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In re Heritage Bond Litigation

United States District Court, C.D. California
Sep 27, 2004
MDL Case No.: 02-ML-1475 DT, Consolidated with Cases: No. CV 01-5752 DT (RCx), Nos. CV 02-382 DT (RCx), CV 02-993 DT (RCx), CV 02-2745 DT (RCx), CV 02-6484 DT (RCx), CV 02-6841 DT (RCx), CV 02-9221 DT (RCx), Companion Case: No. CV 02-6512 DT (RCx), This Document Relates to: No. CV 02-382 DT (RCx) (C.D. Cal. Sep. 27, 2004)

Opinion

MDL Case No.: 02-ML-1475 DT, Consolidated with Cases: No. CV 01-5752 DT (RCx), Nos. CV 02-382 DT (RCx), CV 02-993 DT (RCx), CV 02-2745 DT (RCx), CV 02-6484 DT (RCx), CV 02-6841 DT (RCx), CV 02-9221 DT (RCx), Companion Case: No. CV 02-6512 DT (RCx), This Document Relates to: No. CV 02-382 DT (RCx).

September 27, 2004


ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR ENTRY OF JUDGMENT, PRE-JUDGMENT INTEREST AND POST-JUDGMENT INTEREST AGAINST DEFENDANT VIRGIL LIM.


I. BACKGROUND A. Factual Summary

Because the parties are generally familiar with the factual and procedural history of this case, the Court does not recount them here except as necessary to explain its decision in response to the issues raised herein.

On June 28, 2004, this Court granted Plaintiffs' Motion for Partial Summary Judgment, or Alternatively for Summary Adjudication of Issues, on Fifth Cause of Action (Negligence) Against Defendant Virgil Lim. Based on this Court's June 28, 2004 ruling, Plaintiffs moved for entry of judgment in the amount of $23,676,057.00 against defendant Virgil Lim ("Defendant"). However, Plaintiffs' request for entry of judgment against Defendant was denied without prejudice for failing to provide a legal or factual basis to support the request. Thereafter, on September 3, 2004, Plaintiffs again moved for entry of judgment in the amount of $23,676,057.00 against Defendant, and additionally, requested an award of pre-judgment and post-judgment interest.

B. Procedural History

On June 28, 2004, this Court issued its Order Granting Plaintiffs' Motion for Partial Summary Judgment, or Alternatively for Summary Adjudication of Issues, on Fifth Cause of Action (Negligence) Against Defendant Virgil Lim ("June 28, 2004 Partial Summary Judgment Order").

On July 16, 2004, Plaintiffs filed a Motion for Entry of Judgment against Virgil Lim, which was denied without prejudice.

On September 3, 2004, Plaintiffs filed a Motion for Entry of Judgment, Pre-Judgment Interest and Post-Judgment Interest ("Renewed Motion for Entry of Judgment"), which is currently before the Court.

II. DISCUSSION A. Analysis

1. Plaintiffs Are Entitled to Entry of Judgment Pursuant To Federal Rule Of Civil Procedure 54(b)

Based on this Court's June 28, 2004 Partial Summary Judgment Order, Plaintiffs filed their Renewed Motion for Entry of Judgment, seeking final judgment in the amount of $23,676,057.00 against Defendant, pre-judgment interest and post-judgment interest.

Plaintiffs move for entry of judgment pursuant to Federal Rule of Civil Procedure ("Rule") 54(b), which applies to actions involving multiple claims or multiple parties. Fed.R.Civ.P. 54(b). Rule 54(b) authorizes district courts to direct entry of a final judgment where the following two elements are met: (1) "a final judgment"; and (2) "no just reason for delay." Fed.R.Civ.P. 54(b); Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 7-8 (1980) (quoting Sears, Roebuck Co. v. Mackey, 351 U.S. 427, 436 (1956)). In finding the two-part test satisfied for the reasons stated below, entry of final judgment is warranted.

Rule 54(b) states, in full, that:

When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction of entry of judgment.

Fed.R.Civ.P. 54(b) (emphasis added). The present case involves multiple claims and parties. As such, Rule 54(b) provides the proper statutory basis for Plaintiffs' Renewed Motion for Entry of Judgment.

As mentioned, in order to grant an entry of judgment under Rule 54(b), there must be a "final judgment" by the trial court as to at least one party in a multiple-party case. Cont'l Airlines, Inc. v. Goodyear Tire Rubber Co., 819 F.2d 1519, 1524 (9th Cir. 1987). "It must be a `judgment' in the sense that it is a decision upon a cognizable claim for relief, and it must be `final' in the sense that it is `an ultimate disposition of an individual claim entered in the course of a multiple claims action.'" Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 7 (1980) (quoting Sears, Roebuck Co. v. Mackey, 351 U.S. 427, 436 (1956)).

