PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

______________

No. 21-2289

______________

SOVEREIGN BANK

v.

REMI CAPITAL, INC; ERIK A. KAISER, Individually

 *Jenzack Partners, LLC, as assignee for Sovereign Bank,

 Appellant

 *(Pursuant to Rule 12(a), Fed. R. App. P.)

______________

APPEAL FROM THE 

UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF NEW JERSEY

(D.C. No. 3-09-cv-01580)

District Judge: Honorable Peter G. Sheridan

______________

Argued: May 25, 2022

______________

Before: GREENAWAY, JR., PORTER, and PHIPPS, Circuit 

Judges.
2

(Opinion Filed: September 15, 2022)

Howard J. Bashman [ARGUED] 

Suite 400

500 Office Center Drive

Fort Washington, PA 19034

Peter R. Bray

Bray & Bray

100 Misty Lane

Lanidex Executive Center

Parsippany, NJ 07054

Alissa L. Poynor

Riemer & Braunstein

100 Cambridge Street

22nd Floor

Boston, MA 02114

Counsel for Appellant

Joseph B. Fiorenzo

Stephen M. Klein [ARGUED]

Mark S. Olinsky

Sills Cummis & Gross

The Legal Center

One Riverfront Plaza

11th Floor

Newark, NJ 07102

Counsel for Appellee

______________

OPINION 

______________
3

GREENAWAY, JR., Circuit Judge.

Parties settle their civil disputes. They enter into 

agreements wherein plaintiffs dismiss their case or defendants 

consent to entry of a judgment. The cases end. It is incumbent 

on the parties to detail, with precision and with clarity, the 

bargain they have struck. The failure to do so in an agreement, 

or in a consent judgment that reflects or incorporates that 

agreement, precludes a district court from enforcing an 

otherwise silent provision one party asks it to divine. Here, the 

District Court correctly discharged a consent judgment that 

was satisfied as written. Accordingly, we will affirm the 

District Court’s final order discharging the judgment in this 

case.

I. BACKGROUND

This appeal arises out of an action to collect on a 

defaulted loan originated over a decade ago. Sovereign Bank 

(“Sovereign”) was a federally chartered savings bank 

headquartered in Pennsylvania.1

 REMI Capital, Inc. (“REMI”) 

is a Delaware corporation, with its principal place of business 

in New Jersey. Erik A. Kaiser is an individual residing in New 

York. On January 25, 2007, Sovereign entered into a loan 

agreement with REMI, extending to REMI a $15 million line 

of credit to help REMI fund the origination or acquisition of 

mortgage loans for residential property (the “Loan 

1

 In the years since this action was instituted, Sovereign Bank 

moved its headquarters to Boston, Massachusetts, and 

rebranded as Santander Bank, N.A.
4

Agreement”). In connection with the Loan Agreement, 

Sovereign and REMI executed a promissory note in the amount 

of $15 million (the “Promissory Note”). On that same date, 

Kaiser executed a suretyship agreement guaranteeing all of 

REMI’s obligations under the Loan Agreement and 

Promissory Note (the “Suretyship Agreement”). The 

Suretyship Agreement contains a choice-of-law provision 

providing that Pennsylvania law governs interpretation of the 

agreement. 2

As relevant here, Sovereign and Kaiser agreed that “any 

judgment entered against [Kaiser] pursuant to [the Suretyship 

Agreement] shall bear interest until paid at the Prime Rate plus 

six percent (6%) per annum, and not at the statutory rate of 

interest after judgment, and shall be collectible as part of any 

judgment under this Agreement.” App. 93. 

Eventually, REMI defaulted. On February 6, 2009, 

Sovereign sent REMI a default notice. Sovereign filed a 

complaint against REMI and Kaiser on April 3, 2009. 

Ultimately, the parties resolved the case by agreement, which 

the District Court entered as a consent judgment on September 

1, 2010, in the amount of $1,560,430.24 (the “Consent 

2

 We focus on the language of the Suretyship Agreement 

because Appellants’ opening brief only seeks to enforce the 

contractual rate of interest against Kaiser solely on the basis of 

his guaranty. The language of the Suretyship Agreement, 

including the choice-of-law provision, thus governs Kaiser’s 

obligations with respect to the loan underlying this action. 

