Court Opinion

ID: 8926736
Source: CourtListenerOpinion
Date Created: 2022-11-27 06:44:52.973152+00
Date Added: 2024-06-11T17:09:25.134927
License: Public Domain

GIBBONS, Circuit Judge,
dissenting:
I concur in the opinion of the Court insofar as it affirms the district court’s award of postjudgment interest and the award of interest on costs. I would reverse, however, the district court’s holding that Devex is not entitled to collect interest on the delinquent postjudgment and prejudgment interest payments.
The United States rule, under which payments are applied first to accrued interest and then to principal, should govern this case unless the parties have “clearly expressed [an] intention to handle allocation in some other way.” Nat G. Harrison Overseas Corp. v. American Barge Sun Coaster, 475 F.2d 504, 507 (5th Cir.1973). The majority infers such an agreement from two court orders. That inference is not supportable.
The majority’s position overextends the holding of Harrison Overseas. In Harrison Overseas, the fifth circuit held that the United States rule did not apply to a judgment on a note that clearly stated that each payment would constitute Vn of the principal due, and Vn of the interest due.1 Id. The parties in Harrison Overseas clearly intended payments to be applied ratably to interest and principal. No such clear intention to avoid the United States rule is evidenced here.
The majority’s conclusion that the parties did not intend the United States rule to apply is based on two district court orders. On July 8, 1982, before the postjudgment or prejudgment interest had been paid, the district court directed the clerk to enter satisfaction of the royalty portion of the judgment. On June 7, 1983, before the postjudgment interest had been paid, the district court directed the clerk to enter satisfaction of the prejudgment interest portion of the judgment.
These orders do not evidence the kind of “clearly expressed intention” to deviate from the United States rule that was apparent in Harrison Overseas. A court order, even if obtained by motion of the parties, is fundamentally different from a freely negotiated contract. Even if these orders could be viewed as an agreement between the parties, there is no evidence that the parties or the court considered the possibility that the orders would later have an effect on interest payments. In July 1982, when Devex moved for an order directing General Motors to pay the reasonable royalty portion of the judgment, the prejudgment interest portion of the judgment was on appeal to the Supreme Court, and the district court had not yet determined the' postjudgment interest rate. Since the royalty award was the only uncontested part of the judgment at that point, it was the only part that Devex could collect immediately. The plaintiffs were concerned only with collecting the royalty judgment without undue delay. See, Transcript of July 2, 1982 at 14. The district court gave no indication of an intention that this order relieve General Motors of future interest payments. In fact, the court indicated an intent to require General Motors to pay the judgment immediately so that the plaintiffs, and not General Motors, would have the benefit of the use of the money while the remainder of the judgment awaited appeal. Tr. at 6. Thus neither the parties nor the court evidenced a clear intention to avoid application of the United States rule to the payments by General Motors on the judgment owed to Devex.
Finally, strong policy concerns militate against extending the Harrison Overseas exception to the circumstances of this case. The majority’s holding allows General Motors to delay payment of long-overdue interest with impunity. If no interest is assessed, General Motors simply has no incentive to pay the judgments promptly. This appeal has allowed General Motors to enjoy a further interest-free delay, during *1028which time plaintiffs are not being compensated for the lost time-value of money due under the judgment in their favor. By allowing General Motors the interest-free use of delinquent payments, the court is depleting plaintiffs’ real recovery as surely as if it had simply reduced the amount of their award. It is, moreover, rewarding General Motors for resorting to this court on several occasions in the interest of delay.

. The agreement in Harrison Overseas provided that the total interest due was “payable with each installment of principal, payable in seventy-one (71) equal monthly installments...." 475 F.2d at 506 n. 4.