Opinion
CIVIL ACTION NO. 2-O0CV-0419-J
February 27, 2002
ORDER ON PLAINTIFF'S MOTION FOR INTEREST AND LEGAL FEES
Before the Court is Plaintiff's "Motion for Recovery of Prejudgment Interest and Post-Judgment Interest and Brief in Support," filed February 7, 2002; Plaintiff's "Motion for Recovery of Legal Fees and Brief in Support," filed February 7, 2002; and defendant's February 21, 2002, response to each.
On January 28, 2002, this Court entered its Final Judgment on plaintiffs motion to confirm an arbitration decision in which plaintiff was awarded $350, 000.00 resulting from an on the job injury. In affirming the arbitrator's award, this Court ordered IBP, Inc. to pay plaintiff the full amount of the arbitrator's award. This Court further ordered IBP, Inc. to pay plaintiff's costs associated with seeking a confirmation of the arbitrator's award. Plaintiff now seeks an award of prejudgment interest, post-judgment interest, and attorney's fees resulting from the arbitrator's award and this Court's confirmation of that award.
Prejudgment Interest
Plaintiff alleges that this Court's Final Judgment should have included an award of prejudgment interest beginning from December 21, 2000, the date he filed a civil action in this Court to confirm the arbitrator's award, through January 27, 2002, the date this Court confirmed the arbitrator's decision. Plaintiff seeks an award of prejudgment interest in the amount of $38, 547.94. For the following reasons, Plaintiffs request for prejudgment interest is DENIED.
Texas law governs the award of prejudgment interest on an arbitrator's award. See Executone Information Systems, Inc. v. Davis, 26 F.3d 1314, 1329 (5th Cir. 1994) citing Schlobohm v. Pepperidge Farm, Inc., 806 F.2d 578, 583-84 (5th Cir. 1986). The Texas Supreme Court has said that the award of prejudgment interest, although equitable in nature, should generally be awarded and is not generally a matter of discretion. See Matthews v. DeSoto, 721 S.W.2d 286, 287 (Tex. 1986); Concorde Limousines, Inc. v. Moloney Coachbuilders, Inc., 835 F.2d 541, 549 (5th Cir. 1987).
However, the foregoing is not without exceptions. In Schlobohm v. Pepperidge Farm, Inc., 806 F.2d 578 (5th Cir. 1986), a case this Court analyzed in deciding not to include an award of prejudgment interest in its Final Judgment, the issue of prejudgment interest arose in the context of affirming an arbitration decision. In Schlobohm, it was argued, in opposition of awarding prejudgment interest, that for the district court to add attorney's fees, interest, and costs to an arbitration decision would "judicialize" the arbitration process and undermine the purposes for which parties seek arbitration. Id. at 580.
In response to that argument, the Fifth Circuit held that, in situations like the case at bar, where the parties agreed that any dispute arising from the contract would be submitted to arbitration, a strong argument could be made that for a district court to make such an award would be impermissibly modifying the arbitrator's decision. Id at 581. The Court went on to say that where the parties made an agreement intended to avoid court litigation by resolving the entire dispute through arbitration, intervention by the court to award additional relief would be inconsistent with the language and policy of the Federal Arbitration Act. Id. The Fifth Circuit's language in Schlobohm supports the denial of prejudgment interest by this Court.
Attorney's Fees
Plaintiff alleges that because IBP, Inc. refuses to abide by the arbitrator's decision, without justification, he should be awarded attorney's fees in the amount of $36, 913.00. Plaintiffs claim for attorney's fees is DENIED.
In support of his claim, plaintiff relies on Bell Prod Eng'rs Assoc. v. Bell Helicopter Textron, 688 F.2d 997, 999-1000 (5th Cir. 1982), for the proposition that when a challenger refuses to abide by an arbitrator's decision without justification, attorney's fees and costs may be awarded. This Court first notes that the language cited by plaintiff contains precatory language such as "may" be awarded, as opposed to mandatory language such as "must" be awarded. Secondly, as IBP, Inc. correctly points out, the Court in Bell held that an award of attorney's fees is the exception rather than the rule. Id. at 999.
Furthermore, courts in this circuit have regularly denied an award of attorney's fees related to the affirming of an arbitration award. In Amalgamated Meat Cutters of N. Am., Local Union 540 v. Great W. Food Co., 712 F.2d 122, 125 (5th Cir. 1983), the Fifth Circuit held that a party to an arbitral award is not entitled to the attorney's fees it incurs in enforcing that award unless the noncomplying party's refusal to abide by the award was "without justification." In following Amalgamated, the Fifth Circuit, in Executone Information Systems, 26 F.3d at 1131, held that where the issue of arbitrator's authority to make an award is questioned, the refusal to abide by an award is not frivolous and there was no abuse of discretion by the district court in refusing to make such an award. In the case at bar, IBP, Inc. argued that the award by the arbitrator was outside his authority and was not allowed under the terms of the WISP program. Based on the foregoing, this Court finds that an award of attorney's fees is unwarranted and plaintiffs request is DENIED.
Post-Judgment Interest
Plaintiff also seeks post-judgment interest on the arbitrator's award. While this Court's Final Judgment of January 28, 2002, did not expressly award plaintiff post-judgment interest, an award for post-judgment interest is proper and this Court's Final Judgment shall be read to include an award of post-judgment interest pursuant to 28 U.S.C. § 1961.
In accordance with section 1961, interest shall be calculated from the date of entry of the judgment, at a rate equal to the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve, for the calendar week preceding the date of the judgment and compounded daily. In this case, the applicable rate is 2.18% and shall be computed daily, beginning December 20, 2000, and continuing until the date the judgment is paid in full.
CONCLUSION
Based on the foregoing, plaintiffs motion for prejudgment interest and attorney's fees are DENIED. This Court's Final Judgment of January 28, 2002, expressly stated that plaintiff was to recover from IBP, Inc. the amount of $350, 000.00 as well as his costs associated with affirming the arbitration decision. The Final Judgment also provides for recovery of post-judgment interest at the rate provided above, computed from December 20, 2000, until the date the judgment is paid in full.
The Court will enter its Amended Final Judgment to reflect the foregoing. It is SO ORDERED.