Opinion
X08FSTCV155014970S
03-02-2017
Alpha Beta Capital Partners, LP v. Pursuit Investment Management, LLC
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE DEFENDANT'S MOTION TO OPEN JUDGMENT AND MODIFY/REDUCE INTEREST RATES (#355) AND THE PLAINTIFF'S OBJECTION THERETO (#359) AND THE DEFENDANT'S OBJECTION TO THE PLAINTIFF'S BILL OF COST (#361)
Robert L. Genuario, J.
On October 14, 2016 after sixteen days of trial, the court issued its Memorandum of Decision in which it entered judgment in favor of the plaintiff and against certain defendants " in the amount of $4, 929, 582.00 plus prejudgment interest at the rate 10% per year from October 16, 2015 (the date that the plaintiff's interest in the UBS proceeds should have been remitted to the plaintiff) until October 16, 2016 in the amount of $492, 958.00 for a total of $5, 422, 540.00. Postjudgment interest will continue to accrue at the rate of 10% per annum on all outstanding amounts until paid." See Memorandum of Decision #342.
The sixteen days of trial included a prejudgment remedy (PJR) proceeding. The parties stipulated that the evidence introduced in the PJR proceeding would be evidence in the subsequent trial.
The defendant in this motion #355 seeks to reduce the postjudgment interest rate and eliminate or reduce the prejudgment interest rate.
In the defendants' original motion and briefing the defendants primarily challenged the 10% interest rate on the grounds that the 10% figure is significantly outside the standard interest rate award and the court's decision to award interest at the rate of 10%, if not an abuse of discretion, was an ill considered exercise of it. However, in their final memorandum, relying heavily on the case of Whitney v. J.M. Scott Associates, Inc., 164 Conn.App. 420, 137 A.3d 866 (2016), the defendants argue that the court has no authority to award prejudgment interest in a case of this nature. The court will address the issue of its authority to award prejudgment interest first.
II. The Authority to Award Prejudgment Interest in the Case at Bar
Connecticut General Statutes § 37-3a provides in pertinent part " . . . interest at the rate of 10% per year, and no more, may be recovered and allowed in civil actions . . . as damages for the detention of money after it becomes payable." Our Supreme Court in Sikorsky Financial Credit Union, Inc. v. Butts, 315 Conn. 433, 108 A.3d 228 (2015), recently commented as follows:
The purpose of § 37-3a is not to punish persons who have detained money owed to others in bad faith but, rather, to compensate parties that have been deprived of the use of their money. An award of interest under § 37-3a may include either or both prejudgment and postjudgment interest. Whether a prevailing party will receive interest as damages pursuant to § 37-3a is principally and equitable question lying within the trial court's discretion. The trial court also has discretion to chose the rate of prejudgment and postjudgment interest up to the statutory maximum rate of 10%.Id. at 442-43 (internal citations and quotation marks omitted).
In Foley v. Huntington Co., 42 Conn.App. 712, 682 A.2d 1026 (1996), our Appellate Court set forth the distinction between when prejudgment interest pursuant to § 37-3a may be awarded and when it should not be.
Prejudgment interest pursuant to § 37-3a has been applied to breach of contract claims for liquidated damages, namely, where a party claims that a specified sum under the terms of a contract, or a sum to be determined by the terms of the contract owed to that party has been detained by another party.Id. at 740 (emphasis added). On the other hand claims for breach of contract in which damages are claimed and awarded to the plaintiff for loss of the benefit of the bargain (such as, when appropriate, lost profits) rather than a " sum to be determined by the terms of the contract" is not an award for which prejudgment interest should be awarded under § 37-3a. Whitney follows this rule. The defendants' reliance on Whitney is misplaced since Whitney involved a claim by the plaintiff and an award by the court of damages in excess of any money detained by the defendant therein. The trial court in Whitney calculated the damages due the plaintiff based upon the loss of the benefit of the bargain suffered by the plaintiff therein rather than awarding damages for the detention of money which should have been paid pursuant to a contract.
In the case at bar as described in more detail in the court's Memorandum of Decision the parties entered into an agreement entitled Confidential Settlement Agreement (the CSA) to settle prior litigation. That agreement laid out what the plaintiff's interest in certain assets were at the time the CSA was executed. The specific asset which is the subject of this case was not liquidated and was contingent upon the successful pursuit of a claim against two third party defendants. However, this court held that once the claim of some of the defendants herein against those third-party defendants was settled and the claim generated a liquidated and definitive amount, certain defendants had an obligation to remit the plaintiff's interest in that liquidated asset as soon as practicable. The court's award, as spelled out in its Memorandum of Decision, is simply the amount to which the plaintiff was entitled to be paid under the terms of the CSA. It was a sum that was determined by the terms of the CSA.
