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United States District Court, S.D. New York

March 19, 2004.


The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge Page 3


Defendants Basic Capital Management, Inc. ("BCM") and A. Cal Rossi, Jr. ("Rossi") have moved pursuant to Federal Rules of Civil Procedure 52 (b), 59 and 60 for additional findings, for a new trial, to alter or amend the judgment, or for relief from the judgment. BCM and Rossi seek to vacate the previously-entered judgments, or in the alternative to amend the judgments to reflect the federal rate of post-judgment interest. Plaintiffs Lankier, Siffert & Wohl LLP ("LSW"), Decision Strategies, L.L.C., ("Decision Strategies"), DecisionQuest, Inc. ("DecisionQuest"), Lexecon, Inc. ("Lexecon"), Steve Thel ("Thel") and Donna M. Hitscherich ("Hitscherich") (collectively, the "Plaintiffs"), oppose the motion of BCM and Rossi and request that the Court certify partial final judgment pursuant to Fed.R.Civ.P. 54(b) on the account stated claims which were previously decided in favor of the Plaintiffs. For the reasons set forth below, the motion of BCM and Rossi to vacate the judgment is denied, the motion of BCM and Rossi to amend the judgment is granted, and the request by Plaintiffs to certify partial final judgment is granted.

Prior Proceedings

  Plaintiffs filed their complaint in this action on December 19, 2002, alleging non-payment of attorneys' fees and other related fees. The complaint includes 42 claims, including Page 4 causes of action by the various plaintiffs for breach of contract, account stated, conversion, unjust enrichment and tortious interference with contractual relations.*fn1 Defendants Rossi and BCM filed a third party complaint against American International Specialty Lines Insurance Company ("AISLIC") on February 24, 2003.

  The above-named plaintiffs (but not Purcell and Cornerstone) filed a motion for partial summary judgment on the account stated claims on April 29, 2003. This Court granted the motion on October 10, 2003. See Lanker, Siffert & Wohl v. Rossi, 287 F. Supp.2d 398 (S.D.N.Y. 2003). The Plaintiffs then served Notices of Settlement of Judgment on BCM and Rossi on or about October 27, 2003, and filed the judgments with the Clerk of Court. This Court signed the judgments of the Plaintiffs on November 3, 2003, and they were entered on November 5, 2003.

  On November 1, 2003, BCM and Rossi served on the Plaintiffs a response to the Notices of Settlement of Judgment, contesting the propriety of entry of judgment on the account stated claims. That document, however, was not received by this Court before the judgments were signed. On November 19, 2003, BCM and Rossi formally moved pursuant to Rules 52(b), 59 and 60 for additional findings, for a new trial, to alter or amend the Page 5 judgment, or for relief from the judgment. The Plaintiffs have responded both to BCM's and Rossi's initial response to the Notices of Settlement of Judgment, and to their motion, and have requested that the Court certify final judgment on the account stated claims pursuant to Rule 54(b). Oral argument was heard on the motion on January 21, 2004, at which time the motions were deemed fully submitted.

 The Case is Reopened

  Following the entry of the judgments by the moving Plaintiffs on November 4, 2003, this case was inadvertently closed, despite the fact that numerous claims remain unresolved. Accordingly, the case is hereby reopened.


  Defendants have brought this motion on a variety of procedural grounds pursuant to Rules 52(b), 59 and 60. The motion is most appropriately treated as a motion for relief from the operation of the judgment pursuant to Rule 60(b)(6), or alternatively as a motion to alter or amend the judgment pursuant to Rule 59(e). "Given the similarity between [Rules 52(b) and 59(e), it is not critical to the court's analysis whether the plaintiff intends to rely upon one or the other or both of these rules." Acruillo v. Police Benevolent Ass'n of New York State Page 6 Troopers, 1994 WL 494639, at *2 (N.D.N.Y. Aug. 15, 1994). There has been no trial in this case, and a motion for a new trial under Rule 59(a) is therefore inappropriate. Defendants seek to have the judgments which were entered on November 5 withdrawn as procedurally improper, or in the alternative to have the judgments modified to apply the federal post-judgment interest rate rather than the New York rate. The former request will be considered pursuant to Rule 60(b)(6), and the latter pursuant to Rule 59(e).

