The use of high-low agreements during the trial of tort cases is an often underutilized and misunderstood litigation technique that serves both parties well. From a plaintiff's perspective, a high-low agreement guarantees that a minimum monetary amount will be received regardless of the verdict. In most cases, this will result in the payment of case expenses, an award to plaintiff and a fee for the attorney in the event of a defendant's verdict.

For a defendant, it will prevent a “run-away jury” verdict, protect both a defendant from personal or corporate exposure and an insurance carrier from bad faith claims if the jury verdict exceeds the policy.

A High-Low Is a Settlement

In Cunha v. Shapiro, 42 AD3d 95 (2d Dep't 2007), the court found that a high-low agreement is a settlement for CPLR purposes, unless the provisions of the statute are expressly exempted. After a jury was selected, and prior to the presentation of evidence, the parties placed a high-low agreement on the record in open court. The parties agreed that, regardless of the verdict, the plaintiff would receive damages not less than $75,000 and no more than $325,000. The court specifically stated that “there will be no appeals or post-trial motions” and that “the case will be settled based upon the jury verdict.”

After a pre-apportionment verdict of $325,000, defendants' counsel sought a general release from plaintiff's counsel. Plaintiff's counsel stated that no release was required. Without a release, defendants refused to pay damages. Plaintiff filed a judgment for $325,000 plus interest. Defendants responded by moving by order to show cause to vacate the judgment. They argued that the parties' high-low was a settlement, displacing the jury verdict in its entirety. Without a general release, the time frame for payment pursuant to CPLR 5003 would not begin. The Second Department found that the strict enforcement of open-court stipulations of settlement served the interest of efficient dispute resolution, the management of court calendars, and the integrity of the litigation process. It ruled that the parties' agreement was a settlement and warranted the application of the general release provision of the CPLR.

Interests and Costs

A high-low agreement limits recovery to the amount awarded by the jury and also prevents additional costs such as interest and disbursements. In Vargas v. Marquis, 65 A.D.3d 1332 (2d Dep't 2009), the parties entered into a high-low agreement with parameters of $275,000/$25,000. The jury found for plaintiff in the sum of $135,000. Plaintiff entered that amount as a judgment with an additional $31,000 in pre-verdict interest and costs and disbursements. Defendant objected, arguing that the agreement waived the right to a judgment and the plaintiff was obligated to provide a stipulation of discontinuance and general release. The clerk entered the plaintiff's judgment and the Second Department granted defendant's motion to vacate, finding that the agreement was straightforward and its terms must stand. Pre-verdict interest, costs and disbursements did not apply.

The Court's Role

The court cannot alter a high-low agreement. In Esposito v. Podolsky, 104 A.D.3d 903 (2d Dept 2013, litigants in an auto accident case agreed to submit liability and damages to an arbitrator with high-low parameters of $50,000/0. Thereafter, they stipulated to proceed to arbitration regarding liability. The arbitrator found for plaintiff on the liability issue and plaintiff moved to restore the action to the trial calendar to resolve the issue of damages. The trial court directed that the parties return to arbitration, but modified the recovery amounts to $250,000, the full amount of the insurance policy and in excess of the agreed upon limits. The appellate court found that the trial court erred in allowing recovery in an amount exceeding the limits provided in the high-low agreement. Because the parties had agreed to the $50,000 limit, it should have been binding.

Jury Sheet

A high-low agreement can be valid even where there is an error on the jury instruction sheet. In Crosby v. Montefiore Medical Center, 128 A.D.3d 523, 523 (1st Dep't 2015), the parties entered into a high-low settlement during jury deliberations. The agreement set a range of $1,485,000 and $250,000. Afterwards, defendants noted an error on the verdict sheet instructions which directed the jury to determine apportionment of fault and damages, even upon a finding of no liability. The parties agreed that if the jury found no liability but proceeded to award damages, the court would enter a defense verdict. The jury returned a verdict finding that defendants had departed from the standard of care but that the departure was not a substantial factor in causing the injuries. The jury nonetheless, allocated fault and awarded the plaintiff $650,000.