The opinion of the court was delivered by: Robert Sweet, Senior District Judge
Plaintiff John S. Pereira, as Chapter 7 Trustee (the "Trustee") of Trace International Holdings, Inc. ("Trace International") and Trace Foam Sub Inc. ("Trace Foam") (collectively "Trace") has moved for entry of a proposed Final Judgment in light of the May 7, 2003 Opinion (the "Opinion") awarding judgment to the Trustee. Pereira v. Cogan, 2003 WL 21039976 (S.D.N.Y. May 8, 2003). The Officer and Director Defendants other than Marshall S. Cogan ("Cogan") have objected to several aspects of that proposed judgment.
For the following reasons, the Trustee's proposed final judgment is adopted except that the Officer and Director Defendants other than Cogan (the "Defendants") shall not be liable for the late charges on the Cogan notes, but instead shall only be liable for prejudgment interest thereon as specified in the Opinion. In addition, the judgment should be modified to acknowledge a few other inconsistences and/or mistakes.
A trial was held on this action from November 12 to November 27, 2002. Post-trial briefing and arguments were completed on April 7, 2003, and the Opinion issued on May 7, 2003. In the Opinion, judgment was granted to the Trustee as against all the defendants. However, the amount of those judgments varied based upon each defendants' culpability, as determined by the Court.
The Trustee submitted a proposed final judgment on May 16, 2003. Counsel for defendants Andrea Farace ("Farace") and Frederick Marcus ("Marcus") filed objections on May 19, 2003. Counsel for defendants Robert H. Nelson ("Nelson"), Philip Smith ("Smith"), and Karl Winters ("Winters") filed objections on May 27, 2003. The Trustee replied on May 30, 2003, at which time the motion was considered fully submitted.
I. Objections Regarding the Cogan and Insider Loans
In their post-trial arguments, the Defendants urged the Court to make a finding of fact that Cogan's loans totaled approximately $13.4 million, based on the figures in Trace's ledger. Such a finding was made. Opinion, at 89. The same Defendants now contend that, in fact, the amount of the Cogan loans should be reduced to $12.175 million, based on the totals from a column of figures that appeared in the opinion. Id. The column does not purport to be a recitation of what is reflected in Trace's ledger. Instead, it is a series of wire transfers to Cogan. It was not relied upon by the Court in finding that, as the Defendants urged, Trace's general ledger reflected $13.4 million in loans to Cogan.
In addition, the $13.4 million figure is about $900,000 less than the notes evidence, and therefore is already a break for the Defendants. As a result, this objection is denied.
The Defendants also object to the amount of prejudgment interest accounted on the Lowrance loan. The Trustee has received $30,000 in settlement on the loan, which was for $43,000. As a result, the appropriate Defendants are liable for $13,000. They contend that prejudgment interest should be on $13,000 from the effective date. The Trustee's calculations are more accurate, however, as he started from the higher principal, and then deducted both the principal and attendant interest reduction on the amounts recovered on this note, effective on the date each partial payment was received.
Two other objections by the defendants are adopted, however.
First, because the amount of Cogan's loan discussed above includes $161,000 in loans to Maureen Cogan, Nelson's liability for that $161,000 amount as an insider loan should not be double counted. The judgment against Nelson therefore should be modified to exclude the additional $161,000.*fn1
Second, the judgment should be modified to calculate pre-judgment interest from September 15, 1997 instead of September 12, 1997, for the ...