  While the Plaintiffs oppose the motion to withdraw the judgments, they have asked that this Court make a determination, pursuant to Rule 54(b), that there is no just reason for delay of entry of judgment. Rule 54(b) provides, in relevant part:

When more than one claim for relief is presented in an action . . . or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment.
Fed.R.Civ.P. 54(b).

  Defendants first argue that the Plaintiffs are not entitled to judgment under Fed.R.Civ.P. 58, which lays out the procedure for entry of judgment. As defendants point out, Rule 58 is "designed to encourage all reasonable speed in formulating and entering the judgment when the case has been decided." United Page 7 States ex rel. Tennessee Valley Authority v. An Easement and RiGht-of-Wav Over Four Tracts of Land, etc., 537 F. Supp. 4, 6 (E.D. Tenn. 1981) (quoting 11 Wright & Miller, Federal Practice and Procedure § 2781) (emphasis added). Plaintiffs, however, have not claimed a right to judgment under Rule 58. Rule 58(a) (2) is explicitly made "[s]ubject to Rule 54(b)" which pertains to judgments involving multiple claims or multiple parties, and Rule 54(b) is, accordingly, the relevant Rule in this context.

  Defendants argue that even if Rule 54(b) is the appropriate provision, the Notices of Settlement of Judgment were not properly submitted as a request for entry of judgment pursuant to Rule 54(b). Plaintiffs stated in the Notices that "Judgment may be entered on the 3rd day of November, 2003," which was seven days after filing. According to Local Civil Rule 6.1, the parties opposing a motion are entitled to a least ten days to file affidavits and memoranda, with at least five days thereafter allotted for the movants to reply. Plaintiffs also did not submit a notice of motion or a memorandum of law with the Notices of Settlement.

  Plaintiffs reply that they were following Local Civil Rule 77.1, entitled "Submission of Orders, Judgments and Decrees," which provides that "[u]nless the form of order, judgment or decree is consented to in writing, or unless the court otherwise directs, three (3) days' notice of settlement is required," and "[o]ne (1) Page 8 day's notice is required of all counter-proposals." As defendants argue, Rule 77.1 contemplates submissions on issues already decided by the Court. On a matter which will require a finding by the Court, as with the judgments this case, a motion should have been made, and the notice requirements of Rule 6.1 followed.

  Plaintiffs further argue that no motion from the Plaintiffs was required at all under Rule 54(b) prior to a district court's directing entry of a final judgment. While that may be true in some cases, see 10 Wright & Miller, Federal Practice & Procedure, § 2660 at n. 8 ("In an appropriate case, the district court may consider the question [of whether to direct entry under Rule 54(b)] sua sponte."), it is irrelevant to the question of the procedural obligations of the parties. Clearly, the possibility of a sua sponte dismissal of a case does not excuse a moving party of following court procedure in filing a motion to dismiss.

  Although the Plaintiffs failed to follow the proper procedure in initially requesting that the Court enter judgment on the account stated claims, it is appropriate to consider the question in the context of this motion, as both parties have been given the opportunity to argue for and against entry of judgment under the standard provided by Rule 54(b):

In order to enter final judgment under Rule 54(b),
(1) multiple claims or multiple parties must be present,
  (2) at least one claim, or the rights and liabilities of Page 9 at least one party, must finally be decided within the meaning of 28 U.S.C. § 1291, and (3) the district court must make "an express determination that there is no just reason for delay" and expressly direct the clerk to enter judgment.

 Ginett v. Computer Task Group, 962 F.2d 1085, 1091 (2d Cir. 1992) (quoting Rule 54(b)). Defendants have not contested that the first factor is satisfied. However, defendants argue that the Court's grant of partial summary judgment has not resolved any single Plaintiff's claim to be paid for the invoices because causes of action for account stated still remain against Phillips for the same invoices, as well as against BCM and Rossi for those invoices based on alternative legal theories.

