French v Schlavo

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French v Schlavo 2010 NY Slip Op 33744(U) November 16, 2010 Sup Ct, NY County Docket Number: 100207-1998 Judge: George J. Silver Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] SUPRlEME COURT OF THE STATE OF NEW YORK -NEW YORK COUNTY PRESENT: , Justice George J, Silver Hon. PART 22 INDEX NO. CAROLYN THOMAS FRENCH 100207-1998 MOTION DATE vs. MOTION SEQ. NO. ALFRED SCHlAVO and TECHNICAL MECHANICAL SERVICES, INC. 009 MOTION CAL. NO. w E 0 LL The following papers, numbered 1 to 2 were read on this motion to/for Notice of MotiodOrder to Show Cause - 1 Notice of Cross-Motion - Affidavits - Exhibits Answering Affidavits -Exhibits Replying Affidavits Cross-Motion: Yes 0NO Upon the foregoing papers, it is hereby In this action arising out of a motor vehicle accident, defendants Alfred L. Schiavo and Technical Mechanical Services, Inc. (L defendants )move by way of order to show cause for an order approving an annuity contract issued to plaintiff by Metropolitan Life Insurance Company pursuant to a CPLR article SO-B judgment; and directing plaintiff to provide defendants with a full satisfaction of judgment. Alternatively, defendants seek an order, pursuant to CPLR 5 5021 [a] [2], declaring the judgment fully satisfied. Plaintiff Carolyn Thomas French ( plaintiff ) cross-moves for various forms of relief. However, at oral argument on September 22,2010, plaintiff withdrew the relief sought in her cross-motion. Accordingly, the court Will treat plaintiffs cross-motion as opposition to defendants order to show cause. The parties also stipulated at oral argument that the sole issue for the court to resolve is whether defendants, having tendered the lump sum payments and purchased the annuity contract as requiried by the judgment, are entitled to a full satisfaction of judgment. A judgment resulting from plaintiffs underlying personal injury action was filed on March 16,20 10 and entered nunc pro tunc as of December 28,2008. According to defendants, on March 25,2010, defendants insurer, CNA, issued three checks in the amount of $4,154,747.07, payable to plaintiff and her attorneys, to satisfy the lump sum payments specified in the judgment. Plaintiff does not dispute defendants contention that these checks were cashed. Check one: c Check if appropriate: FINAL DISPOSITION 0DO NOT POST a NON-FINAL DISPOSITION 0REFERENCE 0SETTLElSUBMIT ORDEWJUDG. [* 2] Thereafter, CNA issued a check made payable to Metlife Tower Resources Group in the amount of $2,190,406.16 to cover the purchase of the annuity contract required by the judgment. On April 14,2010, the annuity contract was forwarded to plaintiffs attorney. Checks were tendered to plaintiff under the m u i t y contract but were not cashed because plaintiff objected to the annuity contract on the grounds that it did not comply with either the terms of the judgment or CPLR article 50-B. However, as noted above, plaintiff has withdrawn those objections. Plaintiff contends that under CPLR article 50-B, defendants will continue to be liable to plaintiff in the event of a default in the p a p e n t of the future periodic payments, making a full satisfaction of judgment inappropriate. Plaintiff also contends that a full satisfaction of judgment would leave her with no recourse against defendants should the owner of the annuity unilaterally change the payee designated on the contract. Defendants contend that they are entitled to full satisfaction of judgment, despite plaintiffs concerns, because article 50-B provides plaintiff with sufficient statutory protections. As the Court of Appeals explained in Rohring v City of Niugara Fulls, 84 NY2d 60,638 NE2d 62,614 NYS2d 714 [1994], CPLR article 50-B was enacted in 1986 as part of New York State s effort at tort reform (see, L 1986, ch 682, 8 9). In its essential features it closely parallels CPLR article 50-A, which had been enacted a year earlier in response to concerns about the increasing size of verdicts in medical and dental malpractice actions (see generally Siegel, Practice Commentaries, McKinney s Cons Laws of NY, Book 7B, CPLR a t 50- A, at 71 I, and r CPLR art 50-B, at 730-73 1). Though the statutory scheme of article 50-B is technical and complicated, its basic operation is easily stated. Past damages are paid in a lump sum (CPLR 8 5041 PI). Future damages, which are awarded by the jury without reduction to present