Opinion
No. CV98-0163762S
February 14, 2011
Memorandum of Decision on Plaintiff's Motion for Order on Remand (No. 222)
Procedural/Factual Background
The plaintiff is a Maine corporation now or formerly having a business office in Greenwich Connecticut. The business of the corporation was salmon farming conducted from three hatcheries in bays on the coast of Maine. The plaintiff sustained a significant loss as the result of Hurricane Bob which struck the east coast almost twenty years ago on August 19, 1991. The hurricane damaged the fish cages at plaintiff's Frenchboro farm, resulting in the escape of farmed salmon. Plaintiff's inventory of farmed salmon at its three hatcheries was insured by a policy issued by the defendants. The policy covered fish that were lost due to death, destruction or escape. On March 3, 1992 the plaintiff submitted a formal claim to the defendants specifying losses of $744,070, later reduced to $729,672. The defendants denied the claim by letter, stating that the claim was excessive.
This action was commenced in February of 1998, claiming breach of the insurance contract and violations of the late payment and unfair claims settlement practices provisions of the Maine Insurance Code, Title 24-A of the Maine Revised Statutes. The case was tried to a jury in this court in the fall of 2001. The jury returned a verdict in favor of the plaintiff on its breach of contract and late payment claims (Counts 1 and 2, respectively), awarding damages of 445,000. The jury returned a verdict in favor of the defendants on the unfair claims settlement practices claim (Count 3). The parties had stipulated prior to trial that in the event of a plaintiff's verdict, the trial court, not the jury, would decide the amount and calculation of interest and attorneys fees. The trial court (Tierney, J.) awarded the plaintiff attorneys fees of $487,194 and interest of $765,515. The attorneys fees and interest were awarded in conjunction with the plaintiff's verdict on Count 2 under the authority of 24A Maine Revised Statutes Annotated § 2436 which provides for an award of interest at the rate of 1.5% per month after the due date and reasonable attorneys fees in the event of recovery against an insurer under that statute for the insurer's failure to pay an undisputed insurance claim within the statutory time limit. The interest awarded by Judge Tierney was calculated through November 6, 2001 — the date of the verdict.
The plaintiff had sought $744,070 in compensatory damages for loss of fish and $20 million in consequential damages for the loss of its business.
On appeal, the Appellate Court reversed the judgment on Count 2, holding that the Maine statute on which it was based, § 2436, did not apply to this claim because claims under that statute are limited by express statutory language to "a claim for payment of benefits under a policy of insurance delivered or issued for delivery within this state [Maine]." The court found based on the evidence at trial that the policy issued by the defendants was delivered to the plaintiff at its Connecticut office and was not issued for delivery in Maine. The verdict on Count 2 and its concomitant award of interest and attorneys fees was reversed and the case was remanded with direction to render judgment for the defendants on that count. The judgment on the $445,000 breach of contract verdict (Count 1) was affirmed, as was the defendants' verdict on Count 3. Mariculture Products, Limited v. Certain Underwriters, 84 Conn.App. 688 (2004), cert. denied, 272 Conn. 905 (2004) (" Mariculture I").
On remand, the plaintiff moved in this court in January 2005 for an award of prejudgment and post-judgment interest under Connecticut law on the $445,000 verdict on the breach of contract count, which remained unsatisfied even after it had been affirmed in Mariculture I. The interest claim was made under Conn Gen. Stat. § 37-3a which provides in relevant part:
No part of the $445,000 verdict has been paid. In 2010 the Underwriters at Lloyds of London (defendants herein) commenced an interpleader action in this court (Docket No. FST-CV10-6005444S) naming Mariculture Products (plaintiff herein) Ruth Navon, Gershon Navon, Frank Simon II, Cummings Lockwood, LLC, and Norman Hanson, Detroy, LLC as defendants who were allegedly competing claimants for the payment of the $445,000 verdict amount awarded to Mariculture. All defendants in the interpleader action have now filed a Joint Motion for Interlocutory Judgment of Interpleader and Final Judgment stipulating that final judgment may enter in the interpleader action holding that the Plaintiff should pay the $445,000 to Mariculture. Although no judgment has yet entered in that interpleader case, it is clear that there are no parties seeking payment of the $445,000 policy proceeds other than Mariculture which has a final judgment in its favor against Underwriters in this case in that amount.
