Opinion
No. X06 CV 08 4016022 S
July 26, 2011
MEMORANDUM OF DECISION ON THE PLAINTIFFS' RENEWED MOTION FOR POSTJUDGMENT INTEREST (#368)
STATEMENT OF THE CASE
On March 25, 2011, judgment entered in favor of the plaintiffs Frederick Ulbrich ("Ulbrich") and Ulbrich Properties, LLC and against the defendants TD Banknorth, N.A., and Tranzon Auction Properties. In count seven of the complaint against Banknorth and in count nine against Tranzon, the jury found that the defendants made negligent misrepresentations to the plaintiffs. As to Ulbrich, the jury further found that Banknorth breached a warranty of title as alleged in count twelve and violated the Connecticut Unfair Trade Practices Act, General Statutes §§ 42-110a et seq. ("CUTPA"), as alleged in count fifteen. Pending before the court is the plaintiffs' renewed motion to receive postjudgment interest on this verdict pursuant to General Statutes § 37-3a and § 37-3b. The defendants have objected to this motion. For the following reasons, the plaintiffs' motion for interest under § 37-3a is granted. The plaintiffs' motion for interest under § 37-3b is denied.
The plaintiffs' initial motion for postjudgment interest was filed during the appeal period and the court denied that motion without prejudice for it to be re-filed after the expiration of the appeal period.
DISCUSSION I General Statutes § 37-3a A
In relevant part, General Statutes § 37-3a(a) provides that "interest at the rate of ten per cent a year, and no more, may be recovered and allowed in civil actions . . . as damages for the detention of money after it becomes payable." Section 37-3a(a) authorizes, but does not mandate, the recovery of interest. The law is established that the entry of a monetary judgment makes money payable within the meaning of § 37-3a(a) and that "an award of postjudgment interest is authorized by § 37-3a . . . This statute has been construed to make the allowance of interest depend upon whether the detention of the money is or is not wrongful under the circumstances." (Citations omitted; internal quotation marks omitted). Urich v. Fish, 112 Conn.App. 837, 843, 965 A.2d 567 (2009). The Appellate Court has explained that "in the context of § 37-3a, wrongful is not synonymous with bad faith conduct. Rather, wrongful means simply that the act is performed without the legal right to do so. Nevertheless, the allowance of interest as an element of damages is primarily an equitable determination and a matter lying within the discretion of the trial court . . ." (Citations omitted; internal quotation marks omitted.) Hartford Steam Boiler v. Underwriters at Lloyd's, 121 Conn.App. 31, 63, 994 A.2d 262 (2010); accord Sosin v. Sosin, 300 Conn. 205, 244 n. 25, 14 A.3d 307 (2011) ("the case law interpreting § 37-3a has equated "wrongful" with the withholding of funds without the legal right to do so" and "a finding of wrongfulness in this context does not require the trial court to assess blameworthiness"); Bower v. D'Onfro, 45 Conn.App. 543, 696 A.2d 1285 (1997) (citation omitted; internal quotation marks omitted;) ("A decision to deny or grant postjudgment interest is primarily an equitable determination and a matter lying within the discretion of the trial court"). The rate of interest under § 37-3a is not a required rate, but rather is the maximum rate of interest that a trial court, in its discretion, can award. Sears, Roebuck Co. v. Board of Tax Review, 241 Conn. 749, 765, 699 A.2d 81 (1997).
The full text of General Statutes § 37-3a(a) is as follows:
Except as provided in sections 37-3b, 37-3c and 52-192a, interest at the rate of ten percent a year, and no more, may be recovered and allowed in civil actions or arbitration proceedings under chapter 909, including actions to recover money loaned at a greater rate, as damages for the detention of money after it becomes payable. Judgment may be given for the recovery of taxes assessed and paid upon the loan, and the insurance upon the estate mortgaged to secure the loan, whenever the borrower has agreed in writing to pay such taxes or insurance or both. Whenever the maker of any contract is a resident of another state or the mortgage security is located in another state, any obligee or holder of such contract, residing in this state, may lawfully recover any agreed rate of interest or damages on such contract until it is fully performed, not exceeding the legal rate of interest in the state where such contract purports to have been made or such mortgage security is located.
