Lee v. Joseph E. Seagram & Sons, Inc.

• Citation: 592 F.2d 39
• Decision Date: 03 January 1979
• Docket Number: D,No. 183,183
• Court: U.S. Court of Appeals — Second Circuit
• Parties: Howard S. LEE, Eric Lee and Lester Lee, Plaintiffs-Appellees, v. JOSEPH E. SEAGRAM & SONS, INC., Defendant-Appellant. ocket 78-7331.

Page 39

592 F.2d 39

Howard S. LEE, Eric Lee and Lester Lee, Plaintiffs-Appellees, v. JOSEPH E. SEAGRAM & SONS, INC., Defendant-Appellant.

No. 183, Docket 78-7331.

United States Court of Appeals Second Circuit.

Argued Oct. 26, 1978.

Decided Jan. 3, 1979.

Allan L. Gropper, New York City (White & Case, New York City, Robert W. Mannix, New York City, of counsel), for defendant-appellant.

Robert W. Biggar, New York City (Malcolm A. Hoffmann, New York City, of counsel), for plaintiffs-appellees.

Before FRIENDLY, MULLIGAN and GURFEIN, Circuit Judges.

MULLIGAN, Circuit Judge:

Harold Lee and his two sons (the Lees) obtained a jury verdict of $407,850 in a diversity action in the United States District Court for the Southern District of New York against Joseph E. Seagram & Sons, Inc. (Seagram). The verdict represented damages for breach of contract and was entered on June 30, 1975. The district court, Hon. Charles H. Tenney, Judge, denied Seagram's motion for judgment notwithstanding the verdict, Lee v. Joseph Seagram & Sons, Inc., 413 F.Supp. 693 (S.D.N.Y.1976) and this court affirmed, 552 F.2d 447 (1977). Shortly thereafter, on May 2, 1977, the judgment and all accrued post-judgment interest was paid in full by Seagram. On May 27, 1977, almost two years after the judgment had been entered, the Lees moved in the district court for an order pursuant to Rule 60(a) of the Federal Rules of Civil Procedure to amend and correct the judgment by adding prejudgment interest. In a Memorandum and Order dated May 12, 1978, Judge Tenney granted the Lees' motion and amended the initial judgment Nunc pro tunc by including an additional $88,235 for pre-judgment interest, plus more than $15,000 in post-judgment interest on interest, i. e., interest on $88,235 from June 30, 1975 to date. This appeal followed.

The central issue on this appeal is whether the district court properly permitted the judgment for damages to be amended and corrected to provide for pre-judgment interest under Rule 60(a) of the Federal Rules of Civil Procedure. ¹ We hold that Rule 60(a) is not available to the Lees here except as to the very small proportion of pre-judgment interest which accrued between the date the verdict was rendered and the date judgment was entered.

Under the law of New York ² pre-judgment interest is recoverable as a matter of right in an action at law for breach of contract. N.Y.C.P.L.R. §§ 5001(a), 5002; Julien J. Studley, Inc. v. Gulf Oil Corp., 425 F.2d 947, 950 (2d Cir. 1969); Marx & Co., Inc. v. Diners' Club, Inc., 405 F.Supp. 1, 3 (S.D.N.Y.1975), modified on other grounds, 550 F.2d 505 (2d Cir.), cert. denied, 434 U.S. 861, 98 S.Ct. 188, 54 L.Ed.2d 134 (1977). ³ The Lees in their action did not request pre-judgment interest in their complaint or during the course of the trial. Neither their proposed form of jury verdict nor their proposed jury instructions made such a request. The jury was not charged as to pre-judgment interest and no issue regarding interest was raised on the initial appeal to this court. The state statute which primarily governs this case, N.Y.C.P.L.R. § 5001(c), provides that where, as here, the date from which interest should run is disputed, and the jury has been discharged without specifying the date, the court shall fix the date upon motion. However, the first time the issue of pre-judgment interest was raised was in the 60(a) motion ultimately made by the Lees some two years after entry of the judgment.

Rule 60(a) provides as follows:

(a) CLERICAL MISTAKES. Clerical mistakes in judgments, orders or other parts of the record and errors therein arising from oversight or omission may be corrected by the court at any time of its own initiative or on the motion of any party and after such notice, if any, as the court orders. During the pendency of an appeal, such mistakes may be so corrected before the appeal is docketed in the appellate court, and thereafter while the appeal is pending may be so corrected with leave of the appellate court.

(Emphasis supplied). This rule on its face applies only to Clerical mistakes and errors in judgments arising from oversight or omission.