(a) Except as provided in sections 37-3b, 37-3c and 52-192(a), interest at the rate of ten percent a year, and no more, may be recovered and allowed in civil actions or arbitration proceedings under chapter 909, including actions to recover money loaned at a greater rate, as damages for the detention of money after it becomes payable . . .
This court, (D. Tobin, J.) granted the motion and entered a supplemental award of prejudgment interest in the amount of $452,924.66 calculated at the rate of ten percent per annum from April 2, 1992 through June 4, 2002. (The date of Judge Tierney's memorandum of decision disposing of all post-verdict motions.) He also ordered that postjudgment interest at the rate of ten percent per annum would run from the date of judgment until payment. Judge Tobin concluded that "[n]othing in the stipulations entered into by the parties in open court [at the start of trial, regarding the adjudication of the plaintiff's claim for interest] suggests an intent to limit the issue of interest to Maine law." Following up on that conclusion the court relied on the jury's answers to certain interrogatories to find that the defendants wrongfully withheld payment of policy proceeds thereby entitling the plaintiff to prejudgment and postjudgment interest under Conn. Gen. Stat. § 37-3a. On appeal the Appellate Court reversed both of those findings. Holding that the stipulation reserving the issue of interest to the court and not to the jury was limited to interest claimed under Maine law only, and not Connecticut law, and that the jury interrogatory answers relied upon by the court were not an adequate factual predicate for a finding of wrongful withholding under section 37-3a because those interrogatories had been drafted and submitted to the jury to determine if the plaintiff had proved the different factual predicates for an award of interest under § 2436 of the Maine Revised Statutes, the Appellate Court reversed the award of interest and remanded the case with direction to vacate that order. Mariculture Products, Ltd v. Those Certain Underwriters at Lloyds of London Individually Subscribing to Certificate No. 1395/91 et al., 110 Conn.App. 668 (2008). (" Mariculture II") On remand, this court (Mintz, J.) vacated the award of interest under Conn. Gen Stat. § 37-3a. (Docket Entry No. 227.00, September 10, 2010.)
Now before the court is Plaintiff's Motion for Order on Remand dated June 8, 2010, seeking an order requiring the defendants to pay to Mariculture: (1) the judgment of 445,000; (2) $222,703 in prejudgment interest under Maine law (14 Maine Revised Statutes Annotated § 1602-B); and (3) $437,096 in post-judgment interest under Maine law ( 14 M.R.S.A § 1602-C) from the date of judgment until payment. As an alternative to the third requested order for postjudgment interest plaintiff in its memorandum of law and at oral argument seeks an order requiring the defendants to pay the postjudgment interest ordered by Judge Tobin on August 1, 2006 under Conn. Gen Stat. § 37-3a. The defendants object to plaintiff's motion on the grounds that the claims made therein for entitlement to prejudgment interest or postjudgment interest have either been waived by the plaintiff since they were never raised in earlier appeals or rejected by the Connecticut Appellate Court in Mariculture I or Mariculture II.
The statutes cited in the motion are actually 14 M.R.S.A. §§ 1601-B and 1601-C which seem to be erroneous citations. Section 1601 does not provide for prejudgment or postjudgment interest. It deals with entry of judgment, attachments, rights to disclose, and death of a party. The statutes relied upon by the plaintiff are clearly 14 M.R.S.A. § 1602-B (Interest before judgment) and 14 M.R.S.A. § 1602-C (Interest after judgment) which are the statutes cited in plaintiff's memorandum of law and at oral argument, and by the defendants in opposing this motion.
Discussion
A. Order Directing Payment of the $445,000 Judgment
Plaintiff is the holder of a final judgment against the defendants in this case, entered pursuant to the verdict of the jury on Count 1 of the Amended Complaint and affirmed on appeal in Mariculture I. Plaintiff has its remedies to enforce that judgment. Furthermore, plaintiff is poised to have judgment enter in its favor in the interpleader action commenced by plaintiff seeking a court order as to payment of the $445,000 judgment. There is nothing to be gained by this court in effect entering a second $445,000 judgment against the defendants in this case, and the court declines to do so.
