Plaintiff’s 2001 Judgment Gets Paid with Compound Interest Despite 14 Year Delay in Enforcement

B.Z. Chiropractic, P.C. v Allstate Ins. Co.

In this declaratory judgment action arising out of a No-Fault suit, the Court rules that plaintiff’s delay of 14 years in enforcing a judgment it obtained in 2001 does not toll the accumulation of interest at 2% per month, compounded, as per the Insurance Department regulations in effect at that time.  Nor does the interest rate change as a result of reducing the order to a judgment.Thus, a judgment in the amount of $8,847.49 entered in 2001 is now worth $227,060.57.—LNR

υThe instant action arises out of an action filed in the Civil Court of the City of New York, Queens County, entitled B.Z. Chiropractic, P.C. a/a/o Tony Dance v. Allstate Insurance Company, Index No. 70935/00, which sought to recover first party No-Fault benefits for services rendered to defendant’s insured by plaintiff. Plaintiff was granted summary judgment in that action and on November 15, 2001, the Clerk of the Court entered judgment in favor of the plaintiff in the amount of $8,847.49. Plaintiff did not attempt to enforce said judgment until 2015, at which time defendant moved for a protective order and modification of the judgment pursuant to CPLR 5240. At that time, the amount of the judgment had grown to $227,060.57 ($8,847.49 plus 2% per month interest, compounded from November 15, 2001 through August 11, 2015). In an Order, dated November 16, 2015, the Civil Court found that plaintiff unreasonably allowed the compound interest to accrue and stayed said interest for the period of November 1, 2005 through June 19, 2015, the date that defendant received the plaintiff’s collections letter. Respondent issued checks in the amount of $22,999.70 in accordance with that decision and sought a satisfaction of judgment, moving by Order to Show Cause to compel same. Said motion was granted on July 7, 2016. Plaintiff appealed and on August 18, 2017, the Appellate Term, consolidated both appeals and reversed the lower court’s decision, finding that contrary to defendant’s assertions, plaintiff did not prevent defendant from timely paying the judgment. The Appellate Term added in an advisory capacity that the postjudgment rate of interest should be calculated pursuant to CPLR 5004 and not at the 2% per month rate provided for in 11 NYCRR 65-3.9(a). Thereafter, B.Z. Chiropractic moved before the Appellate Term seeking clarification of said decision or, in the alternative, for leave to appeal to the Appellate Division. The Appellate Term clarified that it was the Court’s intention to note that interest be awarded at the rate of 9% per year as in CPLR 5004, but that same is advisory and not appealable as of right or by permission.

The portion of Petitioner’s Petition seeking to turn over monies from its bank account maintained outside of New York State with Bank of America, N.A. in such sum as is sufficient to satisfy the judgment is denied in its entirety as Bank of America, N.A. is not a party to this action as required by CPLR §5225(b).

The portion of Petitioner’s Petition seeking a declaratory judgment on the proper interest rate which accrues on first party no-fault benefits after the entry of judgment is decided as follows: Pursuant to CPLR §5004, interest shall be at the rate of nine per centum per annum, except where otherwise provided by statute. Pursuant to 11 NYCRR 65-3.9(a), All overdue mandatory and additional personal injury protection benefits due an applicant or assignee shall bear interest at a rate of two percent per month, calculated on a pro-rata basis using a 30-day month. At the time that the underlying claims were filed, said interest accrued at a compound rate. It is well settled that “with respect to interest on first party benefits due under the no-fault statute,…the Insurance Law supersedes the provisions for interest contained in CPLR 5002, 5003 and 5004 (Gov’t Emp. Ins. Co. v. Lombino, 57 AD2d 957, 394 N.Y.S.2d 898 [1977]) The policies of encouraging prompt payment of claims and reducing litigation outweigh limits on interest found elsewhere. The interest rate on No-Fault actions is intentionally punitive, with severe penalties in order to encourage prompt adjustment of claims. As such, the rate of interest is not reduced simply because the claim has been reduced to a judgment. While such claims remain overdue, they accrue interest at two percent per month. As such, plaintiff is entitled to a declaratory judgment recognizing same.

Comment: As an interesting side note, this case had gone up to the Appellate Term, which had ruled that post-judgment interest should accrue at the statutory rate of 9%, not the “no fault” rate of 24%, but stated that this was an “advisory” opinion only.  Supreme Court declined to follow it.

2019 NY Slip Op 50241(U)
Decided on February 25, 2019
Supreme Court, Queens County

Love, J.