Parties’ stipulation to liability caused interest to run from the subsequent damages verdict.

Defendant stipulated to liability two and one-half years before the trial on damages.  In the stipulation conceding liability, plaintiff withdrew her claim for punitive damages and the parties agreed that the action would be on the issue of damages with recovery to be capped at a certain amount.  The stipulation contained no provision as to prejudgment interest on the verdict.

After the damages trial was held, Supreme Court computed interest from the date of the jury verdict on damages, not from the date of the stipulation, and the Second Department affirmed.

CPLR 5002, which applies to personal-injury actions, states:

Interest shall be recovered upon the total sum awarded, including interest to verdict, report or decision, in any action, from the date the verdict was rendered or the report or decision was made to the date of entry of final judgment. The amount of interest shall be computed by the clerk of the court and included in the judgment.

Emph. supplied.

When the determinations of liability and damages are made together, the computation of prejudgment interest under CPLR 5002 is straightforward. But when the determinations of liability and damages are bifurcated, prejudgment interest under CPLR 5002 runs from the date of the “verdict, report or decision” on liability, rather than from the date of the “verdict, report or decision” on damages.   But a stipulation between the parties does not constitute a “verdict, report or decision” because stipulations are not adjudications made by a third party.  They are voluntary agreements or contracts by which the parties themselves chart their own course.  Here the stipulation addressed not only the issue of liability but also the cause of action for punitive damages, and it imposed a cap on plaintiff’s recovery.

What does constitute a “verdict, report or decision”?  The determination of liability by an adjudicative body, such as a jury, a court, or an arbitrator such as decisions on motions for summary judgment; motions for leave to enter a default judgment and motions to strike a defendant’s answer; decisions on unopposed applications for a directed verdict on the issue of liability; and binding arbitrators’ awards .  When a court has ordered a referee to “hear and report with recommendations,” pre-judgment interest is computed not from the date of the referee’s report, but from the date on which a court has confirmed it and thus made it binding.  An appellate court’s order reversing the denial of a plaintiff’s motion for summary judgment on the issue of liability starts interest running from the date of the appellate court’s decision.

Plaintiff’s argument that the law favors stipulations was unavailing.  Had the Legislature intended CPLR 5002 to include stipulations, it could have included them, as it has in other statutes [citations omitted].

Here the two-and-one-half-year difference between the determinations of liability and damages amounted to prejudgment interest of $90,000, which difference would have been compounded because prejudgment interest is added to the total amount of the judgment, and post-judgment is computed on the total amount of the judgment including prejudgment interest.

Mahoney v. Brocklebank, 2016 NY Slip Op 05630 (2d Dep’t July 27, 2016) http://www.courts.state.ny.us/reporter/3dseries/2016/2016_05630.htm

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