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DAMIANO v. EXIDE CORP.

June 24, 1997

RICHARD DAMIANO, Plaintiff,
v.
EXIDE CORPORATION, Defendant.



The opinion of the court was delivered by: SAND

 June 24, 1997

 HONORABLE LEONARD B. SAND, U.S.D.J.

 The matter before the Court entails conflicting views concerning how N.Y.C.P.L.R. Article 50-B should be applied to determine the sum of money ultimately to be paid to a plaintiff for future damages, an issue which has divided the lower courts and has not yet been definitively resolved by the New York Court of Appeals.

 Plaintiff Richard Damiano ("Damiano") moves pursuant to Federal Rule of Civil Procedure 60(b) and C.P.L.R. § 5044 for an order modifying the August 12, 1996 judgment (the "Judgment") issued in this case. Defendant Exide Corporation ("Exide") moves pursuant to Rule 60(b) for an order requiring Plaintiff to provide a satisfaction of judgment or, alternatively, an order modifying the Judgment with regard to future lost wages. For the reasons set forth below, we agree with Plaintiff that Defendant's payments to date have been less than what is required under C.P.L.R. Article 50-B, and we thus order the Judgment modified to require an additional lump-sum payment representing the amount by which Defendant's payments to date have been deficient. We further order Defendant to provide an annuity which will properly implement the verdict. Defendant's motion is denied in its entirety.

 I.

 BACKGROUND

 Following a March 1996 trial on Damiano's product liability claims, a jury rendered an itemized verdict in favor of Damiano in the total amount of $ 2,970,000--$ 770,000 in past damages and $ 2,200,000 in future damages. *fn1" Judgment was entered on August 12, 1996. In accordance with section 5041 of Article 50-B, the Judgment provided for a lump-sum payment of $ 770,000 for the past damages, and a lump-sum payment covering the first $ 250,000 of the future damages. Also in accordance with section 5041, the remaining future damage amount of $ 1,950,000 (after deduction of the $ 250,000) was reduced to a present value of $ 1,461,241, representing the present value of an annuity contract which would provide for payment of the remaining future damages in periodic installments.

 The motions now before the Court arise from a dispute between the parties as to the periodic payments which Damiano is to receive in satisfaction of the remaining future damages in excess of $ 250,000. Damiano contends that the annuity contract purchased by Exide provides for total payments over time which will be significantly less than the amount which Damiano is entitled to receive under Article 50-B. Exide contends that its payments are in full compliance with Article 50-B, and in addition, Exide seeks a modification of the Judgment to set off benefits received by Damiano from collateral sources. As is more fully set forth below, we rule in favor of Damiano with respect to both issues.

 II.

 DISCUSSION

 A. C.P.L.R. Article 50-B

 Article 50-B governs the entry of judgment upon a verdict in an action to recover damages for personal injury, property damage, or wrongful death. The heart of Article 50-B is section 5041, which provides a step-by-step procedure for calculating the elements of such a judgment. The New York Court of Appeals has summarized section 5041 as follows:

 
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 5041[b]). Future damages, which are awarded by the jury without reduction to present value (CPLR 4111[f]), are bifurcated for purposes of article 50-B. The first $ 250,000 is paid as a lump sum (CPLR 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.

 Rohring v. City of Niagara Falls, 84 N.Y.2d 60, 638 N.E.2d 62, 63, 614 N.Y.S.2d 714 (N.Y. 1994). Though section 5041 can be summarized easily, New York courts have struggled with the details of its application. See Singletary v. Three City Centre, 158 Misc. 2d 841, 601 N.Y.S.2d 649, 650 (Sup. Ct. 1993) (describing Article 50-B as "every Judge's nightmare").

 The initial steps in the application of section 5041 are not disputed by the parties. First, after applying any applicable set-offs or credits, the court shall enter judgment in a lump sum for all past damages. See § 5041 (b). Next, the court shall enter judgment in a lump sum for the first $ 250,000 in future damages. See id. The statute then provides for payment of the plaintiff's attorney's fees--fees related to past damages, and fees related to the first $ 250,000 in future damages, are to be paid in lump sums to the attorney. See § 5041(c).

 The next step is to determine the present value of the remaining future damages in excess of $ 250,000. See § 5041(e). (These remaining future damages in excess of $ 250,000, prior to their reduction to present value, shall be referred to as the "gross future damages"). The court shall enter judgment for the amount of the present value of an annuity contract "that will provide for the payment of the remaining amounts of future damages in periodic installments." Id. Following the reduction of the gross future damages to present value, the court must also determine the attorney's fee related to the gross future damages. Section 5041(c) provides that this attorney's fee shall be payable in a lump sum (just as attorney's fees related to past damages and the first $ 250,000 in future damages are payable in lump sums). Section 5041(c) provides that such lump sum shall be "based on the present value of the annuity contract purchased to provide payment of such future periodically paid damages pursuant to subdivision (e) of this section." The New York Court of Appeals has concluded that the proper ...


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