Court Opinion

ID: 9467658
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:53:22.22371+00
Date Added: 2024-06-11T17:40:27.164677
License: Public Domain

MIKVA, Circuit Judge,
dissenting:
I am compelled to dissent from the decision of my colleagues because the reference points used in the majority opinion aré inappropriate. Wholly apart from the question of whether federal law is applicable in this diversity case,1 the majority’s reliance on rule 54(b) to deny post-verdict interest ignores the different purposes served by a rule of finality and a rule that commences the running of interest.
The substantive provision authorizing the allowance of interest in federal courts is section 1961 of the Judicial Code, 28 U.S.C. § 1961 (1976). This section provides that “interest shall be allowed on any money judgment in a civil case recovered in a district court [and] shall be calculated from the date of entry of the judgment, at the rate allowed by State law.”
The majority opinion suggests that because “judgment” is not defined in section 1961, they must refer to other sources to determine its meaning. I fail to see why. I believe that the meaning of the word “judgment” in section 1961 is best ascertained by examining the reasons for allowing interest on litigated claims. Interest is the cost of withholding the amount owed the plaintiff once that sum has been determined in a court proceeding. The *619jury’s verdict is an assessment of the plaintiff’s damages as of the date it is returned and includes interest as damages. If the plaintiff is to be made whole on the date of payment, interest must be allowed during the period between verdict and payment.
In this case, neither the presence of third party claims nor the remittitur changes the fact that the plaintiffs’ damages were assessed as of May 27,1975-the date on which the verdict of the jury was entered as a judgment. The plaintiffs originally sued both Sheraton and Paddock, the company that built the pool. Paddock filed third party complaints against its insurers for litigation expenses and indemnification in the event Paddock was found liable. The jury returned a verdict against Sheraton only and absolved Paddock of any responsibility. It is true that Paddock was still claiming litigation expenses from its insurers-but this is hardly an appropriate reason to deny plaintiffs interest on the amount Sheraton owed the plaintiffs under the terms of a jury verdict duly entered as a judgment under rule 58 of the Federal Rules of Civil Procedure.
It is true that subsequent to the entry of this judgment, the district court ruled that the entire verdict would be overturned unless the plaintiffs agreed to a reduced recovery of $4,680,000. But this ruling merely indicates that, as of May 27, 1975, the sum of $4,680,000 was due and owing to the plaintiffs as the result of a determination in a court proceeding. In reducing the verdict, the trial judge held that a reasonable jury would have returned a verdict of not more than $4,680,000 on May 27,1975. The plain words of section 1961 mandate that interest be allowed on that sum from that date forward.
Even if guidance must be sought in the Federal Rules of Civil Procedure, I believe that the majority turns to the wrong rule. Rule 58(1) provides that “upon a general verdict of a jury ... the clerk, unless the court otherwise orders, shall forthwith prepare, sign and enter the judgment without awaiting any direction by the court.” The term “judgment” in rule 58 is the same term used in section 1961. There is no reason not to consider section 1961 applicable to a rule 58 judgment. Indeed, the purpose of rule 58(1) was to avoid the delays previously encountered between the time of the jury verdict and the entry of that verdict as a judgment by order of the court. See Kaplan, Amendments of the Federal Rules of Civil Procedure, 77 Harv. L.Rev. 801, 831 (1964) (“Rule 58 had always urged speed and, as to the less complicated determinations by court or jury, it told the clerk to prepare and enter judgment himself, without prompting from the judge, unless the judge otherwise directed.”). That rule 58 allows the clerk to enter the judgment does not lessen its validity as a judgment. See id.
It is true that rule 54(b), relied on by the majority in reaching the opposite conclusion, states that not all judgments are final for purposes of appeal. But neither case law nor statute suggests that a judgment must be final for purposes of appeal before it can be a judgment for other purposes. Rule 54(b) does not modify, change or limit the meaning of the term judgment. That being so, the fact that rule 58 is subject to the provisions of rule 54(b) operates only to limit the finality of judgments entered under rule 58. Since section 1961 does not limit the allowance of interest to final judgments, I see no reason not to allow interest on all rule 58 judgments.2
