IN RE DEPT. OF ENERGY STRIPPER WELL EXEMPTION LIT.

• Decision Date: 07 May 1993
• Docket Number: No. Civ. A. 78-1070.,Civ. A. 78-1070.
• Citation: 821 F. Supp. 1432
• Parties: In re The DEPARTMENT OF ENERGY STRIPPER WELL EXEMPTION LITIGATION. MOBIL OIL CORPORATION, et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF ENERGY, et al., Defendants.
• Court: U.S. District Court — District of Kansas

821 F. Supp. 1432

In re The DEPARTMENT OF ENERGY STRIPPER WELL EXEMPTION LITIGATION.

MOBIL OIL CORPORATION, et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF ENERGY, et al., Defendants.

No. Civ. A. 78-1070.

United States District Court, D. Kansas.

May 7, 1993.

Leslie K. Dellon, Lepon, McCarthy, Jutkowitz & Holzworth, Washington, DC, Evan J. Olson, Hershberger, Patterson, Jones & Roth, Wichita, KS, Arthur G. Hofmann, Mobil Exploration & Production, U.S., Inc., Dallas, TX, for Mobil Oil Corp.

N. Sue Allen, Kelley D. Sears, Koch Indus. Inc., Legal Dept., Wichita, KS, for Koch Indus.

MEMORANDUM AND ORDER

THEIS, District Judge.

This matter is before the court on the following two motions filed by Mobil Oil Corporation (Mobil): Motion to enforce judgment against Koch Industries, Inc. (Doc. 2109) and Motion for sanctions against Koch Industries, Inc. (Doc. 2112). The court heard oral argument on April 23, 1993. The court has considered the arguments presented at the hearing and the briefs previously filed by the parties and is now prepared to rule.

1. Motion to Enforce Judgment

Mobil's motion to enforce arises from the parties' disagreement regarding the amount Koch Industries, Inc. (Koch) owes Mobil pursuant to this court's judgment. Mobil has calculated Koch's liability at $3,779,195.00 as of January 31, 1993, plus additional interest at the DOE policy rate until Koch fully satisfies the judgment. Koch mailed a check in the amount of $3,191,309.97 which Mobil received on February 19, 1993. The parties entered into a stipulation (Doc. 2116) that Koch would pay $3,191.309.97 so that interest would not continue to accrue on that amount. Both sides reserved their rights to have the court determine the exact amount due.

The issues identified by Koch are: (1) whether the DOE policy rates of interest continue to apply after the entry of judgment or whether the rate provided by the postjudgment interest statute applies; (2) what date is "the date of the entry of the judgment" for purposes of computing pre- and postjudgment interest; and (3) whether or how the interest is to be compounded.

The following background is necessary for an understanding of the present dispute. On August 13, 1990, this court granted summary judgment in favor of Mobil on its third party complaint against Koch. Doc. 1913 (published at 743 F.Supp. 1467). In that order, the court found Koch liable to Mobil for a severance tax refund which Koch received from the State of Oklahoma but which Koch failed to remit to the escrow account, plus interest at the DOE policy rates. The court also held Koch liable for interest imposed by DOE on Mobil based on delayed payments Koch made to Mobil to forward to the escrow.

On August 27, 1990, Koch moved for reconsideration of the applicable interest rate. Koch argued that the court should not have held Koch liable for interest at the DOE policy rates for the period prior to the date of the Oklahoma severance tax refund. Koch next argued that the court should not have held Koch liable for interest at the DOE policy rates for the period after it received and retained the severance tax refund. Finally, Koch challenged the factual basis for the late payment issue. See Docs. 1923-1925. The court granted the motion to reconsider in part. The court ruled that Koch was not liable to Mobil for interest at the DOE policy rate for escrow deficiencies attributable to the severance tax refund until the date Koch received the refund, November 22, 1983. The court held that Koch was liable for interest at the DOE policy rates from the date Koch received the tax refund from Oklahoma until the date Koch pays the judgment. The court rejected Koch's challenge to the late payment issue. Doc. 1947 (Oct. 12, 1990).

On October 25, 1990, both Mobil and Koch filed motions for reconsideration or clarification. Mobil sought clarification that Koch was liable for the total tax refund received from Oklahoma (i.e., tax plus the interest paid by the State) plus interest at DOE policy rates on the total tax refund from the date of the refund until the date Koch pays the judgment. Docs. 1950-1951. Koch's motion for reconsideration challenged for the second time the late payment issue. Docs. 1952-1953. By memorandum and order dated December 11, 1990, the court granted Mobil's motion to clarify and denied Koch's motion to reconsider. The court stated that it was holding Koch liable for the total tax refund received from Oklahoma (tax plus interest paid by the State) plus interest at the DOE policy rates from the date of the refund until the date judgment is paid. Doc. 1977 (Dec. 11, 1990).