B. Alternative Claim for Postjudgment Interest under Conn. Gen. Stat. § 37-3a
This claim is precluded by final judgment. In Mariculture II the Appellate Court clearly held that "[t]he judgment is reversed as to the order of interest under § 37-3a and the case is remanded with direction to vacate that order." 110 Conn.App. at 679. Since the underlying order of interest under § 37-3a had included both prejudgment and postjudgment interest and the Appellate Court did not limit its order of reversal to one or the other, the mandate to vacate clearly applied both to the prejudgment and postjudgment interest under Connecticut law, as did the order to vacate following remand, entered in this court on September 10, 2010.
C. Prejudgment Interest under M.R.S.A. § 1602-B
Section 1602-B, which plaintiff has characterized as the statute authorizing regular or traditional Maine prejudgment interest awarded to the prevailing party, provides, in part:
Interest before judgment
(3) In civil actions other than those set forth in subsections 1 and 2 [small claims actions and suits on a note or contract that contain a provision relating to interest] prejudgment interest is allowed at the one year United States Treasury bill rate plus 3%.
(4) When prejudgment interest is awarded pursuant to subsection 2 or 3, the applicable rate must be asserted in the judgment. (5) Prejudgment interest accrues from the time of notice of claim setting forth under oath the cause of action, served personally or by registered or certified mail upon the defendant until the date on which an order of judgment is entered. If notice of claim has not been given to the defendant, prejudgment interest accrues from the date on which the complaint is filed . . . If the prevailing party at any time requests and obtains a continuance for a period in excess of 30 days, interest is suspended for the duration of the continuance. On petition of the nonprevailing party the trial court may order that interest awarded by this section be fully or partially waived.
Defendants have argued that this claim for prejudgment interest has been waived in that it was not pleaded in the complaint, which alleged a claim for prejudgment interest under § 2436, but not under § 1602-B. It is true that the Amended Complaint in Count 2 sought prejudgment interest by alleging nonpayment on in insurance claim in violation of § 2436. Although there is no claim pleaded for prejudgment interest expressly premised on § 1602-B, the general claims for relief at the end of the complaint include a claim for "interest" without citation of any statute. This latter claim was sufficient to plead a claim for prejudgment interest under any applicable statute. "Interest and costs need not be specifically claimed in the demand for relief in order to receive them." Practice Book § 10-28.
Defendants argue strenuously that plaintiff has waived a claim for prejudgment interest under § 1602-B — or ought to be estopped from making such a claim at this late date — because that claim was not made at trial and has not been mentioned in any of the post-trial proceedings during the course of two appeals and several post-judgment hearings in this court. The starting point for analysis of this claim is the stipulation or stipulations reached by the parties concerning the issue of prejudgment interest. In ruling on post-verdict motions Judge Tierney who presided at the trial described the agreement:
The parties agreed that Maine law was to be applied as to the issues involving the calculation and determination of prejudgment interest as well as attorneys fees . . . Counsel agreed that the trial court, not the jury, would decide the amount and calculation of interest and attorneys fees . . . The parties stipulated, that if such a violation was found by the jury [a violation of the late payment proscription of § 2436], an award of prejudgment interest and attorneys fees would be appropriate. The parties further stipulated that the claim for prejudgment interest and attorneys fees under § 2436 including the method of calculation and the amount would be determined by the trial court." (Emphasis in original.) Mariculture v. Under-Lloyds of Lond., No. CV980163762S, Superior Court, Judicial District of Stamford/Norwalk at Stamford (June 4, 2002, Tierney, J.); 2002 Ct.Sup. 7136, 7139 as quoted in Mariculture II, 110 Conn.App. at 676, 677 where the court said "The record supports the stipulation as summarized by the trial court . . ." Id. 677
The waiver of jury trial on the interest claim was not total. The court was to calculate and determine the amount of interest only if the jury found the factual predicate for the award of interest under § 2436, the Maine statute then being claimed. This concept was key to the second basis of reversal in Mariculture II: "Here, the trial court had ruled that the factual underpinning to the plaintiff's claim for interest and attorneys fees would be decided by the jury . . . We conclude that the jury's answers to the interrogatories do not support the court's determination on remand. The interrogatories directed the jury to make specific findings on the plaintiff's claims under Maine law. The jury did not make any findings concerning [Conn. Gen. Stat.] § 37-3a." 110 Conn.App. At 678. The role of the jury in the prejudgment interest claim is also confirmed by the fact that the parties submitted special interrogatories to the jury, one of which specifically asked whether or not the defendants had "fail[ed] to pay an undisputed claim or any undisputed part of any claim when due," in other words whether or not the defendants had violated § 2436(3).
