United States District Court, S.D. New York
March 19, 2004.
LANKLER SIFFERT & WOHL, LLP, DECISION STRATEGIES, L.L.C., DECISIONQUEST, INC., LEXECON INC., WILLIAM PURCELL, STEVE THEL, DONNA M. HITSCHERICK, and CORNERSTONE RESEARCH, INC., Plaintiffs, -against- A. CAL ROSSI, JR., BASIC CAPITAL MANAGEMENT, INC. and GENE PHILLIPS, Defendant; A. CAL ROSSI, JR. and BASIC CAPITAL MANAGEMENT, INC., Third-Party Plaintiffs, -against- AMERICAN INTERNATIONAL SPECIALTY LINES INSURANCE COMPANY, Third-Party Defendant
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.
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
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
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
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
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
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
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
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)
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
(2) at least one claim, or the rights and liabilities
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
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'
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
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
`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,
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
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
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
Underwood court acknowledged that a split existed among federal district
courts in New York. Id. at 142 n.9 (citing cases). However, the court
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
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.
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.