U.S. S.E.C. v. Carrillo
Decision Date | 28 March 2003 |
Docket Number | No. 02-12285.,02-12285. |
Parties | UNITED STATES SECURITIES AND EXCHANGE COMMISSION, Plaintiff-Appellee Cross-Appellant, v. Bosque Puerto CARRILLO, Defendant-Cross-Appellee, Terence James Ennis, Ralf Stefan Jaeckel, Defendant-Appellants Cross-Appellees. |
Court | U.S. Court of Appeals — Eleventh Circuit |
Frederick L. Noland, MacDonald, Hoague & Bayless, Seattle, WA, for Carillo.
Appeals from the United States District Court for the Southern District of Florida.
Before EDMONDSON, Chief Judge, and BARKETT and COX, Circuit Judges.
In the absence of a controlling statute, district courts have the discretion to award prejudgment interest to prevailing litigants. In this case, the district court's order awards prejudgment interest to the plaintiff but does not specify the interest rate or the date from which interest accrues, and we must determine whether the order constitutes a final judgment under 28 U.S.C. § 1291. Because the calculation of prejudgment interest in this case is not merely a "ministerial" task, we conclude that the district court's order is not a final judgment. Accordingly, we dismiss this appeal for want of jurisdiction.
In 1993, the United States Securities and Exchange Commission (SEC) filed a complaint against Bosque Puerto Carrillo ("Bosque"), a Costa Rican corporation, and two former vice-presidents of Bosque, Ralf Stefan Jaeckel and Terence James Ennis, alleging that the defendants fraudulently offered and sold unregistered securities to finance Bosque's operations1 in violation of federal securities laws. The defendants allegedly promoted unregistered Bosque securities by placing advertisements in the complimentary in-flight magazines of American Airlines and Lacsa Airlines. Jaeckel and Ennis also allegedly arranged for favorable articles about Bosque's securities to appear in the Lacsa Airlines magazine.
The defendants filed a motion to dismiss for lack of personal jurisdiction, and the district court granted the motion. On appeal, this court concluded that the district court had personal jurisdiction with respect to all defendants and remanded the case for further proceedings. SEC v. Bosque Puerto Carrillo, 115 F.3d 1540, 1548 (11th Cir.1997). Following remand, the defendants failed to answer the SEC's complaint, and the district court granted the SEC's motion for a default judgment. The district court entered a judgment against Bosque, Jaeckel, and Ennis that enjoined the defendants from violating federal securities laws and declared them jointly and severally liable to pay $10 million as disgorgement. The district court also ordered the defendants to pay prejudgment interest in the sum of $8,457,802.00 to the SEC.
Bosque filed a motion under Fed. R.Civ.P. 60(b) to set aside the default judgment. The district court granted the motion in part and denied the motion in part; the court denied the motion to set aside the entry of default and denied the motion as to injunctive relief, but granted the motion to set aside the judgment for money damages (disgorgement). The court then held an evidentiary hearing on damages.
During the evidentiary hearing, the SEC stated that the proper method for calculating disgorgement is to determine the total amount that Bosque's United States shareholders paid for their shares and subtract the total value of those shares at the time of their purchase. The SEC offered evidence to support its position that, under this method, the defendants should be ordered to disgorge $15,293,100.00. Furthermore, the SEC asked the court to award $16,023,788.45 in prejudgment interest, which was calculated based on the IRS underpayment rate established in 26 U.S.C. § 6621. In response, Bosque argued that only the individual defendants, Jaeckel and Ennis, should be liable for disgorgement because an order of disgorgement against Bosque would harm the company's current shareholders; the SEC countered that the company shared in the proceeds from the fraudulent sale of unregistered securities and therefore should be liable for disgorgement. In an apparent attempt to contest their liability for securities fraud, Jaeckel and Ennis argued that they had little experience in developing and obtaining investment for this type of business.
The district court entered judgment on March 27, 2002. In its order, the court concluded that Bosque was not liable for disgorgement. The court held that Jaeckel and Ennis were jointly and severally liable for disgorgement in the amount of $1.7 million, the amount of money that was "unaccounted for" in a 1995 audit. Notably, the district court awarded "$1.7 million dollars plus interest" and "retain[ed] jurisdiction to determine the amount of the interest." (R.4-166 at 7 (emphasis added).) Jaeckel and Ennis appealed the order, and the SEC filed a cross-appeal.
