Opinion ID: 720637
Heading Depth: 3
Heading Rank: 1

Heading: Interest to be calculated before the offset?

Text: 23 Indu Craft argues that the district court erred by deducting the amount of the setoff from Indu Craft's damages before computing Indu Craft's pre-verdict interest pursuant to New York C.P.L.R. § 5001. Indu Craft maintains that the application of the interest on the balance rule, in which the setoff was deducted from Indu Craft's award before the addition of pre-verdict interest, effectively granted Baroda pre-verdict interest on its $1.7 million equitable recovery at the statutory rate of 9%. According to Indu Craft, the application of the interest on the balance rule in this instance failed to take into account the equitable nature of Baroda's recovery, for this award was intended not to make Baroda whole but rather to avoid a windfall to Indu Craft. 24 As the district court noted, although New York cases have not used the phrase interest on the balance rule, they generally have followed it. See, e.g., Manshul, 436 N.Y.S.2d at 727; Sloan v. Pinafore Homes, Inc., 38 A.D.2d 718, 329 N.Y.S.2d 420, 421 (2d Dep't 1972). Accordingly, the district court deducted Baroda's setoff and calculated interest on the balance. As in the usual case in which the rule is applied, in this case the plaintiff had use of the amount due under the note during the pendency of the litigation. Moreover, the setoff was directly related to the plaintiff's claim and was not collateral to it. See Ralston Purina Co. v. Parsons Feed & Farm Supply, Inc., 416 F.2d 207, 212 (8th Cir.1969). For these reasons, we conclude that the district court's calculation of interest on the amount after setoff was not so inequitable and so unfair that we are compelled to disturb it.