Cataphora, Inc. v. Parker et al

Filing 315

ORDER by Magistrate Judge Bernard Zimmerman granting in part and deferring motion for costs 267 Motion for Attorney Fees; granting 268 Motion (bzsec, COURT STAFF) (Filed on 1/4/2012)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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CATAPHORA INC.,

)
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Plaintiff(s),
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v.
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JERROLD SETH PARKER, et al.,)
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Defendant(s).
)
)

No. C09-5749 BZ
ORDER AWARDING ATTORNEY’S
FEES AND INTEREST

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Plaintiff has moved for attorney’s fees and costs, as the

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“prevailing party” under California Civil Code section 1717,

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and for prejudgment and postjudgment interest.1
ATTORNEY’S FEES

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“In an action involving state law claims, [federal

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courts] apply the law of the forum state to determine whether

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a party is entitled to attorneys’ fees, unless it conflicts

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with a valid federal statute or procedural rule.”

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Commc’ns v. Am. Tel. & Tel. Co., 197 F.3d 1276, 1282 (9th Cir.

MRO

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A ruling on Plaintiff’s motion for costs is deferred
until after the Clerk has taxed costs and objections, if any,
are filed.
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1999).

Here, the parties signed a contract which provides, in

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relevant part, that the “prevailing party ... shall be

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entitled ... to reimbursement for its costs and expense [sic]

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(including court costs and reasonable fees for attorneys and

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expert witnesses) incurred with respect to the bringing and

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maintaining” of any legal action brought by one party against

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the other and arising out of the contract.

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of William W. Farrer at ¶ 7.)

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the parties have contractually obligated themselves to pay

(See Declaration

Under California law, “where

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attorneys’ fees,” California Civil Code section 1717 governs.

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Farmers Ins. Exchange v. Law Offices of Conrado Joe Sayas,

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Jr., 250 F.3d 1234, 1237 (9th Cir. 2001).

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provides in relevant part:

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Section 1717

(a) In any action on a contract, where the contract
specifically provides that attorney’s fees and costs,
which are incurred to enforce that contract ... then the
party who is determined to be the party prevailing on the
contract, whether he or she is the party specified in the
contract or not, shall be entitled to reasonable
attorney’s fees in addition to other costs ...

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(b)(1) The court, upon notice and motion by a party,
shall determine who is the party prevailing on the
contract for purposes of this section, whether or not the
suit proceeds to final judgment. Except as provided in
paragraph (2), the party prevailing on the contract shall
be the party who recovered a greater relief in the action
on the contract.

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The California Supreme Court has explained that in

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deciding whether there is a “party prevailing on the

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contract,” the trial court is “to compare the relief awarded

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on the contract claim or claims with the parties’ demands on

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those same claims and their litigation objectives as disclosed

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by the pleadings, trial briefs, opening statements, and

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similar sources.”

Hsu v. Abbara, 9 Cal. 4th 863, 876 (1995).
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“The prevailing party determination is to be made only upon

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final resolution of the contract claims and only by a

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‘comparison of the extent to which each party has succeeded

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and failed to succeed in its contentions.’” Id.

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omitted).

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(citation

Here, Defendants argue that Plaintiff is not the

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“prevailing party” because Plaintiff did not recover the full

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amount it sought under the contract.

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unpersuasive.

Defendants’ argument is

Unlike other cases where courts have refused to

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award attorney’s fees under section 1717, this case was

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decided on the merits of Plaintiff’s contract claims, and

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produced a “final resolution” of these claims in Plaintiff’s

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favor.

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v. Global Payments Direct, Inc., Case No. 06-1332, 2007 U.S.