On February 12, 1991, the court certified the August 13, 1990, October 12, 1990 and December 11, 1990 orders as final pursuant to Fed.R.Civ.P. 54(b), thereby allowing an appeal to be taken.

Koch subsequently appealed to the Temporary Emergency Court of Appeals (TECA) and the Tenth Circuit. TECA affirmed. In re: The Department of Energy Stripper Well Exemption Litigation, 968 F.2d 27 (Temp.Emer.Ct.App.1992). Koch argued on appeal that this court abused its discretion by holding Koch liable for prejudgment interest at the DOE policy interest rate. See Exhs. 2 and 3 to Doc. 2110. Specifically relevant to the present dispute, TECA affirmed the application of the DOE policy interest rate for prejudgment interest. 968 F.2d at 38-39. In a footnote, TECA noted the court's application of the DOE policy rate as the postjudgment interest rate, i.e., from the date of judgment until the date the judgment is paid. Id. at 30 n. 1 ("By its Orders of October 12, 1990 and December 11, 1990, the court clarified its holding by explaining that Koch was liable for the total severance tax refund (principal and interest paid by Oklahoma) plus interest at DOE policy rates from the date that Koch received the refund until judgment was paid.").

On December 31, 1992, the Tenth Circuit dismissed Koch's appeal for lack of subject matter jurisdiction. In re: The Department of Energy Stripper Well Exemption Litigation, 983 F.2d 172 (10th Cir.1992).

Mobil argues that all aspects of this court's decision, including the interest rate to be applied to the amount of the judgment, are law of the case.

Koch argues that the court need not enter an order enforcing judgment, because it has paid $3,191,309.97 and intends to pay any additional amount found to be due. Koch identified the following three issues for decision: (1) whether the postjudgment interest statute, 28 U.S.C. § 1961, governs the rate and method of calculating postjudgment interest; (2) what is the date of judgment; and (3) what methodology is to be used to calculate prejudgment interest at DOE policy rates. The court shall address each of these issues in turn.

A. Rates of Interest

Koch argues that the postjudgment interest statute, 28 U.S.C. § 1961, dictates the rate of postjudgment interest and the method of compounding and that the court has no authority to award postjudgment interest at a different rate (i.e., at the higher DOE policy rate). Koch asserts that the issue of postjudgment interest was neither litigated nor decided in this action and that TECA only affirmed the imposition of prejudgment interest at the DOE policy rates. See Doc. 2114 at 10. Koch also argues that TECA's mandate requires that the judgment bear interest at the rate provided by law. See Fed.R.App.P. 37 ("Unless otherwise provided by law, if a judgment for money in a civil case is affirmed, whatever interest is allowed by law shall be payable from the date the judgment was entered in the district court."). Koch argues that the interest allowed by law is the interest rate specified in 28 U.S.C. § 1961.

The postjudgment interest statute provides in pertinent part:

(a) Interest shall be allowed on any money judgment in a civil case recovered in a district court.... Such interest shall be calculated from the date of the entry of the judgment, at a rate 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. The Director of the Administrative Office of the United States Courts shall distribute notice of that rate and any changes in it to all Federal judges.

28 U.S.C. § 1961(a). The only notable exception to this rule is found in section 1961(c)(1), which dictates different rates of interest in internal revenue tax cases. 28 U.S.C. § 1961(c)(1).

Mobil argues that Koch is bound by this court's decision that the DOE policy interest rate applies postjudgment. The court previously ruled that the DOE policy interest rate would apply until the date the judgment is paid. On appeal, Koch challenged the use of the DOE rate as the prejudgment interest rate, but did not challenge the use of the DOE rate for the postjudgment rate. Mobil further argues that the DOE policy rate properly applies to both prejudgment and postjudgment interest.

Mobil argues that Koch is attempting to relitigate an issue that was decided by this court and for which the time to appeal has expired. Mobil cites United States v. Tippett, 975 F.2d 713 (10th Cir.1992) in support of its position. However, Mobil's reliance on Tippett is misplaced. In Tippett the Tenth Circuit addressed claim preclusion, i.e., res judicata. The factual scenario before this court involves issues of law of the case, not res judicata.

Unlike the various rigid rules of res judicata, the more amorphous concept of law of the case determines whether a court's prior decision on a rule of law should continue in force in subsequent stages of the same case. Arizona v. California, 460 U.S. 605, 618, 103 S.Ct. 1382, 1391, 75 L.Ed.2d 318 (1983). As it is most frequently applied, law of the case encompasses a lower court's adherence to its own prior rulings, to the rulings of its superior court in the case, or to the...