State Law Requires New York Officials to Pay Interest for Defaulting on Federal Settlement
State Law Requires New York Officials to Pay Interest for Defaulting on Federal Settlement
The United States District Court for the Southern District of New York has ordered the City of New York and other defendants to pay interest to the plaintiffs in a federal settlement following the defendants’ failure to timely make the agreed payments.
Sophia Elliot and I.E., an infant, filed suit in the district court in October 2011 against the City of New York and Police Officers FNU Figueroa, Jane Doe, and John Doe, alleging false arrest. The parties settled on September 14, 2012 and the defendants agreed to pay Elliot $9,000 and I.E. $5,000, which included attorney’s fees and costs. When the defendants defaulted, plaintiffs’ counsel submitted a letter to the court on December 18, 2012, explaining the default and requesting interest. The court treated counsel’s letter as a motion and on July 10, 2013, the district court held that under state law, the plaintiffs were entitled to an additional $355.31 in interest.
In reaching this conclusion, the district court had determined that state, rather than federal, law governed the enforcement of a federal settlement unless a conflict of federal and state law arose, an issue not present in this case. Accordingly, the New York statue provided that payment was due “within ninety days” of the settlement date. The court noted that the settlement agreement had been filed and executed on September 14, 2012 and became fully effective on September 17. Therefore, the payment by the defendants had been due by December 17, 2012. However, Elliot received a check on December 26, 2012 and I.E. on January 17, 2013.
State law specifies that “payment occurs upon mailing, not receipt, of the settlement proceedings.” because the defendants had not indicated “whether those checks were received by hand or by mail,” the district court assumed the latter. Concluding that the “[defendants were] deemed to have made payment three business days prior to the dates” that the plaintiffs had received their checks, the court ultimately found that defendants had not timely made payment to the plaintiffs.
Therefore, the district court, applying the state statutory nine percent interest rate, ordered the defendants to pay an additional $208.60 to Elliot and $146.71 to I.E. See: Elliot v. City of New York, U.S.D.C. (S.D.N.Y), Case no. 1:11-cv-07291-RWS.
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Related legal case
Elliot vs City of New York
| Year | 2012 |
|---|---|
| Cite | U.S.D.C. (S.D.N.Y), Case no. 1:11-cv-07291-RWS |
| Level | District Court |
| Conclusion | Settlement |
| Damages | 14,000 |