Court Opinion

ID: 4635515
Source: CourtListenerOpinion
Date Created: 2020-11-23 21:00:32.825096+00
Date Added: 2024-06-11T07:58:23.881926
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       NOV 23 2020
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

LL LIQUOR, INC., DBA Lolo Liquor,               No.    19-36002

                Plaintiff-Appellant,            D.C. No. 6:15-cv-00071-SEH

 v.
                                                MEMORANDUM*
STATE OF MONTANA; et al.,

                Defendants-Appellees.

LL LIQUOR, INC., DBA Lolo Liquor,               No.    19-36041

                Plaintiff-Appellee,
                                                D.C. No. 6:15-cv-00071-SEH
 v.

STATE OF MONTANA; et al.,

                Defendants-Appellants.

                   Appeal from the United States District Court
                           for the District of Montana
                    Sam E. Haddon, District Judge, Presiding

                      Argued and Submitted October 7, 2020
                               Portland, Oregon

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: PAEZ and RAWLINSON, Circuit Judges, and ANTOON,** District Judge.
Dissent by Judge RAWLINSON

      All parties appeal the district court’s judgment awarding post-judgment

interest to Plaintiff LL Liquor, Inc. pursuant to 28 U.S.C. § 1961. We have

jurisdiction under 28 U.S.C. § 1291, and we vacate and remand.

      1. An award of post-judgment interest is typically reviewed for abuse of

discretion. Citicorp Real Est., Inc. v. Smith, 155 F.3d 1097, 1107 (9th Cir. 1998).

But where “review of the award of interest involves statutory interpretation of 28

U.S.C. § 1961” or other issues of law, the award is reviewed de novo. Id.

      Generally, in actions within a district court’s supplemental jurisdiction,

“state law determines the rate of prejudgment interest, and postjudgment interest is

governed by federal law.” Id. (quoting Am. Tel. & Tel. Co. v. United Comput. Sys.,

Inc., 98 F.3d 1206, 1209 (9th Cir. 1996)); see Sea Hawk Seafoods, Inc. v. Exxon

Corp. (In re Exxon Valdez), 484 F.3d 1098, 1100 (9th Cir. 2007). Federal law

provides for interest on money judgments in civil cases at the rate prescribed in 28

U.S.C. § 1961. But “[a]n exception to § 1961 exists when the parties contractually

agree to waive its application.” Fid. Fed. Bank, FSB v. Durga Ma Corp., 387 F.3d

1021, 1023 (9th Cir. 2004) (citing Citicorp, 155 F.3d at 1107–08).

      **
            The Honorable John Antoon II, United States District Judge for the
Middle District of Florida, sitting by designation.

                                          2
      Here, the parties settled LL Liquor’s breach of contract claim and stipulated

to the entry of a $5 million judgment in favor of LL Liquor. They also agreed that

Montana statutes—not 28 U.S.C. § 1961—governed post-judgment interest,

though they disagreed on the correct application of those statutes. Despite the

parties’ agreement, the district court awarded LL Liquor post-judgment interest

under 28 U.S.C. § 1961. This was error.

      Although a general choice-of-law provision in a contract is insufficient to

waive § 1961 where it “makes no reference to interest rates,” Fid. Fed. Bank, 387

F.3d at 1023, here both sides expressly agreed that § 1961 did not apply and that

Montana law controlled. They made this clear repeatedly in their submissions to

the district court, including in their “status update” reporting their settlement and in

the settlement agreement itself. And unlike in Fidelity Federal Bank and the other

cases relied upon by the dissenting judge and the district court, in this case there

was no dispute between the parties regarding whether they had contractually

agreed to waive § 1961.1 The district court should have honored the parties’

express agreement to apply Montana law.

      2. Because the district court awarded interest pursuant to § 1961, it did not

resolve the parties’ competing arguments regarding the effect of applying Montana

      1
            They expressed their intent to waive § 1961 in their settlement
agreement and continued to do so through oral argument in this appeal.

                                           3
law to post-judgment interest. We now analyze that legal question.2

      LL Liquor argues that it is entitled to post-judgment interest at the rate of

10% per year from the date of judgment under § 18-1-404(1)(b) of the Montana

Code, which provides that in contract actions, “[t]he state of Montana is liable for

interest from the date on which the payment on the contract became due” and “[i]f

the contract is subject to a good faith dispute brought before a government agency

or before a court, the interest rate is 10% simple interest each year, whether due

before or after a decision by the government agency or court.” Mont. Code § 18-

1-404(1)(b) (2013) (emphasis added). Defendants, on the other hand, maintain that

they do not owe any post-judgment interest at all if the judgment is paid within two

years, citing § 2-9-317 of the Montana Code, which states: “Except as provided in

[§] 18-1-404(1)(b), if a governmental entity pays a judgment within 2 years after

the day on which the judgment is entered, no penalty or interest may be assessed

against the governmental entity.” Mont. Code § 2-9-317 (2013) (emphasis added).

