Opinion
16-CV-09527 (MKV)(SN)
11-02-2022
EXXONMOBIL OIL CORP., Petitioner, v. TIG INSURANCE COMPANY, Respondent.
TO THE HONORABLE MARY KAY VYSKOCIL:
REPORT AND RECOMMENDATION
SARAH NETBURN, UNITED STATES MAGISTRATE JUDGE.
The Court of Appeals remanded this case on the narrow question of when prejudgment interest stops accruing and post-judgment interest starts running. This inquiry requires the Court to determine the date on which the judgment was “ascertained in a meaningful way and supported by the evidence.” Adrian v. Town of Yorktown, 620 F.3d 104, 107 (2d Cir. 2010) (citing Andrulonis v. United States, 26 F.3d 1224 (2d Cir. 1994)). Not surprisingly, TIG Insurance Company (“TIG”) - the loser at arbitration - argues that post-judgment interest should begin when Judge Ramos issued his judgment on May 26, 2020. ExxonMobil Corporation (“Mobil”) seek to extend the period of prejudgment interest accrual to a date in the future when a judgment is entered by this Court. I recommend that the Court award prejudgment interest from August 17, 2019, until May 26, 2020, for a total prejudgment interest award of $1,744,519.50.
BACKGROUND
This action arises out of an insurance coverage dispute relating to an excess liability insurance policy between Mobil and TIG. Following court-compelled arbitration, Mobil moved to confirm the arbitral Award, which was issued on August 17, 2019, and to enter a final judgment that included prejudgment interest. ECF No. 36. Judge Ramos granted this motion and entered judgment on May 26, 2020. See ExxonMobil Oil Corp. v. TIG Ins. Co., No. 16 CIV. 9527 (ER), 2020 WL 2539063 (S.D.N.Y. May 18, 2020); ECF No. 56. After learning that Judge Ramos owned stock in Mobil, TIG moved to vacate the May 26, 2020 judgment. ECF No. 58. The case was reassigned to Judge Vyskocil, who denied the motion to vacate and concluded that Judge Ramos's decisions were legally correct. See ExxonMobil Oil Corp. v. TIG Ins. Co., No. 16 CV. 9527 (MKV), 2021 WL 4803700 (S.D.N.Y. Oct. 14, 2021). As relevant here, the Court concluded that Judge Ramos appropriately imposed post-breach prejudgment interest, consisting of both pre- and post-Award interest. Id. at *4.
TIG appealed all the district court decisions. The Court of Appeals affirmed the district court's denial of the motion to vacate and the order compelling arbitration. ExxonMobil Oil Corp. v. TIG Ins. Co., 44 F.4th 163 (2d Cir. 2022). It reversed the decision granting Mobil pre-Award prejudgment interest but affirmed the grant of post-Award prejudgment interest. Id. at 179-80. The Court of Appeals remanded the matter to the district court “to calculate the interest accrued through the date of judgment.” Id. at 180.
The parties agree that post-Award prejudgment interest should accrue at the statutory rate of 9% per annum from August 17, 2019, the date of the arbitral Award. They dispute, however, when interest at that rate should stop and post-judgment interest should begin.
DISCUSSION
I. Judgment Was Meaningfully Ascertained on May 26, 2020
28 U.S.C. § 1961 allows a prevailing party to recover interest on any money judgment in a civil case, running from the date of judgment. “Postjudgment interest is designed to compensate Plaintiffs for the delay it suffers from the time damages are reduced to an enforceable judgment to the time defendant pays the judgment.” Andrulonis, 26 F.3d at 1230 (citing Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827, 835 (1990)). Although not always the case, under New York law, prejudgment interest is mandatory. ExxonMobil, 44 F.4th at 179.
Generally, prejudgment interest ends, and post-judgment interest begins, when judgment is “‘ascertained' in any meaningful way” that is “supported by the evidence.” Kaiser Aluminum, 494 U.S. at 836. Thus, courts “focus on the judgment itself” and consider when it is “unconditional, ascertained and enforceable.” Andrulonis, 26 F.3d at 1233, 1235. When a judgment is entered and then affirmed on appeal, interest accrues from the date of the district court judgment. Lewis v. Whelan, 99 F.3d 542, 545 (2d Cir. 1996).
TIG asserts that judgment was meaningfully ascertained and supported by evidence on May 26, 2020, when Judge Ramos confirmed the $25 million arbitral Award. That judgment has never been set aside or reversed. Judge Ramos also ordered post-Award prejudgment interest as of August 17, 2019. That decision has also never been set aside or reversed. The only issue that has been successfully challenged on appeal was the district court's decision to impose pre-Award prejudgment interest. On remand from the Court of Appeals, this Court was directed only to calculate the interest; the record was not to be reconsidered and the liability finding was left unaffected.
