Opinion ID: 2074384
Heading Depth: 1
Heading Rank: 4

Heading: Future v Present Value

Text: Against this mind-numbing backdrop we turn to the first question presented: should the annual payments, which are the basis of the annuity contract, be based on the future, or present, value of the remaining future damages award? [3] Plainly, the difference can be considerable. Defendant urges that because CPLR 5031 and 5041 were tort reform measures intended, among other things, to reduce malpractice insurance premiums, the Legislature required payment of the discounted, present value of future damage awards over time. The future awards, in defendant's view, should therefore have been reduced to present value and the present value paid in installments ( see, Silvestri v Smallberg, 165 Misc 2d 827, affd on other grounds 224 AD2d 172, affd 88 NY2d 1004, supra; Alvarez-Icaza v Cartier Inc., 920 F Supp 449). [4] The language, history and context of the structured judgment statutes, however, indicate otherwise. Because our purpose here, as in all statutory interpretation cases, is to implement the will of the Legislature, we turn first to the words of the Legislature. Despite other complexities, the statutory language supports plaintiffs' position over defendant's. CPLR 5031 and 5041 consistently refer to payment of future damages in periodic installments, and compensation for the  full amount of the remaining future damages  (emphasis added). In Schultz v Harrison Radiator Div. Gen. Motors Corp. (supra, 90 NY2d, at 316-317), this Court construed the virtually identical language of CPLR 4111. [5] CPLR 4111, which was necessary to implement the structured judgment statutes ( see, Mem of State Executive Dept, 1985 McKinney's Session Laws of NY, at 3019), requires that in actions in which article fifty-A or fifty-B of this chapter applies, in computing said damages, the jury shall be instructed to award the full amount of future damages, as calculated, without reduction to present value (CPLR 4111 [d], [f] [emphasis added]). As we explained in Schultz, inclusion of an inflation adjustment in future damage awards does not provide additional compensation for a plaintiff above and beyond the damages already awarded; rather, it ensures that the passage of time will not devalue the award because of a general rise in prices for goods and services, including such items as medical care ( Schultz v Harrison Radiator Div. Gen. Motors Corp., supra, 90 NY2d, at 319; see also, id., at 317 [evidence of inflation is necessary to ensure plaintiff receives the full amount of future damages]). In holding that the trial court properly permitted expert testimony as to inflation despite inclusion of the 4% additur in calculating the structured payments, we explained that absent adjustment for inflation plaintiffs might receive less than the full recovery ( id., at 319). Reduction of the jury's future damages award to present value, and then payment of that already discounted award in future installments over timedefendant's proposaldoes not assure recovery of the full amount of future damages. Plaintiffs would receive reduced-to-present-value awards paid in less valuable, future dollars. [6] Moreover, use of the present value of future damages as the basis for the annual payments would be at odds with Schultz, as it would for all intents and purposes extract the jury's inflation adjustment from the plaintiff's award. Nothing in the statutes' language supports this unintended result ( see also, Fisk v City of New York, 256 AD2d 167, lv denied 93 NY2d 845; 1A NY P.JI3d 1148 [1999]; 10 Weinstein-Korn-Miller, NY Civ Prac ¶ 5031.03). Indeed, using the present value of future damages as the basis for the annual payments would underminenot guaranteethe legislative objective of compensation for future health care costs, lost earnings and other needs ( see, Governor's Program Mem, 1985 NY Legis Ann, at 132). The context of CPLR 5031 (e) and 5041 (e) further confirms that the future, rather than present, value of future damages is the proper basis for calculating the annual payments. In addition to CPLR 4111, which prescribes that the jury be instructed to award the full amount of future damages    without reduction to present value, CPLR 5034 and 5044 direct that upon granting a judgment creditor's petition for lump-sum payment of the judgment after there has been a default, the court shall total the remaining periodic payments due and owing    and shall not convert these amounts to their present value (emphasis added). Similarly, CPLR 5035 (b) and 5045 (b), which authorize conversion of periodic installments allocable to loss of future earnings to a lump-sum payment upon the death of the judgment creditor, require that the court calculate the present value of such payments. In directing that the judgment or remaining annuity contract payments not be reduced or converted to present value or explicitly requiring calculation of the present value of remaining payments, these related CPLR provisions demonstrate that the basis for payment of the judgment is the future, not the present, value of the future damages awards. Thus, we conclude that the proper basis for determining the annual payments under CPLR articles 50-A and 50-B is the future, not present, value of the future damages award.