Liberty Square Development Trust v. City of Worcester
| Decision Date | 07 May 2004 |
| Citation | 441 Mass. 605,808 NE 2d 245 |
| Parties | LIBERTY SQUARE DEVELOPMENT TRUST & another v. CITY OF WORCESTER. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Present: MARSHALL, C.J., GREANEY, IRELAND, SPINA, SOSMAN, & CORDY, JJ.
David A. Talman for the plaintiffs.
Donald V. Rider, Jr., Assistant City Solicitor, for the defendant.
As in M.B. Claff, Inc. v. Massachusetts Bay Transp. Auth., ante 596 (2004), the present appeal contends that the Superior Court judge erred in utilizing the statutory interest rate set by G. L. c. 79, § 37, to calculate the interest to be awarded as part of an eminent domain damages case. The landowner, Liberty Square Development Trust (Liberty), filed a motion on the day of trial asking the judge to determine the interest rate based on a "prudent investor" standard rather than on the statutory standard. The judge ruled that interest was to be calculated at the statutory rate. After entry of judgment reflecting that rate, Liberty appealed. We transferred the case to this court on our own motion. For the following reasons, we conclude that Liberty did not make a sufficient showing that the statutory rate, as applied to the land taking in question, failed to provide reasonable compensation, and we therefore affirm the judgment.
1. Background. On June 7, 1995, the city of Worcester (city) effected a taking of two parcels of land owned by Liberty, located on Commercial and Central Streets. The city offered a nominal sum as compensation, which Liberty rejected. Liberty filed an action for its damages on May 6, 1998.
On June 19, 2002, immediately prior to the start of trial, Liberty filed a "motion to determine and assess a proper rate of interest." In that motion, Liberty contended that the interest rate set by G. L. c. 79, § 37, was inadequate to provide it with just compensation. Specifically, whereas the statutory formula would provide a rate of 5.88 per cent per year (that rate being based on the auction price of one-year United States Treasury bills immediately prior to the date of taking), Liberty contended that "a prudent investor, investing in a mix of low to moderate risk securities of varying maturity, would have realized an annual return of 6.5% to 7.5% depending upon the mix in the portfolio." The motion recited the rates earned on various forms of investments during the years 1994 through the first quarter of 1999 (Moody's AAA rated corporate bonds, thirty-year Treasury bonds, five-year Treasury notes, six-month bankers acceptances, and the prime rate), advising the court that "evidence of the rates quoted shall be provided post-verdict, pre-judgment by affidavit or testimony" and that it was "prepared to offer testimony and/or affidavit as to the prudent investor standard in real estate." No action was taken on the motion prior to trial.
On June 26, 2002, after a one-week trial, the jury returned a verdict in favor of Liberty in the amount of $743,549. The following day, the judge ruled on Liberty's motion, specifying that interest was to be calculated at the statutory rate, which the judge mistakenly identified as 5.66 per cent per year. Judgment was entered on July 2, 2002, with simple interest from the date of taking calculated at that rate.
On July 17, Liberty filed a motion to amend the judgment, asking to adjust the interest rate from the 5.66 per cent rate referenced in the judge's ruling to "the correct rate" of 5.88 per cent.2 Liberty's motion explained that G. L. c. 79, § 37, set the interest rate by reference to the "last auction of 52-week United States Treasury bills settled immediately before the date of taking," and that the last such auction prior to the June 7, 1995, taking was the auction held on May 25, 1995. The figures reflecting those auction rates were set forth in Federal publications, which specified a rate of 5.88 per cent for the May 25, 1995, auction.3 Liberty's motion suggested that the clerk had probably obtained the 5.66 per cent rate by consulting an unofficial table of interest rates that contained that error. The motion said nothing about any higher or other rate of interest, and made no reference to Liberty's prior request to have the judge determine interest based on a "prudent investor" standard.