Under these circumstances, the judgment was ascertained in a meaningful way and supported by the evidence as of May 26, 2020. That judgment “correctly determined liability,” including the obligation to pay post-Award prejudgment interest. NML Cap. v. Republic of Argentina, 435 Fed.Appx. 41, 43 (2d Cir. 2011) (cutting off prejudgment interest from original district court judgment despite an error in calculating prejudgment interest). See also Bancamerica Com. Corp. v. Mosher Steel of Kansas, Inc., 103 F.3d 80, 81-82 (10th Cir. 1996) (“Here, our reversal was limited to the district court's failure to grant Plaintiff's prejudgment interest, whereas we affirmed all other aspects of the district court's lengthy decision.... Accordingly, postjudgment interest should accrue from August 2, 1995, the date of the district court's original judgment.”); Art Midwest, Inc. v. Clapper, 805 F.3d 611, 617 (5th Cir. 2015) (“Because, on remand, the district court calculated damages by choosing one of two predetermined amounts, without reopening the evidentiary record, it should have-according to the Art Midwest II mandate-calculated interest with reference to the first judgment.”).
II. Equitable Considerations Are Unavailable and Would Not Control
Mobil contends that the “law and equity” require a different result. ECF No. 76 at 2. First, with respect to the law, Mobil argues that the Court of Appeals for the Second Circuit has misapplied Kaiser Aluminum by imposing a first-in-time rule. The cases it cites, however, do not establish such a bright-line rule, but rather evaluate substantively when the judgment was meaningfully ascertained-a straightforward application of Kaiser Aluminum. See, e.g., Andrulonis, 26 F.3d at 1233 (awarding postjudgment interest from later issued judgment because the liability amount was not ascertained until then); Indu Craft, Inc. v. Bank of Baroda, 87 F.3d 614 (2d Cir. 1996) (awarding postjudgment interest from original, reinstated jury verdict, when the liability was ascertained based on the evidence).
Seeking to distance itself from this Circuit's caselaw, it argues that the Court should follow a decision of the Ninth Circuit Court of Appeals. See Am. Tel. & Tel. Co. v. United Computer Systems, 98 F.3d 1209, 1210 (9th Cir. 1996) (“AT&T”). In AT&T, the court of appeals rejected a first judgment rule and imposed prejudgment interest through to the judgment following remand. The court of appeals reached this conclusion based on its assessment of when the judgment was meaningfully ascertained and because it more fully compensated the party. AT&T, 98 F.3d at 1211 (“Where a prior judgment awarding damages has been vacated pursuant to the actions of an ultimately losing party, equitable principles favor calculating the interest in a manner that more fully compensates the prevailing party.”).
The Second Circuit has expressly rejected consideration of equities in determining when to run interest. “When calculating postjudgment interest under section 1961, courts do not enjoy some amorphous equitable power to select a date other than the ‘date of the entry of the judgment' to trigger the running of interest, even if their laudable aim is to effectuate the compensatory purpose of the postjudgment interest statute.” Andrulonis, 26 F.3d at 1233 (citing Kaiser Aluminum, 494 U.S. at 834). Mobil offers no cases within this Circuit that would permit a consideration of the equities. And this Court does not recommend adopting an out-of-circuit precedent.
Second, even if the Court were to consider the equities, it is not clear that they favor Mobil. Originally, TIG was ordered to pay pre-Award prejudgment interest from the date of the breach, October 30, 2016, through the date of the arbitral Award, August 17, 2019. TIG made a meritorious appeal, which resulted in the reversal of pre-Award prejudgment interest. The net effect of Mobil's request would require TIG to turn over nearly the same value of interest that TIG's meritorious appeal saved TIG. Equities cannot favor abandoning the benefits of a meritorious appeal or punishing a party for pursuing that appeal in the first place.
There are 1021 days between October 30, 2016, and August 17, 2019; there are 1172 days between August 17, 2019, and November 1, 2022.
CONCLUSION
I recommend that the Court calculate prejudgment post-Award interest from August 17, 2019, until May 26, 2020, and that Mobil be awarded $26,744,519.50, representing the $25,000,000 awarded in arbitration, plus prejudgment interest on that amount accruing at a rate of 9% per annum pursuant to N.Y. CPLR §§ 5002 and 5004.
* * *
NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen days from the service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. A party may respond to another party's objections within fourteen days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable Mary Kay Vyskocil at the United States Courthouse, 500 Pearl Street, New York, New York 10007, and to any opposing parties. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Mary Kay Vyskocil. The failure to file these timely objections will result in a waiver of those objections for purposes of appeal. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985).