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Dist. LEXIS 95238, at *10 (N.D. Cal. Dec. 14, 2007) (no fees

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awarded where case dismissed for improper venue because

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“[d]efendants do not constitute a ‘prevailing party’ entitled

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to fees because no decision has been reached on the merits of

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Plaintiff's contract claims.”);

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Unified Sch. Dist., Case No. 05-0441, 2006 U.S. Dist. LEXIS

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47287, 2006 WL 1867682, at *7 (N.D. Cal. Jul. 6, 2006)

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(concluding that defendant was not a prevailing party because

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the court “dismissed plaintiffs’ breach of contract claim for

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lack of jurisdiction, and made no determination whatsoever as

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to the merits of that claim”);

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F. Supp. 2d 903 (N.D. Cal. 2005) (no award of attorneys’ fees

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where court dismissed breach of contract action for lack of

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subject matter jurisdiction); Advance Fin. Res., Inc. v.

Hsu, 9 Cal. 4th at 876; Cf. Laurel Village Bakery, LLC

N.R. v. San Ramon Valley

Idea Place Corp. v. Fried, 390

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Cottage Health Sys., Inc., Case No. 08-1084, 2009 U.S. Dist.

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LEXIS 79647, 2009 WL 2871139, at *2 (D. Or. Sep. 1, 2009)

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(holding that defendant was not a prevailing party under

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section 1717 because the “contract claim was dismissed on

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jurisdictional grounds and there [had] been no final

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resolution of the underlying contract claim”); Estate of

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Drummond, 149 Cal. App. 4th 46, 51 (2007) (denying attorney’s

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fees because “appellants obtained only an interim victory,

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based on [the attorney] having attempted to pursue his claims

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in the wrong forum”); Garzon v. Varese, Case No. 09-9010, 2011

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U.S. Dist. LEXIS 4250, 2011 WL 103948, at *3 (C.D. Cal. Jan.

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11, 2011) (stating that because “Defendant secured a dismissal

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on technical grounds, rather than a judgment on the merits of

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the contract claim, he is not the prevailing party withing the

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meaning of section 1717 and is, therefore, not entitled to

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attorney’s fees”).2

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Defendants also assert that Plaintiff is not the

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“prevailing party” because Plaintiff had advanced several of

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damages theories, including a “lost business opportunity”

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theory, under which Plaintiff sought nearly two million

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dollars in damages, which it never collected.

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is also unpersuasive.

This argument

Plaintiff’s sued to recover $366,000 on

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Defendants’ reliance on Horning v. Shilberg, 130 Cal.
App. 4th 197 (2005), is misplaced. In Horning, the trial court
found that while defendant had breached the contract, plaintiff
had suffered no legally recoverable damages. The trial court
then found that defendant was the prevailing party and awarded
him attorney fees. After affirming the trial court’s rulings
on the merits, the Court of Appeal simply held the trial court
had not abused its discretion in awarding fees. Here, the jury
not only found Defendants liable for breaching the contract,
but also awarded Plaintiff damages according to proof.
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the grounds that Defendants had breached the contract.

While

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Plaintiff only recovered $317,000, the fact that Plaintiff

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recovered less than the total it sued for does not

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automatically make it a nonprevailing party.

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Sparkman, 703 F.2d 1097, 1100 (9th Cir. Cal. 1983) (rejecting

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the position that a party who recovers less than the total

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relief requested is not a “prevailing party”); see also

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Sukut-Coulson, Inc. v. Allied Canon Co., 85 Cal. App. 3d 648,

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656 (1978).

See, e.g., In re

While Plaintiff may have asserted alternative

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damage theories in discovery, Plaintiff nevertheless obtained

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its primary litigation objective.

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Had Plaintiff had been awarded only a small percentage of

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the relief it requested, Defendants might have a stronger

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argument.

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(9th Cir. 2002) (concluding that district court did not abuse

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its discretion in denying attorneys’ fees to plaintiff as

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plaintiff “recovered only $23,502 in compensatory damages for

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breach of the NDA, although he sought more than $ 1.2 million”

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-- i.e., only 2% of amount originally sought; emphasizing

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that, “[i]n this case, [the plaintiff’s] demands and

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objectives clearly involved a substantial financial payoff”

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but the jury “completely rejected [his] contractual damages

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theory, instead awarding damages consistent with the estimates

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offered by [defendant’s] expert”).