Under these circumstances the court agrees that the plaintiff has waived the right to claim prejudgment interest under M.R.S.A. § 1602-B by a motion filed some nine and one-half years after the conclusion of the trial. By virtue of that delay in asserting its known right to claim prejudgment interest under § 1602-B, the plaintiff avoided the obligation of proving factual underpinnings of that claim before the jury (long ago discharged) and prevented the defendants from presenting evidence and/or making arguments to the jury that the plaintiff had not met that burden. Plaintiff argues that the right to prejudgment interest under § 1602-B is a matter of right and not discretionary, in effect, that there is no factual predicate to be shown, but that is not necessarily so. Under § 1602-B there could be a factual issue whether or not the plaintiff has been responsible for any continuance of the case lasting more than thirty days, or whether or not the plaintiff had properly served a sworn notice of claim on the defendants, or if a notice of claim was served, whether or not it was adequate. The jury has been bypassed on these possible factual disputes in violation of the parties' express agreement that factual underpinnings of the interest claim would be decided by the jury. The plaintiff is therefore estopped from asserting the § 1602-B claim for prejudgment interest at this late date under these circumstances.
The plaintiff has submitted in connection with its 2005 motion for prejudgment interest under Conn. Gen. Stat. § 37-3a transcript excerpts of colloquy between counsel and the trial court on October 4, 2001 and October 25, 2001 where plaintiff's counsel Atty. Poliquin made repeated reference to plaintiff's option to seek interest under § 2436 or to seek "traditional pre-judgment interest" depending on the nature of the damages found by the jury. See excerpts attached to Docket Entry No. 206.
The interrogatories that would have been submitted to the jury to cover issues such as these under § 1602-B may have been had some overlap with those that were actually submitted under § 2436, but the Mariculture II court held that "[t]he interrogatories directed the jury to make specific findings on plaintiff's claims under Maine law [§ 2436] . . . The jury did not make any findings concerning [Conn. Gen. Stat.] § 37-3a" 110 Conn.App. at 679. Section 37-3a is Connecticut's general provision for awarding interest to prevailing litigants. Since § 1602-B is specifically applicable to insurance claims, and unfair insurance settlement practices, it is doubtful that § 2436 interrogatories would suffice for a claim under § 1602-B which is Maine's general provision for awarding prejudgment interest to prevailing parties. For example the former allows interest to accrue after the "due date" of the claim payment, while the latter allows interest to accrue from the date of sending a notice of claim or, if no notice was sent, from the date of filing the lawsuit.
The cases cited by plaintiff for the proposition that prejudgment interest is a matter of right under Maine law must be taken as qualified by the holding of the Supreme Judicial Court of Maine in Batchelder v. Tweedie v. Batchelder, CT Page 4969 294 A.2d 443, 444 (1972) that "The right to interest [under § 1602] is not absolute but is subject to enlargement or loss due to the parties' conduct of the proceedings." And none of the cases cited by plaintiff involved a stipulation such as here that factual underpinnings of a claim for interest must be decided by the jury.
e.g. Enqueue, Inc. v. Data Management Group, 566 F.Sup.2d 13, 23 (D.Maine, July 22, 2008) ("Maine statutory law [§ 1602-B] entitles civil plaintiffs to prejudgment interest as a matter of right").
D. Postjudgment Interest under 14 M.R.S. A. § 1602-C
Postjudgment interest under Maine law is governed by 14 M.R.S.A. § 1602-C which provides in part:
Interest after judgment
1. In all civil and small claims actions, post-judgment interest is allowed at a rate equal to: . . . B. The one-year United States Treasury bill rate plus 6% . . .
The applicable post-judgment interest rate must be stated in the judgment, except for judgments in small claims actions.
