INSURANCE COMPANY SLOW PAYING SETTLEMENT MONEY OWES PLAINTIFFS INTEREST ON AMOUNT IN RELEASE PLUS COSTS, BUT NO ATTORNEY'S FEES

Court: Supreme Court, Bronx County, New York

Case: Khadijah Muhammad and Semereab Solomon v. Jose Garcia

Date: March 9, 2012

From: New York attorney Gary E. Rosenberg (personal injury and accident attorney and lawyer; serving Queens; Queens injury attorney)

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ALEXANDER W. HUNTER JR., J.

The motion by plaintiffs by order to show cause for an order entering judgment against Jose Garcia, Country-Wide Insurance Company and Country-Wide Management Company pursuant to C.P.L.R. Sec. 5003-a for the amount of all of plaintiffs' settled claims as of December 12, 2011, is deemed moot. Plaintiffs' further motion for an order granting plaintiffs interest as of December 12, 2011 as well as costs and disbursements, is granted. The request for attorneys fees is denied.

The cause of action herein was for personal injuries sustained by the plaintiffs in a motor vehicle accident that occurred on August 2, 2010. The vehicle plaintiffs occupied was struck in the rear by defendant's vehicle.

The action settled on or about December 9, 2011 and on December 12, 2011, counsel for plaintiffs sent to defendant's counsel all closing papers including executed releases and a stipulation of discontinuance. Defendant's counsel acknowledged receipt of same on December 12, 2011. Plaintiff now moves by order to show cause for an order entering judgment against defendant and his insurance company on the ground that payment of the settlement has not been made despite numerous telephone calls to counsel for defendant. The order to show cause was signed by this court on January 12, 2012 and the return date of same was January 31, 2012.

Plaintiffs assert that there has been no objection to the closing documents and pursuant to C.P.L.R. Sec. 5003-a(e) plaintiffs request that the carrier be ordered to pay interest on the settlement from December 12, 2011. Plaintiffs cite to case law and argue that defendant and his insurance carrier should be required to pay all of plaintiffs' costs and disbursements incurred before and after the settlement. Plaintiffs' counsel annexes a list of all the costs and disbursements expended in this action to date and further requests legal fees in the amount of $2,695.00 for work performed as a result of the insurance carrier's failure to tender a settlement draft within the statutory period.

Defendant opposes the motion and asserts that the order to show cause is now moot as the settlement checks were forwarded to plaintiffs' attorney. Copies of the settlement checks, which are dated January 18, 2012, are annexed to the opposition papers as Exhibit A. Defendant further asserts that if this court were to determine that plaintiffs are entitled to interest, costs and disbursements, plaintiffs are clearly not entitled to attorneys' fees for legal research and preparation of the instant order to show cause. Defendant argues that pursuant to a retainer agreement, plaintiffs' attorney is entitled to a percentage of the settlement plus disbursements. Plaintiffs' attorney is not working on an hourly basis and, thus, is not entitled to an hourly rate from the defendant for legal research and preparation of the instant motion. Moreover, C.P.L.R. Sec. 5003-a(e) does not state that plaintiffs' attorney is entitled to an hourly rate for the legal research and preparation of the instant order to show cause. Therefore, plaintiffs' counsel should not be permitted to obtain a windfall on the within settlement.

C.P.L.R. Sec. 5003-a(a) states, in pertinent part, "When an action to recover damages has been settled, any settling defendant ... shall pay all sums due to any settling plaintiff within twenty‑one days of tender, by the settling plaintiff to the settling defendant, of a duly executed release and a stipulation discontinuing action executed on behalf of the settling plaintiff." C.P.L.R. Sec. 5003-a(e) states, in pertinent part, "In the event that a settling defendant fails to promptly pay all sums as required ... any unpaid plaintiff may enter judgment, without further notice, against such settling defendant who has not paid. The judgment shall be for the amount set forth in the release, together with costs and lawful disbursements, and interest on the amount set forth in the release from the date that the release and stipulation discontinuing the action were tendered."

Since the settlement checks were forwarded to plaintiffs' counsel prior to the return date of the order to show cause, the request by plaintiffs for an order entering judgment for the amount of plaintiffs' settled claims is deemed moot. However, plaintiffs herein submitted proof that defendant's counsel received the executed releases and stipulation of discontinuance on December 12, 2011. The settlement checks submitted by defendant's insurance carrier are dated January 18, 2012. Thus, defendant did not promptly pay the settlement sum within the period prescribed by statute. Therefore, pursuant to C.P.L.R. Sec. 5003-a(e), plaintiffs are entitled to interest on the amount set forth in the release from December 12, 2011 as well as costs and disbursements.

Plaintiffs' counsel is not entitled to attorneys' fees for legal research and the preparation of the instant order to show cause as C.P.L.R. Sec. 5003-a(e) does not provide for same. Liss v. Brigham Park Cooperative Apartments Sec. No. 3, Inc., 264 A.D.2d 717 (2nd Dept.1999).

This constitutes the decision and order of this court.

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