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hardly awarded a minute percentage of the relief sought; the

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jury gave Plaintiff all the relief it sought on one of its

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damage theories which amounted to about 90% of what it

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originally sought.

See, e.g., Berkla v. Corel Corp., 302 F.3d 909, 920

But here, Plaintiff was

While it is true that I rejected
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Plaintiff’s initial damages theory on summary judgment, and

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that Plaintiff altered its damages theory during discovery,

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the bottom line is that Plaintiff won.

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litigation were not “so equivocal” that the court should

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conclude that there was no prevailing party,

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at 874.

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party recovered the amount it sought at trial, despite having

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articulated alternative damages theories during discovery, and

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yet was not deemed the prevailing party for purposes of a fee

The results of the

Hsu, 9 Cal. 4th

Tellingly, Defendants did not cite any case where a

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award.

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contract claims in its favor, I find that Plaintiff is the

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“prevailing party” within the meaning of section 1717 and is

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therefore entitled to attorney’s fees.

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Given the final resolution of Plaintiff’s breach of

In computing attorney’s fees pursuant to contract under

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California or federal law, courts follow the “lodestar”

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approach.

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(N.D. Cal. 2005); PLCM Group v. Drexler, 22 Cal. 4th 1084,

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1095 (2000).

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time spent by a reasonable hourly rate.

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majority of the time Plaintiff claims was spent by William W.

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Farrer.

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rate of $500, for a total of $790,545.00.3

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challenge Mr. Farrer’s hourly rate or the hourly rate of his

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legal assistant, but instead claim that the hours spent by Mr.

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Farrer are unreasonable and should be reduced because (1) the

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request for fees, in proportion to the amount of the judgment

Signature Networks, Inc. v. Estefan, 2005 WL 151928

The loadstar is calculated by multiplying
Here, the vast

Plaintiff claims a total of 1,569 hours at an hourly
Defendants do not

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This fee award also includes $7,095 in legal
assistant fees at an hourly rate of $50.00.
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rendered, is unreasonable and disproportionate on its face;

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(2) the fee request includes hours for common claims that were

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ultimately dismissed; (3) the fee request includes hours for

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time spent litigating tort claims against Lenny Davis, who was

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ultimately dismissed from the lawsuit; and (4) the fee request

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includes time spent on a motion for summary judgment wherein

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the court determined that the amount sought by Plaintiff was

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an unenforceable penalty.
As for the hours claimed, while the time is substantial,

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it was Defendants who pursued an aggressive litigation

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strategy.4

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forced to incur the fees for which it seeks reimbursement.5

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Moreover, absent a challenge to specific hours, I cannot fault

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Plaintiff for incurring fees related to the prosecution of its

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lawsuit given Defendants’ litigation strategy.

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International Longshoremen’s & Warehousemen’s Union v. Los

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Angeles Export Terminal, Inc., 69 Cal. App. 4th 287, 304

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(1999) (a defendant “cannot litigate tenaciously and then be

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heard to complain about the time necessarily spent by the

It is therefore not surprising that Plaintiff was

See, e.g.,

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While Defendants successfully defeated Plaintiff’s
motion for summary judgment by arguing, inter alia, that the
$366,000 was an illegal penalty and Plaintiff was only entitled
to any lost profits it could prove, the practical effect of
this victory was to convert a fairly simple case involving a
fixed fee into a more laborious one in which Plaintiff had to
prove lost profits.
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For example, very early in the litigation Defendants
filed a motion to stay pending transfer of the case as a tagalong action in the Chinese Drywall MDL. (Docket No. 4.)
Plaintiff also asserts that Defendants never engaged in any
meaningful settlement discussions until after a jury verdict
had been rendered. (See, e.g., Supplemental Declaration of
William W. Farrer at ¶¶ 5-10.)
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plaintiff in response.”).

It is also noteworthy that

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Plaintiff has paid the fees that Mr. Farrer claims.

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Farrer Decl. at ¶¶ 42-63.)