REMI Capital does not appear to have participated in this 

appeal, without objection from either party, and its obligations 

under the Promissory Note are no longer relevant to this action.
5

Judgment”). Prior to entry of the Consent Judgment, the 

parties had the following discussion on the record before the 

District Court regarding the terms of settlement.

THE COURT: Good afternoon. 

Thank you for coming. Thank you 

for bringing your clients. Is there 

a settlement? Or what are we 

doing, a consent judgment?

MR. HOFFMAN (counsel for 

REMI and Kaiser): I guess that's 

correct.

THE COURT: So[,] I think what 

we should do is place the terms of 

the consent judgment on the 

record.

MR. BARLIA (counsel for 

Sovereign Bank): Okay. 

MR. HOFFMAN: The parties 

have agreed, your Honor, that the 

Court can enter judgment against 

the defendants in a sum to be 

computed as follows – I’ve not 

done the math, I apologize, your 

Honor.

THE COURT: All right.
6

MR. HOFFMAN: The top 

number is $2,364,780.24, minus 

$992 – $992,350; again, 

$992,350, plus legal fees in the 

amount of $188,000.

THE COURT: All right. We'll 

compute that all out. At the 

present time I’ll have an order 

drafted, and then the parties can 

sign it today. Are you willing to 

do that?

...

THE COURT: But that will end 

the case[,] correct? And the 

judgment is against both Mr. 

Kaiser and [REMI]?

MR. HOFFMAN: That is correct, 

your Honor.

MR. BARLIA: That is correct.

App. 402-03.

Counsel for the parties signed the Consent Judgment 

thereafter. The Consent Judgment provides, in its entirety:

This matter having been brought 

before the Court pursuant to a 

status conference; and the parties 
7

having amicably resolved the 

matter and consented to a 

judgment against defendants 

REMI Capital, Inc. and Erik A. 

Kaiser (collectively, 

“Defendants”) in favor of 

Sovereign Bank (“Plaintiff”); and 

for good cause having been 

shown; 

It is on this 1st day of September 

2010 ORDERED that judgment is 

entered jointly and severally 

against Defendants in the amount 

of $1,560,430.24.

App. 11. The Consent Judgment was silent as to any applicable 

interest rate.

On July 16, 2012, Sovereign Bank assigned and 

transferred to Jenzack Partners, LLC (“Jenzack”), all of the 

bank’s right, title, and interest in and to the Consent Judgment. 

Jenzack, as assignee, is the Appellant in this action.

On December 8, 2017, Kaiser filed a motion to declare 

that judgment had been satisfied pursuant to Fed. R. Civ. P. 

60(b)(5). On September 24, 2018, the District Court entered 

an order denying the motion. The District Court also ordered

that: (1) the applicable interest rate is the Federal statutory 

post-judgment interest rate, fixed by the Federal Reserve Bank, 

at 0.26%; and (2) REMI may serve discovery on Sovereign 

Bank to determine the status of loans and other payments 

REMI made towards the Consent Judgment. In determining 
8

that the statutory rate of interest applied, the District Court 

observed that no clear, unambiguous, and unequivocal 

language in the Consent Judgment demonstrated an intent to 

depart from the rate of interest provided by 28 U.S.C. § 1961.

On October 17, 2018, Jenzack appealed the District 

Court’s September order. In its appeal, Jenzack sought to 

reverse the portion of the District Court’s order applying the 

federal statutory post-judgment interest rate. Then, as now, 

Jenzack argued that the applicable interest rate is the rate 

contained in the contracts underlying the Consent Judgment. 

In a not precedential opinion, we declined to review the District 

Court’s order because it was not yet final under 28 U.S.C. § 

1291. Sovereign Bank v. Remi Cap., 810 F. App’x. 101, 104-

05 (3d Cir. 2020). We explicitly left open the question as to 

which interest rate was proper. Id. at 105.

On June 17, 2021, the District Court entered a final 

order, denying reconsideration of its earlier order setting the 

post-judgment rate of interest at the federal statutory rate, 

declaring post-judgment discovery complete, confirming the 

amount of money already paid by Kaiser to Jenzack, and 

discharging the Consent Judgment. Jenzack timely appealed. 

