Student Loan Marketing Ass'n v. Lipman

• Decision Date: 10 January 1995
• Docket Number: No. 94-1903,94-1903
• Parties: , 97 Ed. Law Rep. 118 STUDENT LOAN MARKETING ASSOCIATION, as assignee of Valley National Bank, Plaintiff-Appellant, v. Frederick S. LIPMAN, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 173

45 F.3d 173

31 Fed.R.Serv.3d 85, 97 Ed. Law Rep. 118

STUDENT LOAN MARKETING ASSOCIATION, as assignee of Valley

National Bank, Plaintiff-Appellant, v. Frederick S. LIPMAN, Defendant-Appellee.

No. 94-1903.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 28, 1994.

Decided Jan. 10, 1995.

Robert A. Perkins, Paul S. Turner (argued), McCullough, Campell & Lane, Lawrence M. Liebman, Eddy & Liebman, Jeffrey S. Firestone, Chicago, IL, for plaintiff-appellant.

Frederick S. Lipman, pro se.

Before EASTERBROOK, MANION, and ROVNER, Circuit Judges.

ILANA DIAMOND ROVNER, Circuit Judge.

When Frederick Lipman failed to make any payments on seven medical school loans, the Student Loan Marketing Association ("SLMA") filed this diversity action in federal court. Although served with process, Lipman never appeared before the trial court, and on December 26, 1991, that court entered a default judgment in the amount of $75,676.20, "plus interest at the statutory rate." (R. 15.) The case then lay dormant until August of the following year, when SLMA, believing that the district court had based its judgment on an erroneous assessment of the principal amount due, filed a motion to correct the record. SLMA also requested, as it had in its complaint and motion for default, that the court award both the capitalized and non-capitalized interest due under the notes. ¹ The district court denied SLMA's motion on August 19, 1992, explaining in a minute order that it had taken the judgment amount from the underlying loan documents rather than from SLMA's "unsupported" assertions. Although the court rejected SLMA's claim to $123,148.13 in principal and capitalized interest, the August 19, 1992 order did not mention the amount of interest due under the notes, leaving the parties with the earlier award of "interest at the statutory rate." More than a year later, SLMA again moved, this time through new counsel, for a correction of the judgment. SLMA maintained, as it had in its earlier motion, that Lipman owed it $80,000.00 in principal and more than $60,000.00 in capitalized and non-capitalized interest. Characterizing this as a Fed.R.Civ.P. 60(b) motion, the district court found the motion untimely, as it had been filed more than one year after entry of the underlying judgment. See Fed.R.Civ.P. 60(b)(1) (motion to relieve party of final judgment due to mistake, inadvertence, surprise, or excusable neglect must be made within a reasonable time, and not more than one year after entry of the judgment). SLMA appeals, arguing that because its motion was one to correct a clerical mistake under Rule 60(a), rather than to correct a mistaken judgment under Rule 60(b), the motion could be filed at any time. SLMA therefore asks us to remand with directions that the district court correct the judgment to conform with the proof and that it calculate the interest due under the terms of the notes. We agree that a remand is appropriate, although we reach that conclusion by an alternate course.

We asked SLMA's counsel at oral argument whether the December 26, 1991 judgment is "final," for if it is not, then a motion to correct a mistake in that judgment could not be untimely even under Rule 60(b), as the one year time period in that rule would never have commenced to run. See Fed.R.Civ.P. 60(b) (rule and time limitations apply to "final" judgments); see also Advisory Committee Note to 1948 amendment to Rule 60(b), 55 F.R.D. 433, 479 (Rule 60(b) applies only to final judgments; "interlocutory judgments are not brought within [its] restrictions"). Our concern with the judgment's finality results from its oblique reference to "interest at the statutory rate." This phrase leaves the finality of the judgment in doubt because it does not specify whether the district court was awarding prejudgment or merely postjudgment interest. See Pace Communications, Inc. v. Moonlight Design, Inc., 31 F.3d 587, 591 (7th Cir.1994). The distinction is significant because if the district court intended to award prejudgment interest but failed to calculate the amount, its judgment is not final. Id.; see also Mercer v. Magnant, 40 F.3d 893, 896 (7th Cir.1994); Production and Maintenance Employees' Local 504 v. Roadmaster Corp., 954 F.2d 1397, 1401 (7th Cir.1992). There is an exception to this rule, however, where the uncalculated interest is free from dispute and is readily ascertainable from the record--that is, where only a ministerial calculation is required and we could perform it as easily as the district court. In that circumstance, we have perceived no purpose in a remand and instead have treated the judgment as final even in the absence of the interest calculation. See, e.g., In re Stoecker, 5 F.3d 1022, 1027 (7th Cir.1993); Roadmaster Corp., 954 F.2d at 1401; Herzog Contracting Corp. v. McGowen Corp., 976 F.2d 1062, 1064 (7th Cir.1992).