The parties raise several issues on appeal, but prior to oral argument this court sua sponte raised another issue for the parties' consideration: whether the district court's March 27, 2002, order — which appears to contemplate an award of prejudgment interest — constitutes a final judgment for the purposes of 28 U.S.C. § 1291? We asked the parties to address this issue at oral argument and to file supplemental briefs on this issue following oral argument. After careful consideration of the parties' arguments and their supplemental briefs, we conclude that the district court's March 27, 2002, order is not a final judgment for the purposes of 28 U.S.C. § 1291. Because we lack appellate jurisdiction, we do not reach the merits of the issues raised by the parties on appeal.
As a court of limited jurisdiction, we must evaluate our appellate jurisdiction sua sponte even if the parties have not challenged it. See Rinaldo v. Corbett, 256 F.3d 1276, 1278 (11th Cir.2001); Rembert v. Apfel, 213 F.3d 1331, 1333 (11th Cir. 2000).
The parties agree that the district court's March 27, 2002, order awarding "$1.7 million dollars plus interest" contemplates an award of prejudgment — not postjudgment — interest. In its supplemental brief, the SEC argues that the district court's failure to calculate the amount of prejudgment interest does not affect the finality of the judgment because the calculation of prejudgment interest in this case is a ministerial task. During the evidentiary hearing, the SEC asked the district court to employ the IRS underpayment rate established in 26 U.S.C. § 6621 to calculate prejudgment interest. Bosque did not challenge the SEC's proposed method for calculating prejudgment interest, and the defendants did not offer an alternative method of calculation. Because the only proposed method for calculating prejudgment interest was provided in the SEC's Prejudgment Interest Report, the SEC contends that prejudgment interest "can be computed mechanically by plugging the disgorgement amount ($1.7 million) into the prejudgment interest formula that the [SEC] supplied to the district court during the remedies trial in this case." (SEC Supp. Letter Br. at 5.) Bosque, Jaeckel, and Ennis agree that only one method for calculating prejudgment interest was proposed to the court and that no objections were made by any party, and therefore only a ministerial calculation of prejudgment interest is necessary.
As an initial matter, we agree with the parties that the court's March 27, 2002, order awards prejudgment interest, not postjudgment interest, to the SEC. The prevailing party in this case, the SEC, is statutorily entitled to postjudgment interest under 28 U.S.C. § 1961. The district court does not have any discretion to deny or modify the terms upon which the SEC may receive postjudgment interest under § 1961; section 1961(a) establishes the applicable interest rate and instructs that interest shall be calculated from the date of the entry of the judgment. 28 U.S.C. § 1961(a). If we were to read "$1.7 million dollars plus interest" to award postjudgment interest, the court's references to "interest" would be rendered superfluous because, by virtue of the statute, the SEC is already entitled to such interest. See Student Loan Mktg. Ass'n v. Lipman, 45 F.3d 173, 176 (7th Cir.1995) ( ). Moreover, the district court heard testimony regarding the propriety of awarding prejudgment interest and the calculation of such interest, and we decline to hold that the court's reference to "interest" awards postjudgment interest to the SEC — when such a decision is not within the court's discretion in light of § 1961(a) — while simultaneously denying the SEC's request for prejudgment interest sub silentio. See id. at 177. Finally, we note that the court originally awarded the SEC over $8 million in prejudgment interest when the court entered its default judgment against the defendants, and in doing so, the court evinced its willingness to award prejudgment interest in this case. Thus, it is clear that the court's March 27, 2002, order awards prejudgment interest to the SEC, and we must now consider whether the order is an appealable final judgment.
As a general rule (subject to exceptions not implicated by this case), federal courts of appeals have jurisdiction to review only "final decisions" of lower federal courts. 28 U.S.C. § 1291. A final decision "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633-34, 89 L.Ed. 911 (1945). Although the "final judgment rule" serves many purposes, one of...
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