II. JURISDICTION AND STANDARD OF REVIEW

The parties in this case are completely diverse, and the 

amount in dispute is greater than $75,000. The District Court 

had jurisdiction pursuant to 28 U.S.C. § 1332. The District 

Court entered a final order in this case and Jenzack timely 

appealed. We have jurisdiction pursuant to 28 U.S.C. § 1291.

“We review grants or denials of relief under Rule 60(b), 

aside from those raised under Rule 60(b)(4), under an abuse of 
9

discretion standard.” Budget Blinds, Inc. v. White, 536 F.3d 

244, 251 (3d Cir. 2008). Here, our “review of the District 

Court’s ruling with respect to . . . post-judgment interest” 

concerns interpretation of 28 U.S.C. § 1961 and “requires de 

novo review.” Traveler Cas. & Sur. Co. v. Ins. Co. of N. Am., 

609 F.3d 143, 157 (3d Cir. 2010).

III. DISCUSSION

Jenzack asks us to slalom past an intervening settlement 

agreement and a plainly written consent judgment to award it

more than a million dollars in post-judgment interest. We 

choose a different path. We are not convinced that interest 

should accrue at the Prime Rate plus six percent, as had been 

set forth in the Suretyship Agreement.

The doctrine of merger provides that “[w]hen the 

plaintiff recovers a valid and final personal judgment, his 

original claim is extinguished and rights upon the judgment are 

substituted for it. The plaintiff’s original claim is said to be 

‘merged’ in the judgment.” In re Stendardo, 991 F.2d 1089, 

1099 (3d Cir. 1993) (quoting Restatement (Second) of 

Judgments § 18 cmt. a). “It is immaterial whether the judgment 

was rendered upon a verdict or upon a motion to dismiss or 

other objection to the pleadings or upon consent, confession, 

or default.” Restatement (Second) of Judgments § 18 cmt. a. 

A successful plaintiff in a contract action, for example, may no 

longer pursue remedies on the basis of the underlying contract 

once a judgment is entered on that claim. Instead, he or she 

“may maintain proceedings by way of execution for 

enforcement of the judgment” or “maintain an action upon the 

judgment.” Id., cmt. c.
10

Interest on a party’s defaulted obligation, then, ceases 

to accrue at a previously stipulated rate upon entry of a 

judgment. At that moment, interest on the new obligation, the 

judgment to be satisfied, accrues at the rate provided by statute 

or court rule. Cf. Stendardo, 991 F.2d at 1095 (“[C]ourts have 

consistently held that the doctrine of merger . . . entitles a 

mortgagee post-judgment to the legal rate of interest rather 

than the rate specified in the mortgage. Because the mortgage 

merges into the judgment, its terms specifying the contractual 

interest rate no longer exist to bind the parties.”)

In federal money judgments, 28 U.S.C. § 1961 governs 

the rate at which interest accrues. 3

 Both parties agree that 

while § 1961 provides a default rule, it may be modified by 

private agreement. They suggest that the rule announced by 

the Second Circuit in Westinghouse Credit Corp. v. D’Urso

should govern: “[i]f parties want to override the general rule 

on merger and specify a post-judgment interest rate, they must 

express such intent through ‘clear, unambiguous and 

unequivocal’ language.” 371 F.3d 96, 102 (2d Cir. 2004) 

(quoting Banque Nationale de Paris v. 1567 Broadway 

Ownership Assocs., 669 N.Y.S.2d 568, 569 (N.Y. App. Div. 

1998)). The Fifth, Seventh, Ninth, and Tenth Circuits have 

concluded the same. See In re Lift & Equip. Serv., Inc., 816 

F.2d 1013, 1018 (5th Cir. 1987); Cent. States, Se. & Sw. Areas 

Pension Fund v. Bomar Nat’l, Inc., 253 F.3d 1011, 1020 (7th 

Cir. 2001); Citicorp Real Est., Inc. v. Smith, 155 F.3d 1097, 

3

 Section 1961 provides that 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 System, for 

the calendar week preceding[] the date of the judgment.”
11

1107-08 (9th Cir. 1998); Soc’y. of Lloyd’s v. Reinhardt, 402 

F.3d 982, 1004 (10th Cir. 2005). But see Broad St. Energy Co. 

v. Endeavor Ohio, LLC, 806 F.3d 402, 410-11 (6th Cir. 2015) 

(declining to apply interest rate specified in escrow agreement 

to judgment).

