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LIRIANO v. HOBART CORP.

January 31, 1997

LUIS LIRIANO, Plaintiff, against HOBART CORPORATION, Defendant. HOBART CORPORATION, Third-Party Plaintiff, - against - SUPER ASSOCIATED, Third-party Defendant.


The opinion of the court was delivered by: SCHEINDLIN

 SHIRA A. SCHEINDLIN, U.S.D.J.:

 Following a jury award to plaintiff in the amount of $ 1,352,500, the parties were unable to agree on the discount rates to be applied pursuant to Article 50-B of the New York Civil Practice Law and Rules. See N.Y.C.P.L.R. § 5041 (McKinney 1992) ("Article 50-B"). For the reasons set forth below, I find that a discount rate of 5.82% should be applied to the lost wages award, 6.2% to the pain and suffering award, and 6.48% to the medical expenses award.

 Factual Background

 This lawsuit stems from on-the-job injuries sustained by Luis Liriano ("Liriano") when his hand was caught in a commercial meat grinder in 1993. As a result of this accident, Liriano suffered an amputation of his dominant right hand and part of his forearm. At the time Liriano suffered these injuries, he was seventeen years old and employed by Super Associated ("Super"), a grocery store in the Bronx.

 Liriano sued Hobart in 1994, alleging that Hobart was negligent for failing to warn users of the dangers of operating its machine without a guard. Hobart denied any culpability, insisting that no warning was required because removal of the guard was not foreseeable and because the dangers of operating the machine without a guard were obvious. Hobart also filed a third-party complaint against Super, contending that if Hobart was liable, then Super's removal of the guard constituted an intervening event which caused the accident.

 A jury trial was held from January 29 to February 8, 1996. The jury found for Liriano and awarded him $ 650,000. Pursuant to this Court's Opinion and Order of July 23, 1996, *fn1" a retrial was held to determine the existence and extent of Liriano's comparative negligence. On September 9, 1996, the retrial jury found in a special verdict that plaintiff was 33.3% comparatively negligent, and awarded damages in the total amount of $ 1,352,500. *fn2"

 A hearing was held on December 23, 1996 in which the parties provided expert testimony regarding the applicable discount rates. The parties also submitted post-hearing materials and arguments regarding the discount rate issue.

 Applicable Legal Standard

 Article 50-B creates a "structured judgment" for personal injury awards whereby future damages above $ 250,000 are paid out in periodic installments rather than in one lump sum. The complex statutory guidelines of Article 50-B were thoroughly reviewed in Alvarez-Icaza v. Cartier Inc., 920 F. Supp. 449 (S.D.N.Y. 1996). Under Article 50-B, Liriano's judgment must be awarded in the following way:

 (1) First, all attorney's fees and litigation expenses (including those related to future damages) are paid in a lump sum. N.Y.C.P.L.R. § 5041(c).

 (2) Next, the entire amount of any past damages award, and the first $ 250,000 of any future damages award is also paid as a lump sum. Id. § 5041(b).

 (3) The remaining future damages payments (i.e., total future damages award less the $ 250,000 lump sum payment and less attorney's fees and expenses) (the "Remainder") are reduced to the present value of an annuity contract that will provide for payment of the remaining amounts of future damages in periodic installments, but for no more than 10 years for a future pain and suffering award. Id. § 5041(e). The first year's annual payment is the Remainder divided by the number of years over which the payments will be made. Each succeeding year's payment is increased by 4% per year. Id.

 (4) The present value of the annuity contract is to be determined "in accordance with generally accepted actuarial practices by applying the discount rate in effect at the time of the ...


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