Opinion ID: 672316
Heading Depth: 2
Heading Rank: 2

Heading: Postjudgment Interest on the Contribution Judgment

Text: 37 Section 1304(b)'s restrictions on awards of interest do not apply to defendants other than the United States. Hence, section 1304(b) does not govern interest on the Government's contribution judgment against the NYSDOH. We turn, therefore, to 28 U.S.C. Sec. 1961, the general postjudgment interest statute. 38 Under section 1961, postjudgment interest runs from the date of the entry of the judgment. 28 U.S.C. Sec. 1961(a). Judge Munson observed, however, that the Government would reap an impermissible windfall were it allowed to recover interest against the NYSDOH from the date the contribution judgment was entered (October 18, 1989), since the Government did not part with any money for three and one-half years, when it paid Andrulonis on the primary judgment (February 23, 1993). As Judge Munson saw it: 39 The purpose of post-judgment interest is to compensate the party in whose favor the judgment was entered for any delay in payment. In the case at bar, although judgment was entered in 1989, the [Government] was not entitled to recover on its judgment for contribution from the [NYSDOH] until after it satisfied the primary judgment to the plaintiff.... Only after [February 23, 1993] did the [Government] suffer for delay in receiving the [NYSDOH's] payment for contribution. It would run contrary to the intent, in my opinion, of Section 1961 to permit a party such as the [Government] to recover interest on a judgment for contribution when that party has not yet paid the underlying judgment. 40 Accordingly, Judge Munson held that interest on the contribution judgment did not begin to accrue until the Government actually paid Andrulonis (February 23, 1993), rather than the date judgment was entered (October 18, 1989). We agree with this result, but for quite different reasons. 41 When calculating postjudgment interest under section 1961, courts do not enjoy some amorphous equitable power to select a date other than the date of the entry of the judgment to trigger the running of interest, even if their laudable aim is to effectuate the compensatory purpose of the postjudgment interest statute. See Kaiser Aluminum, 494 U.S. at 834, 110 S.Ct. at 1575 (rejecting the view of those courts that had relied upon the policy underlying the postjudgment interest statute to award interest from the date of the verdict, rather than from the date of the judgment); Magee, 976 F.2d at 823-24 (We do not approve of the district court's device of creating a make-believe date of entry whose sole purpose was to avoid the clear intent of section 1961 and thus the uniformity the section was intended to create.). Accordingly, Judge Munson erred when he invoked the principle underlying the postjudgment interest statute to disregard the clear language of the statute that interest be calculated from the date the judgment was entered. 42 Nevertheless, we reach a similar result when we focus on the judgment itself. Under Kaiser Aluminum, the judgment contemplated by section 1961 is one that is  'ascertained' in [a] meaningful way and supported by the evidence. Kaiser Aluminum, 494 U.S. at 836, 110 S.Ct. at 1576. See Wachs v. Winter, 569 F.Supp. 1438, 1449 (E.D.N.Y.1983). For the reasons that follow, we believe the pro rata contribution judgment entered on October 18, 1989, was not ascertained in any meaningful sense until the Government paid Andrulonis more than its pro rata share of the primary judgment. A brief digression into third-party practice and the underlying substantive law of contribution may help explain why this is so. 43 When the United States is sued under the FTCA, Federal Rule 14(a) permits it to implead a third-party defendant who is or may be liable to it for all or part of the plaintiff's judgment. See Fed.R.Civ.P. 14(a); see, e.g., United States v. Yellow Cab Co., 340 U.S. 543, 71 S.Ct. 399, 95 L.Ed. 523 (1951); see generally Charles A. Wright, et al., Federal Practice & Procedure: Civil 2d [Wright & Miller] Sec. 1450, at 398-99 (1990). Thus, the rule permits a defendant to bring in a third-party defendant even though the defendant's claim is purely inchoate--i.e., has not yet accrued under the governing substantive law--so long as the third-party defendant may become liable for all or part of the plaintiff's judgment. Federal impleader cannot, however, operate to enlarge the third-party plaintiff's right to recovery beyond that available under the controlling substantive law. See Smith v. Whitmore, 270 F.2d 741, 745 (3d Cir.1959); Brown v. Cranston, 132 F.2d 631, 633-34 (2d Cir.1942), cert. denied, 319 U.S. 741, 63 S.Ct. 1028, 87 L.Ed. 1698 (1943). 44 Under New York law, the right to contribution does not arise in favor of the defendant unless and until the defendant pays the plaintiff an amount exceeding its equitable share of the primary judgment. See Klinger v. Dudley, 41 N.Y.2d 362, 369, 393 N.Y.S.2d 323, 361 N.E.2d 974 (1977). In a federal case governed by New York law, Rule 14(a) nevertheless permits a defendant to implead a joint tortfeasor for contribution before the right to contribution accrues, because that third party may be liable to the defendant for a share of the plaintiff's primary judgment. The defendant's claim for contribution is thus properly characterized as contingent. See Wright & Miller Sec. 1451, at 407. 