In reaching its conclusion, the Westinghouse court 

reasoned that “§ 1961 is silent on the point, neither expressly 

permitting nor ruling out deviations by private agreement.” 

371 F.3d at 101. It also discerned that Congress’s use of

mandatory language in § 1961 was to “preclude[e] district 

courts from exercising discretion over the rate of interest or 

adopting an interest rate set by arbitrators” not to “limit[] the 

ability of private parties to set their own rates through 

contract.” Id.

The contract at issue in Westinghouse provided that “[i]f 

and in the event payment . . . is not made on the due date, 

interest shall be added to the Amount Due” at a specified 

interest rate greater than the rate provided for by statute. Id. at 

99. However, the Westinghouse court declined to apply the 

stipulated rate of interest post-judgment because “[t]he parties 

failed to state that this rate would apply to judgments rendered 

on [the underlying obligation].” Id. at 102 (emphasis 

supplied). The parties failed, in other words, to clearly,

unambiguously, and unequivocally express their intent that 

judgments, not merely contract debts, should accrue interest at 

the agreed-upon rate.

In Stendardo, a bankruptcy case, we recognized the 

ability of partiesto reflect in a mortgage that certain obligations 

would survive a judgment. 991 F.2d at 1095. There, creditors 

argued that a mortgage entitled them to recover certain postjudgment expenses from the debtors notwithstanding the prior 
12

entry of a foreclosure judgment in creditors’ favor. Id. at 1094. 

The mortgage provided that, upon default by the debtor, the 

creditor was entitled to recover for the payment of taxes and 

insurance premiums. Id. at 1092. However, we discerned that

“[n]o language appears in the [m]ortgage at issue here that 

indicate[d] the parties’ intent to preserve the [d]ebtors’

obligation to pay the relevant taxes and premiums beyond the 

date of the [j]udgment.” Id. at 1095-96. Thus, the creditors 

were not entitled to recover expenses incurred post-judgment. 

Id.

Here, by contrast, the language in the Suretyship 

Agreement is clear as crystal. The parties agreed, in no 

uncertain terms, that judgments entered against Kaiser on the 

basis of the Suretyship Agreement would accrue interest at the 

Prime Rate plus six percent. So, the post-judgment interest rate 

was not merged into the judgment. But holding that Jenzack is 

not claim precluded is neither the end of the story, nor the 

terminus of our analysis.

After the Suretyship Agreement, there was a settlement 

agreement—and the judgment entered in this case was the 

Consent Judgment transforming that settlement agreement into 

a judicial decree. Accordingly, as the District Court correctly 

surmised, the relevant question is whether the Consent 

Judgment demonstrates clearly, unambiguously, and 

unequivocally that the parties intended interest on the 

judgment to accrue at a stipulated rate. Because the Consent 

Judgment does not, we cannot accord Jenzack the relief sought.

The dissent concludes that “[w]ithout any reference to 

post-judgment interest, the consent judgment does not 

evidence a ‘mutual and clear’ intention to modify the 

contractual post-judgment interest rate.” Diss. Op. at 6
13

(Phipps, J., dissenting) (quoting County of Morris v. Fauver, 

707 A.2d 958, 967 (N.J. 1998)). It continues: “[n]or does the 

consent judgment provide so much as a hint that it fully and 

completely replaces the parties’ prior agreement; it resolves 

only the amount of outstanding liability for loan obligations. 

Thus, the consent judgment does not contractually modify the 

agreed-upon post-judgment interest rate or fully replace the 

parties’ prior agreement.” Id. But we are interpreting the 

judgment itself, and the converse applies. The previously 

agreed-upon post-judgment interest rate does not modify the 

subsequently entered Consent Judgment.

The dissent’s conclusion divorces the Consent 

Judgment from its context, fails to respect its nature as a 

judicial instrument, and upends our practice of settlement. 

Were we to adopt the dissent’s approach, district courts would 

be inundated with arguments that, despite entry of a consent 

judgment, parties intended this or that term to survive entry of 

a judgment and the court need only look through their prior 

agreements and see for itself. 