value (CPLR $ 4 111 [fl), are bifurcated for purposes. The first $250,000 is paid as a lump sum (CPLR 5 5041 [b]). The remainder, after the subtraction of attorney s fees and other adjustments, is to . be paid in periodic installments (CPLR 5041 [e]). To provide for these periodic payments, subdivision (e) further specifies that defendants are to purchase an annuity contract. Since the structured award provision of article 50-B was explicitly based on the analogous 50-A provision, the legislative history of article 50-A is relevant here (Schultz v Harrison Radiator Div. GMC, 90 NY2d 31 1,683 NE2d 307,660 NYS2d 685 [1997]). The dual purpose behind article 50-A was to moderate the cost of medical malpractice premiums, while assuring adequate and fair compensation for injured persons (Governor s Program Mem, 1985 NY Legis Ann, at 132). By providing that injured parties receive future damage awards in periodic installments paid over time, the Legislature sought to guarantee plaintiffs that compensation for future health care costs, lost earnings and other needs [would] be available to meet those expenses as they [arose] (Governor s Program Mem, 1985 NY Legis Ann, at 132). At the same time, defendants would benefit because paying a judgment in periodic installments reduces the overall cost of the judgment by permitting the insurer to retain and invest the balance of the award before the installments come due [and] additional savings [would] result from relieving the defendant from the obligation to make payments toward the plaintiffs future health care and other non-economic expenses in the event of the plaintiffs death (id.at 132; see also CPLR 58 5035 [a], 5045 [a]). Although it is clear that the legislation was intended to address the concerns of defendants and to ensure the availability of liability insurance by providing for the structuring of judgments with respect to awards of future damages in excess of $250,000, the Legislature was also cognizant of the need to provide adequate security for the payment of the periodic installments required by the judgments for the period of time over which such periodic payments were to be made. It did so by requiring defendants and their insurance carriers to purchase an annuity contract executed by a qualified insurer approved by the Superintendent of Insurance and to guarantee the payments thereunder. The Legislature also provided that, in the event p a p e n t was not made in a timely fashion, a plaintiff could apply to the court for an order Index No. 100207-1998 Page 2 of 3 [* 3] requiring payment of the outstanding payments in a lump sum without reduction to present value (Rohring v Ct ofNiagura Falls, 212 AD2d 320 [4*Dept 19951). iy While it is clear from the legislative history that article 50-B was enacted primarily to benefit defendants, and their insurers, by moderating the costs of ever rising insurance premiums (Stinton v Robin s Wood, Inc., 45 AD3d 203 [2d Dept 2007]), there is nothing the legislative history to indicate that, in exchange for this benefit, a defendant was to be burdened with a judgment for the extended period of years over which a plaintiff was entitled an award of future damages. Moreover, in the highly unlikely event that the owner of the instant annuity contract changes the payee, or there is a default in payments under the annuity contract, plaintiffs economic interests are more than adequately protected by the provisions of CPLR 0 5 5043 and 5044 (Allison v Erie County Indus. Dev. Agency, 2007 NY Slip Op 27207 [Sup Ct, Erie County]). Therefore, as defendants have shown that the required lump sum payments were made to plaintiff and that an annuity contract was purchased, defendants have established that all of the judgment has been satisfied (Malik v Noe, 54 AD3d 733 [2d Dept 20081). Accordingly, it is hereby ORDERED that defendants order to show cause is granted to the extent that, pursuant to CPLR § 5021 [a] [2], the Clerk of the Court is directed to make an entry of the full satisfaction on the docket of the judgment; and it is further ORDERED that plaintiffs cross-motion is denied as moot; and it is further ORDERED that defendants are to serve a copy of this order, with notice of entry, upon plaintiff within thugr days of entry. Dated: November /I , 2 0 10 New York County F I LE D NEW YORK COUNTY CLERKS OFFICE - Index No. 100207-1998 Page 3 of 3

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