  A claim is deemed to be finally decided "[i]f the decision Aends the litigation [of that claim] on the merits and leaves nothing for the court to do but execute the judgment' entered on that claim." Ginett, 962 F.2d at 1092 (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 467, 98 S.Ct. 2454, 2457, 57 L.Ed.2d 351 (1978)). The account stated claims against the moving Plaintiffs have been decided on the merits. The fact that the Plaintiffs also have claims based on alternate legal theories does not alter that fact. In addition, the grant of partial summary judgment against BCM and Rossi entitles the moving plaintiff to all relief requested on those claims, despite the fact that Plaintiffs did not also move for summary judgment against Phillips. While there may remain issues regarding apportionment and contribution Page 10 among the defendants, those issues have no impact on the question of whether judgments may be executed against BCM and Rossi. BCM and Rossi may litigate those issues separately without affecting Plaintiffs' judgments.

  Even when the first two factors are satisfied, the district court must still make a finding that entry of partial judgment is appropriate:

Although the Advisory Committee's comment to Rule 54(b) implied that the rule was originally intended to apply only to the "infrequent harsh case," the Second Circuit has ruled that with the advent of complex litigation involving numerous parties and claims this standard is no longer "workable." Ginett, 962 F.2d at 1094. Courts should not restrict the use of Rule 54(b) to cases which are "`unusual', `exceptional', or `extraordinary'" but should instead be guided by the "`interest of sound judicial administration.'" Id. at 1095 (quoting Curtiss-Wright 446 U.S. at 8). Thus, district courts should consider the possibility that "the ultimate dispositions of the claims remaining . . . could either moot [the decision of the appellate court] on the appealed claim or require [the appellate court] to decide issues twice." Ginett, 962 F.2d at 1094.
Bowne v. AmBase Corp., 161 F.R.D. 270, 272 (S.D.N.Y. 1995). Defendants cite to a number of pre-Ginett cases suggesting that separate judgments should be entered sparingly or infrequently. See, e.g., Cullen v. Margiotta, 618 F.2d 226, 228 (2d Cir. 1980); Luckenback Steamship Co. v. M. Muehlstein & Co., 280 F.2d 755 (2d Cir. 1960). However, as the Second Circuit has warned, "today's Page 11 `extraordinary' case may well be tomorrow's ordinary fare." Ginett, 962 F.2d at 1095.

  The Second Circuit has therefore held that "[o]nly those claims `inherently inseparable' from or `inextricably related' to each other are inappropriate for Rule 54(b) certification." Ginett, 962 F.2d at 1096. Two claims are not inherently inseparable if "[t]hey . . . can be decided independently of each other," id. at 1095 (quoting Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 436, 76 S.Ct. 895, 100 L.Ed. 1297 (1956)), and claims are inextricably intertwined if they are


the sort of claims so interrelated that (1) [the appellate court] would necessarily have to reach the merits of one or more claims not appealed and/or (2) the district court's disposition of one or more of the remaining claims could render [the appellate court's] opinion advisory or moot.
Id. (citing Brunswick Corp. v. Sheridan, 582 F.2d 175, 184-85 (2d Cir. 1975) (Friendly, J.)). Beyond considerations of separability, district courts should also take cognizance of the "historic policy against piecemeal appeals." O'Bert ex rel. Estate of O'Bert v. Vargo, 331 F.3d 29, 41 (2d Cir. 2003) (quoting Curtiss-Wright, 446 U.S. at 8).

  The interests of sound judicial administration would be served by the certification of the judgments in this case. As Plaintiffs have argued, and as is evident from the Complaint, Page 12


If each of the judgments for the Moving Plaintiffs on their account stated claims are satisfied, then the Moving Plaintiffs will have received full relief. The Moving Plaintiffs will have no need to pursue their remaining claims because those claims — breach of contract, conversion, unjust enrichment, and tortious interference with contractual relations — seek the same relief the Court has already granted to the Moving Plaintiffs.
Wohl Declaration, ¶ 5. If the appellate court affirms the judgments, the case will be at an end as to those plaintiffs. If the judgments are vacated, Plaintiffs will seek relief on the alternate legal theories — a course of action they may undertake in the absence of certification. Further, the remaining two plaintiffs who did not move for summary judgment will be unaffected by either result. Therefore, the certification of the judgments will not involve potentially duplicative work for either the district court or the appellate court, and will not involve consideration of the merits of issues not appealed.