We can neither embrace nor endorse, a system that 

permits or encourages parties to return to court under similar 

circumstances. While that approach may suit a subsequent 

action to enforce a settlement agreement recorded solely as a 

contract, it is incumbent upon the parties to a consent judgment 

to fully memorialize their agreement on the judgment’s face or 

through incorporation of other documents by reference.

Within the context of this record, the settlement 

agreement bears all the indicia of a substitute contract.4

 We 

4

 Under Pennsylvania law, “[t]he required essentials of a 

novation are ‘the displacement and extinction of a valid 
14

would be hard-pressed to conclude that when asked by the 

District Court to place the terms of the consent judgment on 

the record, the parties would specify only “the Court can enter 

judgment against the defendants in a sum to be computed as 

follows... The top number is $2,364,780.24, minus . . . 

$992,350 . . . plus legal fees in the amount of $188,000,” but 

yet also intend that the judgment would accrue interest at the 

Prime Rate plus six percent. App. 402. And again, when the 

District Court inquired as to whether the agreement on the justrecited terms would “end the case,” the parties would respond 

“that is correct,” if they intended to remain bound by this (and 

contract, the substitution for it of a valid new contract . . . a 

sufficient legal consideration for the new contract, and the 

consent of the parties.’” Buttonwood Farms, Inc. v. Carson, 

478 A.2d 484, 486 (Pa. Super. Ct. 1984) (emphasis removed)

(quoting Yoder v. T.F. Scholes, Inc., 173 A.2d 120, 121-22 (Pa. 

1961)). The “intention of the parties to effect a novation or 

substituted contract may be shown by other writings, or by 

words, or by conduct or by all three.” Id. at 487.

Though our dissenting colleague makes much of the supposed 

applicability of New Jersey law, the analysis is functionally 

identical. “[A] novation is when the parties agree to substitute 

a new validly executed contract for a previous contract” and 

“requires that the parties intend to ‘extinguish the old 

contract.’” GMAC Mortgage, LLC v. Willoughby, 165 A.3d 

787, 188 (N.J. 2017) (quoting Wells Reit II—80 Park Plaza, 

LLC v. Dir., Div. of Taxation, 999 A.2d 489, 497 (N.J. Super. 

Ct. App. Div. 2010). “In order to effect a novation there must 

be a clear and definite intention on the part of all concerned 

that such is the purpose of the agreement.” Wells Reit II, 999 

A.2d at 497.
15

only this) particular term of the underlying agreement. App. 

403.

We need not parse out whether this recitation of the 

agreement placed on the record is in fact a substitute contract. 

The parties agreed to entry of the Consent Judgment, and we 

are bound to interpret it “within its four corners, and not by 

reference to what might satisfy the purposes of one of the 

parties to it.” United States v. Armour & Co., 402 U.S. 673, 

682 (1971). This is because “consent judgments should be 

interpreted in a way that gives effect to what the parties have 

agreed to, as reflected in the judgment itself or in documents 

incorporated in it by reference.” SEC v. Levine, 881 F.2d 1165, 

1179 (2d Cir. 1989).

5

 Were the Consent Judgment or an 

incorporated document ambiguous as to the applicable interest 

rate, it may be relevant what a prior agreement said on that 

point. See id.; cf. Harley-Davidson, Inc. v. Morris, 19 F.3d 

142, 148 (3d Cir. 1994) (declining to consider evidence of an 

“oral understanding” about the terms of a consent judgment 

where the language of the judgment was unambiguous). 

5

 We emphasize that a consent judgment is not a contract but 

a judicial decree, and that the parties’ prior contract does not 

alter that judicial decree. See United States v. Swift, 286 U.S. 

106, 115 (1932). This is particularly noteworthy here, where 

the District Court may have been unaware of a separate interest 

rate agreement. Preventing these backdoor amendments to 

consent judgments is also important because, in some contexts, 

district courts must assess a consent judgment’s substantive 

fairness. See, e.g., SEC v. Citigroup Global Markets, Inc., 752 

F.3d 285 (2d Cir. 2014) (district courts have a duty to 

determine if consent decree is fair and reasonable for securities 

litigation).
16

Because the Consent Judgment is unambiguous, however, we 

must conclude that the parties did not agree interest would 

accrue at a stipulated rate.6

We note that this is, however subtly, different from the 

doctrine of merger-by-judgment as described by our dissenting 

colleague. See Diss. Op. at 4-6. Sovereign’s contract claims 

were not extinguished solely by entry of a judgment in this 

case. Rather, the parties agreed to a settlement which they 

recorded in a judicial decree. The nature of that decree, the 

Consent Judgment, constrains us to interpret the subsequent 

agreement by the parties within the confines of its text. True 

to the contractual roots of the Consent Judgment, our analysis 

more closely resembles application of the contractual principle 

of merger than merger-by-judgment. 

