Key Takeaway
Court ruling clarifies that stipulating to liability doesn't trigger prejudgment interest accrual, potentially costing plaintiffs significant money in lengthy cases.
Understanding Prejudgment Interest When Liability is Stipulated
In personal injury litigation, defendants sometimes agree to stipulate to liability early in the case, essentially admitting fault while reserving the right to contest damages. While this might seem advantageous to plaintiffs by streamlining the legal process, a recent New York appellate court decision highlights a critical financial consideration that attorneys must understand.
The Second Department’s ruling in Mahoney v Brockbank addresses a fundamental question: does a stipulation to liability trigger the accrual of prejudgment interest under New York law? The answer has significant implications for case strategy, particularly in cases involving substantial damages and lengthy litigation timelines. Understanding how prejudgment interest calculations work becomes crucial when evaluating whether to accept liability stipulations.
Jason Tenenbaum’s Analysis:
Mahoney v Brockbank, 2016 NY Slip Op 05630 (2d Dept. 2016)
“In short, we conclude that a stipulation as to liability does not trigger the accrual of prejudgment interest under CPLR 5002. Moreover, because the parties did not provide for prejudgment interest in their stipulation, the Supreme Court properly determined that prejudgment interest was to be computed from the date of the jury verdict on the issue of damages.”
When I read this case, all I thought is a rear-end collision with serious injuries and a defendant stipulating to liability; the case takes 6 years to get to trial; and now, the plaintiff lost 54% interest on a case worth between $400,000-$800,000. Is that stipulating away to malpractice?
Key Takeaway
This ruling demonstrates that accepting a liability stipulation without addressing prejudgment interest can be financially devastating for plaintiffs. In cases with substantial damages and lengthy trial delays, the lost interest can represent hundreds of thousands of dollars—a consideration that must factor into any strategic decision about stipulations and settlement negotiations.