45 Because the underlying right to contribution is necessarily conditioned upon the defendant's satisfaction of the primary judgment, the judgment entered upon that claim should reflect this contingency. See id. at 410-11 (The court is free to shape the relief on an accelerated or contingent claim to reflect the limitations of substantive state law.); 3 Moore's Federal Practice p 14.11, at 14-77 (2d ed. 1994) (The impleader judgment can be fashioned to protect the rights of the other tortfeasors, so that defendant's judgment over against them may not be enforced until the defendant has paid plaintiff's judgment[.]). 46 For example, the district court could permit judgment to be entered, but stay its execution until the third-party plaintiff demonstrates that the contingency has been satisfied. See id.; see, e.g., Burris v. American Chicle Co., 120 F.2d 218, 223 (2d Cir.1941) (defendant's indemnity judgment against third-party defendant should be entered, but execution stayed until defendant pays plaintiff). Or, the defendant's judgment could be expressly conditioned upon the defendant's satisfaction of the primary judgment. In Klinger v. Dudley, for example, the New York Court of Appeals modified the contribution judgment entered therein to provide that payment to defendant by the third-party defendants is conditioned upon payment by defendant to plaintiff of more than his proportionate share of the judgment, or an amount in full satisfaction of the judgment. 41 N.Y.2d at 372, 393 N.Y.S.2d 323, 361 N.E.2d 974. See also 8A Carmody-Wait 2d Sec. 63:35 (1990) (proposing sample form for New York judgments that determine rights among codefendants). 47 The Third Circuit's decision in Smith v. Whitmore, 270 F.2d 741 (3d Cir.1959), is instructive. There, as here, the contribution judgment purported to award the third-party plaintiff a sum certain, calculated as a percentage of the plaintiff's judgment. Smith, 270 F.2d at 743. The Third Circuit observed, however, that the controlling substantive law conditioned the defendant's right to recover against the third-party defendant upon proof that the defendant had actually paid the plaintiff more than his pro rata share of the primary judgment. Accordingly, the court found that the judgment as entered was erroneous: The quiver of the judgment should contain but two arrows--one directed to the liability of the defendant and one to the existence of the right of contribution. 270 F.2d at 746. The proper course, the court suggested, would be for the district court to enter a judgment for a definite sum as against the defendant, but for a contingent sum as against the third-party defendant. Id. 48 Ignoring the contingent nature of the Government's claim against the NYSDOH, the 1989 contribution judgment purported to award the Government an unconditional sum certain against the NYSDOH. 5 And, because that judgment was entered on October 18, 1989, see Fed.R.Civ.P. 58, the Government now claims the right to recover interest on the amount stated therein from the date of the entry of the judgment through the date of payment. 28 U.S.C. Sec. 1961(a) & (b). As the foregoing discussion demonstrates, however, the district court erred initially in awarding an unconditional sum certain to the Government in 1989. While the NYSDOH's percentage of liability was ascertained at the time judgment was entered, the dollar amount of damages to which the Government was entitled was not. 49 Rather than prolong the life of this fourteen-year old lawsuit by directing the district court to correct the original judgment, see Part III, infra, we believe the more prudent course is to construe the 1989 contribution judgment as one awarding damages conditioned upon the Government's payment to Andrulonis of an amount exceeding its proportionate share of the primary judgment, or an amount in full satisfaction of that judgment. See Klinger, 41 N.Y.2d at 372, 393 N.Y.S.2d 323, 361 N.E.2d 974. So construed, postjudgment interest cannot be calculated on the contingent amount awarded in the judgment before the date the contingency was satisfied. It would be counterintuitive, to say the least, to believe that Congress intended postjudgment interest to be calculated from such a [non-ascertained] judgment. Kaiser Aluminum, 494 U.S. at 836, 110 S.Ct. at 1576. It was only when the Government paid Andrulonis more than its pro rata share of the primary judgment that the contribution award ripened into an ascertained judgment capable of sustaining an award of interest. 50 To hold otherwise would obligate third-party defendants to pay interest on judgments before they incurred any obligation to pay the principal. We cannot believe Congress intended such an absurd result, and we decline to read section 1961 to require it. In this case, the NYSDOH could hardly have been expected to abate an obligation prior to the time that it had legally arisen, or now to pay compensation for this failure of prescience. Gele v. Wilson, 616 F.2d 146, 150 (5th Cir.1980). Cf. Donnelly v. Brooklyn, 121 N.Y. 9, 20, 24 N.E. 17 (1890) ([i]t is obvious that if the duty to pay has not become absolute, the liability for interest does not arise). 51 Accordingly, we hold that postjudgment interest on the contribution judgment is properly calculated under section 1961 from the date the contribution award ripened into an unconditional, ascertained and enforceable judgment (February 23, 1993) through the date the NYSDOH paid the Government in satisfaction of that judgment (April 16, 1993). We therefore affirm Judge Munson's decision denying the Government's motion for additional interest.