Opinion ID: 516947
Heading Depth: 1
Heading Rank: 6

Heading: the appropriate post-judgment interest rate

Text: 75 Chapman argues that when jurisdiction is based on diversity of citizenship, the rate applied post-judgment should be determined by the applicable state law, which would be Texas law in this case. Under Texas law, the appropriate rate would be the contract rate of 10% per annum. Tex.Rev.Civ.Stat.Ann. art. 5069-1.05, Sec. 1(1) (Vernon 1985). We must reject this contention, however, and uphold the district court's application of 28 U.S.C. Sec. 1961 as amended. 22 Amended Sec. 1961 replaced the directive for applying the state rate of interest with a nationwide variable rate of interest based upon a formula using the rate paid by the Government for 52-week treasury bills. Brooks v. United States, 757 F.2d 734, 740 (5th Cir.1985). Under amended Sec. 1961, the correct interest rate applicable in this case is 7% per annum. 23 76 Chapman's argument that Texas law should still govern since this is a diversity case is based upon cases decided before Sec. 1961 was amended and on Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78-79, 58 S.Ct. 817, 822-23, 82 L.Ed. 1188 (1938). See Degelos Bros. Grain Corp. v. Fireman's Fund Ins. Co., 498 F.2d 1238, 1239 (5th Cir.1974) (In a diversity case state law governs the award of interest, 28 U.S.C. Sec. 1961 notwithstanding); Southland Life Ins. Co. v. Stone, 112 S.W.2d 336, 337 (Tex.Civ.App.--Dallas 1938, no writ). In Erie, the Supreme Court declared that federal courts exercising jurisdiction in diversity of citizenship cases should apply state law except in matters governed by the Federal Constitution or by Acts of Congress. 304 U.S. at 78-79, 58 S.Ct. at 822-23. 77 Since the statutory amendment, however, the great majority of the circuit courts have held that the amended Sec. 1961 applies in diversity cases as well as other federal cases. They have specifically held that Sec. 1961 applies to any judgment in a civil case recovered in a district court,... including actions based on diversity of citizenship. Weitz Co. v. Mo-Kan Carpet, Inc., 723 F.2d 1382, 1385-86 (8th Cir.1983) (emphasis added). See also, G.M. Brod & Co. v. U.S. Home Corp., 759 F.2d 1526, 1542 (11th Cir.1985); Roy Stone Transfer Corp. v. Budd Co., 796 F.2d 720, 723 n. 6 (4th Cir.1986); Elias v. Ford Motor Co., 734 F.2d 463, 467 n. 6 (1st Cir.1984); Drovers Bank of Chicago v. National Bank & Trust Co., 829 F.2d 20, 23 n. 3 (8th Cir.1987); Bailey v. Chattem, Inc., 838 F.2d 149, 151-53 (6th Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 2831, 100 L.Ed.2d 931 (1988); International Telemeter, Corp. v. Hamlin International Corp., 754 F.2d 1492, 1494 (9th Cir.1985); Lowell Staats Mining Co. v. Pioneer Uravan, Inc., 645 F.Supp. 254, 258-59 (D.Colo.1986); Harmon v. Clark Equipment Co., 657 F.Supp. 873 (D.Me.1987); Commonwealth Edison Co. v. Decker Coal Co., 653 F.Supp. 841, 845 (N.D.Ill.1987). But see Davis & Cox v. Summa Corp., 751 F.2d 1507, 1522 (9th Cir.1985); Weitz Co., 723 F.2d at 1387-88 (dissenting opinion took the position that if Congress had intended to change the law for post-judgment interest, it would have done so more explicitly). The statute has been amended and is clear. We hold in agreement with virtually all the circuit courts that have considered the issue. Section 1961 applies to all civil cases in federal courts. No reason is found, including the terms of the statute, to find it not applicable to cases where federal jurisdiction is based upon diversity of citizenship.