Opinion ID: 3032708
Heading Depth: 3
Heading Rank: 3

Heading: Interest, Costs, and Attorneys’ Fees

Text: Because we reverse the District Court’s grant of summary judgment, we must also vacate its subsequent awards to SAMBA, and against Shaw, of pre- and post-judgment interest, costs, and attorneys’ fees. We nonetheless agree with the Court’s analysis of these issues had they applied to SW Engineering. With respect to the award of pre-judgment interest, we specifically agree with the District Court’s reliance on the Guaranty’s choice of New York law and its assignment of a 9% interest rate running from May 31, 2000.12 We likewise concur in the Court’s 11 As expressly reserved by SAMBA in its Statement of Cure Claim, its claim for repayment of $6,872,979 should now be treated as a Proof of Claim against SW Engineering. See App. at A458. 12 Despite the Guaranty’s statement that it “shall be governed by the laws of the State of New York,” SAMBA sought application of Delaware’s legal interest rate of 11%. See Saudi American Bank II, 354 B.R. at 689–91. Shaw, SW Engineering, and others argued in response that SAMBA was not entitled to receive interest on the sum because the joint venture’s “obligation to SAMBA ultimately arose under and is determined by the Credit Agreement, and . . . Payment Letter,” which are controlled by Saudi law that forbids the collection of interest. Id. at 690. The District Court concluded that the terms of the Guaranty controlled in all respects, granting SAMBA pre-judgment interest at New York’s interest rate of 9%. See id. at 690–91; N.Y. C.P.L.R. §§ 5001(a) & 5004. The Court distinguished the Guaranty from the Credit Agreement by reiterating that a guaranty “is a separate contract involving duties and responsibilities which are different from the basic contract to which it is collateral.” Id. at 690 (quoting FinanceAmerica, 380 A.2d at 1379). It applied New York’s interest rate because it determined that Delaware, whose law would control in the absence of the parties’ choice of law, did not 21 application of 28 U.S.C. § 1961 to establish a 3.33% post-judgment interest rate. See Saudi American Bank II, 354 B.R. at 693. Regarding litigation expenses, we approve the Court’s determination that the Guaranty’s promise of reimbursement for “any and all expenses incurred [by SAMBA] in enforcing [its] rights under this Guaranty” entitles SAMBA to reasonable attorneys’ fees and other litigation costs. Saudi American Bank II, 354 B.R. at 691–3. Any reward recovered under the language of the Guaranty, however, must be limited to the fees directly incurred in enforcing rights against SW Engineering under that instrument. See id. at 692.