Court Opinion

ID: 5489141
Source: CourtListenerOpinion
Date Created: 2022-01-10 02:22:47.580503+00
Date Added: 2024-06-11T08:33:44.393018
License: Public Domain

Abdus-Salaam, J.
(dissenting in part). The majority concludes that, because the withdrawal payment owed by plaintiff Village of Herkimer under the Abandonment Plan was calculated based on an estimate of plaintiff’s share of workers’ compensation claims to be paid in the future, the County’s recovery of damages for the loss of the withdrawal payment constituted compensation for future losses, which should have been discounted to present value (see majority op at 818-820). In my view, however, the withdrawal payment was a lump sum contractual payment like any other, albeit one calculated via an actuarial estimate of the cost of outstanding workers’ compensation claims, and the County suffered an immediate present loss when plaintiff failed to make the payment on the due date. Accordingly, I would hold that the trial court properly declined to discount the damages award to present value because it remedied only a present loss, and I dissent from the majority’s conclusion to the contrary.
The law is not in dispute here. In a breach of contract action, the non-breaching party is generally entitled to compensatory damages to place it in the same position it would have occupied had the breaching party satisfied its obligations under the *823contract (see generally Kenford Co. v County of Erie, 73 NY2d 312, 319 [1989]; 36 NY Jur 2d, Damages § 19). Where the contract requires the breaching party to continue to make payments or otherwise perform on the contract at various future times subsequent to the breach, the non-breaching party must be awarded damages that will compensate that party only for its losses as they occur on those future dates, and thus any damages awarded for those future losses must be discounted to present value to prevent the non-breaching party from obtaining the windfall of an award that will increase over time to exceed the amount necessary to cover those future losses at the time of their occurrence (see Randall-Smith v 43rd St. Estates Corp., 17 NY2d 99, 103 [1966]; 36 NY Jur 2d, Damages § 38). Logically, however, where a contract requires a party to make a specific payment on a set date in the present and not to perform any future duty thereafter, that party’s breach of that present contractual obligation causes a present loss to the non-breaching party, and therefore the non-breaching party is entitled to undiscounted damages that are needed to cover a loss which it immediately suffers in full.
Here, plaintiffs breach of the contract, i.e., the Abandonment Plan, caused a present loss of the withdrawal payment to the County, and therefore the jury’s damages award compensated the County for that present loss and did not have to be discounted to present value. Specifically, plaintiff sought to withdraw from the Abandonment Plan, which required plaintiff to pay a withdrawal payment on the date of its planned withdrawal, December 31, 2005. Had plaintiff performed under the contract by giving the County the undiscounted $1.6 million withdrawal payment on December 31, 2005, plaintiff would have completely fulfilled its end of the bargain, and plaintiff would not have owed, and the County would not have gained or lost from plaintiff, anything at any future time. Indeed, several other municipalities withdrew from the Abandonment Plan in exactly this manner, paying undiscounted withdrawal payments on their scheduled withdrawal dates and causing no further gain or loss to the County thereafter. Of course, since the County would have gained a $1.6 million withdrawal payment from plaintiff on the December 2005 due date if plaintiff had performed its contractual duty, it follows that the County lost that same amount immediately on that date when plaintiff withdrew from the Abandonment Plan without making the payment in violation of the contract. Therefore, the jury rightly *824awarded the undiscounted $1.6 million amount of the withdrawal payment to the County in order to place it in the same position it would have occupied had plaintiff timely made that payment.