On July 25, the city also filed a motion to amend the judgment. The city's motion asked the judge to reduce the interest award on account of Liberty's dilatory conduct during discovery, which had allegedly caused considerable delay in reaching trial.4
On August 16, prior to any ruling on either party's motion to amend the judgment, Liberty filed a motion for reconsideration of the judge's ruling on its earlier motion to determine a proper rate of interest, along with an "amended motion to determine and assess a proper rate of interest." That "amended" motion, like the original motion, asked the judge to apply a rate of interest that would have been earned by a "prudent investor" in lieu of the statutory rate. However, the "amended" motion submitted different figures based on a larger assortment of investment measures than those referenced in the original motion, along with an affidavit from an investment expert and an affidavit from the trustee of Liberty. Whereas the original motion had asked for an interest rate in the range of 6.5 to 7.5 per cent, Liberty's "amended" motion now sought an interest rate of 11.12 per cent (according to the expert) or 12 per cent (according to the trustee).
On August 23, the city tendered a check in the amount of $1,059,132.88 to Liberty's counsel "in full satisfaction" of the judgment. On August 26, Liberty's counsel replied that, in light of the unresolved issues concerning the interest award, Liberty was not willing to accept the tendered check "in full satisfaction" of the judgment, but would only be willing to accept it as payment on account.
It appears that the judge held a hearing on the outstanding motions on August 28. At that hearing, he denied the city's motion to amend the judgment (thereby rejecting the city's contention that Liberty's pretrial delay warranted a reduction in the interest award) and allowed Liberty's motion to amend the judgment, correcting the rate from 5.66 per cent to the 5.88 per cent rate provided by G. L. c. 79, § 37. During the course of the hearing, Liberty also asked (for the first time) that the interest be calculated as compound interest, and raised a concern as to whether the city's tender of its check on August 23 operated to stop the accrual of postjudgment interest as of July 31.5 After each side submitted further memoranda on those remaining two points, the judge ordered that judgment be entered with simple interest, and that postjudgment interest would not accrue past July 31. Ultimately, the total amount of the judgment (including prejudgment interest) was calculated at $1,052,654.21, plus costs of $9,564.40 (see note 2, supra), with postjudgment interest through July 31 of $4,951.68. Meanwhile, on September 9, 2002, Liberty had accepted the city's check "on account."
2. Discussion. The principal issue on appeal is whether the judge erred in denying Liberty's request to calculate interest based on a "prudent investor" standard rather than at the rate set by G. L. c. 79, § 37.6 Before reaching the merits of that issue, we must first address the city's arguments that the issue was not timely or properly raised below.
a. Waiver. As we discussed in M.B. Claff, Inc. v. Massachusetts Bay Transp. Auth., ante 596, 599-601 (2004), there is some merit to requiring a party to plead and then prove at trial a claim that "just compensation" for the taking in question requires application of an interest rate higher than that provided by G. L. c. 79, § 37. Here, Liberty did not raise this issue until literally the morning of trial, normally viewed as a time that is too late to insert a new, substantive claim into the case. Moreover, it did not introduce any evidence on the point at trial, but instead sought leave to produce affidavits or testimony after trial, to the extent that such evidence was deemed necessary to verify the various figures submitted in its motion. However, as we also noted, procedures for determining interest rates in eminent domain cases are not uniform, and property owners have been allowed to challenge the adequacy of statutory interest rates after trial on damages. Id. at 600-601, and cases cited.
Here, it does not appear that the city objected to Liberty's motion on grounds of untimeliness,7 or that the city objected to the proposal that the judge decide the matter after trial. The judge apparently took the motion under advisement, and then ruled on its merits immediately after the verdict was returned. While we have concerns about the late hour at which this issue was inserted into the case, the judge did not abuse his discretion in agreeing to entertain the request, particularly where the city voiced no procedural objection at the time.
The city next argues that, when Liberty did file a motion to amend the judgment pursuant to Mass. R. Civ. P. 59 (e), 365 Mass. 827 (1974), it waived its claim to any interest rate higher than the statutory rate because it asked that the judgment be amended to reflect the "correct interest rate" of 5.88 per cent pursuant to the statute. We do not think that that motion operated to waive the issue. Liberty had already requested, by written motion, that the judge set interest at the rate that a "prudent investor" would have earned, rather than at the statutory rate. That motion had effectively been denied with the judge's determination that the statutory rate should be utilized. When the interest calculation in the subsequent judgment mistakenly utilized a figure even lower than the statutory rate, Liberty could ask that that technical mistake be corrected without thereby waiving its right to claim that the judge's earlier substantive decision on the issue was erroneous. When a...
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