Whether the court's award of "interest at the statutory rate" refers to prejudgment or postjudgment interest is therefore significant. If the court awarded only postjudgment interest, then SLMA would have been required to ask for prejudgment interest within ten days of the judgment, as such a motion falls under Rule 59(e) and is subject to the timing requirement in that rule. Osterneck v. Ernst & Whinney, 489 U.S. 169, 175, 109 S.Ct. 987, 991, 103 L.Ed.2d 146 (1989); McNabola v. Chicago Transit Auth., 10 F.3d 501, 520 (7th Cir.1993). Yet if the court intended to award prejudgment interest, or both pre- and postjudgment interest, its judgment would be incomplete and non-final unless merely a ministerial interest calculation remains.

We were faced with an equally ambiguous judgment in Pace Communications. There, the district court had entered judgment in a particular dollar amount "plus interest and costs," and we inquired of the parties whether this referred to pre- or postjudgment interest. 31 F.3d at 590-91. Because postjudgment interest is awarded automatically by statute to civil litigants who recover money judgments in federal court (see 28 U.S.C. Sec. 1961(a)), we observed that "awarding such interest as part of the judgment is redundant" and potentially confusing. 31 F.3d at 591. Yet, because the plaintiff in that case assured us that it had never requested prejudgment interest and that the reference in its complaint to "interest and costs" referred to postjudgment interest alone, we treated the judgment as final. We noted, however, that this required us to read "both the complaint and the district court's opinion to contain unnecessary references to postjudgment interest." Id. (emphasis in original).

In the instant case, the district court's judgment also refers to "interest" without specifying whether it is of the pre- or postjudgment variety. The court's mention of "the statutory rate," however, suggests that the district court may have had only postjudgment interest in mind. As Pace Communications explains, postjudgment interest is awarded automatically by statute, and the statute itself sets the applicable rate. See 31 F.3d at 591. ² Thus, reference to "the statutory rate" could plausibly refer to the postjudgment rate set by section 1961(a). As we noted in Pace Communications, however, that interpretation would require us to assume that the district court included in its judgment a wholly superfluous reference to postjudgment interest. We are reluctant to do that unless the totality of circumstances convinces us, as they did in Pace Communications, that such an assumption is accurate. See 31 F.3d at 591.

Unlike the plaintiff in Pace Communications, SLMA is and always has been seeking pre judgment interest on the principal amounts owed. In its complaint, for example, SLMA alleged that Lipman owed $80,000.00 in principal, $52,443.05 in interest through December 31, 1990, and additional interest thereafter through the date of judgment. (R. 1, p 13.) It requested a judgment against Lipman "in the sum of $132,443.05 plus attorney's fees, per diem interest through the date of judgment and court costs." (Id.) Thus, all of the references in SLMA's complaint were to pre- and not postjudgment interest. In its motion for default, SLMA similarly requested that judgment be entered consistent with the facts alleged in its complaint, and it attached an affidavit attesting that Lipman owed $80,000.00 in principal and $52,443.05 in interest. (R. 9.) In a subsequent affidavit, SLMA maintained that Lipman owed $123,148.13 in principal and capitalized interest, as well as $18,250.91 in non-capitalized interest. (R. 12.) Neither the default judgment motion nor the affidavits mentioned postjudgment interest. The district court responded by entering judgment for $75,676.20, plus, mysteriously, "interest at the statutory rate." (R. 15.) ³

In light of the allegations in SLMA's complaint and its subsequent requests for prejudgment interest in the default motion and affidavits, we think it inconceivable that in awarding "interest at the statutory rate," the district court intended to deny prejudgment interest sub silentio, and to award only postjudgment interest under section 1961(a). The notes themselves clearly provide for interest to accrue as of the date of disbursement, and the district court never indicated that SLMA was for some reason not entitled to the benefit of its bargain. If the court actually had intended to deny SLMA the interest it was due, it...