Court Opinion

ID: 8970788
Source: CourtListenerOpinion
Date Created: 2022-11-27 10:30:09.169481+00
Date Added: 2024-06-11T17:10:25.732583
License: Public Domain

MURNAGHAN, Circuit Judge,
concurring in part and dissenting in part:
For the most part, I can find no fault in Judge Butzner’s opinion; indeed it is a thoughtful and lucid presentation of the issues, and undoubtedly, in all major facets, reaches a just result. I dissent, however, as to one small concern — the majority’s reversal of the district court’s award of ten percent prejudgment interest. The majority finds that Maryland law caps prejudgment interest at a rate of six percent. As I believe the Maryland legislature has indicated otherwise, I must disagree.
The Maryland Constitution specifies that the legal rate of interest is six percent, unless otherwise provided by the legislature. Md. Const. Art. Ill, § 57. The Maryland General Assembly has decreed that the legal rate of interest on judgments will be ten percent. Md.Cts. & Jud.Proc. § 11-107. While Maryland courts have naturally confined § 11-107 to the judgment setting, see, e.g., Mayor and City Council of Baltimore v. Kelso Corp., 294 Md. 267, 273, 449 A.2d 406, 409 (1982); Maryland Port Admin, v. C.J. Langenfelder & Son, Inc., 50 Md.App. 525, 539-46, 438 A.2d 1374, 1382-86 (1982), they have not drawn the distinct dichotomy between pre- and post-judgment situations perceived by the majority.1
Indeed, Maryland accords the same rationale for both types of interest. In Mayor of Baltimore, the court stated the purpose of postjudgment interest was to compensate the judgment creditor for the loss of the moneys that are due and owing to him from the time judgment is entered until it is paid. 294 Md. at 271, 449 A.2d at 408. Similarly, prejudgment interest is designed “to compensate the aggrieved party for the loss of the use of the principal liquidated sum found due it and the loss of the income from said funds.” I.W. Berman Properties v. Porter Bros., Inc., 276 Md. 1, 24, 344 A.2d 65, 79 (1975). Given such an identity of purpose, the legislative determination that the old six percent rate no longer fairly compensated judgment creditors would appear equally to extend to prejudgment situations. See generally Mayor of Baltimore, 294 Md. at 271-73, 449 A.2d at 409. Prejudgment interest accompanies postjudgment interest and crossing the dividing line in no way justifies or indicates a change in the rate of interest.
Furthermore, as the court indicated in Mayor of Baltimore, an unfairly low rate of interest acts as a direct incentive to the liable party to delay in satisfying a judgment or, in this case, concluding litigation. A disparity between pre- and post-judgment interest would merely exacerbate the disincentive. Such reasoning has apparently led several federal district court judges implicitly to assume that § 11-107’s rate applies to prejudgment interest. See Vlachos v. M/V Proso, 637 F.Supp. 1354, 1376 (D.Md.1986); Sea Land Industries, Inc. v. General Ship Repair, 530 F.Supp. 550, 569 (D.Md.1982).
I readily concede that the admiralty cases cited by the district court and the *361FSLIC may not at first glance fully support the award of prejudgment interest at a rate facially variant from the Maryland legal rate of interest. The fact remains, however, that it is indeed anomalous to restrict prejudgment interest to the general legal rate of six percent when the Maryland legislature has determined that ten percent is the appropriate rate of interest for judgments. See George’s Radio & Television Co., Inc. v. Insurance Co. of America, 536 F.Supp. 681, 683 (D.Md.1982).
Section 11-107 of the Md.Cts. & Jud. Proc. Article itself does not draw a distinction between post- or pre-judgment situations but speaks only of “interest on a judgment.” The Maryland Constitution, Art. Ill, § 57, concerns only the legal rate of interest saying nothing about what it is to be applied to. Interest calculated on the basis of a judgment is interest on a judgment or judgment interest whether calculation operates with respect to the period before judgment or with respect to the period after judgment. Prejudgment interest is one form of interest on a judgment. The judgment is the basis on which the calculation is made.
In short, I conclude that, though perhaps indirectly, the legislature of Maryland has otherwise provided as to the legal rate of prejudgment interest. For the above reasons, I do not believe that the Maryland Court of Appeals would limit prejudgment interest to the general six percent legal rate, and would affirm the district court’s award.

. Although in Mayor of Baltimore, supra, the prejudgment interest rate was set at six percent, that rate was specifically required under Md. Real Property Code § 12-106(c). In fact, § 12-106(c) sets six percent as the minimum rate of prejudgment interest to which a property owner is entitled in a quick-take condemnation action. If the property owner produces evidence that the six percent rate is constitutionally insufficient, he is entitled to a higher rate of return as part of just compensation. King v. State Roads Comm’n, 298 Md. 80, 467 A.2d 1032 (1983).
Interestingly in Md. Port Admin., supra, even though the court found § 11-107 generally inapplicable to a Board of Contract Appeals decision, it, nevertheless, permitted 10% predecision interest as part of the equitable remedy awarded to the applicant.