  Finally, "the court can take into account whether delay would cause financial hardship to either party." Bowne, 161 F.R.D. at 273. While there has been no claim that defendants are in any danger of becoming insolvent, which was a concern in Bowne, Plaintiffs have each been waiting for over a year and a half for payment of substantial sums on their account stated. It is therefore held, in the interest of sound judicial administration and the financial hardship of Plaintiffs, that there is no just Page 13 reason for the delay of the entry of final judgment on the moving Plaintiffs' claims for account stated.

 The Federal Rate of Post-Judgment Interest Applies to the Judgment

  In its initial response to the Notices of Settlement of Judgment, defendants argued that the then-proposed judgments improperly calculated post-judgment interest at the rates apparently applicable under state law rather than the rates applicable to federal judgments. In response, Plaintiffs argue that federal district courts in New York exercising diversity jurisdiction regularly award both pre-and post-judgment interest at the New York statutory rate. Plaintiffs cite Inter-Ocean Industries, Inc. v. Nasser, 02 Civ. 8499, 2003 WL 21639453, at *2 (S.D.N.Y. July 2, 2003) and Kingvision Pay-Per-View, Ltd, v. Recio, 02 Civ. 6583, 2003 WL 21383826, at *6 (S.D.N.Y. June 11, 2003). Both cases cite to New York's CPLR § 5003, which provides that "every money judgment shall bear interest from the date of its entry," and CPLR § 5004, which sets the annual interest rate at 9 percent.

  Notwithstanding the cases cited by Plaintiffs, New York's post-judgment statute is preempted by the federal post-judgment interest statute, 28 U.S.C. § 1961(a). The reasoning of the court in Underwood v. B-E Holdings, Inc., 269 F. Supp.2d 125 (W.D.N.Y. 2003) is persuasive that the federal rate should apply. The Page 14 Underwood court acknowledged that a split existed among federal district courts in New York. Id. at 142 n.9 (citing cases). However, the court held:

First, the plain language of the statute indicates that it applies to "any money judgment in a civil case recovered in a district court." 28 U.S.C. § 1961 (a) (emphasis added). Congress elected not to make an exception for judgments recovered in diversity cases. Second, every circuit court to address this issue has concluded that the federal rate applies to all money judgments recovered in civil cases, including diversity cases.
Id. at 142 (citing cases from the Fourth, Fifth, Sixth, Seventh, Eighth, Ninth and Eleventh Circuits); see also Caruolo v. AC & S, 93 Civ. 3752, 2001 WL 125678, at *2 (S.D.N.Y. Feb. 13, 2001) (noting that "[n]umerous Courts of Appeal have held that 28 U.S.C. § 1961 applies in diversity cases," and following their holdings).

  The Underwood court was also unpersuaded that the Erie doctrine (see Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)) compelled the application of the New York interest rate, noting that the Eighth Circuit had found "that post-judgment interest is `a subject with respect to which Congress has full power to legislate, even as to cases that get into the federal courts only because of diversity of citizenship.'" Id. (quoting Weitz Co., Inc. v. Mo-Kan Carpet, Inc., 723 F.2d 1382, 1386 (8th Cir. 1983)). Accordingly, the federal rate of post-judgment interest will apply to the judgments filed by Plaintiffs. Amended Page 15 judgments should accordingly be filed by Plaintiffs, with 10 days notice given to the defendants to raise further objections.


  This case is reopened. The objections of BCM and Rossi to entry of final judgments on the account stated claims pursuant to Rule 54(b) are rejected, and it is determined that there is no just reason for the delay of entry of the judgments. The judgments will be amended to reflect the federal rate of post-judgment interest pursuant to 28 U.S.C. § 1961(a). The defendants' motion for relief from the operation of the judgment pursuant to Rule 60(b)(6) is therefore denied, and the motion to alter or amend the judgment pursuant to Rule 59(e) is granted.

  It is so ordered.

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