Underwood v. B-E Holdings, Inc.
| Decision Date | 06 May 2003 |
| Docket Number | No. 96-CV-85S.,96-CV-85S. |
| Citation | 269 F.Supp.2d 125 |
| Parties | Howard H. UNDERWOOD, Jr. and Amy Underwood Plaintiffs, v. B-E HOLDINGS, INC. and BUCRUS-ERIE COMPANY Defendants/Third Party Plaintiffs, v. <I>IROQUOIS ROCK PRODUCTS, INC.</I> Third Party Defendant. |
| Court | U.S. District Court — Western District of New York |
Paul Williams Beltz, Paul William Beltz, P.C., Buffalo, NY, for Plaintiffs.
Dennis R. McCoy, Hiscock Barclay Saperston & Day, Buffalo, NY, for Defendants.
Dennis P. Glascott, Hurwitz & Fine, P.C., Buffalo, NY, for Third Party Defendant.
DECISION & ORDER
The motions currently before this Court involve the application of Article 50-B, New York's structured judgment statute. This task is always a challenging endeavor. As the current Chief Judge of New York has noted, applying Article 50-B is "every Judge's nightmare." In the instant case, the analysis is further complicated by a potential conflict between the mandates of Article 50-B and the Federal Rules of Civil Procedure with respect to the entry of a judgment, as well as a dispute between the parties regarding whether post-trial discovery is appropriate.
The facts underlying this personal injury action are set forth in this Court's Decision and Order denying summary judgment (Docket No. 69). Briefly, on March 17, 1994, Plaintiff Howard Underwood, Jr. was working on a construction site when the boom of a crane fell on him. The crane was manufactured by Defendant Bucyrus Erie Company. (Defendant "Bucyrus"). Howard Underwood and his wife, Plaintiff Amy Underwood, commenced the instant action, alleging that Bucyrus was liable for their injuries because the boom's design was defective. Bucyrus impleaded Howard Underwood's employer, Third Party Defendant Iroquois Rock, Inc. (Defendant "Iroquois"), claiming that Iroquois was ultimately responsible for the accident because it failed to follow proper safety protocol and inadequately trained Howard Underwood.
On July 19, 2002, after a six-week trial held before this Court, a jury awarded Plaintiffs $7,190,712 (Docket No. 208). The following was awarded to Plaintiff Howard Underwood for past damages: medical expenses $120,175; loss of earnings $418,504; pain and suffering $1,000,000. For future damages, the jury award was as follows: medical expenses $1,654,736 over a period of thirty years; loss of earnings $962,578 over a period of fourteen years; pain and suffering $2,000,000 over a period of thirty years. Plaintiff Amy Underwood was awarded past damages of $199,240 and future damages of $835,497 over a period of thirty years.
On August 6, 2002, the Clerk of the Court entered a judgment equal to the amount of the jury's verdict. (Docket No. 221). On August 19, 2002, Defendant Iroquois filed a Motion to Alter or Amend the Judgment. Defendant Bucyrus followed suit on August 20, 2002, moving to Strike, Amend, or Stay Enforcement of the Judgment.
At the request of counsel, this Court delayed consideration of these motions for several months as the parties attempted to resolve the outstanding issues through mediation. After the parties indicated that they were unable to reach a settlement, this Court heard oral argument on January 8, 2003, and reserved decision at that time.
During the mid-1980s, the New York State Legislature responded to a perceived liability insurance crisis by enacting two structured judgment provisions, Articles 50-A and 50-B. See Alisandrelli v. Kenwood, 724 F.Supp. 235, 238-39 (S.D.N.Y.1989). Article 50-B, which applies in the present case, provides a formula for structuring judgments in personal injury, wrongful death, and property damage actions in which the plaintiff is awarded more than $250,000 in future damages. N.Y.C.P.L.R. § 5041. The provisions of Article 50-B require that judgments be structured so that the plaintiff receives "periodic payments of future awards as opposed to the immediate lump-sum payment of a discounted award." Bryant v. New York City Health and Hosp. Corp., 93 N.Y.2d 592, 695 N.Y.S.2d 39, 716 N.E.2d 1084, 1087 (1999).
