Campbell v. U.S., 86-1622

• Citation: 809 F.2d 563
• Decision Date: 03 February 1987
• Docket Number: No. 86-1622,86-1622
• Parties: Duncan CAMPBELL, Individually and as personal representative of the Estate of Carolyn Louise Campbell, deceased; Plaintiff-Appellant, v. UNITED STATES of America; James A. Baker, Office of the Secretary of the Department of the Treasury; Charles A. Bowsher, Controller General Comptroller; Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 563

809 F.2d 563

Duncan CAMPBELL, Individually and as personal representative of the Estate of Carolyn Louise Campbell deceased; Plaintiff-Appellant, v. UNITED STATES of America; James A. Baker, Office of the Secretary of the Department of the Treasury Charles A. Bowsher, Controller General Comptroller; Defendants-Appellees.

No. 86-1622.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Nov. 7, 1986.

Decided Feb. 3, 1987.

Mark S. Davis, Honolulu, Hawaii, for plaintiff-appellant.

Wendy M. Keats, Washington, D.C., for defendants-appellees.

Appeal from the United States District Court for the District of Hawaii.

Before NELSON, REINHARDT and WIGGINS, Circuit Judges.

NELSON, Circuit Judge:

This case presents a narrow, somewhat esoteric issue: whether a provision of the Federal Courts Improvement Act of 1982 ("FCIA"), Pub.L. No. 97-164, tit. III, pt. B, Sec. 302, 96 Stat. 25, 55-56 (1982) (codified in part at 28 U.S.C. Sec. 1961 (1982)), which governs the rate of post-judgment interest on money judgments in civil cases in federal district courts, applies to judgments against the United States entered after the FCIA's date of enactment and before its effective date. The district court held that the provision applies only to judgments entered after the FCIA's effective date. Appellant argues that, for judgments entered before the effective date, the former interest rate should apply in the period prior to the effective date and that the new rate should apply in the period following the effective date. We agree with appellant's contention and, accordingly, we reverse and remand.

I. STATUTORY CHANGES

Prior to the enactment of the FCIA, federal law prescribed a 4% post-judgment interest rate for money judgments entered against the United States in district court. See 28 U.S.C. Sec. 2411(b) (1976). Interest was ordinarily payable only for the period after a transcript of the judgment was filed with the Comptroller General and through the day before the date of a mandate of affirmance. See 31 U.S.C. Sec. 724a (1976). The statutes made no provision for annual compounding of interest. The former statutory framework also provided that interest on judgments against parties other than the United States would be imposed at the rate prescribed by state law. See 28 U.S.C. Sec. 1961 (1976). Such interest accrued from the date of entry of the judgment to the date of payment. See id.

The FCIA altered the statutory framework in several respects and left other provisions intact. First, it repealed 28 U.S.C. Sec. 2411(b), thus eliminating the 4% rate and leaving 28 U.S.C. Sec. 1961 to encompass judgments against the United States as well as those against other parties. See FCIA Sec. 302(b)(2), 96 Stat. at 56. Second, it eliminated the state-by-state interest rates and prescribed a national, uniform interest rate applicable to judgments against any party. This "T-bill rate" is equal to "the coupon issue yield equivalent (as determined by the Secretary of the Treasury) of the average accepted auction price for the last auction of fifty-two week United States Treasury bills settled immediately prior to the date of the judgment." FCIA Sec. 302(a)(2), 96 Stat. at 55 (codified at 28 U.S.C. Sec. 1961(a) (1982)). Third, the FCIA left intact the limitation on the allowable interest period for judgments against the United States. See 31 U.S.C. Sec. 1304(b)(1)(A) (1982) (recodifying former 31 U.S.C. Sec. 724a). Finally, the FCIA provided that any such interest shall be compounded annually. See FCIA Sec. 302(a)(3), 96 Stat. at 56 (codified in part at 28 U.S.C. Sec. 1961(b) (1982)). The FCIA was enacted on April 2, 1982, and it carried an effective date of October 1, 1982. FCIA Sec. 402, 96 Stat. at 57-58. ¹

The general congressional purposes behind these changes are clearly, though briefly, stated in the Senate committee report accompanying the bill:

Under current law, the interest rate on judgments in the Federal courts is based on varying State laws and frequently falls below the contemporary cost of money. [This provision] sets a realistic and nationally uniform rate of interest on judgments in the Federal courts that would be keyed to the prime interest rate.... This eliminates an economic incentive which exists today for a losing defendant to appeal a judgment and accumulate interest on the judgment award at the commercial rate during the pendency of the appeal.