In the instant multiple claims litigation, this Court, in its June 28, 2004 Partial Summary Judgment Order, concluded as a matter of law that Plaintiffs were entitled to summary adjudication with respect to Plaintiffs' Fifth Cause of Action for Negligence only. Where, as here, multiple claims exist, and where liability is established on one or some of those claims, "Rule 54(b) authorizes the district court to determine the damages stemming from [those determined] claims and to enter final judgments with respect to them. . . ." Int'l Controls Corp. v. Vesco, 535 F.2d 742, 748 (2d Cir. 1976); see also Wright Miller, Federal Practice and Procedure: Civil §§ 2653, 2654. Accordingly, because Defendant's liability for negligence has been established, Rule 54(b) provides a proper vehicle for this Court to determine the amount of damages resultant from Defendant's liability.

Plaintiffs seek entry of a final judgment against Defendant for negligence in the amount of $23,676,057.00. The specific details by which Plaintiffs arrive at this amount is set forth in the Declaration of Brian Barry (the "Barry Declaration"). The Barry Declaration indicates that the damages amount was calculated by adding the total value of requisition certificates, which includes, the "dummy" invoices created by Defendant and the inter-company transfers Defendant personally authorized and processed by signing the requisition certificates.

Plaintiffs state that the methodology used to calculate the total damages against Defendant is valid and has already been adopted by the Court. Plaintiffs point out that the same methodology in calculating damages was previously used in Plaintiffs' May 24, 2004 Motion for Default Judgment Against the Estate of Andrew Korneich in the amount of $14,379,965.06. Although Plaintiffs' Motion for Default Judgment was granted, the Court does not automatically presume that the present motion's calculation of damages is also valid. Instead, the Court carefully reviews Plaintiffs' calculation of damages in order ensure that the damages stated are accurate and reasonable.

Upon review of the record, it appears that the damages stated by Plaintiffs are reasonable. Furthermore, the Court notes that Defendant has introduced no evidence disputing the amount of damages. When a nonmoving party fails to offer evidence disputing the existence or the amount of damages, the issue of damages is summarily decided in favor of the moving party as a matter of law. McGlinchy v. Shell Chem. Co., 845 F.2d 802, 808-09 (9th Cir. 1988) (holding that where the moving party meets its burden of proof with respect to proving the amount of damages, and the nonmoving party fails to "produce[any] . . . evidence at all to contradict . . . or even to enable contradictory inferences" as to this amount, the issue of damages is summarily decided in favor of the moving party). In the present case, Plaintiffs present undisputed evidence demonstrating the amount of damages resulting from Defendant's negligence. As such, the Court enters judgment in favor of Plaintiffs in the amount of $23,676,057.00 as against Defendant Virgil Lim.

Although the Ninth Circuit case, McGlinchy v. Shell Chem. Co., 845 F.2d 802, 808-09 (9th Cir. 1988), involved a partial summary judgment motion and not, as here, a motion for entry of judgment, the Court nevertheless finds the principle of summarily adjudicating the issue of damages applicable under the facts of the instant case where, as here, the non-moving party neither refutes nor provides contradictory evidence as to the amount or existence of damages.

Pursuant to Rule 54(b), the Court must next determine whether there is "no reason for delay" in entering a final judgment. Fed.R.Civ.P. 54(b). A district court may enter a final judgment under Rule 54(b) only if it makes an "express determination that there is no just reason for delay." Fed.R.Civ.P. 54(b). In making this determination:

[A] district court must take into account judicial administrative interests as well as the equities involved. Consideration of the former is necessary to assure that application of the Rule effectively "preserves the historic federal policy against piecemeal appeals." [citation omitted] It was therefore proper for the District Judge here to consider such factors as whether the claims under review were separable from the others remaining to be adjudicated and whether the nature of the claims already determined was such that no appellate court would have to decide the same issues more than once even if there were subsequent appeals.
Curtis-Wright Corp., 446 U.S. at 8 (quoting Sears, Roebuck Co., 351 U.S. at 438).

In the present case, all causes of action against Defendant, except for Plaintiffs' negligence claim, were dismissed on August 31, 2004. As such, with respect to claims against Defendant, there is no interrelation among claims. Moreover, the Court notes that Plaintiffs' negligence claim against Defendant does not appear interrelated with any claim against any other defendant such that a Rule 54(b) certification would be improper. Indeed, the Court, in its June 28, 2004 Partial Summary Judgment Order, made specific findings of fact against Defendant only. In particular, the Court found that:

Defendant, on his own initiative, recommended . . . improper inter-company transfers among Heritage facilities. [citation omitted]. Defendant knew that the inter-company transfers were improper and impermissible, he nevertheless prepared, signed and submitted . . . requisition certificates which were used to obtain bond proceeds, which were then used to find the improper inter-company transfers. [citations omitted]. In fact, Defendant even created and submitted numerous "dummy" invoices to . . . facilitate the improper and impermissible inter-company transfers. . . . Defendant's affirmative acts, certain omissions and personal participation definitely created an unreasonable risk of injury. . . ."