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the hours claimed by Plaintiff are warranted.6

(See

Nevertheless, some adjustments to

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I agree with Defendants that a reduction in the hours

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requested by Plaintiff for the work associated with the claims

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against Lenny Davis is justified.

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against Mr. Davis were voluntarily dismissed by Plaintiff

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based on lack of personal jurisdiction.

The tort claims asserted

(Docket No. 37.)

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therefore reduce Plaintiff’s claimed hours by 8.7

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Reynolds Metals Co. v. Alperson, 25 Cal. 3d 124, 129-130

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(1979); see also PLCM Group, Inc. v. Drexler, 22 Cal.4th 1084,

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1095–1096 (2000) (the amount of attorneys’ fees is within the

Cf.

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At the hearing, Defendants argued that Plaintiff
should be awarded no fees for work done prior to March 2011
because Defendants were treated unfairly by the court during
the first pretrial conference at which the court “pushed”
Plaintiff to back off of one damages theory and pursue a lost
profits theory instead. Inasmuch as this argument was raised
for the first time during the hearing and is not mentioned in
Defendants’ opposition, I decline to consider it. White v.
FedEx Corp., Case No. 04-99, 2006 U.S. Dist. LEXIS 9975, 2006
WL 618591, at *2 (N.D. Cal. Mar. 13, 2006) (“The Court will not
consider any arguments or evidence raised for the first time at
the hearing”) (citing Civ. L.R. 7-3(a), (d)); Google Inc. v.
Am. Blind & Wallpaper Factory, Inc., Case No. 03-5340, 2006
U.S. Dist. LEXIS 58970, at *6 n.3 (N.D. Cal. Aug. 10, 2006).
That said, it was Defendants who introduced the lost profits
theory into the case when they opposed Plaintiff’s summary
judgment motion in November 2010 by arguing successfully that
the $366,000 fee was an illegal penalty and that all Plaintiff
was entitled to was lost profits. See Freedman v. The Rector,
37 Cal. 2d 16 (1951).
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In its reply brief, Plaintiff agreed to reduce its
hours for fees associated with the Lenny Davis claims by 8
hours. At the hearing, I asked whether Defendants had any
reason to increase the number of hours that should be reduced
for work pertaining to Lenny Davis and was given no suggestion
from Defendants’ counsel regarding what deduction beyond 8
hours would be appropriate.
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sound discretion of the trial court).

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I also agree with Defendants that a minor adjustment in

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Plaintiff’s requested fee award should be made to omit hours

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billed for the common counts asserted by Plaintiff, which were

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ultimately summarily dismissed.8

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this case and the course of the litigation, I do not believe

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that prosecution of these common counts added materially to

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Mr. Farrer’s work, and neither party addressed this issue

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during oral argument.

Based on my recollection of

Moreover, neither common count was ever

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the focus of the litigation and both were factually inter-

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related with the main claim for breach of contract.

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Reynolds, 25 Cal. 3d at 129-130.

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given the outcome of these claims, a reduction of 15 hours for

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time spent researching the common claims and defending them

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against summary adjudication is warranted.

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Cf.

Nevertheless, I find that

I agree with Defendants that a reduction in hours is

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warranted with respect to Plaintiff’s unsuccessful summary

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judgment motion.

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pursuing Plaintiff’s summary judgment motion.

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Declaration of William W. Farrer ¶¶ 51-54.)

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did not summarily prevail on its damages theory, Plaintiff did

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obtain a number of favorable rulings by way of its motion,

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such as a finding that there was a valid and enforceable

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contract between the parties.

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Plaintiff, and helped streamline the trial.

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these factors, I find that a reduction of 92 hours is

Mr. Farrer billed approximately 184 hours
(See

While Plaintiff

These rulings were helpful to
Considering all

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These common counts included Plaintiff’s fourth and
fifth claims for relief for accounting.
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warranted.

