Opinion
Civil Action No. 93-2550-GTV.
July 14, 2000.
William P. Ronan, Overland Park, KS, for Rufus A. Caldwell, III, plaintiff.
Phillip R. Fields, Wichita, KS, for Western Atlas International, Inc., defendant.
Craig T. Kenworthy and James A. Durbin, Swanson Midgley, LLC, Kansas City, MO; Richard N. Bien, Lathrop Gage L.C., Kansas City, MO, for Life Insurance Company of North America, defendant.
MEMORANDUM AND ORDER
The court has under consideration defendant's Motion to Alter or Amend Judgment; or in the Alternative for Relief From Judgment (Doc. 165) and defendant's Motion to Reconsider (Doc. 167). These two motions seek the same relief and are directed to the court's order entered July 22, 1999 (Doc. 162), which granted judgment to plaintiff on his claim for monthly disability benefits under his employer's ERISA plan. The motion of defendant to alter or amend the judgment is considered by the court as a motion filed pursuant to Fed.R.Civ.P. 59(e), and as explained in this Memorandum and Order, it is granted in part. The motion to reconsider seeks the same relief as the motion to alter or amend the judgment, and it is filed pursuant to D. Kan. Rule 7.3. It is denied as unnecessary and redundant to the motion to alter or amend.
Plaintiff has filed a response (Doc. 170) to the defendant's motions. In his response, plaintiff contends that the motions are untimely because they were not filed until August 12, 1999, while the court's order was dated July 22, 1999. Motions to alter or amend judgments pursuant to Fed.R.Civ.P. 59(e) and motions to reconsider pursuant to D. Kan. Rule 7.3 are required to be filed within ten days from the entry of the judgment or the order. However, judgment was not entered by the clerk on the court's order until August 2, 1999, and on that date the ten days began to run. The motions in question were filed on August 12, 1999, which was the eighth business day after the entry of the judgment, and the court granted the defendant's motion to extend the time to file its motion to reconsider pursuant to a motion seeking such extension filed on August 12, 1999.
Fed.R.Civ.P. 6(e) excludes Saturdays, Sundays and holidays from the time computation when the period allowed is less than eleven days.
Defendant, in its motion to alter or amend the judgment, seeks three modifications of the court's order and its judgment. First, defendant asks that prejudgment interest not be awarded in this case. Second, defendant asserts that if prejudgment interest is awarded, then the prejudgment interest should commence on the date of the final benefits decision in this case which defendant asserts to be October 24, 1997. Third, defendant contends that if prejudgment interest is awarded, it should be awarded at the rates and in the manner provided by 28 U.S.C. § 1961. The request that prejudgment interest not be awarded to plaintiff is denied. Defendant's contention that the prejudgment interest award not begin to run until October 24, 1997, is denied, but the court, as explained in this order, concludes that the judgment should be modified with respect to the dates from which prejudgment interest is to run. The court further concludes that the rate of prejudgment interest previously ordered by the court should be modified.
Granting Prejudgment Interest
An award of prejudgment interest rests within the discretion of the court.Frymire v. Ampex Corporation, 61 F.3d 757, 773 (10th Cir.1995). In making its decision whether to award prejudgment interest, the court must determine if the award serves a compensatory function and reflects fundamental considerations of fairness. Id. at 774 (citations omitted.) This is a two-step analysis. Anixter v. Home-Stake Production Co., 977 F.2d 1549,1554 (10th Cir. 1992). In the case now before the court, the court concludes that the award of prejudgment interest serves a compensatory function, in that it compensates plaintiff for the loss of the use of the money involved in the award of benefits. The court also concludes that the award is eminently fair because it is an essential component of full compensation for plaintiff.
