NYC CIVIL COURT LIMITS INTEREST RECOVERABLE BY NO-FAULT PLAINTIFF THAT FAILS TO ACTIVELY PROSECUTE LAWSUIT

Arzu v. NYC Trans. Auth., 35 Misc 3d 210 (N.Y. Civ. Ct., Kings 1/9/2012)

Jones Jones has succeeded in limiting the statutory interest available to a no-fault plaintiff, where the interest has accrued as a result of a failure by the plaintiff to prosecute their case.

Pursuant to the No-Fault regulations, overdue claims bear an interest rate of two percent (2%) per month.  In a system of Courts where motion practice and adjournments of trial dates can easily drag cases out for several years, the exposure to interest may often reach a level equal to, or greater than, the original principal amount in dispute.  The Regulations provide, however, that “[i]f an applicant has submitted a dispute to arbitration or the courts, interest shall accumulate, unless the applicant unreasonably delays the arbitration or court proceeding.”

There has not been much guidance by the Courts as to what actually constitutes an unreasonable delay, and when a case is dismissed or voluntarily settled it becomes a moot point.  Whenever the issue is raised, the authority relied upon by plaintiffs over the last decade is a Nassau County District Court decision in the matter of Shtarkman Neurologist, P.C. v Allstate Ins. Co., 191 Misc 2d 76 (Nassau Dist Ct., 2002).  The Disctrict Court’s position in Shtarkman, was that, by simply neglecting the case, as opposed to affirmatively obstructing it, the plaintiff was not guilty of unreasonable delay.  In light of the Shtarkman decision, the issue of delay does not appear to be raised often by other defense firms.

Our office recently moved for a stay of interest in Arzu v NYCTA as the plaintiff had failed to prosecute their case.  We argued that it is a plaintiff’s obligation to prosecute their own case, and the plaintiff’s neglect constitutes unreasonable delay, thus warranting the tolling of interest accrual.  Civil Court, Kings County, (Levine, J.) issued an Order on January 9, 2012 expressly rejecting the decision in Shtarkman, placing the burden on plaintiffs to move their cases forward, or else interest will be tolled for their unreasonable delays.

Our position in this issue is in line with the stated purpose of the no-fault law, which is expeditious resolution of claims (e.g. requiring written notice of claim, submission of claim forms, and issuance of payment, verification request, or denial, to all be made timely).  While this decision still leaves room for individual judges to disagree entirely, or just simply to apply their own subjective analysis to a given time period when determining how much time must a plaintiff allow to pass before it becomes unreasonable, this decision marks a big step in the right direction of creating valuable precedent that will enable us to continue to limit the recovery by no-fault plaintiffs and their attorneys.

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