Academic journal article The Review of Litigation

Interest Accrual on Attorney's Fee Awards

Academic journal article The Review of Litigation

Interest Accrual on Attorney's Fee Awards

Article excerpt

I. INTRODUCTION

In 1984, MidAmerica Federal Savings & Loan Association sued Shearson/American Express, Inc. for violations of the Oklahoma Securities Act and breach of fiduciary duty in connection with MidAmerica's purchase of fifty million dollars in investment trusts from Shearson.1 MidAmerica prevailed, and on July 23, 1986, the district court entered judgment for MidAmerica and granted it the right to recover attorney's fees. On April 22, 1991, the court set MidAmerica's attorney's fee award at $512,197.15.3 Following the April 22, 1991 judgment, MidAmerica and Shearson disputed the proper date to begin interest accrual on the attorney's fee award4 under 28 U.S.C. § 1961(a),5 the federal interest statute: the July 23, 1986 merits judgment or the April 22, 1991 attorney's fee judgment.6

Attorney's fee disputes, such as MidAmerica's and Shearson's, usually include two judgments.7 The first judgment, i.e., July 23, 1986, is the "merits judgment."8 At the merits judgment (also known as the judgment on the jury verdict),9 the court enters judgment for the prevailing party and grants the prevailing party the right to recover attorney's fees.10 The second judgment, i.e., April 22, 1991, follows a separate hearing by the court to determine the specific amount or quantum of attorney's fees to award.11 It is called the "exact quantum judgment," because this judgment determines the amount of attorney's fees to be awarded.12

The United States Courts of Appeals are split on whether interest accrual under § 1961(a) begins on the date of the merits judgment or the exact quantum judgment.13 The split of authority results from the fact that § 1961(a) does not distinguish between the two judgments in attorney's fee cases.14 The interest statute, § 1961(a), provides that interest accrual begins on "the date of . . . judgment."15 The Fifth, Sixth, Eighth, Ninth, Eleventh, and Federal Circuit Courts of Appeals have held that interest accrual under § 1961(a) begins on the date of the merits judgment.16 The merits judgment circuits have reasoned that § 1961(a) compensates prevailing parties for delays in payment of damage awards from the date the prevailing party becomes fully entitled to its damage award.17 Furthermore, because the prevailing party becomes entitled to its attorney's fee award on the date of the merits judgment, the prevailing party is entitled to interest under § 1961(a) from the date of the merits judgment.18 Under the merits judgment approach, MidAmerica would be entitled to approximately $200,000 in interest-at the then-prevailing rate of approximately 7%-for the delay in payment between the merits judgment and the exact quantum judgment.19

The Third, Seventh, and Tenth Circuit Courts of Appeals, conversely, have held that interest accrual under § 1961(a) begins on the date of the exact quantum judgment.20 The exact quantum judgment circuits have reasoned that the term "judgment" in § 1961(a) is short for "money judgment."21 Furthermore, because the exact quantum judgment is the judgment for a specific amount of money (in attorney's fee cases), interest accrual under § 1961(a) begins on the date of the exact quantum judgment.22 Under the exact quantum judgment approach, MidAmerica would not have been entitled to collect the $200,000 in interest that accrued between the merits and exact quantum judgments.23

This Article argues that the date of the merits judgment is the correct date to begin interest accrual on attorney's fee awards under § 1961(a). Part II introduces § 1961(a), provides the statutory language relevant to the interest accrual dispute, and discusses the United States Supreme Court's interpretation of § 1961(a). Part III defines the merits judgment and exact quantum judgment approaches to the interest accrual dispute.

Part IV argues that the merits judgment approach provides the correct solution to the interest accrual dispute, because the merits judgment approach remains consistent with the statutory language of § 1961(a), advances the legislative intent behind § 1961(a), and is supported by public policy. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.