2. Post-judgment interest accrues from and after the date of entry of judgment and includes the period of any appeal . . . If the prevailing party at any time requests and obtains a continuance for a period in excess of 30 days, interest is suspended for the duration of the continuance. On petition of the nonprevailing party and on a showing of good cause, the trial court may order that interest awarded by this section be fully or partially waived.
The plaintiff asserts that the stipulation that the issue of interest being governed by Maine law is broad enough to cover both prejudgment interest and post-judgment interest. The defendants argue that this particular statute, § 1602-C, being procedural and not substantive, would not be covered by the stipulation, and that plaintiff waived its right to claim under § 1602-C by claiming initially under § 2436, but does not dispute the assertion that Maine law governs any claim for interest, prejudgment or post-judgment. And that assertion has become the law of the case under Mariculture II where the court reversed and remanded with direction to vacate Judge Tobin's award of interest under Connecticut law, which included both prejudgment interest and an award of post-judgment interest at 10% per annum from the date of judgment until payment, saying: "There is ample evidence from the record to suggest that the parties intended to limit the issue of interest to Maine law." 110 Conn.App. at 676. Plaintiff is therefore within the scope of the stipulation in making this claim for post-judgment interest under a Maine statute.
Plaintiff cites a statement made by defendants at page 23 of their 2007 brief submitted to the Appellate Court in conjunction with the Mariculture II appeal: "Contrary to the postremand court's observations, literally everything in the trial record establishes that the only substantive law at issue in this case — on the question of interest and everything else — was Maine law." (Emphasis in original.)
There was no waiver by not submitting the factual issues underpinning this claim for post-judgment interest before the jury. Unlike § 2436 under which the award of interest requires detailed factual findings as to the practices and timing of the processing of insurance claims, § 1602-C is a general statute allowing for the award of post-judgment interest to a prevailing party in a civil action. There are no uncontested factual issues which might have been submitted to the jury. The fact of the judgment is uncontested and a matter of record. The fact of nonpayment of the judgment could not have been known at the time of verdict. Section 1602-C does permit a nonprevailing party to argue for a full or partial waiver of post-judgment interest "on a showing of good cause." Defendants here have argued and briefed that plaintiff should be deemed to have waived post-judgment interest under § 1602-C by failing to plead under that statute (previously discussed) and by failing to raise a claim under that statute until June 8, 2010 through the course of several post-judgment proceedings in this court and two appeals to the Appellate Court. But no claim of waiver based on facts which existed prior to the November 6, 2001 jury verdict has been advanced. In other words, there is no factual issue underpinning this claim which might have been submitted to the jury and defendants have therefore not been deprived of their right under the stipulation to have the factual underpinnings of this claim determined by the jury. Although § 1602-C contemplates a motion for post-judgment interest being submitted to the court at the time of judgment because of the requirement that "[t]he applicable post-judgment interest rate must be stated in the judgment . . ." it has been held that that requirement does not bar the post-trial submission of a claim under § 1602-C to the court. Walsh v. Cusack, 946 A.2d 414, 416-17 (2008), where the issue of post-judgment interest was raised for the first time on appeal ("[T]here is no indication that . . ." [the 2007 amendment which added the requirement that the rate of post-judgment interest be stated in the judgment] alters the long-standing practice that a party is entitled to post-judgment interest absent an express full or partial waiver of interest, for good cause, by the court"). The Walsh court goes on to say that, . . . "a party is generally entitled to post-judgment interest even absent a request." Id. 417.
This motion first came up on the non-arguable short calendar, but I continued the matter sua sponte to the "law-arguable" short calendar. Although both parties were present at that subsequent calendar and offered oral argument, neither party sought to present any evidence, which would have been their right.
Plaintiff has consistently claimed post-judgment interest. Having lost the first appeal in 2004 on a jurisdictional issue, and the second appeal in 2008 on a stipulation construction issue, it was entitled to continue its pursuit of post-judgment interest by this motion filed in 2010 by which the plaintiff seeks to reconcile the law of the case established by the two appeals and proceed under a statute which may not be inconsistent with either appellate holding. The fact that this claim was not made immediately after the 2008 decision in Mariculture II should not relegate the plaintiff forever to the result that it has no claim at all for loss of use of $445,000 to which it is entitled by a final judgment of this court. If there has been delay, the blame does not lie solely on the shoulders of the plaintiff. The defendants, underwriters of a world-renowned insurance company, have continued steadfastly to withhold payment of a final judgment of this court for all this time. The court rejects the waiver argument insofar as is applies to post-judgment interest.