June 28, 2004 Partial Summary Judgment Order, 9:22-10:8. The Court found Defendant negligent for his own specific acts and omissions, and therefore liable for the resulting damages. In sum, Plaintiffs' negligence claim against Defendant does not appear interrelated to any other claim brought by Plaintiffs such that "the appellate court would have to decide the same issues more than once even if there were subsequent appeals."Curtiss-Wright Corp., 446 U.S. at 8 (quoting Sears, Roebuck Co., 351 U.S. at 438). Therefore, the Court makes the express determination that there is no just reason for delay in entering final judgment on Plaintiffs' negligence claim against Defendant under Rule 54(b).

2. Plaintiffs Are Entitled To Entry Of Pre-Judgment Interest

Plaintiffs further request pre-judgment interest. Pre-Judgment Interest on a damages award for a negligence claim may be permitted under California Civil Code § 3287 or § 3288. Superior Gunite v. Mitzel, 117 Cal. App. 4th 301, 316 (2004). Under California Civil Code § 3287, pre-judgment interest is allowed if the damages are "certain, or capable of being made certain by calculation." Cal. Civ. Code § 3287. Therefore, with respect to § 3287, the question is whether the damages were certain or ascertainable within the meaning of the statute. Superior Gunite v. Mitzel, 117 Cal. App. 4th 301, 316-17 (2004) (citing Esgro Central, Inc. v. General Ins. Co., 20 Cal. App. 3d 1054, 1062 (1971) ("Subdivision (a) of section 3287 does not authorize prejudgment interest as a matter of law where the amount of damage, as opposed to only the determination of liability, depends upon a judicial determination based upon conflicting evidence and is not ascertainable from truthful data. . . .").

Plaintiffs contend, and this Court agrees, that the Barry Declaration filed in connection with Plaintiffs' Renewed Motion for Entry of Judgment properly establishes, by "ma[king] certain by calculation[,]" the damages caused by Defendant. Cal. Civ. Code § 3287. Such damages are shown to total $23,676,057.00.

The Court also finds that pre-judgment interest is permissible under California Civil Code § 3288. Section 3288 permits pre-judgment interest to be awarded "[i]n an action for the breach of an obligation not arising from contract, and in every case of oppression, fraud, or malice, . . . in the discretion of the jury." Cal. Civ. Code § 3288; Bullis v. Sec. Pac. Nat'l Bank, 21 Cal. 3d 801, 814 (1978). The "jury" is construed to include the trial court as the trier of fact. Bullis v. Sec. Pac. Nat'l Bank, 21 Cal. 3d at 814 n. 16.

It is important to note that Pre-judgment interest under § 3288 is an element of compensatory damages and is not punitive or exemplary in nature. In re Pago Pago Aircrash of January 30, 1974, 525 F. Supp. 1007, 1013 (C.D. Cal. 1981). An award of pre-judgment interest pursuant to § 3288 compensates a party for the loss of the use of his or her property over th time period for which he or she was improperly deprived of it. Nordahl v. Dept. of Real Estate, 48 Cal. App. 3d 657, 665 (1975); In re Pago Pago Aircrash of January 30, 1974, 525 F. Supp. 1007, 1014 (C.D. Cal. 1981); Ruth v. Lytton Savings Loan Ass'n of N. Cal., 272 Cal. App. 2d 24, 26 (1969). Plaintiffs argue, and this Court agrees, that Plaintiffs have been deprived of the use of that sum since at least November 21, 2001, the date the filing of the initial class action complaint.

California Civil Code § 3288 does not provide a specific rate of interest; however, where the legislature provides for an award of interest, but does not set a specific rate, the state constitutional rate of 7% should be applied, Lund v. Albrect, 936 F.2d 459, 465 (9th Cir. 1990), and compounded annually,Koehler v. Pulvers, 614 F. Supp. 829, 850 (S.D. Cal. 1985) ("The interest rate [for state claims] . . . must be awarded at California's legal rate, 7% per annum.") (citing Davis Cox v. Summa Corp., 751 F.2d 1507, 1522-23 (9th Cir. 1985); CAL. CONST. Art. 15, § 1). Therefore, Plaintiffs' pre-judgment award is $5,011,017.20, and calculated in the following manner:

The Court is uncertain as to how Plaintiffs arrived at $4,996,436.81 as the total amount of pre-judgment interest. Although Plaintiffs cite to the Barry Declaration for support, Plaintiffs fail to demonstrate in a step-by-step approach how they calculated the total prejudgment interest. Although the Court was not obligated to determine the total pre-judgment interest, the Court did so for the benefit of the parties.

