Sovereign Bank v. Remi Capital, Inc.
| Decision Date | 15 September 2022 |
| Docket Number | 21-2289 |
| Citation | 49 F.4th 360 |
| Parties | SOVEREIGN BANK v. REMI CAPITAL, INC; Erik A. Kaiser, Individually Jenzack Partners, LLC, as assignee for Sovereign Bank, Appellant |
| Court | U.S. Court of Appeals — Third Circuit |
Howard J. Bashman [ARGUED], Suite 400, 500 Office Center Drive, Fort Washington, PA 19034, Peter R. Bray, Bray & Bray, 100 Misty Lane, Lanidex Executive Center, Parsippany, NJ 07054, Alissa L. Poynor, Riemer & Braunstein, 100 Cambridge Street, 22nd Floor, Boston, MA 02114, Counsel for Appellant
Joseph B. Fiorenzo, Stephen M. Klein [ARGUED], Mark S. Olinsky, Sills Cummis & Gross, The Legal Center, One Riverfront Plaza, 11th Floor, Newark, NJ 07102, Counsel for Appellee
Before: GREENAWAY, JR., PORTER, and PHIPPS, Circuit Judges.
Parties settle their civil disputes. They enter into agreements wherein plaintiffs dismiss their case or defendants consent to entry of a judgment. The cases end. It is incumbent on the parties to detail, with precision and with clarity, the bargain they have struck. The failure to do so in an agreement, or in a consent judgment that reflects or incorporates that agreement, precludes a district court from enforcing an otherwise silent provision one party asks it to divine. Here, the District Court correctly discharged a consent judgment that was satisfied as written. Accordingly, we will affirm the District Court's final order discharging the judgment in this case.
This appeal arises out of an action to collect on a defaulted loan originated over a decade ago. Sovereign Bank ("Sovereign") was a federally chartered savings bank headquartered in Pennsylvania.1 REMI Capital, Inc. ("REMI") is a Delaware corporation, with its principal place of business in New Jersey. Erik A. Kaiser is an individual residing in New York. On January 25, 2007, Sovereign entered into a loan agreement with REMI, extending to REMI a $15 million line of credit to help REMI fund the origination or acquisition of mortgage loans for residential property (the "Loan Agreement"). In connection with the Loan Agreement, Sovereign and REMI executed a promissory note in the amount of $15 million (the "Promissory Note"). On that same date, Kaiser executed a suretyship agreement guaranteeing all of REMI's obligations under the Loan Agreement and Promissory Note (the "Suretyship Agreement"). The Suretyship Agreement contains a choice-of-law provision providing that Pennsylvania law governs interpretation of the agreement.2
As relevant here, Sovereign and Kaiser agreed that "any judgment entered against [Kaiser] pursuant to [the Suretyship Agreement] shall bear interest until paid at the Prime Rate plus six percent (6%) per annum, and not at the statutory rate of interest after judgment, and shall be collectible as part of any judgment under this Agreement." App. 93.
Eventually, REMI defaulted. On February 6, 2009, Sovereign sent REMI a default notice. Sovereign filed a complaint against REMI and Kaiser on April 3, 2009. Ultimately, the parties resolved the case by agreement, which the District Court entered as a consent judgment on September 1, 2010, in the amount of $1,560,430.24 (the "Consent Judgment"). Prior to entry of the Consent Judgment, the parties had the following discussion on the record before the District Court regarding the terms of settlement.
Counsel for the parties signed the Consent Judgment thereafter. The Consent Judgment provides, in its entirety:
App. 11. The Consent Judgment was silent as to any applicable interest rate.
On July 16, 2012, Sovereign Bank assigned and transferred to Jenzack Partners, LLC ("Jenzack"), all of the bank's right, title, and interest in and to the Consent Judgment. Jenzack, as assignee, is the Appellant in this action.
On December 8, 2017, Kaiser filed a motion to declare that judgment had been satisfied pursuant to Fed. R. Civ. P. 60(b)(5). On September 24, 2018, the District Court entered an order denying the motion. The District Court also ordered that: (1) the applicable interest rate is the Federal statutory post-judgment interest rate, fixed by the Federal Reserve Bank, at 0.26%; and (2) REMI may serve discovery on Sovereign Bank to determine the status of loans and other payments REMI made towards the Consent Judgment. In determining that the statutory rate of interest applied, the District Court observed that no clear, unambiguous, and unequivocal language in the Consent Judgment demonstrated an intent to depart from the rate of interest provided by 28 U.S.C. § 1961.
On October 17, 2018, Jenzack appealed the District Court's September order. In its appeal, Jenzack sought to reverse the portion of the District Court's order applying the federal statutory post-judgment interest rate. Then, as now, Jenzack argued that the applicable interest rate is the rate contained in the contracts underlying the Consent Judgment. In a not precedential opinion, we declined to review the District Court's order because it was not yet final under 28 U.S.C. § 1291. Sovereign Bank v. REMI Cap. , 810 F. App'x. 101, 104-05 (3d Cir. 2020). We explicitly left open the question as to which interest rate was proper. Id. at 105.
On June 17, 2021, the District Court entered a final order, denying reconsideration of its earlier order setting the post-judgment rate of interest at the federal statutory rate, declaring post-judgment discovery complete, confirming the amount of money already paid by Kaiser to Jenzack, and discharging the Consent Judgment. Jenzack timely appealed.
The parties in this case are completely diverse, and the amount in dispute is greater than $75,000. The District Court had jurisdiction pursuant to 28 U.S.C. § 1332. The District Court entered a final order in this case and Jenzack timely appealed. We have jurisdiction pursuant to 28 U.S.C. § 1291.
"We review grants or denials of relief under Rule 60(b), aside from those raised under Rule 60(b)(4), under an abuse of discretion standard." Budget Blinds, Inc. v. White , 536 F.3d 244, 251 (3d Cir. 2008). Here, our "review of the District Court's ruling with respect to ... post-judgment interest" concerns interpretation of 28 U.S.C. § 1961 and "requires de novo review." Travelers Cas. & Sur. Co. v. Ins. Co. of N. Am. , 609 F.3d 143, 157 (3d Cir. 2010).
Jenzack asks us to slalom past an intervening settlement agreement and a plainly written consent judgment to award it more than a million dollars in post-judgment interest. We choose a different path. We are not convinced that interest should accrue at the Prime Rate plus six percent, as had been set forth in the Suretyship Agreement.
The doctrine of merger provides that In re Stendardo , 991 F.2d 1089, 1099 (3d Cir. 1993) (). "It is immaterial whether the judgment was rendered upon a verdict or upon a motion to dismiss or other objection to the pleadings or upon consent, confession, or default." Restatement (Second) of Judgments § 18 cmt. a. A successful plaintiff in a contract action, for example, may no longer pursue remedies on the basis of the underlying contract once a judgment is entered on that claim. Instead, he or she "may maintain proceedings by way of execution for enforcement of the judgment" or "maintain an action upon the judgment." Id. , cmt. c.
Interest on a party's defaulted obligation, then, ceases to accrue at a previously stipulated rate upon entry of a judgment. At that moment, interest on the new obligation, the judgment to be satisfied, accrues at the rate provided by statute or court rule. Cf. Stendardo , 991 F.2d at 1095 ( )
In federal money judgments, 28 U.S.C. § 1961 governs the rate at which interest accrues.3 Both parties agree that while § 1961 provides a default rule, it may be modified by private agreement. They suggest that...
To continue reading
Request your trial