753 F. Supp. 2d 665
E.D. Ky.2010Background
- This is a diversity action in the E.D. Kentucky concerning damages awarded to Jack Henry & Associates against BSC, Inc. and others.
- Jack Henry sought postjudgment interest, attorney's fees, and inclusion of postjudgment interest in an amended judgment and supersedeas bond; the court addressed all pending motions in one order.
- Damages awarded to Jack Henry: $1,562,764.89; prejudgment interest at 18% per annum calculated through October 20, 2010; the court amended judgments leading to a final plan for interest.
- Postjudgment interest is governed by 28 U.S.C. § 1961, not the contract rate, unless the contract clearly and unambiguously provides a different postjudgment rate.
- The EFT Agreement between the parties contained a general 18% rate but did not clearly specify that it applied to judgments, so § 1961 applies.
- The court finally held that prejudgment interest stops with the amended judgment entered October 20, 2010, and postjudgment interest accrues at 0.22% compounded annually from October 21, 2010, forward; a supersedeas bond of $2,366,382.50 is required to stay the judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can § 1961 be contracted around? | Parties may contract around § 1961 and set a different rate. | Contracts may not supersede § 1961 without explicit language. | Parties may contract around § 1961; however, Contract language must be clear and unambiguous. |
| Did the EFT Agreement clearly contract around § 1961? | EFT Agreement's 18% applies to judgments. | Language is not explicit enough to apply to judgments. | EFT Agreement did not clearly specify a postjudgment rate; § 1961 controls. |
| What is the applicable postjudgment interest rate? | Eighteen percent postjudgment rate should apply. | Postjudgment interest should be the § 1961 rate (about 0.22%). | Postjudgment interest at § 1961 rate (0.22%), not the contract rate. |
| Should attorney's fees be awarded to Jack Henry? | Inherent authority and 28 U.S.C. § 1927 allow fees for bad-faith conduct. | American Rule generally forbids fee-shifting; counterclaims not frivolous. | Attorney's fees denied. |
| Should postjudgment interest be included in the amended judgment and supersedeas bond? | Include postjudgment interest in bond and amended judgment for appeal protections. | Bond should reflect upcoming postjudgment interest. | Granted in part; final amended judgment will include postjudgment interest for purposes of bond and stay. |
Key Cases Cited
- Scotts Co. v. Central Garden & Pet Co., 403 F.3d 781 (6th Cir. 2005) (postjudgment interest rate governed by statute; final judgment can set transition point)
- In re Riebesell, 586 F.3d 782 (10th Cir. 2009) (contractual rate must be explicit to apply to judgments; general contract rates do not automatically apply postjudgment)
- Westinghouse Credit Corp. v. D'Urso, 371 F.3d 96 (2d Cir. 2004) (federal law governs postjudgment interest despite contract terms)
- FCS Advisors, Inc. v. Fair Finance Co., 605 F.3d 144 (2d Cir. 2010) (language must clearly express postjudgment rate; 1961 governs otherwise)
- In re Lift & Equip. Serv., Inc., 816 F.2d 1013 (5th Cir. 1987) (parties may stipulate a different rate consistent with applicable laws)
- Investment Service Co. v. Allied Equities Corp., 519 F.2d 508 (9th Cir. 1975) (early authority allowing contract around § 1961 (cited with caution))
- Central States, SE & SW Areas Pension Fund v. Bomar Nat'l, Inc., 253 F.3d 1011 (7th Cir. 2001) (circuit support for contracting around § 1961)