The Court of Appeals for the Seventh Circuit has allowed interest in a case indistinguishable from the one at bar.3 In *620Ohio-Sealy Mattress Mfg. Co. v. Sealy, Inc., 585 F.2d 821 (1978), the defendant argued that interest on a verdict as remitted should not be allowed from the date the verdict was entered as a judgment under rule 58. Not only had the original verdict been remitted, other claims between the parties were not resolved until after the remittitur. Indeed, it was not until twenty months after the verdict that there was a final, appealable, judgment. The court analyzed the interplay of rule 58 with section 1961 in exactly the fashion suggested above:
To begin with, the language of Rule 58, read with § 1961 seems perfectly clear. Judgment is to be entered promptly, and interest runs from the date of entry. [We find no merit in the argument] that . . . absent an order of court pursuant to Rule 54(b), Fed.R.Civ.P., there could be no final judgment on which interest could run. The initial difficulty with this argument is that § 1961 does not in terms require that a judgment be final in the sense of tying up all the issues in a case. Congress knew how to specify finality when it was intended, see 28 U.S.C. § 2411, and it did not do so here.
Id. at 845-46.
In Louisiana & Arkansas Ry. Co. v. Pratt, 142 F.2d 847, 849 (5th Cir. 1944), the Fifth Circuit also indicated that interest should be allowed on rule 58 judgments. In that case, the trial court erroneously set aside the jury verdict. Even though no judgment had ever been entered in the trial court, the reviewing court said that it was within “the equity” of the statute “to award interest from the date of the verdict where, without fault of the plaintiff, an appreciable time has elapsed between the rendition of the verdict and the entry of the judgment.” Id. at 849 (footnote omitted). The court concluded that interest would be allowed from the time the verdict should have been entered as a judgment under rule 58. Id.
The majority opinion cites Caputo v. United States Lines Co., 331 F.2d 413, 416-17 (2d Cir.) cert. denied, 374 U.S. 833, 83 5. Ct. 1871, 10 L.Ed.2d 1055 (1963) to support its holding. Not only is Caputo technically distinguishable from this case,4 the Caputo court assumed that rule 54(b) finality would determine the meaning of the term judgment in section 1961 without explanation or any discussion of cases and policies.5 See id. at 416-17. Given the compelling analysis advanced by the Seventh Circuit in Sealy, Caputo cannot be regarded as persuasive precedent for this circuit.
A further complication arises from the fact that this case is not purely a matter of federal law. This is a diversity case, and, as I suggested above, the allowance of interest must be determined by local law.6 It *621is therefore necessary to consider when interest is allowed on a tort claim under the law of the District of Columbia. This brings us to the same result, but by a different route.
Although D.C. law is not in haec verba with section 1961, there is no discernible substantive difference:
“[I]n an action to recover damages for a wrong the judgment for the plaintiff shall bear interest.”
15 D.C.C. § 109 (1973). As with section 1961, the word “judgment” is not defined elsewhere in the section. Section 11-946 of the D.C. Code, however, makes the Federal Rules of Civil Procedure applicable to all local court cases unless modified under a specified procedure. Neither rule 58 nor rule 54(b) has been modified under local law. I think it likely that “judgment” under the local interest statute would be interpreted in terms of the relevant procedural rule-and, in this case, that rule is rule 58 of the Federal Rules of Civil Procedure.
I respectfully suggest that the majority is deciding whether or not there was a “final judgment” for purposes of rule 54(b) of the Federal Rules of Civil Procedure when the question before the court deals with the use of the word “judgment” in two substantive provisions-section 1961 of Title 28 of the United States Code and section 15-109 of the D.C. Code. As Judge Pell pointed out in Sealy, supra, “Congress knew how to specify finality when it was intended.” 585 F.2d at 546. It is not our job to import that concept into portions of the law in which Congress has not specified it. Since I see no reason why a rule 58 judgment cannot be a “judgment” for purposes of section 1961 of the United States Code or section 15-109 of the D.C. Code without being certified as a “final judgment” for purposes of rule 54(b), I would reverse the trial court on this question.