We join our sister circuits who have addressed the 

question in holding that parties may contract to a rate of postjudgment interest by demonstrating through clear, 

unambiguous, and unequivocal language in their agreement an 

intention to do so. We also conclude that the language in the 

Suretyship Agreement underlying this breach of contract claim 

clearly demonstrated the parties’ intent to be bound by a 

stipulated rate of interest post-judgment. However, we cannot 

6 Jenzack’s claim is fatally flawed for at least one other reason. 

Even if we were persuaded that the parties agreed the interest 

rate from the Suretyship Agreement should apply to the 

Consent Judgment, our ability to effectuate relief by amending 

the judgment itself is limited. Jenzack acknowledges that its 

time to amend or appeal from the Consent Judgment is long 

expired.
17

conclude that the District Court erred in discharging the 

judgment because the intervening settlement agreement and 

Consent Judgment demonstrated an intent to be bound by those

explicit terms in exchange for resolving the litigation. Within 

the four corners of the Consent Judgment, there is no language 

from which we may infer that the parties intended the judgment 

to accrue interest at a different rate than is provided in § 1961.

IV. CONCLUSION

We will affirm the District Court’s final order 

discharging the consent judgment as satisfied.
1

Sovereign Bank v. REMI Capital, Inc., No. 21-2289

PHIPPS, Circuit Judge, dissenting.

The Majority Opinion affords too much weight to the onesentence consent judgment entered by the District Court in this 

case. That consent judgment resolved the parties’ dispute as to 

the underlying liability for loan obligations, but it said nothing 

about the post-judgment interest rate. That silence is not 

surprising: through the Master Promissory Note, the parties 

had previously agreed on the post-judgment interest rate, and 

that issue was not mentioned in the pleadings, much less 

disputed in the litigation. Nonetheless, the Majority Opinion 

concludes that the consent judgment nullifies the parties’ 

previous agreement regarding the post-judgment interest rate 

so that the statutory default rate of post-judgment interest 

controls.

I respectfully dissent because the consent judgment does 

not have that effect. A consent judgment is “a hybrid” between 

a court order and a contract. Holland v. N.J. Dep’t of Corr., 

246 F.3d 267, 277 (3d Cir. 2001). And, as elaborated below, 

neither the court-order nor the contractual characteristics of the 

consent judgment in this case support the conclusion that it

supplants the parties’ prior agreed-upon post-judgment interest 

rate. 

I. The Merger-By-Judgment Doctrine Does Not 

Apply Here. 

A consent judgment has attributes of a court order, and one 

of those qualities is the preclusive effect of a judgment. New 

Jersey law, which determines the consent judgment’s 
2

preclusive effect,

1 recognizes merger-by-judgment as a species 

of claim preclusion. See Joseph L. Muscarelle, Inc. v. Dep’t of 

Transp., 418 A.2d 1310, 1316 (N.J. Super. Ct. App. Div. 1980) 

(“[A] consent judgment has the same res judicata effect as any 

other judgment.”). Under that rule’s application, a judgment 

for a plaintiff on a breach-of-contract claim extinguishes any 

right that the plaintiff has to seek additional compensation for 

the breach. See In re A & P Diversified Techs. Realty, Inc., 

1 The Majority Opinion mistakenly applies the choice-of-law 

clause in the Suretyship Agreement, which provides that the 

agreement is governed by Pennsylvania law. Because parties 

cannot, through contract, determine the preclusive effect of a 

federal court’s judgment, that clause has no bearing on the 

merger-by-judgment analysis. Instead, the preclusive effect of 

a judgment entered by a federal court exercising diversity 

jurisdiction is governed by federal common law, which 

incorporates the forum state’s preclusion rules. See Semtek 

Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508–09 

(2001); see also Houbigant, Inc. v. Fed. Ins. Co., 374 F.3d 192, 

205 (3d Cir. 2004) (“In a diversity action, we apply the 

preclusion rules of the forum state, unless they are 

incompatible with federal interests.” (citing Semtek, 531 U.S. 

