| Leipold v Arnot Ogden Med. Ctr. |
| 2007 NY Slip Op 10448 [46 AD3d 1299] |
| December 27, 2007 |
| Appellate Division, Third Department |
| Kathryn Sarah Leipold, an Infant, by Kerry Leipold et al., HerParents and Guardians, et al., Appellants, v Arnot Ogden Medical Center et al.,Respondents. |
—[*1] Ricotta & Naegely, Buffalo (Kevin A. Ricotta of counsel), for Arnot-Ogden Medical Center,respondent. Brown & Tarantino, L.L.C., Buffalo (Ann M. Campbell of counsel), for Southern TierPediatrics and another, respondents.
Rose, J. Appeal from an order of the Supreme Court (Mulvey, J.), entered March 2, 2007 inChemung County, which denied plaintiffs' application for costs, disbursements and interest.
Plaintiffs commenced this action seeking to recover damages for severe brain injuriessustained by infant plaintiff Kathryn Sarah Leipold in 1996. The parties ultimately agreed tosettle the action and placed a stipulation on the record in Supreme Court on June 14, 2006. Thestipulation of settlement specified that the present value of the total consideration for release ofplaintiffs' claims was $5,380,000, with the majority of those funds to be used to purchaseannuities providing the infant plaintiff with a structured settlement of $100,000 per year plus ayearly cost of living increase. The remaining funds were to be paid as "up-front" moneys to theinfant plaintiff's supplemental needs trust, her parents and counsel. The stipulation alsocontemplated that there would be a subsequent written agreement, referred to as the global [*2]agreement, which would set forth the details of the settlement andbe consistent with the stipulation. Supreme Court approved the stipulation of settlement and,pursuant to its terms, allocated defendants' respective shares of the total moneys to be paid in anorder dated August 14, 2006. The global agreement was executed by plaintiffs on October 10,2006. On October 24, 2006, their counsel sent a copy of the global agreement, a release and astipulation of discontinuance to counsel for each defendant. Counsel's cover letters specified theamount of up-front moneys to be paid, requested that checks be made payable to plaintiffs'counsel and demanded payment within the 21-day period specified in CPLR 5003-a. Whendefendants failed to make timely payment, plaintiffs applied for an award of interest, costs anddisbursements pursuant to CPLR 5003-a (e). Finding that the global agreement had supersededthe in-court stipulation and included a waiver of costs, Supreme Court denied the application.Plaintiffs appeal.
Upon our review of the record, we find merit in plaintiffs' arguments that they tendered thedocuments necessary to begin the running of the 21-day time period for payment provided inCPLR 5003-a (a). By its express terms, the global agreement was not effective until executed byall parties (see Dratfield v Gibson Greetings, 269 AD2d 294, 295 [2000]), and there is nodispute that it was not fully executed when plaintiffs demanded payment. Thus, it was noteffective to supersede, or constitute a novation of, the parties' in-court stipulation of settlement(see e.g. Callanan Indus. v Micheli Contr. Corp., 124 AD2d 960, 961 [1986]). For thesame reason, Supreme Court erred in finding that paragraph G of the global agreementconstituted a waiver of the relief afforded by CPLR 5003-a.
CPLR 5003-a (a) provides: "When an action to recover damages has been settled, anysettling defendant . . . shall pay all sums due to any settling plaintiff withintwenty-one days of tender, by the settling plaintiff to the settling defendant, of a duly executedrelease and a stipulation discontinuing action executed on behalf of the settling plaintiff."Although "tender" is defined as "to personally deliver or to mail, by registered or certified mail"(CPLR 5003-a [g]), we agree with plaintiffs that where, as here, mailing is utilized and the dateof receipt is known, the 21 days should be measured from receipt (see Cunha v Shapiro, 42 AD3d 95,101 n 3 [2007], lv dismissed 9 NY3d 885 [2007]; Rodgers v State of New York, 14 Misc 3d 1215[A], 2006 NY SlipOp 52533[U] [2006]; Johnson vKaravassilis, 2 Misc 3d 341, 342 [2003]).
Here, the record confirms that plaintiffs mailed duly executed releases, separate from those inthe written settlement agreement, to defendants Arnot Ogden Medical Center (hereinafterAOMC), Southern Tier Pediatrics (hereinafter STP) and Ralph Moore on October 24, 2006.While AOMC argues that the release was invalid because it did not include the infant plaintiff'strust as a payee and erroneously recited that AOMC's share of the settlement had been paid incash to plaintiffs, it does not dispute that both the total amount of AOMC's liability and theamount of the up-front moneys to be paid were accurately stated in the release and counsel'scover letter. Nor is the release invalid merely because plaintiffs have raised the possibility ofadverse tax consequences to themselves by directing payment to someone other than a trust.Furthermore, AOMC does not deny that the release and stipulation of discontinuance werereceived on October 25, 2006. Measured from that date, the 21-day period provided by CPLR5003-a had clearly expired before AOMC made payment of the up-front moneys on November21, 2006.
Similarly, as to STP and Moore, the record contains a separate release that recites the correctamount to be paid, is fully executed by plaintiffs and was received by those defendants on [*3]October 25, 2006. Again measuring the 21-day period from the dateof receipt, their payment tendered on November 17, 2006 was untimely. We are also unpersuadedby their contention that the five-day extension provided by CPLR 2103 (b) (2) should be appliedto afford them 26 days from the date of mailing. CPLR 2103 (b) (2) provides that "where aperiod of time prescribed by law is measured from the service of a paper and service is bymail, five days shall be added to the prescribed period" (emphasis added). As noted above, CPLR5003-a (a) provides that the 21-day period for payment begins to run upon tender (compare Coty v County of Clinton, 42AD3d 612, 613 [2007]). Inasmuch as tender expressly includes mailing, the time forpayment would not be extended by CPLR 2103 (b) (2). Since there is no dispute as to when STPand Moore received the demand for payment, the 21-day period provided by CPLR 5003-aclearly expired before they tendered payment.
Inasmuch as Supreme Court should have granted plaintiffs a judgment pursuant to CPLR5003-a (e), the matter must be remitted for determination of the amounts of interest, statutorycosts and disbursements (see Cunha v Shapiro, 42 AD3d at 101; Hadier v RemingtonPlace Assoc., 302 AD2d 428 [2003]). Interest should be calculated for the period betweenthe date of tender and the dates on which defendants made payment (see CPLR 5003-a[e]; O'Meara v A & P, Inc., 169 Misc 2d 697, 699 [1996]). Contrary to plaintiffs'contention, we also find that interest should be calculated upon the amount of up-front moneysowed at the time of tender rather than upon each defendant's share of the full settlement. As to alldefendants, it appears that the prescribed annuities had been fully funded before plaintiffsdemanded payment of the remaining up-front amounts. While the releases do state the amountsof the full shares as well as the lesser amounts still owing, there can be no interest awarded onamounts that had previously been paid to fund future payments because CPLR 5003-a isinapplicable to structured settlements (see CPLR 5003-a [f]; compare Mann v AllWaste Sys., 293 AD2d 656, 657 [2002], lv denied 98 NY2d 610 [2002]).
Cardona, P.J., Mugglin and Kane, JJ., concur. Ordered that the order is reversed, on the law,with costs, plaintiffs' application granted, and matter remitted to the Supreme Court for furtherproceedings not inconsistent with this Court's decision.