Calculated by adding the $23,676,057.00 judgment award to the $1,657,323.90 in pre-judgment interest from November 21, 2001 to November 21, 2002 = $25,333,380.00.

Calculated by adding $25,333,380.00 to the $1,773,336.60 in pre-judgment interest from November 21, 2002 to November 21, 2003 = $27,106,716.00.

Calculated as 304 (days from November 21, 2003 to September 20, 2004) divided by 365 (days in a year) multiplied by 7% = .0583013.

Pre-Judgement Interest from November 21, 2001 to November 21, 2002 ($23,676,057.00 × 7%) = $1,657,323.90 in pre-judgment interest Pre-Judgment Interest from November 21, 2002 to November 21, 2003 ($25,333,380.00 × 7%) = $1,773,336.60 in pre-judgment interest Pre-Judgment Interest from November 21, 2003 to September 20, 2004 ($27,106,716.00 × .0583013) = $1,580,356.70 in prejudgment interest Total pre-judgment interest is calculated by adding the pre-judgment interest from November, 21, 2001 to the present date of September 20, 2004:

$1,657,323.90 $1,773,336.60 + $1,580,356.70 _____________ Total Pre-Judgment Interest = $5,011,017.20

As stated above, and calculated herein, the total pre-judgment interest is $5,011,017.20. Plaintiffs are therefore entitled to $5,011,017.20 in pre-judgment interest.

3. Post-Judgment Interest

As set forth in Local Rule for the United States District Court for the Central District of California ("Local Rule") 58-7, Entry of Judgment — Settlement of Interest, "[i]f interest is accruing or will accrue on any judgment, decree or order, the party preparing the proposed form of judgment, decree or order shall indicate by memorandum attached thereto the applicable interest rate as computed under 28 U.S.C. § 1961(a) or 26 U.S.C. § 6621 and the amount of interest to be added for each day the document remains unsigned." Local Rule 58-7 (emphasis added). Although Plaintiffs' request post-judgment interest, they fail to comply with Local Rule 58-7, requiring Plaintiffs as "the party preparing the proposed form of judgment" to attach a memorandum to the proposed judgment stating "the applicable interest rate" as computed by statute and "the amount of interest to be added for each day the document remains unsigned." Local Rule 58-7.

By the express language of the Local Rules, Plaintiffs are required to provide specific information before this Court may award post-judgment interest. Due to Plaintiffs' failure to comply such Court rules, Plaintiffs' request is denied at this time.

III. CONCLUSION

In light of the foregoing, this Court grants in part and denies in part Plaintiffs' Motion for Entry of Judgment, Pre-Judgment Interest and Post-Judgment Interest Against Defendant Virgil Lim. The Court grants Plaintiffs' motion insofar as entry of judgment in the amount of $23,676,057.00, and pre-judgment interest in the amount of $5,011,017.20 is warranted. Plaintiffs' motion is denied without prejudice to submit a motion for an amended judgment with respect to Plaintiffs' request for post-judgment interest as against Defendant Virgil Lim.

IT IS SO ORDERED.


Summaries of

In re Heritage Bond Litigation

United States District Court, C.D. California
Sep 27, 2004
MDL Case No.: 02-ML-1475 DT, Consolidated with Cases: No. CV 01-5752 DT (RCx), Nos. CV 02-382 DT (RCx), CV 02-993 DT (RCx), CV 02-2745 DT (RCx), CV 02-6484 DT (RCx), CV 02-6841 DT (RCx), CV 02-9221 DT (RCx), Companion Case: No. CV 02-6512 DT (RCx), This Document Relates to: No. CV 02-382 DT (RCx) (C.D. Cal. Sep. 27, 2004)
Case details for

In re Heritage Bond Litigation

Case Details

Full title:IN RE HERITAGE BOND LITIGATION

Court:United States District Court, C.D. California

Date published: Sep 27, 2004

Citations

MDL Case No.: 02-ML-1475 DT, Consolidated with Cases: No. CV 01-5752 DT (RCx), Nos. CV 02-382 DT (RCx), CV 02-993 DT (RCx), CV 02-2745 DT (RCx), CV 02-6484 DT (RCx), CV 02-6841 DT (RCx), CV 02-9221 DT (RCx), Companion Case: No. CV 02-6512 DT (RCx), This Document Relates to: No. CV 02-382 DT (RCx) (C.D. Cal. Sep. 27, 2004)