Opinion ID: 212079
Heading Depth: 1
Heading Rank: 4

Heading: Princess's Cross-Appeal

Text: 38 Princess's cross-appeal is limited to whether the trial court abused its discretion in awarding prejudgment interest in favor of the government. It is undisputed that no statute or regulation explicitly authorizes prejudgment interest. In the absence of a statute governing the award of prejudgment interest, the question is governed by traditional judge-made principles. City of Milwaukee v. Cement Div., Nat'l Gypsum Co., 515 U.S. 189, 194, 115 S.Ct. 2091, 132 L.Ed.2d 148 (1995). Prejudgment interest serves to compensate for the loss of use of money due as damages from the time the claim accrues until judgment is entered, thereby achieving full compensation for the injury those damages are intended to redress. West Virginia v. United States, 479 U.S. 305, 310 n. 2, 107 S.Ct. 702, 93 L.Ed.2d 639 (1987). 39 The trial court's decision whether to award prejudgment interest is reviewed for abuse of discretion. United States v. Reul, 959 F.2d 1572, 1578 (Fed.Cir.1992). An abuse of discretion results if the trial court made an error of law, or a clear error of judgment, or made findings which were clearly erroneous. Id. (internal quotation omitted).
40 The trial court agreed with Princess that Customs' inability to provide Princess with an explanation for the actual basis for some of its bills until late in this litigation [was] appalling. Summary judgment opinion, 217 F.Supp.2d at 1368. The trial court disagreed, however, with Princess's argument that the government was not entitled to prejudgment interest, reasoning that the relevant equitable inquiry focuses on when Customs was entitled to the principal APF amounts at issue and that the government was entitled to prejudgment interest from the time Princess should have made its APF payments. Id. 41 Princess argues that [a]nyone familiar with the long and tortured history of this case cannot possibly conclude that the equities lie with the Government here. Princess thus effectively contends that the trial court abused its discretion by making a clear error of judgment in balancing the equities. 42 The degree to which the trial court is to balance equitable factors to determine whether to award prejudgment interest is not easy to discern from the case law. In Rodgers v. United States, the Supreme Court stated, 43 As our prior cases show, a persuasive consideration in determining whether such obligations shall bear interest is the relative equities between the beneficiaries of the obligation and those upon whom it has been imposed. And this Court has generally weighed these relative equities in accordance with the historic judicial principle that one for whose financial advantage an obligation was assumed or imposed, and who has suffered actual money damages by another's breach of that obligation, should be fairly compensated for the loss thereby sustained. 44 332 U.S. 371, 373-74, 68 S.Ct. 5, 92 L.Ed. 3 (1947) (emphasis added); see also Reul, 959 F.2d at 1577-79 (stating that the Court of International Trade in exercising its equitable powers may in its sound discretion award prejudgment interest and declining the appellant's invitation to rebalance the equities). In West Virginia, however, the Supreme Court stated: The District Court held that whether interest had to be paid depended on a balancing of equities between the parties; the Court of Appeals rejected such an approach, as do we. 479 U.S. at 311 n. 3, 107 S.Ct. 702. Instead, the Supreme Court reasoned that [p]rejudgment interest is an element of complete compensation and, therefore, would further the congressional intent underlying the statute in question in that case. Id. at 310-11, 107 S.Ct. 702. We need not resolve any tension among these cases, however, because the result would be the same on the facts of this case. 45 Here, the trial court found the government's conduct to be appalling but determined that the government's acts, though appalling, did not outweigh its right to the interest it could have earned had it received these APF payments in the ordinary course of business. Summary judgment order, 217 F.Supp.2d at 1368. Thus, the trial court appropriately focused on the principle of full compensation. 46 Princess argues that the full compensation rationale for awarding prejudgment interest is not relevant to this case, of course, since the Government already has possession of the contested amount. Princess's argument is unpersuasive, for even if a party receives payment some time before judgment, the party has still lost the interest it could have earned during the time from when the payment was originally due to when it was received. As stated by the trial court, Customs is correct in stating that it `lost' the interest it could have earned had it received these APF payments in the ordinary course of business. Id. 47 Accordingly, we hold that the trial court's award of prejudgment interest properly accounted for the principle of complete compensation and, therefore, that no clear error of judgment occurred.
