Opinion ID: 720637
Heading Depth: 2
Heading Rank: 2

Heading: Indu Craft's Cross-Appeal

Text: 21 On cross-appeal, Indu Craft challenges several aspects of the district court's judgment. Indu Craft maintains that it is entitled to (1) interest on the full amount of Indu Craft's verdict before deduction of the amount of the equitable setoff, (2) additional post-verdict, prejudgment interest at 9% from the date of the original judgment (August 21, 1992) through the date the judgment was reinstated (October 19, 1995) pursuant to New York C.P.L.R. §§ 5002 and 5004, (3) post-judgment interest from October 19, 1995 at the rate applicable when the judgment was reinstated (5.62%) rather than at the rate applicable at the time of the original judgment (3.41%) pursuant to 28 U.S.C. § 1961, and (4) compound prejudgment interest. Although Baroda disputes each of these claims, it concedes that Indu Craft is entitled to the following interest amounts: (1) prejudgment interest at 9% under New York C.P.L.R. § 5001(a) from July 9, 1987 to August 12, 1992 (jury verdict); (2) post-verdict, prejudgment interest at 9% under New York C.P.L.R. § 5002 from August 12, 1992 to August 21, 1992 (original judgment); and (3) post-judgment interest at 3.41% under 28 U.S.C. § 1961 from August 21, 1992 (original judgment) through the present. We consider each claim in turn. 22
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.
25 The award of post-judgment interest is mandatory under 28 U.S.C. § 1961. As the district court noted, the parties agree that Indu Craft is entitled to prejudgment interest for the period before this court's original judgment of August 21, 1992. Indu Craft now seeks an additional award of prejudgment interest for the period between the entry of the original judgment and the entry of the reinstated judgment. The determination of the date when post-judgment interest begins to accrue establishes, in turn, when prejudgment interest (which in this case is calculated at the substantially higher New York rate) ceases to accrue. In this case, more than three years elapsed between the original judgment, which was entered on August 21, 1992, and the reinstated judgment, which was entered on October 19, 1995. 26 In opposition to Indu Craft's request, Baroda principally argues that we previously denied this request on October 4, 1995, when we ruled on Indu Craft's motion to recall the mandate. Our original opinion contained no instructions to the district court concerning the award of post-judgment interest. Therefore, in the judgment of August 18, 1995, the district court only awarded Indu Craft prejudgment interest at 9% under New York law from July 9, 1987 to August 21, 1992, the date the original judgment was entered. On August 29, 1995, Indu Craft moved to recall the mandate to add direction for interest. On October 4, 1995, we directed the district court--without opinion--to award Indu Craft post-judgment interest at the applicable federal rate from August 21, 1992, the date of the original judgment. 27 Notwithstanding our earlier direction, Indu Craft urges us to consider the merits of its argument on the ground that the precise issue was not fully considered by the earlier panel on the motion to recall the mandate. See DeWeerth v. Baldinger, 38 F.3d 1266, 1271 (2d Cir.) (cannot presume that denial of motion to recall mandate constitutes comprehensive rejection on merits of arguments presented), cert. denied, --- U.S. ----, 115 S.Ct. 512, 130 L.Ed.2d 419 (1994). Even if we were to reconsider our earlier mandate, Indu Craft would fare no better. Although we have previously interpreted 28 U.S.C. § 1961 to require that interest run only from the date of the mandate issued from this court, see Powers v. New York Cent. R.R., 251 F.2d 813, 818 (2d Cir.1958), that interpretation of 28 U.S.C. § 1961 has been superseded by Fed.R.App.P. 37, Smith v. National R.R. Passenger Corp., 856 F.2d 467, 472-73 (2d Cir.1988), which states: 28 If a judgment is modified or reversed with a direction that a judgment for money be entered in the district court, the mandate shall contain instructions with respect to allowance of interest. 29 This rule gives appellate courts discretion to decide the issue on a case-by-case basis. Smith, 856 F.2d at 473. 30 We reaffirm our earlier holding that post-judgment interest should run from the date of the original judgment. In Andrulonis v. United States, 26 F.3d 1224 (2d Cir.1994), we held that post-judgment interest is to commence from a judgment that is ascertained in [a] meaningful way and is supported by the evidence. Id. at 1233 (citing Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827, 836, 110 S.Ct. 1570, 1576, 108 L.Ed.2d 842 (1990)). In this case, our reversal of the district court's grant of Baroda's motion for judgment as a matter of law does not change the fact that the judgment was ascertained in a meaningful sense on August 21, 1992, the date on which the original judgment was entered following the jury verdict. 31 Indu Craft's reliance on Kaiser, in which the Supreme Court held that post-judgment interest should accrue from the date of the reinstated judgment, is misplaced. 494 U.S. at 835, 110 S.Ct. at 1575. In Kaiser, the Supreme Court set the date for the commencement of post-judgment interest immediately after the later judgment rather than after the initial judgment, because the district court found that the first judgment was not supported by sufficient evidence on the issue of damages. See id. Unlike Kaiser, here we did not disturb the jury's factual findings on appeal and the original judgment was sufficiently substantiated by the evidence. We reaffirm our earlier directive that post-judgment interest runs from the date of the trial court's first judgment, August 21, 1992, on the principal sum provided in our mandate of February 3, 1995.
32 On October 19, 1995, the district court amended its earlier judgment to add post-judgment interest from August 21, 1992 at the federal rate of 3.41%. Indu Craft argues that because post-verdict, prejudgment interest should be awarded through the date of the reinstated judgment, post-judgment interest should properly be calculated at 5.62%, the rate applicable when the judgment was reinstated on October 19, 1995. Because we have determined above that post-judgment interest should be awarded commencing on August 21, 1992, the date of the original judgment, post-judgment interest was properly awarded from the date of the original judgment at a rate of 3.41% and post-verdict, prejudgment interest was appropriately awarded at the state rate of 9%, see New York C.P.L.R. §§ 5002 & 5004, for August 12, 1992 through August 21, 1992.
33 Finally, Indu Craft claims that it should have been awarded compound interest from July 9, 1987 through October 19, 1995 on the basis of the jury's finding that Baroda acted in bad faith. See Wilson v. Great Am. Indus., 763 F.Supp. 688, 691 (N.D.N.Y.1991), aff'd in part and rev'd in part on other grounds, 979 F.2d 924 (2d Cir.1992). This issue was not raised below, and we decline to disturb the district court's failure to award compound prejudgment interest.