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1050, 1052 (9th Cir. 1991) (“If a plaintiff ultimately wins on

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a particular claim, she is entitled to all attorney’s fees

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reasonably expended in pursuing that claim - even though she

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may have suffered some adverse rulings.”)

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See Cabrales v. County of Los Angeles, 935 F.2d

Finally, Defendants argue that Mr. Farrer’s hours should

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be reduced because Mr. Farrer engaged in block billing.

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“Block billing” refers to “the time-keeping method by which

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each lawyer and legal assistant enters the total daily time

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spent working on a case, rather than itemizing the time

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expended on specific tasks.”

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Bernardino, 540 F.3d 1109, 1129 n.2 (9th Cir. 2008) (quoting

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Welch v. Met. Life Ins. Co., 480 F.3d 942, 948 (9th Cir.

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2007)).

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billed hours because the nature of these time entries renders

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it difficult to determine whether fees are unnecessarily

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duplicative or unreasonable.

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This is so because it is “more difficult to determine how much

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time was spent on particular activities.”

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reviewed the time records, I do not find any entries that

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appear excessive or objectionable.

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occasionally engage in block billing, his time entries are

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both specific and itemized in a fashion that permit a

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meaningful review of the entries for purposes of determining

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their reasonableness.

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duplication of effort or administrative overlap are mitigated

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in this case by virtue of the fact that Mr. Farrer completed

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nearly all of the legal work performed in this case on his

Mendez v. County of San

Generally, courts have discretion to reduce block-

See Welch, 480 F.3d at 948.

Id.

Having

Although Mr. Farrer does

Moreover, any concerns regarding

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own, without the assistance of other attorneys.10

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find that no additional reductions in Mr. Farrer’s time are

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necessary.

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I therefore

INTEREST
Under California law, prejudgment interest is governed by

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Civil Code section 3287 and is recoverable in any action in

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which damages are certain or “capable of being made certain by

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calculation” and the right to recover such damages is vested

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in the plaintiff on a particular day.

Cal. Civ. Code §

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3287(a); see also, Cortez v. Purolator Air Filtration Products

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Co., 23 Cal. 4th 163, 174-75 (2000).

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“certainty” under section 3287(a) is whether the defendant

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actually knows the amount owed or could have computed the

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amount from reasonably available information.11

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Hosp. & Med. Ctr. v. Bonta, 97 Cal. 4th 740, 774 (2002).

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Under this section, prejudgment interest cannot be awarded

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when the amount of damages cannot be ascertained except on

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conflicting evidence.

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(1948); Coughlin v. Blair, 41 Cal.2d 587, 604 (1953). The

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rationale behind the rule is that where a defendant does not

The test for determining

Children’s

Lineman v. Schmid, 32 Cal.2d 204, 212

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Mr. Farrer has also provided a very detailed monthly
analysis of the work he performed in this case in his
declaration, thereby further mitigating any concerns regarding
his billing practices in this litigation. Notably, under
certain circumstances the Local Rules permit an attorney to
submit a “summary” of the time spent in this litigation (see
L.R. 54-5(b)(2)), and Mr. Farrer has provided significantly
more detailed records to support Plaintiff’s fee request.
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“[The] certainty requirement of section 3287,
subdivision (a) has been reduced to two tests: (1) whether the
debtor knows the amount owed or (2) whether the debtor would be
able to compute the damages.” Chesapeake Industries, Inc. v.
Togova Enterprises, Inc., 149 Cal. App.3d 901, 911 (1983).
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know what amount he owes and cannot ascertain it except by

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accord or judicial process, he cannot be in default for not

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paying it.

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App. 2d 664, 689-690 (1966) (citing Cox v. McLaughlin, 76 Cal.

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60, 70 (1888)).

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resolved except by verdict or judgment, section 3287(a)

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prejudgment interest is not appropriate.

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Corp. v. California Commerce Bank, 49 Cal. App. 4th 948, 960-

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61 (1996) (prejudgment interest not awardable on bank’s

Conderback, Inc. v. Standard Oil Co., 239 Cal.