The claim for interest that plaintiff did make at trial under § 2436 allowed for interest both prejudgment and post-judgment, if the jury found an insurer's failure to pay an uncontested claim within 30 days of receipt of a proof of loss in violation of the statute. The interest under § 2436 would start to run "at the rate of 1 1/2% per month after the [30 day] due date" which can include both prejudgment and post-judgment accrual periods.
Defendants argue that § 1602-C should not be applied because all of M.R.S.A. § 1602 was held to be procedural (for retroactivity purposes) in Batchelder v. Tweedie, 294 A.2d 443 (Maine, 1972). But this is not a choice of law or conflict of laws issue where the procedural/substantive distinction would be significant. This is an application of Maine law by stipulation of the parties.
They [defendants] contend that the parties could not have contemplated or arrived at any agreement concerning interest under Connecticut law because the plaintiff's claim to interest before, during and after the trial had been under Maine law. We agree with the defendants. Mariculture II, 110 Conn.App. 668, 675.
The stipulation of the parties was clearly the basis of the foregoing holding, as the court continued:
[A] stipulation of the parties is to be regarded and construed as a contract . . . In giving meaning to the terms of a contract, we have said that a contract must be construed to effectuate the intent of the contracting parties. (Quotation marks and citation omitted.) Id.
There is nothing in the record to indicate any intent of the stipulating parties to distinguish between Maine procedural law and Maine substantive law in their agreement to have the claim for interest decided under the law of Maine. Section 1602-C is a statute of the state of Maine pursuant to which prevailing civil litigants in Maine are awarded post-judgment interest as a matter of right unless it is found that they have waived the right to such interest. Purwin v. Robertson Ents., Inc., No. CV-81-1444, 1985 Me.Super. LEXIS 287, *3, 4 (Me.Super.Ct. October 10, 1985); See also Enque, Inc. v. Data Mgmt. Group, Inc., supra, fn.6 (Prejudgment interest). A statute like § 1602-C was clearly within the contemplation of the parties' stipulation whether or not it has been held to be procedural for purposes of retroactive application.
The rate of interest to be awarded under § 1602-C(1) is "a rate equal to . . . the United States Treasury Bill rate plus 6%." The United States Treasury Bill rate is further defined as "the weekly average one-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the last full week of the calendar year immediately prior to the year in which post-judgment interest begins to accrue." The jury verdict in this case awarding the plaintiff $445,000 in damages was rendered on November 6, 2001. The measuring period for rate determination would therefore be the final week of the year 2000. Plaintiff claims — and defendant does not dispute — that the weekly average one-year constant maturity yield as published by the Board of Governors for the Federal Reserve System for the last full week of 2000 was 5.44%. The applicable § 1602-C rate is therefore 5.44% plus 6% or 11.44% per annum. Interest on the sum of $445,000 from November 6, 2001 through today, February 14, 2011, at 11.44% per annum comes to $472,119.00. The per diem interest for days following February 14, 2011 is $139.47.
Order.
Plaintiff's Motion for Order on Remand dated June 8, 2010, is granted in part and denied in part, as follows:
(1) The request for an order directing the defendants to pay the $445,000 judgment entered against them in 2001 on Count 1 is denied as unnecessary and duplicative, since the plaintiff already holds a final judgment against the defendants in that amount;
(2) The request for an award of prejudgment interest under Maine Revised Statutes Annotated § 1602-B is denied;
(3) The request for an award of post-judgment interest under Maine Revised Statutes Annotated § 1602-C is granted. Post-Judgment Interest in the amount of $472,119.00 is awarded for the period November 6, 2001 through February 14, 2011, plus $139.47 for each day after February 14, 2011 that the $445,000 judgment remains unpaid;
(4) the alternate request for an award of post-judgment interest under Connecticut General Statutes § 37-3a is denied.