Opinion
93 Civ. 3752 (RWS)
February 7, 2001
MEMO OPINION
The personal injury judgment against defendant John Crane, Inc. ("Crane") in the above-entitled action was recently affirmed by the Second Circuit in all respects, except that the award of pre-judgment interest was vacated, and this Court was directed to recalculate that amount in accordance with Rhode Island law. See Caruolo v. John Crane, Inc., 226 F.3d 46, 59 (2d Cir. 2000).
Under Rhode Island law, a tortfeasor held liable for damages must pay prejudgment interest annually at the rate of 12% "from the date the cause of action accrued." See R.I. Gen. Laws 1956, § 9-21-10; Merrill v. Trenn, 706 A.2d 1305, 1310-11 (R.I. 1998). Thus, in order to calculate the prejudgment interest amount, it must be determined when the cause of action accrued.
If Rhode Island law governs the accrual question then, pursuant to Rhode Island's discovery rule, Paul Caruolo's ("Caruolo") cause of action accrued at the time Caruolo discovered his injury. See Nicolo v. Philip Morris, Inc., 201 F.3d 29 (1st Cir. 2000) (applying Rhode Island law). Under this rule, Caruolo claims to be entitled to a judgment in the amount of approximately $11 million, after certain offsets and other adjustments.
However, Caruolo maintains that, although prejudgment interest is to be calculated pursuant to Rhode Island law, the determination as to when the cause of action accrued — for purposes of these calculations — is governed by New York law. Caruolo's rationale is that the time of accrual is a "conduct-regulating" issue. Caruolo further maintains that, under New York law, his cause of action occurred when he was first exposed to asbestos, i.e., June 11, 1944. Under this reasoning, Caruolo claims a judgment in excess of $59 million, after certain offsets and other adjustments.
In its recent decision, the Second Circuit reiterated that in this case, New York law governs "conduct-regulating" issues, while Rhode Island law governs "loss-allocating" issues. See Caruolo, 226 F.3d at 59.
Caruolo acknowledges that no case has yet expressly addressed the issue of whether determining the time of accrual is a conduct-regulating or a loss-allocating issue. This question, however, need not be resolved here. Assuming arguendo that the time of accrual is a conduct-regulating issue and, therefore, that New York law applies, under that law Caruolo's claim accrued when he discovered his illness, not when he was first exposed to asbestos. The reason for this result is that New York applies a "discovery rule" for tort actions, such as this one, where a tort plaintiff has a latent injury. See N.Y. CPLR § 214-c (McKinney 1990) ("[T]he three year period within which an action to recover damages for personal injury . . . caused by the latent effects of exposure to any substance . . . must be commenced shall be computed from the date of discovery of the injury .").
Caruolo contends that New York's discovery rule does not postpone the accrual of a claim but, rather, serves only to toll its running until the discovery of the injury. In making this claim, Caruolo relies on Consorti v. Owens-Corning Fiberglas, Corp., 86 N.Y.2d 449, 451-51 (N.Y. 1995), which he insists stands for the proposition that a tort plaintiff's cause of action accrues at the time of injury even if, under CPLR § 214-c, he has until three years after discovery of the injury to bring suit. However, in Consorti, the New York Court of Appeals was asked to determine whether a plaintiff could bring a loss of consortium cause of action where her spouse was injured by asbestos exposure before the marriage, but did not become ill until after the marriage. See Consorti, 86 N.Y.2d at 451. Under New York law, a loss of consortium cause of action "does not lie if the alleged tortious conduct and resultant injuries occurred prior to marriage." Id. (internal quotation marks and citation omitted). Given this rule, the court's inquiry concerned when the injury occurred, and the court held that the injury occurred at the time of exposure — i.e., before the marriage — thus barring the claim. See id. at 453-54. Consorti did not concern the "discovery rule" under CPLR § 214-c nor, indeed, does Consorti ever mention the terms "accrual" or "statute of limitations." In sum,Consorti is unhelpful.