      “In interpreting a state statute, a federal court applies the relevant state’s

rules of statutory construction.” In re W. States Wholesale Nat. Gas Antitrust

Litig., 715 F.3d 716, 746 (9th Cir. 2013). In Montana, the “objective when

interpreting a statute is to implement the objectives the legislature sought to

      2
             “If the district court avoids an issue that, on appellate review,
becomes dispositive, we will decide a question of law and resolve the case.” RTC
Transp., Inc. v. Conagra Poultry Co., 971 F.2d 368, 375 (9th Cir. 1992).

                                           4
achieve.” Rogers v. Lewis & Clark Cnty., 472 P.3d 171, 182 (Mont. 2020). The

plain meaning of the words in the statute controls if it is possible to determine

legislative intent from those words. Id. “We examine legislative history only

when the intent cannot be ascertained from the language of the statute.” Id.

      Defendants urge that the exception in § 2-9-317 for § 18-1-404(1)(b) means

that in contract cases the State is obligated to pay prejudgment interest—including

interest before a court decision and interest between a court decision and a

judgment—but is not obligated to pay post-judgment interest if it pays the

judgment within two years. We reject this strained reading. The plain meaning of

§ 18-1-404(1)(b) is that the state of Montana owes both prejudgment interest and

post-judgment interest in contract cases. Interest after a judgment is also interest

“after a decision.” And applying this reading of § 18-1-404(1)(b) to § 2-9-317’s

“[e]xcept” clause, the state of Montana does not enjoy a two-year grace period for

paying post-judgment interest in contract cases.3

      3
               The legislative history of these two provisions confirms our plain-
meaning conclusion. The “[e]xcept” clause was added to § 2-9-317 in 1997 at the
same time that § 18-1-404(1) was amended to render the state of Montana liable
for interest in contract cases “whether due before or after a judgment.” 1997 Mont.
Laws Ch. 508 (H.B. 534) (titled “An act making the state liable for interest . . . in a
judgment involving a contract”). Another amendment, in 2001, left § 2-9-317
unchanged but amended § 18-1-404(1)(b) to read as it does today—“whether due
before or after a decision by [a] government agency or court.” 2001 Mont. Laws
Ch. 181, § 12 (S.B. 90). Defendants present no basis for a conclusion that in 2001
the Montana legislature intended to undo its clear 1997 intention to include post-
judgment interest within the state’s obligations in contract cases.

                                           5
      Accordingly, we vacate the judgment and remand with instructions to enter

an amended judgment in favor of LL Liquor, Inc. that bears post-judgment interest

from October 1, 2019, at the rate of 10% as provided by Montana law.

      VACATED AND REMANDED.

                                        6
                                                                              FILED
LL Liquor, Inc. v. State of Montana, Case Nos. 19-36002 and 19-36041 NOV 23 2020
Rawlinson, Circuit Judge, dissenting:
                                                                           MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS
      I respectfully dissent from the majority’s conclusion that the district court

erred in applying federal law to calculate post-judgment interest in this case

brought under the contract clauses of the United States Constitution and the

Montana Constitution. The parties ultimately entered into a settlement agreement.

Relevant to this appeal, the agreement specified that:

                    The parties dispute whether post-judgment interest
             is owed on the Judgment and both parties reserve that
             issue and agree to submit the issue to the Federal District
             Court for a decision . . .

      Nothing in the agreement addressed application of state law rather than

federal law in calculating the amount of post-judgment interest. Rather, as stated,

this matter was “submit[ted] . . . to the Federal District Court for a decision.”

      28 U.S.C. § 1961(a) provides that:

           [i]nterest shall be allowed on any money judgment in a
           civil case recovered in a district court. . . . Such interest
           shall be calculated . . . at a rate equal to the weekly
           average 1-year constant maturity Treasury yield, as
           published by the Board of Governors of the Federal
           Reserve System . . .
(Emphasis added).

      “We have construed the language of section 1961 to be mandatory in cases

awarding post judgment interest . . .” Van Asdale v. Int’l Game Tech., 763 F.3d

                                           1
1089, 1092 (9th Cir. 2014) (citation, alteration and internal quotation marks

omitted). The only exception to the mandatory application of § 1961 occurs if, and

only if, “the parties contractually agree to waive its application.” Fidelity Fed.

Bank, FSB v. Durga Ma Corp., 387 F.3d 1021, 1023 (9th Cir. 2004) (citation

omitted) (emphasis added).

      The majority points to no contractual agreement by the parties to waive

application of § 1961 because there is no such contractual agreement in the record.

Neither the Franchise Agreement between the parties nor the Settlement

Agreement between the parties contains a waiver of the application of § 1961 to

post-judgment interest rates, as required by our precedent. See Fidelity Fed. Bank,

387 F.3d at 1023 (requiring a contractual agreement as to the interest rates). The

closest the parties come is a statement in the Settlement Agreement that the

Agency Franchise Agreement “will be subject to Montana law.” However, as the

majority concedes, we have explicitly held that such “a general choice-of-law

provision is insufficient to waive § 1961 where it makes no reference to interest

rates.” Majority Opinion, p.3, quoting Fidelity Fed. Bank, 387 F.3d at 1023. The

majority’s reliance on the parties’ pleadings and courtroom arguments find no

support in our precedent. See id. (requiring a contractual agreement).

                                          2
      The district court properly applied our precedent, the majority did not. I

would affirm the judgment of the district court.

                                         3