was not responsible for the delay in assessing damages.

Holding

1. Yes, because interest is intended to compensate the plaintiff for the use of money rightfully theirs from the moment liability is fixed, and not to penalize the defendant for delaying resolution of the case.

Court’s Reasoning

The Court of Appeals affirmed the Appellate Division’s order. The Court reasoned that prejudgment interest under CPLR 5002 is designed to indemnify plaintiffs for the nonpayment of what is due to them. It emphasized that interest is not a penalty but rather the cost of using another person’s money. The court distinguished its prior holding in Trimboli v. Scarpaci Funeral Home, clarifying that fault for delay is not the determining factor. The dispositive factor is when the plaintiff’s right to compensation becomes fixed in law, which occurs in a bifurcated trial when the verdict holding the defendant liable is rendered. At that point, the defendant’s obligation to pay the plaintiff is established, and the only remaining question is the precise amount that is due. The court cited Gunnarson v. State of New York, stating plaintiffs are entitled “to be compensated with interest for the delay in payment of the principal award certainly due them [even though] * * * the amount remain[s] uncertain.” The court noted that the defendant benefits from having the use of the money during the delay. Requiring the defendant to pay interest simply repays the plaintiff for the use of their money during that period. Allowing the defendant to retain the cost of using the money would be a windfall, irrespective of which party causes the delay. Therefore, the Court held that interest accrues from the date of the liability determination to fully compensate plaintiffs for their losses in bifurcated trials.