The defendants argue that because there was a disagreement as to the amount the plaintiff was due under the terms of the CSA, the plaintiff is not entitled to prejudgment interest based on the holding in Whitney . This is a misreading of Whitney . In Whitney the court did not award to the plaintiff a sum that could be determined pursuant to the contract but rather awarded damages that needed to be proven by evidence concerning the lost benefit of the bargain that the plaintiff therein suffered as a result of the defendant therein not performing the contract. In the case at bar the court awarded the plaintiff only the amount the plaintiff was due as determined by the contract. The fact that the parties may have disagreed as to what that amount is or even that the plaintiff may have claimed more than what the court ultimately determined the plaintiff was due, does not render § 37-3a inapplicable. Ultimately the award was based upon a sum calculated by following the strict terms of the contract. If the plaintiff's position is correct, then no prejudgment interest would ever be due in a contract case where the parties had differing interpretations of the contract. That is not the holding of Whitney and certainly not the meaning of C.G.S. § 37-3a.
The defendants' argument is not helped by the fact that information concerning the amount that was due was primarily within the control of the defendants and to a large extent the plaintiff could not calculate the amount that was due until that information was disclosed as a part of the litigation process.
Put most succinctly the court's award to the plaintiff was not an award of damages for the lost benefit of a bargain but was an award of money that the plaintiff was due pursuant to the contract, which money the defendants detained.
III. The Amount of Interest
The defendants sincerely argue that the amount of interest awarded at the rate of 10% is excessive and not a wise exercise of discretion on the part of the court. They properly point out that in many cases courts in this jurisdiction and throughout the state award interest, when interest is appropriate, at rates significantly less than that awarded by the court. And indeed this court has frequently awarded interest at rates significantly lower than the rate it applied in the case at bar. As the court has previously indicated the purpose of § 37-3a interest " is not to punish persons who have detained money owed to others in bad faith but, rather, to compensate parties that have been deprived of the use of their money." Sikorsky at 442 quoting Sosin v. Sosin, 300 Conn. 205, 230, 14 A.3d 307 (2011).
The evidence during trial certainly indicated and the court finds that all parties were in the business of professionally managing money and financial assets. In an effort to compensate the plaintiff for its loss of the use of the money that the defendants wrongfully withheld, the court considered the expertise of the plaintiff in managing money and financial assets. To award interest to the plaintiff utilizing standards such as current passbook interest rates or current mortgage interest rates would not compensate this particular plaintiff in a realistic manner for their loss of use of the money. Nor can the defendants properly claim that such an award is an excessive penalty since the defendants did not get to use the money so long as it was sitting in their attorney's trustee account or in escrow, because the purpose of the interest is not to penalize the defendants but to compensate the plaintiff. The plaintiff has not been able to use the money and their inability to use the money resulted in a significant loss given their expertise.
For this reason the court will decline to alter its prior decision with regard to the rate of interest awarded.
IV. The Bill of Costs
On November 14, 2016 the plaintiff filed a Bill of Costs and requested that the court tax as costs the amounts itemized therein. The defendants had objected to several of the itemized amounts. Prior to argument the parties came to an agreement on all components of the plaintiff's Bill of Costs with the exception of paragraph 7 of the Bill of Costs in which the plaintiff seeks the cost of transcripts of court proceedings in the amount of $14, 091.16 and the cost of trial exhibit books for use of the court in the amount of $182.20. The defendants assert that C.G.S. § 52-257 which spells out in detail items for which the parties may receive costs does not allow for the costs of transcripts of court proceedings.
The court has reviewed C.G.S. § 52-257 and specifically § 52-257(b)(6) upon which the plaintiff relies in submitting the cost of transcripts in its Bill of Costs. In this regard the court agrees with the defendants. Section 52-257 sets forth in significant detail the costs to which a prevailing party is entitled. Nowhere is the cost of transcripts specifically mentioned. Given the fact that transcripts of court proceedings are such a commonly incurred cost, the absence of it as a specifically addressed item is notable.
The plaintiff argues that in this case, because the parties agreed that the evidence originally taken during the eight days of the prejudgment remedy proceeding would become evidence in the case in chief, its request for reimbursement for the cost of the transcripts is justified. However, it is common in extended courtside trials for the parties to provide the court with copies of transcripts either as a part of their arguments or a part of their briefs and yet there is no specification for the cost of transcripts to be charged as cost in C.G.S. § 52-257. Accordingly, the court will not allow the cost of transcripts to be included in the costs awarded. Nor will the court award a copy of the trial exhibit books for the court's use to be taxed as there is no provision in the statute for such cost.
The plaintiff is ordered to submit a revised Bill of Costs consistent with the agreements that it placed on the record but without the paragraph concerning court proceeding transcripts and trial exhibit books (paragraph 7 on the original bill of cost).
V. Conclusion
The court having considered the defendants motion to open the judgment and reduce or eliminate interest denies the same. The court having reviewed the Bill of Cost denies the plaintiff's request for costs for transcripts or trial exhibit books and orders the plaintiff to submit a revised Bill of Costs consistent with the agreement of the parties which it and the defendants placed on the record during this proceeding.