at 508–09)); 19 Arthur R. Miller, Federal Practice and 

Procedure (Wright & Miller) § 4511 (3d ed. April 2022 

update) (explaining that Semtek “directed that state preclusion 

law be applied in diversity cases”). Rather than applying the 

law of the forum state, New Jersey, the Majority Opinion 

applies Pennsylvania law based on the choice-of-law clause in 

the Suretyship Agreement. That undermines the Majority 

Opinion’s central holding that the consent judgment fully and 

completely replaces the parties’ prior agreements. It also 

erodes the Majority Opinion’s interest in relieving courts of the 

obligation to scour prior agreements between parties to assess 

which provisions survive entry of judgment – by finding and 

applying the choice-of-law clause in the Suretyship 

Agreement, the Majority Opinion does just that. 
3

467 F.3d 337, 341 (3d Cir. 2006) (applying New Jersey law) 

(“Under the merger doctrine, a contract is deemed to merge 

with the judgment, thereby depriving a plaintiff from being 

able to assert claims based on the terms and provisions of the 

contractual instrument.”). More succinctly, the claim for 

damages from a breach of contract merges into a judgment and 

cannot be relitigated. See Culver v. Ins. Co. of N. Am., 

559 A.2d 400, 404 (N.J. 1989) (“The rule [of res judicata] 

precludes parties from relitigating substantially the same cause 

of action.”); see also Restatement (Second) of Judgments § 18 

cmt. a (1982) (“When the plaintiff recovers a valid and final 

personal judgment, his original claim is extinguished and rights 

upon the judgment are substituted for it. The plaintiff’s 

original claim is said to be ‘merged’ in the judgment.”);

Restatement (First) of Contracts § 444 (1932). 

But the merger-by-judgment rule is not absolute. A

contractual obligation is not merged into the judgment if the 

contract “clearly evidences an intent to preserve the 

effectiveness of th[e] provision post-judgment.” A & P, 

467 F.3d at 342 (alteration omitted) (quoting In re Stendardo, 

991 F.2d 1089, 1095 (3d Cir. 1993)) (applying New Jersey 

law). And here, the Master Promissory Note does exactly that. 

It states that interest will accrue at “an annual rate (before and 

after judgment) that shall be an additional six percent (6%) 

above the [prime rate].” Master Promissory Note at 1 (Jan. 25, 

2007) (JA83). Due to that unequivocal expression, the parties’ 

agreement on the post-judgment interest rate in the Master 

Promissory Note falls outside the sweep of the merger rule.2

 

2 To be sure, the statute setting the default rate for post- judgment interest, see 28 U.S.C. § 1961, does not foreclose the 

exception to the merger-by-judgment rule: every circuit to 
4

II. Under Principles of Contract Interpretation, 

the Consent Judgment Did Not Modify the 

Contractual Interest Rate or Completely 

Replace the Parties’ Agreement.

Because it has attributes of a contract, a consent judgment 

“is to be interpreted as a contract [under] the governing rules 

of contract interpretation.” Harley-Davidson, Inc. v. Morris, 

19 F.3d 142, 148 (3d Cir. 1994); see also Regan v. Regan,

587 A.2d 1330, 1333 (N.J. Super. Ct. Ch. Div. 1990) 

(interpreting a consent judgment under the rules of contract 

interpretation). As a baseline, the prior agreement 

unequivocally specified a post-judgment interest rate of 6% 

above the prime rate.

3

 But it is possible for a consent judgment 

examine the merger-by-judgment rule in the context of that 

statute has held that parties may “override the general rule on 

merger and specify a post-judgment interest rate” and thus 

“contract out of § 1961.” Westinghouse Credit Corp. v. 

D’Urso, 371 F.3d 96, 101–02 (2d Cir. 2004) (internal 

quotation marks omitted); see also, e.g., Mid Atl. Cap. Corp. v. 

Bien, 956 F.3d 1182, 1208 (10th Cir. 2020) (“[P]arties may 

contract around the merger rule and specify a different 

postjudgment interest rate.”); Tricon Energy Ltd. v. Vinmar 

Int’l, Ltd., 718 F.3d 448, 457 (5th Cir. 2013) (“The merger rule 

is not absolute; parties can contract for a non-statutory rate of 

postjudgment interest.”). 