Moreover, to the extent Consorti is properly understood as concerning the accrual issue, it relied, oddly enough, on a caee that had already been abrogated by the passage in 1986 of CPLR 214-c. See 86 N.Y.2d at 453 (citing Steinhardt v. Johns-Manville Corp., 54 N.Y.2d 1008 (N.Y.App.Div. 1981) (subsequent history omitted) (applying previous common law rule to bar tort claim asserted more than three years after injury).
The statutory language, legislative history, and case law all support the conclusion that CPLR § 214-c serves to delay accrual of a claim rather than to toll the statute of limitations for a claim that has already accrued.
The statute speaks of "comput[ing] [the three-year limitations period] from the date of discovery." CPLR § 214-c (McKinney 1990). This language is not consistent with a tolling theory, since it pertains to when the limitations period first begins to run rather than to when the running of that period might be suspended. Similarly, the Executive Memorandum of the Governor accompanying the enactment of Section 214-c states that the discovery rule is "a fair and simple rule which permits a person to discover his or her injury before the statutory period for suitbegins to run." McKinney's Session Laws, 1986, pp. 3182-83, quoted in DiMarco v. Hudson Valley Blood Services, 147 A.D.2d 156, 160 (N.Y.App. Div. 1989) (emphasis added)).
Both New York courts, and federal courts applying New York law, have observed that Section 214-c relates to the "accrual" of a cause of action for plaintiffs with latent injuries. See, e.g., Hoemke v. New York Blood Center, No. 88 Civ. 9029, 1989 WL 147642, at 1 (S.D.N.Y. Nov. 28, 1989) (CPLR 214-c "delay[s] . . . accrual until the date of discovery");DiMarco, 147 A.D.2d at 160 ("CPLR 214-c was enacted to remedy a widespread injustice of the common law rules in determining the time of accrual of an action.").
Moreover, the reading sought by Caruolo is contrary to basic fairness, since it would allow him to claim for purposes of the statute of limitations that his cause of action did not accrue until he discovered his injury, while simultaneously claiming for purposes of calculating prejudgment interest that his cause of action accrued over forty years earlier.
Therefore, whether the issue of accrual is governed by New York or Rhode Island law, Caruolo's claim accrued when he discovered his injury, and that is the date that will be used for calculating pre-judgment interest.
There is, however, a slight discrepancy between the parties as to when the discovery occurred. Crane contends that the proper date is July 7, 1992, which was the date Caruolo was officially diagnosed with mesothelamia. Caruolo, however', has provided medical records showing that a cell analysis conducted on June 16, 1992, was "highly suggestive of an epithelial mesothehoma." Therefore, June 16, 1992, is the correct date, and the judgment shall be calculated accordingly.
Finally, there are two other minor details disputed between the parties. First, there is the issue of post-judgment interest. Numerous Courts of Appeal have held that 28 U.S.C. § 1961 applies in diversity cases, although the Second Circuit has not yet explicitly addressed this issue. See, e.g., Forest Sales Corp. v. Bedingfield, 881 F.2d 111, 113 (4th Cir. 1989); Chapman Cole v. Itel Container Int'l B.V., 865 F.2d 676, 689-90 (5th Cir. 1989). This statute provides that post-judgment "interest shall be calculated from the date of the entry of the judgment, at [the] rate . . . settled immediately prior to the date of the judgment." 28 U.S.C. § 1961(a). The United States Code sets forth a table of the interest rates applicable as of a series of dates. See 28 U.S.C. § 1961. The judgment in this case was dated November 6, 1998, and was entered November 9, 1998. The rate "settled immediately prior to the date of the judgment" was the rate settled October 13, 1998, and was 4.242%. Therefore, this is the rate that shall be used for purposes of calculating post-judgment interest.
The rate increased on November 9, 1998, to 4.616%. Caruolo urges that this is the rate that should be used. This is incorrect, since it is not the rate "settled immediately prior to the date of the judgment."
Second, the judgment should be offset by previous settlement payments. Crane contends that the correct amount is $2,106,700, which is slightly higher than the amount set forth in Caruolo's proposed judgment. Caruolo has conceded that Crane is correct. Therefore, the judgment shall reflect this amount.
Although Caruolo makes this concession, his most recent proposed judgment, attached to his letter of February 7, 2001, still reflects the previous number.
It is so ordered.