Summary
noting that § 37–3a “is generally understood to contemplate simple interest”
Summary of this case from Weber v. Fujifilm Med. Sys. U.S.A., Inc.Opinion
No. X04 CV94 0124630 S
November 9, 2005
MEMORANDUM OF DECISION
The defendant ATC Partnership seeks a clarification of a decision by the trial court as to whether interest awarded in a condemnation case was intended to be computed as simple interest or as compounded interest. This case has a long and tortuous history: it has twice been appealed to the Supreme Court. Judge McLachlan was the trial judge on remand; in his memorandum of decision he awarded interest of ten percent. During a post-judgment hearing, held on April 14, 2003, Judge McLachlan was asked to reconsider the interest rate, but he declined to do so and reconfirmed that ten percent was "a fair and reasonable rate." (pp. 39-40). He said nothing expressly and specifically one way or another whether the interest was intended to be compounded; nor had he expressly and specifically stated his intention in that regard in the course of his prior written memorandum of decision. See pp. 24-25 of Judge McLachlan's memorandum of decision dated February 14, 2003. The Supreme Court affirmed the decision of Judge McLachlan on December 14, 2004. In the course of its decision, it stated that the plaintiff condemnor had raised as an issue the propriety of an award of ten percent interest pursuant to General Statutes § 37-3c, but the court declined to consider the issue because it had not been properly presented. Northeast CT Economic Alliance, Inc. v. ATC Partnership, 272 Conn. 14, 50-51 (2004).
The instant "Post-Judgment Motion for Determination Regarding Computation of Interest" was filed in the trial court on January 25, 2005. The motion was initially filed in the judicial district of New London. Eventually the motion and the file worked their way to me. The parties represented that they attempted to have the matter decided by Judge McLachlan but that he was unable to decide the matter because of his intervening appointment to the Appellate Court.
Judge McLachlan's appointment to the Appellate Court was effective May 20, 2003.
The positions of the parties are simply stated. ATC argues that the award of interest was made pursuant to General Statutes § 37-3c and the policy in condemnation cases is to award compound interest in order fully CT Page 14064-hw to compensate the condemnee. The plaintiff argues that in the absence of qualifying language, the award of simple interest is presumed. Either method of computing interest would presumably be within the discretion of the court. I believe my role is to attempt to determine the intention of the trial court at the time of entering judgment.
In an effort to do so, I have read the memorandum of decision and the transcript of the post-judgment proceedings, as well as the appellate decision. I of course have read the briefs and authorities cited by the parties. I have not contacted Judge McLachlan. While I make no claim of clairvoyance, I believe that it was the intention of the court to award simple interest of ten percent.
I reach this conclusion for several reasons. First, authority does support the notion that in the absence of an indication to the contrary, the presumption is that interest will be computed as simple interest. See, e.g., Loomis Loomis, Inc. v. Stecker Colavecchio Architects, Inc, 6 Conn.App. 88, 94 (1986); Victorian Associates Limited Partnership v. City of Hartford, 1994 Conn.Super. 2238 (Aronson, J.) ( 12 Conn. L. Rptr. 425).
Second, an analysis of § 37-3c does not lead to a contrary conclusion. I agree that Judge McLachlan was probably considering § 37-3c, and not § 37-3a or some other basis, in assessing the "fair and reasonable interest." Section 37-3c reads as follows:
ATC suggests that the condemnor, in its briefs to the Supreme Court, assumed that interest was to be compounded pursuant to § 37-3c. I do not find that assumption in the appellate materials. The condemnor fairly clearly assumed that the statutory authority was § 37-3c, and indeed reference is made by the Supreme Court to § 37-3c; supra; but such reference does not necessarily lead to the second assumption that compound interest was contemplated.
