Provides that for settlements that require a court order the order shall provide for the payment of interest on the settlement amount at the statutory rate

Title of bill

An act to amend the civil practice law and rules and the surrogate's court procedure act, in relation to addressing delay in payment of a settlement where the settlement requires court approval

Purpose

This proposal amends the CPLR (§§ 1207, 1208, 5003-a) and the Surrogate's Court Procedure Act (§ 2220) to permit interest to accrue where there is a delay in a proposed settlement of claims by an infant, incompetent, or in a wrongful death action, caused by the need for court approval.

Justification

Section 5003-a of the CPLR sets forth times within which a settling defendant must pay all sums due following the tender of a release and stipulation of discontinuance in an action. Difficulties arise, however, with cases involving an infant, an incompetent or the death of a plaintiff, where the release cannot be tendered without prior court approval. Usually it takes at least several weeks (occasionally, several months or longer) between the proposed settlement and court approval. Thus, the anomaly exists that the only litigants who do not receive their settlement monies "promptly" are those who are under the courts' protection.

The interest rate set forth in the proposed amendments is the statutory rate of interest on a judgment. Interest begins to run from the fifteenth day, or in the case of a state or municipal entity from the sixty-first day, following the day that the proposed settlement is entered into and continues to run until the day that the order or judgment is signed. Provision is also made for annuity payments. Once the order or judgment is signed, the defendant then will have 14 days or, in the case of a state or municipal entity, 61 days, to make payment.

The date and terms of the proposed settlement shall be set forth in a writing or court transcript, a copy of which shall be provided to the court in order to calculate the days of interest.

Legislative history

2007-08: A.3059 - Passed Assembly 2005-06: A.5852 - Passed Assembly 2003-04: A.7902 - Passed Assembly 2001-02: A.4743 - Passed Assembly 2000: A.10425 - Passed Assembly

Fiscal implications

This measure will have a negligible fiscal impact on the State, limited to those instances where the State has entered into a settlement of claims with a minor, an incompetent, or a plaintiff who has died.

Effective date

This act shall take effect on the first of January next succeeding the date on which it shall have become law, and shall apply to all actions settled on or after that date.