The contractual method of calculating the withdrawal payment did not alter the nature of that payment or the date on which the County lost it. In that regard, the Abandonment Plan provided that a withdrawing municipality’s withdrawal payment was equal to the municipality’s proportionate share of the Plan’s “outstanding liabilities at the date of withdrawal.” The County interpreted that contractual phrase to mean the cost of covering workers’ compensation claims outstanding under the Plan at the time of withdrawal, and the County calculated that amount by conducting a common actuarial estimate of that cost called a reserve analysis. The County further concluded that the “outstanding liabilities at the date of withdrawal” did not have to be discounted to present value under the terms of the contract and therefore demanded a proportionate share of the undiscounted liabilities as a withdrawal payment from each withdrawing municipality. Although reasonable minds might disagree with the County’s interpretation of the contractual terms defining the withdrawal payment — indeed, plaintiff unsuccessfully disputed the point in its pleadings — that issue is not now before us, and consequently we must assume that the plain language of the Abandonment Plan required any withdrawing municipality to pay an undiscounted lump sum on the date of withdrawal. Thus, when plaintiff failed to pay the withdrawal payment and breached the contract, plaintiff inflicted the present loss of the undiscounted lump sum withdrawal payment on the County, and the jury’s award compensating for that present loss need not have been discounted to present value.
Although the Abandonment Plan, as thus interpreted, allowed for the possibility that the County might receive more or less than it actually needed to cover outstanding workers’ compensation claims that would come due in the future, the possible variance between the eventual cost of the workers’ compensation claims and the agreed-upon withdrawal payment was simply a fair and bargained-for allocation of contractual risk. In particular, the parties bargained for the payment of a flat withdrawal fee that they believed would be sufficient to cover the outstanding workers’ compensation claims. In doing so, plaintiff accepted the risk that it would overpay in the event *825the County overestimated those future liabilities, just as the County undertook the equal risk that the withdrawal payment might not cover the future liabilities if they proved to be greater than originally estimated. The parties accepted the perils of this bargain, and plaintiff was not entitled to a discount on damages just because the County might never suffer the realization of the risk.
Plaintiffs and the majority’s reliance (see majority op at 818, 819) on Toledo v Iglesia Ni Christo (18 NY3d 363 [2012]), Milhrandt v Green Refractories Co. (79 NY2d 26 [1992]), and similar tort cases is misplaced. For example, in Toledo, the decedent and his estate suffered the immediate loss of decedent’s pain and suffering in the accident that caused his death, and the estate suffered future losses such as decedent’s lost earnings and parental support (see Toledo, 18 NY3d at 365-366). Accordingly, the jury apportioned its award among present and future damages, and the jury then discounted the future damages award to present value (see id.). We appropriately upheld that discounting to present value and also found that, under statutes relevant only to the wrongful death context, pre-verdict interest was properly calculated from the date of the death (see id. at 367-369). Similarly, in Milhrandt, another wrongful death case, we concluded that “no preverdict interest should be added to an award for future damages when the award is only discounted back to the date of the verdict” (Milhrandt, 79 NY2d at 36-37). Thus, those cases stand for the general proposition that, where a tort claimant will suffer continuing future losses as the result of the injury inflicted by the tortfeasor, the claimant’s future damages must be discounted to present value to avoid a windfall recovery. By contrast, here, the County’s loss of the withdrawal payment occurred on the date of the breach and not on any future date, and therefore the damages for that present loss did not have to be discounted.
Finally, because the trial court and the jury properly refused to discount the award to present value, the court fairly applied interest to the full amount of the award, which, again, consisted entirely of damages from a present loss on which interest was already owed. Moreover, under CPLR 5001 (b), the court correctly assessed interest starting on December 31, 2005. As correctly stated by the majority (see majority op at 821), on that date, plaintiff refused to honor its contractual obligation to make the withdrawal payment and wrongfully withheld that *826payment, and therefore “there is no reason to extend the accrual date simply because the 2005 Reserve Analysis was not released until June 2006” (id.).
Accordingly, I would affirm the order of the Appellate Division.
Judges Graffeo, Read, Smith and Pigott concur with Chief Judge Lippman; Judge Abdus-Salaam dissents in part in an opinion in which Judge Rivera concurs.
Order modified, without costs, by remitting to Supreme Court, Oneida County, for further proceedings in accordance with the opinion herein and, as so modified, affirmed.