Sec. 37-3c. Rate of interest recoverable in condemnation cases. The judgment of compensation for a taking of property by eminent domain shall include interest at a rate that is reasonable and just on the amount of the compensation awarded. If a court does not set a rate of interest on the amount of compensation awarded, the interest shall be calculated as follows: (1) If the period for which interest is owed does not exceed one year, interest shall be calculated from the date of taking at an annual rate equal to the weekly average one-year constant maturity yield of United States Treasury securities, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the date of taking; and (2) if the period for which interest is owed exceeds one year, interest for the first year shall be calculated pursuant to the provisions of subdivision (1) of this section and interest for each additional year shall be calculated CT Page 14064-hx on the combined amount of principal, which is the amount by which the compensation award exceeds the original condemnation deposit plus accrued interest at an annual rate equal to the weekly average one-year constant maturity yield of United States Treasury securities, as published by the Board of Governors of the Federal Reserve System, for the calendar week preceding the beginning of each year for which interest is owed. Such judgment shall not include interest on any funds deposited by the condemnor as compensation for the taking for the period after such deposited funds become available for withdrawal by the condemnee. The interest shall accrue from the date of taking to the date of payment.
The first sentence directs the court in a condemnation case to include interest "at a rate that is fair and reasonable." The second sentence provides for the automatic computation of interest if the court does not set a rate of interest. The default rate, essentially, is the rate generated by United States Treasury bills, and it is to be compounded. Finally, the section states that interest shall "accrue from the date of taking to the date of payment."
A simple analysis of the statute shows that if the court sets a rate of interest that it believes to be fair and reasonable, then the compounding provision does not take effect. There is no reason apparent in the statute why the court could not award compound interest, but there also is no presumption one way or another.
One can garner some clues from the considerations expressly before the court at the time it awarded interest. In its memorandum of decision, it expressly referred to the effort to award reasonable and just interest pursuant to § 37-3c. It mentioned that ATC had sought 18%, which is the amount of interest though simple, which is paid on back taxes. The court declined to award 18% for several reasons, one of which was that there was no reason why the defendant should be in a better position, at least as to that portion, than anyone who was contesting a tax assessment. The court ended up agreeing with Judge Hammer (it thought) by awarding ten percent. Again, there was no mention of whether simple or compound interest was contemplated.
Apparently the "default" mechanism of § 37-3c applied to the award CT Page 14064-iz of Judge Hammer, who decided the case the first time at the trial level.
At the argument on the post-judgment motion, Judge McLachlan again heard the positions of the parties. Recognizing that Judge Hammer had not set an interest amount, Judge McLachlan again decided that ten percent was equitable. The comparison with the delinquent tax rate was raised, as CT Page 14064-hy well as a consideration that ATC apparently had borrowed money for the project at nine percent again apparently simple. The plaintiff did at one point suggest the treasury bill rate, which, as aptly noted by the defendant might imply compounding. The court, however, remained constant at the ten percent rate.
Had the court intended compound interest, the total interest on the base award of $1,752,365 over ten years would be roughly $3,000,000, according to the defendant's calculations. The court rejected as too high simple interest of 18 percent. But eighteen percent simple interest over ten years amounts to approximately the same $3,000,000. The court referred at times to "the statutory rate" of ten percent: presumably, the reference was to § 37-3a, which is generally understood to contemplate simple interest. Because presumptively interest is computed as simple interest in the absence of expression to the contrary, and because an award of compound interest would be inconsistent with some of the statements of the trial court, I find it more likely than not that Judge McLachlan intended to award simple interest.
$1,752,365 × 0.18 = $315,425.70, which times ten equals $3,154,257. The comparison, of course, is not as compelling in the earliest years following judgment, but Judge McLachlan issued his finding about eight years after the taking.
Two additional concerns may be briefly noted. First, the plaintiff has claimed that the motion is untimely, if considered to be a motion to open or a motion for reconsideration. In the circumstances, where a legitimate dispute exists as to how a judgment is actually to be paid, I find that the motion is appropriate.
Second, the plaintiff questions whether the interest should run for the entire time period between the taking and payment. I find that it should so run. See the last sentence of General Statutes § 37-3c; see also Peter Rock Associates v. Town of North Haven, 2001 Conn.Super. 1218 (Silbert, J.).
So ordered.