The same discretion of the court applies in ERISA cases. "Under ERISA, awards of attorney fees and prejudgment interest are discretionary. 29 U.S.C. § 1132(g)." Lutheran Medical Center of Omaha, Nebraska v. Contractors, Laborers, Teamsters and Engineers Health and Welfare Plan, 25 F.3d 616, 623 (8th Cir. 1994) (citations omitted). "Generally, a court should award prejudgment interest unless 'exceptional or unusual circumstances exist making the award of interest inequitable.'" Id. Jones v. Unum Life Insurance Company of America, ___ F.3d ___ 2000 WL 635401 (2d Cir. 2000). ("In a suit to enforce a right under ERISA, the question of whether or not to award prejudgment interest is ordinarily left to the discretion of the district court.") The court, in the exercise of its discretion, and on the basis of its analysis stated above, determines that prejudgment interest should be awarded to plaintiff. There are no exceptional or unusual circumstances in this case making the award of prejudgment interest inequitable.
The Date from Which Prejudgment Interest Should Run
Prejudgment interest compensates the beneficiaries for amounts they would have received if the ERISA plan had paid their claims when they were filed, and is necessary to allow them to obtain equitable relief, because they have been denied the use of the money. Lutheran Medical Center, 25 F.3d 616 at 623. Prejudgment interest is an integral part of compensatory damages. Johnson v. Continental Airlines Corp., 964 F.2d 1059, 1064 (10th Cir. 1992). "Under federal law, the rationale underlying the award is to compensate the wronged party for being deprived of the monetary value of his loss from the time of the loss to the payment of judgment." U.S. Industries, Inc., v. Touche Ross Co., 854 F.2d 1223, 1256 (10th Cir. 1988).
Defendant urges that the order of the court entering judgment in this case must be modified because the court did not fix the date upon which prejudgment interest began to run. The court agrees. In the instant case, the court finds that the time of loss began when plaintiff failed to receive each of the monthly benefits to which he was entitled. Prejudgment interest, therefore, should run on each monthly award of benefits from the time such benefit became due until the judgment as modified by this order is entered. Because there may be delay in the clerk formally entering judgment pursuant to this order, the court concludes that prejudgment interest should be calculated to July 17, 2000. The first monthly benefit that the court has found to be due to plaintiff was for the month of August 1989, and the court finds that 131.5 months intervened between that time and July 17, 2000. A statement of each of the monthly benefits and the computation of prejudgment interest on each of them is set out in the table below.
The Appropriate Prejudgment Interest Rate
Defendants contend that the court erred in following Biava v. Insurers Administrative Corp., 1995 WL 94461 (10th Cir. 1995) when it awarded post-judgment interest at the Kansas statutory rate of 10% per annum. Defendants assert that Biava should no longer be followed on account of the amendment of 28 U.S.C. § 1961(a), which changed the method of determining the interest rate to be applied to interest on judgments in federal court. Instead, defendant asserts, the court should have adopted the post-judgment interest rate as provided in § 1961. The court rejects this argument. In Biava the court of appeals approved an award of prejudgment interest at the rate provided by a New Mexico statute. However, the amendment to § 1961 does not render the holding of Biava invalid. The court in Biava court held that "[w]e must uphold a district court's determination of prejudgment interest unless there is an abuse of discretion[,]" and that the award using the rate provided by the New Mexico Statute, 56-8-4 NMSA (1978), did not constitute an abuse of discretion.
The effective date of the amendment to 28 U.S.C. § 1961 was October 1, 1982. Pub.L. No. 97-164, 96 Stat. 25.
28 U.S.C. § 1961(a) is a statute that applies to post-judgment interest. It does not deprive the district courts of their discretion in determining the appropriate rate of interest to adequately compensate a party. That discretion may include looking to an appropriate state prejudgment interest statute in making the determination.
In another case decided after the amendment of 28 U.S.C. § 1961(a), e the Tenth Circuit has said that it was proper to look to a New Mexico statute governing prejudgment interest.United States for the Use of C.J.C., Inc. v. Western States Mechanical Contractors, Inc., 834 F.2d 1533, 1542 (10th Cir. 1987).
