2011 WL 1047298
E.D.N.Y.2011Background
- Diversity action; plaintiff and defendant were medical practice partners 2003–2008 under a poorly defined partnership.
- Plaintiff left the practice on June 30, 2008.
- Dispute over whether revenues from certain contracts were partnership property.
- Court conducted bench trial; awarded $222,300 based on plaintiff's accounting claim.
- Plaintiff sought prejudgment interest; no method or rate was previously proven.
- Motion under Rule 59(e) to amend judgment to include interest; granted in part and denied in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Mandatory vs discretionary prejudgment interest | Interest is mandatory under NY law | Interest is not mandatory; accrual not proven | Discretionary, not mandatory |
| Entitlement to prejudgment interest as of right | Entitled because breach of contract claim prevailed | Only accounting claim; no right to breach interest | Not entitled as of right; based on accounting claim |
| Appropriate accrual date and rate | Use CPLR § 5004 9% from dissolution date | Rates/ accrual unspecified; dispute over rate | Discretionary rate; 1.83% from June 30, 2008 to Jan 20, 2011 |
| Equitable treatment and windfall avoidance | Without interest, defendant would be unjustly enriched | No automatic 9% rate in equity context | Court chose 1.83% to avoid windfall |
Key Cases Cited
- New England Ins. Co. v. Healthcare Underwriters Mut. Ins. Co., 352 F.3d 599 (2d Cir. 2003) (prevailing party entitled to prejudgment interest under NY law in breach actions)
- Slupinski v. First Unum Life Ins. Co., 554 F.3d 38 (2d Cir. 2009) (equitable consideration in awarding interest)
- Brushton-Moira Cent. Sch. Dist. v. Fred H. Thomas Assocs., P.C., 91 N.Y.2d 256 (N.Y. 1998) (planning accrual date and rate in equitable claims; CPLR 5001(a) discretion)
- FCS Advisors, Inc. v. Fair Fin. Co., 605 F.3d 144 (2d Cir. 2010) (diversity case; state law governs interest in equitable context)