Thus, where the amount of damages cannot be

See, e.g., Wisper

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liability for customer damages because portion of damages

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attributable to bank’s negligence not subject to calculation

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until after trial and determination of relative fault).

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A defendant’s denial of liability does not make damages

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uncertain for purposes of Civil Code section 3287.

See, e.g.,

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Stein v. Southern Cal. Edison Co., 7 Cal. App. 4th 565, 572

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(1992); Marine Terminals Corp. v. Paceco, Inc., 145 Cal. App.

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3d at p. 995.

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made certain within the provisions of subdivision (a) of

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[Civil Code] section 3287 where there is essentially no

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dispute between the parties concerning the basis of

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computation of damages if any are recoverable but where their

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dispute centers on the issue of liability giving rise to

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damage.”

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App. 3d 1054, 1060 (1971); see also Fireman’s Fund Ins. Co. v.

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Allstate Ins. Co., 234 Cal. App. 3d 1154, 1172-1173 (1991).

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Thus, it is clear that Civil Code section 3287 looks to the

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certainty of the damages suffered by the plaintiff, rather

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than to a defendant’s ultimate liability, in determining

“Damages are deemed certain or capable of being

Esgro Central, Inc. v. General Ins. Co., 20 Cal.

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whether prejudgment interest is mandated.

If the defendant

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does not know or cannot readily compute the damages, the

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plaintiff must supply him with a statement and supporting data

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so that defendant can ascertain the damages.

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v. Southern Pac. Transportation Co., 74 Cal. App. 3d 762, 798

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(1977).12

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calculated and determined from statements rendered by the

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plaintiff to the defendant and those statements are found to

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be true and correct, it is a matter of mere calculation and

Levy-Zentner Co.

In other words, “If the amount owing can be

Conderback, 239 Cal.

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prejudgment interest can be awarded.”

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App. 2d at 689 (citing Anselmo v. Sebastiani, 219 Cal. 292,

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301 (1933)).

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Here, Plaintiff asserts that it is entitled to

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prejudgment interest in the amount of 18% pursuant to the

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contract.13 In support of its argument, Plaintiff relies

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principally on Roodenburg v. Pavestone Co., L.P., 171 Cal.

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App. 4th 185, 191 (2008), for the proposition that where

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prejudgment interest is part of an amount owed under the terms

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of a contract, section 3287(a) and the “certainty” of damages

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requirement do not apply.

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an award of interest on the value of plaintiff’s capital

In Roodenburg, the court affirmed

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In Levy-Zentner Co., the court found that estimates
of expert appraisers were required to render certain, damages
for loss of market value of real property. Id. at p. 800. The
court allowed interest from the date on which plaintiff
supplied defendants with these estimates. Id. at p. 801.
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Section 3.5 of the contract states as follows: “Late
Fees. Any payments that are late shall carry a late fee of
eighteen percent (18%) per annum simple interest (1.5% per
month), which shall become due and payable with such late
payment.”
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account, as found by the jury, where the parties contract

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expressly obligated the defendant to pay interest on any part

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of the value of the capital account that was not paid within

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30 days.

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of prejudgment interest was owed on the unpaid value of the

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capital account under the express terms of the parties’

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agreement; here, nothing in the contract provided for interest

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in the event plaintiff recovered lost profits.

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of the contract relied upon by Plaintiff is in the

In Roodenburg, there was no dispute that some amount

The provision

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“Consequences of Non-Payment” and “Late Fees” section.

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Plaintiff drafted the contract.

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prejudgment interest in the event of any dispute arising out

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of the contract, it could have easily drafted one.

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the contract provides for interest only in the event of a late

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payment, and the dispute here was not over a late payment.

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therefore find Roodenburg inapplicable to the facts of this

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case, and apply the test articulated by California courts

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under 3287(a).

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Had it wanted a provision for

Instead,

I

Under that test, the amount Plaintiff claimed under

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Plaintiff’s theory of the case which the jury accepted, was

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not identified in any contractual document and could not be

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calculated until late in the litigation.