The only portion of the pre-judgment interest awarded below which we believe properly falls within the Rule 60(a) meaning of "clerical error" is the $489 of the $88,235 total which accrued between the rendering of the jury verdict on June 25, 1975 and entry of judgment on June 30, 1975. N.Y.C.P.L.R. § 5002 controls the award of "post-verdict" interest. That statute requires the clerk of the court to add to a judgment in any action interest from the date of the verdict to entry of judgment. Thus, appellees not only had a right to such interest, but the amount was to be computed on the plaintiffs' award and added to the judgment automatically by the court clerk. In our view, the failure of the clerk to make this automatically mandated addition of a mechanically ascertainable amount of interest was a mere ministerial oversight remediable as a clerical error under Rule 60(a). Cf. cases cited in note 4, Infra.

The real concern of the parties to this appeal, however, is the overwhelming percentage of the interest award which accrued Prior to the verdict under N.Y.C.P.L.R. § 5001. It is this award which we will review in this opinion and to which we will hereafter refer simply as pre-judgment interest. It is quite apparent that as to this amount no clerical mistake or error occurred. The verdict as entered on June 30, 1975 accurately reported and reflected the jury's verdict. The jury had not been advised that interest was sought, nor was any date from which interest was to be computed ever suggested during the course of the trial or in the jury charge. There was certainly no miscalculation, error or oversight properly denominated as clerical. The plaintiffs were unquestionably entitled to pre-judgment interest from some date, N.Y.C.P.L.R. § 5001(b), (c), but it was the failure of plaintiffs to bring this statutory entitlement to the attention of the court until almost two years after the entry of the judgment that created the problem not any clerical oversight or error.

The Federal Rules do not leave a plaintiff without a remedy in such a situation. Fed.R.Civ.P. 59(e) provides: "A motion to alter or amend the judgment shall be served not later than 10 days after entry of the judgment." That motion, however, was obviously time barred when the Lees moved for pre-judgment interest in May, 1977. Similarly, Fed.R.Civ.P. 60(b)(1) provides that a party may be relieved from a final judgment for "mistake, inadvertence, surprise, or excusable neglect" but a motion on such ground must be made "not more than one year after the judgment" was entered. This motion also was unavailable to the Lees in May, 1977 because some two years had then passed since entry of judgment. As we have already indicated, no relief as to interest was sought by the Lees on direct appeal.

There is ample authority supporting the proposition that where the failure of the judgment to include pre-judgment interest to which a plaintiff is entitled is not due to clerical inadvertence, Rule 60(a), which has No time limitation, is not the appropriate vehicle for relief.

In Warner v. City of Bay St. Louis, 526 F.2d 1211 (5th Cir. 1976), a judgment was entered bearing an interest rate of 6%. The state legislature had in fact increased the applicable rate of interest to 8% Shortly before entry of the judgment. The court denied a motion brought under Rule 60(a) to amend the judgment, and observed that there was no allegation that the mistake was typographical, inadvertent, or made in transcribing the judgment. Id. at 1212. Thus, the court stated that no contention was made "that the district court Intended that its judgment read 8%." Id. (emphasis added). "To allow a party to correct alleged errors of law at any time by the mechanism of Rule 60(a) would significantly weaken the policy of finality as embodied in the Federal Rules." Id.

In Chicago and North Western Railway Co. v. Union Packing Co., 527 F.2d 592 (8th Cir. 1976) (per curiam), the petitioner sought an amendment of a judgment to allow an award of pre-judgment interest. The court held: "This circuit does not view the erroneous allowance or omission of prejudgment interest to be a clerical error within the purview of Rule 60(a)." See Hoffman v. Celebrezze, 405 F.2d 833 (8th Cir. 1969).

The First Circuit reached a similar conclusion in Morgan Guaranty Trust Co. v. Third National Bank, 545 F.2d 758 (1976). While the court conceded that some mistakes in the computation of interest might be dealt with under Rule 60(a), these situations were limited to instances where the judgment failed to reflect the court's intention when the judgment was entered. In Morgan the court deliberately chose not to include interest in the judgment. The court found that "(i)f there was a mistake, it was not clerical but was based on an erroneous interpretation of the law and Morgan's contention raises a legal issue, the determination of which is well beyond the purview of Rule 60(a)." Id. at 760.

Professor Moore in his treatise has addressed the precise issue at bar:

Some cases have indicated that the failure of a judgment to include the interest to which the plaintiff is entitled is an error that can be corrected under Rule 60(a). It is of course possible that the failure to include interest may result from a clerical error, and such would be the case where the judgment rendered failed to reflect the actual intention of the court. But where there is no clerical error and the failure to include interest resulted from an error of law, then relief may be had only by motion under Rule 59 and within its short time limits, by appeal, or by motion under Rule 60(b).

6A J. Moore, Federal Practice P 60.06(4) at 4067-68 (footnotes omitted). ⁴

In view of the unambiguous language of Rule 60(a), and the persuasive reasoning of the cases and...