Therefore, the entry of the monetary judgment against the defendants makes the amount of the award payable within the meaning of § 37-3a. Furthermore, the defendants' failure to pay the judgment pending the appeal allows the court, in the reasonable exercise of its equitable discretion, to impose interest on this amount from the date of the judgment. See TDS Painting Restoration v. Copper Beech Farm, 73 Conn.App. 492, 512, 808 A.2d 726 (2002) (postjudgment interest is generally "calculated from the date of the final judgment to the date of payment").
The plaintiffs maintain that although the defendants have the right to pursue an appeal, they should not be allowed to profit, at the plaintiffs' expense, "from their retention of money that is otherwise payable to the plaintiffs." Plaintiff's Reply to Defendants' Objection to Renewed Motion Regarding Postjudgment Interest, p. 2. In response, the defendants contend that the plaintiffs' motion for postjudgment interest should be denied because they have a good faith basis for their appeals and because the judgment already includes an award of attorney fees and punitive damages. Banknorth also contends that as a matter of law, postjudgment interest is not recoverable on punitive damages. The court agrees with the plaintiffs.
There is no dispute that this case presents legitimate and novel issues worthy of appellate review. Some of these issues have been identified by the defendants in their objection to the motion for postjudgment interest. The court questions, however, whether all the issues identified by the defendants fall into this category. For example, the defendants seek review of their claim that as a seller and an auctioneer of collateral at an auction under Article 9 of the Uniform Commercial Code (see General Statutes § 42a-9-610), they have no "duty" to use reasonable care to know what property is part of the collateral and subject to the sale. It is questionable whether this claim even presents a "bona fide" issue for appellate review. The defendants also seek review of the "weak" evidence supporting the jury's compensatory award, but they de-emphasize the jury's discretion to evaluate the disputed evidence necessary for this determination. The defendants also de-emphasize the jury's discretion to evaluate the disputed evidence about the defendants' warranty disclaimers.
The largest award against Banknorth was based on the Ulbrich's CUTPA claim because in addition to the compensatory award, attorney fees and punitive damages were awarded. Although Banknorth questions the size of the punitive award, the defendant must nevertheless acknowledge that punitive damages may be based on multiples of the compensatory award and that the amount of a punitive award is governed by the reasonably broad discretion of the court. Also, in its objection to the motion for postjudgment interest, Banknorth does not explicitly address the court's finding that the circumstances of the auction evidence deceptiveness and recklessness. Indeed, the defendant never has addressed squarely how the economic loss doctrine, a judicially created rule applied to common-law torts, applies to a statutory cause of action such as CUTPA that arises from an auction under Article 9.
In any event, contrary to the defendants' position, a good faith basis for filing an appeal is not necessarily the controlling consideration in determining whether interest is recoverable under § 37-3a. As held by the Supreme Court in Sosin v. Sosin, supra, 300 Conn. 228-30, even when a liable party's failure to pay is reasonable or justifiable, a good faith basis for withholding payment is just one factor among the considerations pertinent to the recoverability of interest under § 37-3a. Sosin v. Sosin, supra, 300 Conn. 229 (for purposes of § 37-3a, neither the Supreme Court nor the Appellate Court has held, "that the detention of money cannot be wrongful if the liable party had a good faith basis for nonpayment").
On the facts presented here, the court also rejects the defendants' argument that the recovery of postjudgment interest should be precluded because Ulbrich has recovered attorney fees and punitive damages under CUTPA. Although this recovery is a relevant consideration, the issue is not so much whether the award of attorney fees and punitive damages precludes the recovery of postjudgment interest, as it is whether such interest should be imposed on the award of attorney fees and punitive damages.
In this regard, Banknorth makes the more particular argument that as a matter of law, post-judgment interest is not recoverable on punitive damages. There is no Connecticut authority for this position. Indeed, the express language of § 37-3a does not support this argument. Section 37-3a provides that interest may be recovered as damages "for the detention of money after it becomes payable." Based on this clear and unambiguous language that interest may be recovered for the "detention of money after it becomes payable," postjudgment interest may be recovered on punitive damages because such damages become "payable" when judgment is imposed. See generally Urich v. Fish, supra, 112 Conn.App. 843 (award of postjudgment interest authorized by § 37-3a(a)).