. In diversity cases, the allowance of interest is a question of state law. See note 6, infra.

. This construction is supported by the opinion of the Supreme Court in Briggs v. Pennsylvania Ry., 334 U.S. 303, 68 S.Ct. 1039, 92 L.Ed. 1403 (1948). In Briggs, the Supreme Court suggested that section 1961 might even allow interest on a verdict prior to its entry as a judgment under rule 58-but did not need to determine when interest begins to run in deciding the case before it. Id. at 307, 68 S.Ct. at 1040.

. Rather than addressing the logic of the Seventh Circuit’s reasoning, the majority chooses to distinguish Ohio-Sealy on the basis of that court’s distinction of Caputo v. United States Lines Co., 331 F.2d 413 (2d Cir.), cert. denied, *620374 U.S. 833, 83 S.Ct. 1871, 10 L.Ed.2d 1055 (1963). Although the Seventh Circuit’s initial discussion of section 1961 and rules 58 and 54(b) is well thought out, its subsequent attempt to distinguish Caputo is not. See 585 F.2d at 845-46. Regardless of whether the Seventh Circuit properly distinguished Caputo, the logic of the Seventh Circuit’s decision supports the allowance of interest in the case at bar-and is more persuasive than the Second Circuit’s decision in Caputo. See text and notes at notes 4-5, infra.

. In Caputo, the trial court actually vacated the earlier judgment as prematurely granted. In addition, although the court ignored this point in reaching its decision, the plaintiff had not appealed from either judgment and the question of interest was not properly before the reviewing court. See 331 F.2d at 416.

. Like the court in Caputo, and unlike the Ohio-Sealy court, the majority gives no reason for its application of the finality standards of rule 54(b) to the timing of interest under section 1961. A discussion of the reasoning of Ohio-Sealy and an explanation of why rule 54(b) is determinative would be more helpful to the resolution of the issue before us than a dismissal of Ohio-Sealy based on that court’s strained and erroneous attempt to distinguish Caputo. See note 3, supra.

. As far back as 1891, the Supreme Court held that section 1961
[w]hile providing only for interest on judgments, does not exclude the idea of a power in the several States to allow interest upon verdicts, and where such allowance is expressly made by a State statute, we consider it a right given to a successful plaintiff, of which he ought not to be deprived by a removal of his case to the Federal court. The *621courts of the State and the Federal courts sitting within the State should be in harmony upon this point.
Massachusetts Benefit Ass’n v. Miles, 137 U.S. 689, 691, 11 S.Ct. 234, 235, 34 L.Ed. 834 (1891). Although the Miles Court referred only to state statutes allowing interest on verdicts, Miles was decided prior to Erie R. R. Co. v. Tomkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); at that time, only state statutory law was applied by federal courts sitting in diversity. After Erie, the Supreme Court quoted Miles with approval, stressing that the allowance of interest on verdicts should be the same in federal and state courts in diversity cases. Klaxon Co. v. Stentor Co., 313 U.S. 487, 497, 61 S.Ct. 1020, 1022, 85 L.Ed. 1477 (1941). Thus, the Supreme Court has indicated that state law determines whether interest is allowed on a verdict in diversity cases. See generally Note, Interest on Verdicts and Judgments in State and Federal Courts, 38 N.D.Law. 58, 66 (1962); Note, Interest on Judgments in the Federal Courts, 64 Yale L.J. 1019, 1037 (1955) (“Even if section 1961 is construed strictly, it is certain that if the prevailing state law allows interest from verdict to judgment, this state law applies to a federal judgment on a non-federal cause of action”). In the past, courts have applied this principle to allow interest even prior to a verdict. See, e. g., Joseph E. Bennett Co. v. Trio Industries, Inc., 306 F.2d 546, 548-49 (1st Cir. 1962) (question of interest before judgment always a question of state law; here, under state law, interest accumulates from the time the contractual obligation was breached); New Amsterdam Casualty Co. v. Soileau, 167 F.2d 767, 772 (5th Cir. 1948) (if a state can allow interest from the date of verdict, it can allow it from the date the complaint is filed).