Other courts of appeal have held that courts are not required to use the post-judgment interest rate set forth in 28 U.S.C. § 1961(a) in calculating prejudgment interest. Taxman v. Board of Education of the Township of Piscataway, 91 F.3d 1547, 1566 (3d Cir. 1996). The rate of interest used in calculating prejudgment interest rests firmly within the sound discretion of the trial court, and using an average of prevailing Treasury Bill rates was not an abuse of discretion. Ingersoll Milling Machine Co. v. M/V Bodena, 829 F.2d 293, 310 (2nd Cir. 1987). See also Equal Employment Opportunity Commission v. Wooster Brush Company Employees Relief Association, 727 F.2d 566, 579 (6th Cir. 1984) ("district courts may be influenced by the congressional wisdom expressed in the amendment of 28 U.S.C. § 1961(a), but we do not think that they are invariably compelled to adopt the statutory post-judgment rate in determining prejudgment interest."); Jones v. Unum Life Insurance Company of America, ___ F.3d ___ 2000 WL 635401 (2d Cir. 2000), where the court said that prejudgment interest is an element of the claimant's complete compensation, and that there is no federal statute that purports to control the rate of prejudgment interest. "[T]he court need not limit the award of prejudgment interest to the rate at which the injured party would have lent money to the government." Id.; and Loft v. Lapidus, 936 F.3d 633, 639 (1st Cir. 1991) (section 1961 relates only to post-judgment interest.)
As noted above, defendants urge the court to compute prejudgment interest according to the 52-week Treasury Bill rate table of changes, presumably at the rate in effect on October 24, 1997, which was 5.49% per annum. The court does not adopt that approach. The court will, however, in exercising its discretion relating to prejudgment interest, make reference to the table of changes. The post-judgment rates for the period August 1989, through July 1991-- the period during which plaintiff is entitled to prejudgment interest — varied from a high of 8.7% to a low of 6.09%. The court believes that using a single rate of 8% per annum to be applied to each of the monthly benefit entitlements results in a fair and equitable rate for the calculation. Although this is not the average T-bill rate for the period, it is not far above it, and, after all, plaintiff is not required to lend his money to the government. The table which follows computes the prejudgment interest to be recovered by plaintiff on each of the monthly benefit amounts at the rate of 8% per annum. The monthly benefit amounts were determined in this court's Order (Doc. 162) filed July 22, 1999, and that part of the order is left undisturbed.
Monthly Long-Term Prejudgment Interest Prejudgment Interest Benefits Term at 8% to 7/14/00 August, 1989 25.00 131.5 months 21.92 September, 1989 866.88 130.5 months 754.19 October, 1989 1,414.82 129.5 months 1,221.96 November, 1989 1,414.82 128.5 months 1,212.03 December, 1989 1,414.82 127.5 months 1,202.60 January, 1990 1,108.79 126.5 months 935.08 February, 1990 1,108.79 125.5 months 927.69 March, 1990 1,108.79 124.5 months 920.30 April, 1990 1,108.79 123.5 months 912.90 May, 1990 1,108.79 122.5 months 905.51 June, 1990 1,108.89 121.5 months 898.20 July, 1990 1,108.79 120.5 months 890.73 August, 1990 101.79 119.5 months 81.09 September, 1990 101.79 118.5 months 80.41 October, 1990 101.79 117.5 months 79.74 November, 1990 101.79 116.5 months 79.06 December, 1990 101.79 115.5 months 78.38 January, 1991 498.37 114.5 months 380.42 February, 1991 481.37 113.5 months 364.24 March, 1991 481.37 112.5 months 361.03 April, 1991 481.37 111.5 months 357.82 May, 1991 481.37 100.5 months 322.52 June, 1991 481.37 99.5 months 319.31 July, 1991 481.37 98.5 months 316.10 TOTAL: 16,793.41 13,622.73
IT IS, THEREFORE, BY THE COURT ORDERED, that defendant's Motion to Alter or Amend Judgment; or in the Alternative for Relief From Judgment (Doc. 165), is granted in part and denied in part, and defendant'sMotion to Reconsider (Doc. 167) is denied.
IT IS BY THE COURT FURTHER ORDERED, that the Order of this court filed July 22, 1999 (Doc. 165) is modified so that plaintiff shall recover judgment for monthly long-term benefits totaling $16,793.41, plus prejudgment interest totaling $13,622.73, for a total judgment of $30,416.14, with post-judgment interest at the statutory rate.
The clerk is directed to mail copies of this order to counsel of record.
BY THE COURT IT IS SO ORDERED.