3 See Hymel v. UNC, Inc., 994 F.2d 260, 265–66 (5th Cir. 

1993) (concluding that parties contracted out of the statutory 

default interest rate because their prior contract provided that 

all unpaid amounts “shall bear interest from maturity until 

paid, both before and after judgment, at the rate of 9% per 

annum”); see also In re Lipitor Antitrust Litig., 868 F.3d 231, 265 (3d Cir. 2017); Gov’t Emps. Ret. Sys. of V.I. v. Gov’t of 

V.I., 995 F.3d 66, 79 (3d Cir. 2021).
5

– as a new contractual agreement – to modify or replace a 

previous agreement between the parties. Under New Jersey 

law, which governs the interpretation of the consent judgment,

4

however, the consent judgment fails to modify the parties’ 

previously-agreed-upon post-judgment interest rate or to 

replace their entire prior agreement.

The one-sentence consent judgment makes no mention of 

either the post-judgment interest rate or the parties’ prior 

agreement setting that rate:

This matter having been brought before the 

Court pursuant to a status conference; and the 

parties having amicably resolved the matter and 

consented to a judgment against defendants 

REMI Capital, Inc. and Erik A. Kaiser 

(collectively, “Defendants”) in favor of 

4 As the forum state, New Jersey’s choice-of-law rules 

determine which state’s laws govern the interpretation of the 

consent judgment. See Klaxon Co. v. Stentor Elec. Mfg. Co., 

313 U.S. 487, 496 (1941); Collins v. Mary Kay, Inc., 874 F.3d 

176, 183 (3d Cir. 2017). New Jersey uses a most-significant- relationship test under which “the law of the place where the 

contract was made governs ‘unless the dominant and 

significant relationship of another state to the parties and the 

underlying issues dictates otherwise.’” N. Jersey 

Neurosurgical Assocs., P.A. ex rel. Gil v. Clarendon Nat’l Ins. 

Co., 949 A.2d 851, 856 (N.J. Super. Ct. App. Div. 2008) 

(alteration omitted) (quoting State Farm Mut. Auto. Ins. Co. v. 

Est. of Simmons, 417 A.2d 488, 493 (N.J. 1980)). Here, the 

consent judgment was negotiated by the parties and entered in 

New Jersey by the District Court, and no other state has a 

dominant and significant relationship to the consent judgment 

such that its law overcomes the application of New Jersey law.
6

Sovereign Bank (“Plaintiff”); and for good cause 

having been shown: It is on this 1st day of 

September 2010 ORDERED that judgment is 

entered jointly and severally against Defendants 

in the amount of $1,560,430.24.

Consent Judgment (Sept. 1, 2010) (JA11). Without any 

reference to post-judgment interest, the consent judgment does 

not evidence a “mutual and clear” intention to modify the 

contractual post-judgment interest rate. County of Morris v. 

Fauver, 707 A.2d 958, 967 (N.J. 1998); see also Elliott &

Frantz, Inc. v. Ingersoll-Rand Co., 457 F.3d 312, 322 (3d Cir. 

2006). Nor does the consent judgment provide so much as a 

hint that it fully and completely replaces the parties’ prior 

agreement; it resolves only the amount of outstanding liability

for loan obligations. Thus, the consent judgment does not 

contractually modify the agreed-upon post-judgment interest 

rate or fully replace the parties’ prior agreement.

* * *

A consent judgment is a duality of sorts: it is both a court 

order and a contract. But neither component of that judgmentcontract duality supports the Majority Opinion’s conclusion 

that this consent judgment replaces the parties’ agreed-upon 

rate of post-judgment interest with the statutory default rate. 

The preclusive effect of judgments does not apply here because 

the parties’ prior agreement on the post-judgment interest rate 

was not merged into the consent judgment. And under 

principles of contract law, the consent judgment does not 

provide any basis for modifying the parties’ agreed-upon postjudgment interest rate or replacing their entire agreement. 

Consequently, appellant is entitled to post-judgment interest at 
7

the rate set by the parties’ agreement, not the default rate, and 

I would reverse the judgment of the District Court.