Benz v. Pires
636 A.2d 101, 269 N.J. Super. 574 (1994)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Prejudgment interest does not automatically apply to the stipulated floor or ceiling amounts in a high-low agreement unless the parties expressly provide for it within their agreement, as such agreements function as a modified form of settlement.
Facts:
- Karin Anne Benz initiated an auto negligence action against two drivers, Helio S. Pires and Michael J. Generazio.
- During pretrial settlement efforts, Benz and Pires entered into a 'high-low' agreement.
- The high-low agreement stipulated that Pires would pay Benz a minimum of $45,000, even if the jury exonerated Pires entirely.
- The agreement also established a maximum payment of $62,500 from Pires to Benz, regardless of a higher jury verdict.
- The terms of the high-low agreement, as stated on the record, did not include any mention of prejudgment interest.
- A liability trial was conducted, and the jury found Generazio completely responsible for the accident, exonerating Pires.
Procedural Posture:
- Karin Anne Benz initiated an auto negligence action against Helio S. Pires and Michael J. Generazio in the Law Division (trial court).
- During pretrial proceedings, Benz and Pires entered into a 'high-low' agreement.
- Following a liability trial, the jury found Generazio completely responsible for the accident, thereby exonerating Pires.
- Based on the high-low agreement, an order for judgment was entered in Benz's favor against Pires for $45,000.
- Benz filed an application with the Law Division judge to add prejudgment interest to the $45,000 judgment.
- The Law Division judge denied Benz's application for prejudgment interest.
- Benz, as plaintiff-appellant, appealed the denial of prejudgment interest to the Superior Court of New Jersey, Appellate Division.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a plaintiff who receives a judgment under a high-low agreement, where the defendant was exonerated by the jury, automatically receive prejudgment interest on the agreed-upon floor amount if the agreement did not explicitly mention it?
Opinions:
Majority - R.S. Cohen
No, a plaintiff who receives a judgment under a high-low agreement does not automatically receive prejudgment interest on the agreed-upon floor amount when the agreement did not explicitly mention it. The court reasoned that unless the parties expressly state otherwise, prejudgment interest is not a part of a high-low agreement. High-low agreements are viewed as a form of settlement, and prejudgment interest is not ordinarily applied to settlements. The purpose of prejudgment interest, which is to encourage early disposition of cases, would not be advanced by adding it to the predetermined limits of a high-low agreement. The court clarified that while parties are free to include prejudgment interest in a high-low agreement, it must be explicitly stipulated in their terms, rather than assumed to apply under rules like R. 4:42-11(b).
Analysis:
This case significantly clarifies the legal character of high-low agreements, classifying them as settlements for the purpose of prejudgment interest rather than pure trial verdicts. It underscores the critical importance of explicit drafting in such agreements, particularly for ancillary financial considerations like interest. Attorneys must ensure all desired terms, including the application of prejudgment interest, are clearly stated within the high-low agreement to avoid future disputes, as silence on the matter will result in its exclusion. The ruling reinforces the principle that court rules governing interest on judgments primarily apply to traditional trial awards, not to stipulated amounts within an agreement.