"When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature . . . [General Statutes] § 1-2z directs us first to consider the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extra-textual evidence of the meaning of the statute shall not be considered." (Internal quotation marks omitted.) Hartford/Windsor Healthcare Properties, LLC v. Hartford, 298 Conn. 191, 197, 3 A.3d 56 (2010).
Although no other Connecticut case has considered this precise question under § 37-3a, courts considering this issue under the language of other statutes also have concluded that post-judgment interest may be recovered on punitive awards. Brown v. Petrolite Corp., 965 F.2d 38, 51 (5th Cir. 1992) (construing 28 U.S.C. § 1961(a)) ("awarding postjudgment interest on exemplary damages is consistent with the purpose of postjudgment interest — compensation to a successful plaintiff for the intervening time between entitlement to and actual payment of an award of damages"); Lively v. Flexible Packaging, 930 A.2d 984, 996 (D.C. 2007) (postjudgment interest on a punitive damages award is appropriate to avoid an incentive for defendants "to prolong the litigation to forestall payment of the punitive damages"); Nardone v. Patrick Motor Sales, Inc., 46 Mass.App.Ct. 452, 454, 706 N.E.2d 1151 (1999) (statutory language making interest recoverable on "every judgment for the payment of money" entitles the plaintiff to "post-judgment interest on the punitive damages award"); Life Ins. Co. of Georgia v. Johnson, 725 So.2d 934, 943 (Ala. 1998) (postjudgment interest is just compensation to ensure that a money judgment will be worth the same when it is actually received as when it was awarded").
To support its argument that postjudgment interest is not recoverable on an award of punitive damages, Banknorth relies on the language of Westport Taxi Service v. Westport Transit Dist., 235 Conn. 1, 40-41, 644 A.2d 719 (1995), stating that "our law . . . prohibits awards of interest on punitive damages." Id., 40-41. Westport Taxi Service, however, is distinguishable because that case involved a claim for prejudgment interest, not postjudgment interest. Prejudgment interest is not recoverable on punitive damages because, as previously explained, punitive damages do not become "payable" within the meaning of § 37-3a until after the entry of judgment. As stated in Westport Taxi Service, § 37-3a is inapplicable to a claim for prejudgment interest on punitive damages because "punitive damages do not become payable before judgment." (Citation omitted; internal quotation marks omitted.) Westport Taxi Service v. Westport Transit Dist., supra, 235 Conn. 41.
Moreover, contrary to Banknorth's position, the existence of facts supporting a punitive award actually mitigates in favor of the recovery of postjudgment interest against it. As part of the court's award of punitive damages, the court concluded that the bank's conduct was deceptive, reckless and threatening to the public's confidence in auctions held under the auspices of the Superior Court. Consequently, the damages awarded against Banknorth for violating CUPTA, including the punitive award, operate to promote CUPTA's purpose to deter and punish such conduct. These purposes should not effectively be diminished or lessened by allowing Banknorth to pay the monetary awards without interest after a substantial delay caused by its appeal.
If the defendants prevail on appeal they will be relieved from the legal obligation to pay the money judgment, including any postjudgment interest that may have accrued. Thus, the precise issue is whether the defendants should be required to pay interest on the judgment if their appeals fail. Based on the facts of this case and for the foregoing reasons, the court concludes that postjudgment interest should be paid by the defendants if their appeals are unsuccessful. The amount of the money judgment is definite and ascertainable, payment of the judgment is within the defendants' control and the withholding of payment operates to their benefit. See Sosin v. Sosin, supra, 300 Conn. 235. Although the defendants present bona fide issues for appellate review, none of these issues appears to present matters that sufficiently mitigate against the defendants paying postjudgment interest if their appeals fail. Furthermore, contrary to the defendants' position, the award of attorney fees and punitive damages does not require the denial of the plaintiffs' motion for postjudgment interest. In sum, the recovery of postjudgment interest is appropriate under the circumstances of this case to ensure that the money judgment is worth the same when it is actually received as when it was awarded. See Sosin v. Sosin, supra, 300 Conn. 230 (the primary purpose of § 37-3a is "to compensate parties that have been deprived of the use of their money").