In an opinion written by Chief Judge Judith S. Kaye, the Court of Appeals of New York noted that "[t]he structured judgment provisions have deservedly been labeled `circuitous,' `vexing,' as `every Judge's nightmare,' and `[a]t best ... ambiguous [which] can lead to inexplicable results.'" Id. at 1088 (citations omitted). The formula specified by Article 50-B has been summarized as follows:
Awards for past damages and attorneys' fees, as well as the first $250,000 of awards for future damages, are immediately payable in a lump sum. Defendant is then required to purchase an annuity contract that will "provide for the payment of the annual payments of such remaining future damages." Further, the "annual payment for the first year shall be calculated by dividing the remaining amount of future damages by the number of years over which such payments shall be made and the payment due in each succeeding year shall be computed by adding four percent to the previous year's payment." The court, additionally, must "enter a judgment for the amount of the present value" of the annuity contract "that will provide for the payment of the remaining amounts of future damages in periodic installments." The present value of the annuity contract "shall be determined in accordance with generally accepted actuarial practices by applying the discount rate in effect at the time of the award to the full amount of the remaining future damages, as calculated pursuant to this subdivision."
Id. (citations omitted).
Under the Erie doctrine, a federal court sitting in a diversity jurisdiction case must apply the substantive law of the state in which the court is located. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). In the present action, the parties agree that New York's Article 50-B is substantive and must be applied to the jury's verdict. This is consistent with the case law in this Circuit. See Alisandrelli 724 F.Supp. at 240-42 (); see also Gravatt v. City of New York, 54 F.Supp.2d 233, 233-35 (S.D.N.Y.1999) (following Alisandrelli). However, there is a serious dispute between the parties as to when a federal court should apply the 50-B formula. As far as this Court can determine, this question has not been explicitly addressed in this Circuit.
Defendants argue that the 50-B formula must be applied to the jury's verdict before a judgment may be entered. As such, they contend that the Clerk of the Court should not have entered a judgment in this case because the 50-B formula has not yet been applied. Although Plaintiffs admit that a New York state court would have applied the 50-B formula before entering a judgment in this case, they urge this Court to employ a different procedure. Plaintiffs suggest that a federal court sitting in diversity jurisdiction should first enter a judgment in the amount of the jury's verdict, then apply the 50-B formula, and then finally amend the judgment to reflect the application of 50-B. In support of this argument, Plaintiffs contend that (1) the entry of a judgment is a procedural matter and is thus governed by the Federal Rules of Civil Procedure rather than state law and (2) applying the 50-B formula before entering a judgment frustrates the specific time limits for post-trial motions set forth in the Federal Rules.
This Court finds Plaintiffs' arguments unavailing. As discussed supra, it is undisputed that Article 50-B is substantive not procedural. The plain language of Article 50-B indicates that its statutory formula must be applied to a jury's verdict before a judgment is entered. In fact, Article 50-B begins with the phrase: "[i]n order to determine what judgment is to be entered on a verdict...." N.Y.C.P.L.R. § 5041. The legislature clearly intended courts to delay entry of a judgment until the 50-B formula has been applied to the jury's verdict. In fact, as mentioned above, Plaintiffs admit that had this case been tried before a New York court, the judgment would not have been entered until it had been structured according to Article 50-B. Therefore, under the Erie doctrine, this Court finds that the state law requirement that Article 50-B be applied prior to the entry of a judgment should be adhered to in this case just as it would have been by a New York court.
Second, even assuming arguendo that the entry of a judgment is procedural and governed by the Federal Rules of Civil Procedure, the judgment in this case should not have been entered. Rule 58 of the Federal Rules of Civil Procedure states that "upon a special verdict ... the court shall promptly approve the form of the judgment, and the clerk shall thereupon enter it." In the present case, this Court cannot approve the form of the judgment without reference to the formula set forth in Article 50-B. That is, under 50-B, (which everyone agrees must be applied here) the form of a judgment, in fact, even the amount of a judgment, cannot be approved or determined until the appropriate 50-B calculations have been made.1 Therefore, even under Rule 58, this judgment should not have been entered until its form had been approved by this Court—that is, until after the 50-B formula had been applied.2
Finally, this Court acknowledges that the Federal Rules contain very specific time limits for post-trial motions. See Fed R. Civ. P. 50(b) (); Fed R. Civ. P. 59(b) (). However, these rules provide for time periods running from the entr...
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