48 Princess further contends that the trial court's award of prejudgment interest was inappropriate because the government has unclean hands. The doctrine of unclean hands is a self-imposed ordinance that closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief, however improper may have been the behavior of the defendant. Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814, 65 S.Ct. 993, 89 L.Ed. 1381 (1945). The trial court has broad discretion under the doctrine of unclean hands. Id. at 815, 65 S.Ct. 993 (This maxim necessarily gives wide range to the equity court's use of discretion in refusing to aid the unclean litigant. It is not bound by formula or restrained by any limitation that tends to trammel the free and just exercise of discretion. (internal quotation omitted)). 49 Princess has not shown that the trial court abused its broad discretion in declining to invoke the doctrine of unclean hands. Indeed, Princess has failed to adduce evidence even sufficient to invoke, let alone compel the application of, the doctrine of unclean hands. Princess questions Customs' competence and willingness to address basic calculation errors and discrepancies in its briefing, but Princess has not provided evidence of inequitableness or bad faith as required to invoke the doctrine of unclean hands. See id. at 814, 65 S.Ct. 993.
50 Princess finally argues that the trial court abused its discretion in awarding prejudgment interest by making an error of law. Princess identifies two interest periods in this case, labeling them as a pre-billing interest period and prejudgment interest period. Pre-billing interest refers to interest accruing from the time a cruise line was required to make a payment until the time the cruise line was billed. Prejudgment interest, under Princess's view, covers only the time after the cruise line is billed until judgment. Princess thus contends that the trial court erred as a matter of law by awarding pre-billing interest. 51 As noted above, [p]rejudgment interest serves to compensate for the loss of use of money due as damages from the time the claim accrues until judgment is entered.  West Virginia, 479 U.S. at 310 n. 2, 107 S.Ct. 702 (emphasis added). If a claim accrues at the time of billing, then prejudgment interest accrues from the time of billing. If, on the other hand, a claim accrues at a time before billing, then prejudgment interest accrues from that pre-billing time. Accordingly, the labels Princess advances are unnecessary because the dispositive issue is determining when a claim accrues, not when a bill was sent. 2 52 Princess quotes from Reul, which states that the entire weight of authority holds that a surety cannot be taxed with interest on the principal's debt until demand is made upon the surety for payment of the principal's obligation. 959 F.2d at 1579. The holding in Reul that prejudgment interest did not apply before a demand was made is not generally applicable, however, because it followed from the rule that interest can be charged against the surety only from the date of demand on it, because until then the surety is not in default.  Id. at 1581 (internal quotation omitted, emphasis added). Princess has made no argument that it was only secondarily liable as a surety for making APF payments. Instead, Princess was obligated to make APF payments during the ordinary course of business and, therefore, was in default when it failed to make timely payments. 53 Princess finally cites Customs' October 1993 HQ ruling, which addressed a number of issues, including layover-only HMT liability and the following: 54 Under the provisions of 19 U.S.C. 1505(c), duty amounts fixed by liquidation or reliquidation are considered delinquent if not paid within 30 days. Interest on delinquent accounts accrues from the 15th day after liquidation or reliquidation. Inasmuch as the APF and HMF [HMT] are considered to be duties for administrative and enforcement purposes, the failure to pay these fees can result in the accrual of interest once the debt is fixed. In our view, the debt becomes fixed once it is billed to the principal and surety. 55 1993 U.S. CUSTOM HQ LEXIS 2492, at -. 56 The quoted analysis of the October 1993 HQ ruling, however, is rooted in a statute not at issue here and, therefore, has no application in this case. In this case, the trial court did not rely on that section in assessing prejudgment interest. And, in fact, even Princess agrees on appeal that section 1505(c) does not provide a statutory basis for prejudgment interest. Accordingly, we hold that the trial court did not abuse its discretion in its award of prejudgment interest.