B
As previously stated, the 10% interest rate expressed in § 37-3a is not the required rate, but rather is the maximum rate of interest that a trial court, in its discretion, can award. See Sears, Roebuck Co. v. Board of Tax Review, supra, 241 Conn. 765. The defendants do not address what percentage rate should be applied because they essentially argue that no postjudgment interest should be allowed. As previously discussed, the court rejects this position. The plaintiffs contend that the maximum 10 per cent rate should be imposed. Although the court disagrees with the defendants' arguments that the plaintiffs' motion for postjudgment interest should be denied, the court also disagrees with the plaintiffs that the facts of this case justify interest at the rate of 10 per cent a year.
Although the plaintiffs cite numerous cases applying a 10 per cent interest rate under § 37-3a, they have not provided any information explaining why that is a fair rate on the basis of the present economic climate or the particular facts of this case. Cf. New Haven Trust Co., Receiver v. Doherty, 74 Conn. 468, 472, 51 A. 130 (1902) (court may take judicial notice of the currently known rates of interest.) The court finds that under the totality of the circumstances presented here, postjudgment interest at the rate of 7.5 per cent a year is sufficient to accomplish the compensatory purposes of § 37-3a. Cf. Stuart v. Stuart, 112 Conn.App. 160, 181, 962 A.2d 842 (2009) (pursuant to § 37-3a it is "within the discretion of the court to award prejudgment interest at the rate of 7.5 per cent").
II General Statutes § 37-3b
The plaintiffs also base their claim for interest on General Statutes § 37-3b. In relevant part, General Statutes § 37-3b(a) provides that "interest at the rate of ten per cent a year, and no more, shall be recovered and allowed in any action to recover damages for injury to the person, or to real or personal property, caused by negligence . . ."
The full text of General Statutes § 37-3b, entitled "Rate of interest recoverable in negligence actions," provides the following:
(a) For a cause of action arising on or after May 27, 1997, interest at the rate of ten per cent a year, and no more, shall be recovered and allowed in any action to recover damages for injury to the person, or to real or personal property, caused by
negligence, computed from the date that is twenty days after the date of judgment or the date that is ninety days after the date of verdict, whichever is earlier, upon the amount of the judgment.
(b) If any plaintiff in such action files a postverdict or postjudgment motion or an appeal, the recovery of interest by such plaintiff shall be tolled and interest shall not be added to the judgment for the period that such postverdict or postjudgment motion or appeal is pending before the court. The provisions of this subsection shall not apply if the reason for the filing of a postverdict or postjudgment motion or appeal by the plaintiff is to reply to or answer a motion or appeal filed by a defendant.
As previously stated, the jury found both defendants liable for negligent misrepresentation and awarded $462,000 against each of them. Based on the plaintiffs' claims and the evidence admitted at the trial, the jury's compensatory award consisted of two elements: $413,000 representing the value of personal property that the plaintiffs alleged they were entitled to receive but did not receive as a result of the defendants' wrongdoing; and $49,000 in attorney fees incurred by the plaintiffs to defend their ownership claims to this personal property. Thus, the plaintiffs were awarded compensatory damages for economic losses.
After applying the jury's findings on the defendants' contributory and apportionment claims, the judgment against Banknorth under count seven was reduced to $333,600 and the judgment against Tranzon under count nine was reduced to $291,900.
The clear and unambiguous language establishes that § 37-3b authorizes the recovery of postjudgment interest only in negligence actions involving "injury to the person, or to real or personal property." There is no dispute that the plaintiffs' sole monetary claims were for economic losses and that the jury awarded damages for economic losses. These damages were not for injuries to any "person, or to real property or personal property." Therefore, § 37-3b is inapplicable and the plaintiffs' motion for interest under this statute must be denied.
CONCLUSION
Therefore, for the foregoing reasons, the plaintiffs' motion for postjudgment interest is granted under § 37-3a and the court orders interest at the rate of 7.5 per cent to accrue on the judgment commencing on March 25, 2011, the date judgment entered. See generally TDS Painting Restoration v. Copper Beech Farm, supra, 73 Conn.App. 512 (as a general rule, postjudgment interest is calculated from the date of the final judgment to the date of payment).
So ordered this 26th day of July 2011.