United States District Court, S.D. New York
January 12, 2005.
ZHEJIANG TONGXIANG IMPORT & EXPORT CORPORATION, Plaintiff,
ASIA BANK, N.A., Defendant.
The opinion of the court was delivered by: JOHN SPRIZZO, Senior District Judge
MEMORANDUM OPINION AND ORDER
The present controversy involves the correct method of computing
interest under Article 50 of New York's Civil Practice Law and Rules in a
conversion action in which summary judgment as to one aspect of liability
was granted almost four years prior to any decision on damages. Because
this Court finds that significant issues of causation were left
undetermined in the summary judgment opinion, it agrees with defendant
that statutory interest should be determined on a straight line, and
should not, in effect, be compounded by operation of C.P.L.R. section
Plaintiff, Zhejiang Tongxiang Import & Export Corporation, brought
this action to recover for the wrongful surrender of a bill of lading by
defendant, Asia Bank, N.A. In an opinion issued by Judge Martin dated
January 25, 2001, summary judgment "on the issue of liability" was
granted in favor of plaintiff. See 2001 U.S. Dist. LEXIS 623, at *13. The
case was reassigned to this Court in August 2003, and a Bench Trial to
determine issues of causation and damages was held on June 8-9, 2004. At the conclusion of Summation on November 8, 2004, this Court
determined on the record that "as a matter of fact . . . the plaintiff
was not negligent in this case, but if they were negligent, their
negligence played no part in causing [their] injury." Tr., dated Nov. 8,
2004, at 16-17 ("Summation Tr."). The Court directed plaintiff to submit
a proposed judgment which is the subject of the present controversy.
By letter dated November 24, 2004, plaintiff submitted a proposed
judgment that requested damages in the amount of $978,876.84 plus $179.99
interest for each day until judgment was entered. That figure constituted
$518,130.00 in actual damages plus statutory interest calculated for two
distinct periods of time. Interest in the amount of $211,822.90 was
proposed from the date defendant converted plaintiff's bill of lading,
July 12, 1996, until Judge Martin's decision on January 25, 2001, and
interest computed on that interest and the actual damages was requested
in the amount of $248,923.94 for the period from Judge Martin's decision
until this Court's ruling on November 8, 2004. By letter dated December
1, 2004, defendant objected to this method of calculation, arguing that
this compounding of interest would provide a windfall to plaintiff.
Without compounding, total damages would amount to $906,642.33 a
difference of $72,234.51.
Prejudgment interest is provided for in C.P.L.R. sections 5001 and
5002. Under section 5001, in certain types of actions, including the
conversion action at issue here, "[i]nterest shall be computed from the
earliest ascertainable date the cause of action existed," and shall run until "the date the verdict was rendered or the report or decision was
made, and included in the total sum awarded." N.Y.C.P.L.R. 5001.
Upon entry of the verdict or decision of the court, interest is
provided for under C.P.L.R. section 5002. That section provides that
"[i]nterest shall be recovered upon the total sum awarded, including
interest to verdict, report or decision, in any action, from the date the
verdict was rendered or the report or decision was made to the date of
entry of final judgment." N.Y.C.P.L.R. 5002.
Defendant contends that despite the plain language of the statute,
interest should not be awarded upon "interest to verdict" in an action
such as this, where the trials on liability and damages are bifurcated
and where pre-verdict interest is available, since, given the statutory
interest rate of nine percent, N.Y.C.P.L.R. 5004, to do so would amount
to a windfall to plaintiff. See Letter of Joel M. Markowitz, dated Dec.
Although reported case law focuses primarily on personal injury
actions, in which pre-verdict interest is not available under C.P.L.R.
section 5001, see Love v. State, 78 N.Y.2d 540, 583 N.E.2d 1296,
577 N.Y.S.2d 359 (1991), the statute clearly requires the awarding of
interest for the period between the verdict or decision and the entry of
judgment in those cases where "interest to verdict" is available,
N.Y.C.P.L.R. 5002; see United States Fire Ins. Co. v. Fed. Ins. Co.,
858 F.2d 882, 889 (2d Cir. 1988); In re Kovler, 253 B.R. 592, 595, 602
(Bankr. S.D.N.Y. 2000) (awarding interest for both periods of time in a
breach of contract case where liability and damages were bifurcated);
see also David D. Siegel, Practice Commentaries, McKinney's Cons. Laws of N.Y., Book 7B, C.P.L.R. 5003 (stating that there is "compounding that
occurs when a money obligation steps from the CPLR 5001 to the CPLR 5002
category"). Therefore, this Court cannot agree with defendant that this
type of case is not one in which interest for both periods of time should
Despite the availability of interest for both periods of time in cases
such as this, plaintiff cannot benefit from the post-verdict or decision
interest that it seeks pursuant to C.P.L.R. section 5002 unless Judge
Martin's January 25, 2001 summary judgment opinion is deemed a "verdict,
report or decision" under the statute. N.Y.C.P.L.R. 5002.
In making that determination, the Court must look to see if that
opinion represented the point at which "plaintiff's right to be
compensated for the damages [it] sustained bec[a]me? fixed in law."
Love, 78 N.Y.2d at 544, 583 N.E.2d at 1298, 577 N.Y.S.2d at 361. In
bifurcated trials this occurs "when the verdict holding the defendant
liable is rendered," since at that point "the defendant's obligation to
pay the plaintiff is established, and the only remaining question is the
precise amount that is due." Id., 583 N.E.2d at 1298, 577 N.Y.S.2d at 361.
However, in this case, although Judge Martin's opinion granted summary
judgment for plaintiff "on the issue of liability," see 2001 U.S. Dist.
LEXIS 623, at *13, that opinion did not represent the point at which the
sole remaining question to be answered was the amount of money that
defendant owed plaintiff. For example, Judge Martin's ruling did not
resolve the significant issue of whether defendant's actions were the cause of plaintiff's injury or whether plaintiff itself
was the sole cause of the damages it suffered. Id. at *13-15. In fact,
the June 2004 Trial held before this Court had little or nothing to do
with "disputes concerning the amount" of damages, Summation Tr. at 17,
but dealt entirely with the issue of which party caused the injury
suffered. In light of these completely unresolved questions of
causation, it cannot be said that Judge Martin's decision represented the
point at which plaintiff's right to compensation became "fixed in law."
Love, 78 N.Y.2d at 544, 583 N.E.2d at 1298, 577 N.Y.S.2d at 361.
Therefore, since interest pursuant to C.P.L.R. section 5002 did not
commence until this Court's ruling after Summation, the Court agrees with
defendant that interest should be computed on a straight line from July
12, 1996 through November 8, 2004.
Based on the foregoing, plaintiff is not entitled to C.P.L.R. section
5002 interest commencing on the date of Judge Martin's summary judgment
opinion. The Court therefore directs the Clerk of the Court to enter
judgment for plaintiff in the amount of $906,642.33, and, pursuant to
C.P.L.R. section 5002, an additional $223.56 should be added for each day
between November 9, 2004 and the entry of final judgment.
It is SO ORDERED.
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