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Is post-judgment interest in a no-fault case 24% per annum or 9% per annum?September 8, 2017

B.Z. Chiropractic, P.C. v Allstate Ins. Co., 2017 NY Slip Op 51091(U)(App. Term 2d Dept. 2017)

“A money judgment bears interest from the date of its entry (see CPLR 5003), and, generally, the interest accrues until the judgment is paid (see Matter of Matra Bldg. Corp. v [*2]Kucker, 19 AD3d 496 [2005]; Martin v Tafflock, 166 AD2d 635 [1990]). “Postjudgment interest is awarded as a penalty for the delayed payment of a judgment” (ERHAL Holding Corp. v Rusin, 252 AD2d 473, 474 [1998]). Contrary to defendant’s assertion, there is no evidence of actions or conduct by plaintiff which prevented defendant from paying the judgment (see ERHAL Holding Corp., 252 AD2d at 474; cf. Danielowich v PBL Dev., 292 AD2d 414 [2002]). Since plaintiff, as the prevailing party, was not required to make a demand for the money (see e.g. Feldman v Brodsky, 12 AD2d 347, 351 [1961]; Weinstein-Korn-Miller, NY Civ Prac ¶ 5003.01 [2d ed 2009]) and did not cause the delay in paying the judgment, the Civil Court erred in tolling the accrual of interest on the judgment. However, defendant demonstrated, through the submission of checks to plaintiff, which plaintiff had endorsed “without prejudice,” that defendant had partially paid the judgment and is, therefore, entitled to the entry of a partial satisfaction of judgment in the amount of $22,999.70 (see CPLR 5021 [a]). We note that, contrary to plaintiff’s position, postjudgment interest should be calculated pursuant to CPLR 5004 and not at the two percent per month rate provided for in 11 NYCRR 65-3.9 (a)

This case appears to conflict with:  Corona Hgts. Med., P.C. v Liberty Mut. Ins. Co., 32 Misc. 3d 8, 10 (App. Term 2d Dept. 2011)(“It is noted that plaintiff is not entitled to interest pursuant to the Civil Practice Law and Rules, since Insurance Law § 5106 (a) and the regulations promulgated thereunder supersede the provisions for interest contained in the CPLR”

Also, this case clashed with an older Second Department case (FYI: someone brought this one to my attention):  Matter of McMillan v. UnionAmerican Reinsurance Company, 70 AD2d 659 (2d Dept. 1979)(“Furthermore, the judgment properly provided that interest on the award continue to accrue at the rate of 2% per month “pursuant to statute”, rather than the legal rate of 6% Per annum specified in CPLR 5004.  CPLR 5004 expressly provides for the application of interest rates other than the legal rate of 6% per annum where otherwise provided by statute.  In the instance case, the interest rate of 2% per month applied by Special Term is prescribed by subdivision 1 of section 675 of the Insurance Law (see, also, 11 NYCRR 65.6[g][1]))”

I can understand the frustration that the court had about allowing old judgments to collect a large interest percentage (then compounded).  Clearly, the judgment clerk’s office should not be giving a better rate of return than what is obtained through the best investor out there.  Yet, the statute seems pretty clear and the Appellate Division, I think, hit this one on the head 38 years ago.

7 Responses

  1. Nathan says:

    The only distinctions I could possibly see is that in those other cases, they do not explicitly appear to be addressing interest payments after entry of judgment. Maybe the implication of post-judgment interest under CPLR 5003 being superseded is dicta.

    • jtlawadmin says:

      I have a really good suspicion that the entities in charge of administering our state’s no-fault system probably do not agree with this decision. I hate to see people making 24% (sometimes compounded) through sitting on judgments. It is antithetical to the no-fault system. Yet, the no-fault interest rate is its own animal, regardless of whether a judgment is entered or not entered. I think the Appellate Term or Appellate Division will probably reverse this decision. In reality, the interest rate for no-fault and NY judgments should be adjusted to the market rate interest rate, similar to New Jersey and Federal non-diversity practice.

  2. Bruno Tucker says:

    OK I am no Math Wiz, hell I have trouble with affidavits, but does this really matter. (OK the crazy facts of this case aside). No-Fault interest today is not compounded so if a judgment continues to accrue interest it is only on the principal. However the judgment interest accrues on the entire judgment, the interest, attorney fees, the costs. I would guess the difference ends up being small. I disagree with you on the issue of adjusting the interest rate on judgments. THe high rate is there to encourage people to actually pay the judgment. The debtor Is in full control of the amount of interest they will be liable for.

  3. Chris McCollum says:

    The judgment is from 2001, so it’s compounded. It’s a huge amount.

  4. nycoolbreez says:

    wait… you mean the insurance carrier did not know they lost, really?

  5. Alan Queen says:

    Jason, I tried responding to the blog entry on B.Z. Chiro v. Allstate but was unsuccessful. I thought I’d try this. B.Z. gets more bizarre with the decision this week of a motion for clarification by the Plaintiff. The Appellate Term ruled that they intended to say 9% but that their direction is advisory and not subject to appeal. I have a different interpretation. This is the sentence: “We note that, contrary to plaintiffs position, postjudgment interest should be calculated pursuant to CPLR 5004 and not at the two percent per month rate provided for in 11 NYCRR 65-3.9(a). Absent from that sentence is any reference to Ins Law 5106. Is there any reason we don’t read the decision exactly as it says: “if you calculate interest pursuant to the regulation, you get 9% post judgment interest. Every case that seems to allow post judgment interest at the no fault rate cites to the statute (either 657 o 5106). There are not cases that allow post disposition interest (summary judgment; inquest; judgment) that refer to the regulation. They all refer to Ins Law 5016 and the regulations promulated thereunder. Perhaps the plaintiff in B,Z, did not calculate interest properly and needs to recalculate under the statute. I partly base my view on the standard that a regulation that is contrary to a statute is to be given no weigth. The reg cited in B.Z. is contrary to the interest rate in CPLR 5004; the interested rate in Ins. Law 5106 is supported by CPLR 5004. Plus, one final note, the issue of collection of the judgment was not before either the lower or Appellate term in BZ. the Plaintiff had not started any collection proceedings other than to retrain Allstate’s Bank account. Interestingly, notwithstanding the reference to 9%, the Appellate Term reinstated the restraints that the Civil Court had lifted. The Appellate Term also modified to allow only entry of a partial satisfaction, through it is easily apparent that the amount paid by Allstate exceeded the judgment and 9%

    • jtlawadmin says:

      Alan, I will call you next week. I did get your message. I think Amos needs to go to the Appellate Division on this case. As much as I get sick to think that 2% compounded interest can accrue when a case sits in a judgment clerk’s office growing mold, that is the law. My sense is that the Second Department will grant leave and reverse. Life is never easy my friend.

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