S.Rep. No. 275, 97th Cong., 2d Sess. 11, reprinted in 1982 U.S.Code Cong. & Admin.News 11, 21; see also id. at 30, reprinted in 1982 U.S.Code Cong. & Admin.News at 40. The floor debates also indicate that Congress was concerned more about private parties taking frivolous appeals in order to benefit from favorable interest rates than about the United States doing so, because the government pays adverse judgments and interest ministerially and appeals "only when substantial issues of law are at stake." 127 Cong.Rec. 29,865 (1981) (statement of Sen. Grassley); id. at 29,866 (letter from David Stockman, Director of the Office of Management and Budget, to Sen. Dole, Dec. 3, 1981). Hence the principal purpose of awarding interest on judgments against the government is to compensate plaintiffs for the loss of the use of the money during an unsuccessful appeal. See Devex Corp. v. General Motors Corp., 749 F.2d 1020, 1024 (3d Cir.1984) (stating that the policy of Sec. 1961 is "compensation of the wronged party for loss of the use of money"), cert. denied, --- U.S. ----, 106 S.Ct. 68, 88 L.Ed.2d 55 (1985); Note, Interest on Judgments in the Federal Courts, 64 Yale L.J. 1019, 1019 (1955); see also S.Rep. No. 275, 97th Cong., 2d Sess. 11-12, reprinted in 1982 U.S.Code Cong. & Admin.News at 21-22 (noting this purpose in the context of a proposed provision for pre-judgment interest). Unfortunately, as discussed below, the legislative history concerning the effect of the FCIA's post-judgment interest provision on unpaid judgments entered prior to the date of enactment is sparse.

II. PROCEDURAL BACKGROUND

The dispute that has ultimately resulted in this appeal arose from a medical malpractice action brought under the Federal Torts Claims Act for injuries sustained by appellant Campbell's wife. On June 17, 1982, two-and-one-half months after Congress enacted the FCIA, the district court One month later, the United States filed a Rule 60(b) motion in the district court seeking to modify the judgment in view of Mrs. Campbell's intervening death. On November 28, 1983, the district court denied the government's motion and granted Campbell's motion to enforce the judgment with "interest as provided by law." On February 6, 1984, the United States paid Campbell the principal amount of the judgment, but made no payment of interest.

entered a judgment in favor of Campbell for $2,407,034.41. The judgment did not include a provision for post-judgment interest. The government appealed on August 12, and the act became effective on October 1. Campbell filed a transcript of the judgment with the Comptroller General on January 14, 1983, thereby starting the clock on the government's interest liability. On June 10, 1983, the Ninth Circuit affirmed the judgment, and a mandate of affirmance issued without mention of any interest. The Ninth Circuit denied the government's subsequent motion to recall and amend the mandate on August 3, 1983.

Eighteen months later, after several unsuccessful attempts to secure payment of interest from the government, Campbell filed suit in federal district court to obtain interest at the T-bill rate of approximately 13.6% ² on June 17, 1982. The district court, granting partial summary judgment in favor of Campbell, ruled that the allowable period of interest began on January 13, 1983--the date on which Campbell filed a transcript of the judgment with the Comptroller General--and ended on November 28, 1983--the date of the denial of the Rule 60(b) motion. It held, however, that Campbell was entitled only to the 4% interest rate under former 28 U.S.C. Sec. 2411(b) (1976), and not the T-bill rate. The district court compounded the interest at 4% annually. At the time Campbell filed notice of appeal, a motion for attorneys' fees was unresolved.

On appeal, Campbell argues that the district court should have applied the T-bill rate under the FCIA and that the interest should have been compounded at that rate. ³

III. DISCUSSION

We have jurisdiction over this appeal because the judgment of the district court is "final" for the purposes of 28 U.S.C. Sec. 1291 (1982), notwithstanding the existence of an unresolved attorneys' fees motion at the time the appeal was taken. International Ass'n of Bridge, Structural, Ornamental, & Reinforcing Ironworkers' Local Union 75 v. Madison Indus., Inc., 733 F.2d 656, 657-59 (9th Cir.1984). The interpretation of the applicability of the FCIA to judgments entered prior to its effective date presents an issue of law, which we review de novo. See In re Reynolds, 726 F.2d 1420, 1421 (9th Cir.1984).

A. Cases Interpreting the FCIA's Post-Judgment Interest Provision

At the outset we note that the issue raised in this appeal has not previously been presented to a panel of the Ninth Circuit. In Turner v. Japan Lines, Ltd., 702 F.2d 752 (9th Cir.1983) (per curiam), this court held that a change in an Oregon post-judgment interest statute should not be applied to judgments entered before the statute's July 1979 effective date, even if only for the period following the effective date. See id. at 757-58 (interpreting prior Oregon decisions construing this and other Oregon statutes). The plaintiff in Turner apparently did not argue that the FCIA's T-bill rate should be applied in the period following the October 1, 1982 effective date Since changes in the statutory rate presumably reflect changes in the value of use of money in a dynamic market economy and since the function of interest in the judicial process is to...