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because Plaintiff changed its damages theory as the litigation

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progressed.

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different damages calculations – one for $324,000 and one for

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$317,000.

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circumstances of this case, the applicable test (i.e., whether

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the sum found to be due to plaintiff was known to defendant in

In part, this is

In fact, Plaintiff presented the jury with two

Thus, I do not believe that under all the

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that it was certain or readily ascertainable) has been met.

2

Howard v. American National Fire Ins. Co., 187 Cal. App. 4th

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498, 535 (2010).

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entitled to prejudgment interest under section 3287(a).

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Esgro Central, Inc. v. General Ins. Co., 20 Cal. App. 3d 1054,

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1062 (1971) (“Subdivision (a) of section 3287 does not

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authorize prejudgment interest as a matter of law where the

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amount of damage, as opposed to only the determination of

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liability, depends upon a judicial determination based upon

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conflicting evidence and is not ascertainable from truthful

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data supplied by the claimant to his debtor.”)

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I therefore find that Plaintiff is not
See

Plaintiff also contends that it should be awarded

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prejudgment interest pursuant to 3287(b).

Section 3287(b)

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provides that “Every person who is entitled under any judgment

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to receive damages based upon a cause of action in contract

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where the claim was unliquidated, may also recover interest

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thereon from a date prior to the entry of judgment as the

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court may, in its discretion, fix, but in no event earlier

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than the date the action was filed.”

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3287(b).

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limited by the purposes underlying interest awards ... .”

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Gourley v. State Farm Mut. Auto. Ins. Co., 53 Cal. 3d 121, 133

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(1991).14

Cal. Code Civ. Proc. §

“The discretion conferred [under section 3287(b)] is

Here, Plaintiff argues that the court should award

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14

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Prejudgment interest is awarded to compensate a party
for the loss of the use of his or her property. Nordahl v.
Department of Real Estate, 48 Cal. App.3d at p. 665; Cassinos
v. Union Oil Co., 14 Cal. App. 4th 1770, 1790 (1993) (“The
policy underlying authorization of an award of prejudgment
interest is to compensate the injured party—to make that party
whole for the accrual of wealth which could have been produced
during the period of loss.”). “It has long been settled that
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the 18% interest rate from the date that the complaint was

2

filed because Defendants agreed to pay interest at that rate

3

on any amounts owed under the contract.

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Defendants agreed to pay interest on late payments – not for

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any dispute arising out of the contract.

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$366,000 originally sought in this case by Plaintiff was ruled

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to be an illegal penalty, and therefore unenforceable.

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the circumstances of this case, I decline to award Plaintiff

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prejudgment interest under subsection (b) of 3287.

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I disagree.

Moreover, the

Given

Finally, Plaintiff seeks postjudgment interest at the 18%

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contract rate.

While state law governs prejudgment interest

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on state-law claims in diversity cases, federal law governs

13

postjudgment interest.

14

Computer Sys., Inc., 98 F.3d 1206, 1209 (9th Cir. 1996)

15

(citing

16

F.2d 1154, 1155 (9th Cir. 1988)).

17

mandatory.

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any money judgment in a civil case recovered in a district

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court.”); see also Air Separation v. Underwriters at Lloyd’s

20

of London, 45 F.3d 288, 290 (9th Cir. 1995).

21

recognizes that federal law governs postjudgment interest, but

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argues that parties can contractually agree to a different

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rate of interest.

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parties can “contract around [section] 1961” and that the

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parties did so in this case.

American Tel. & Tel. Co. v. United

Northrop Corp. v Triad Int’l Marketing, S.A., 842
Postjudgment interest is

28 U.S.C. § 1961(a) (“Interest shall be allowed on

Plaintiff

In other words, Plaintiff contends that

(Pl.’s Reply at p.4.)

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[Civil Code] section 3287 should be broadly interpreted to
provide just compensation to the injured party for loss of use
of money during the prejudgment period.” Gourley v. State Farm
Mut. Auto. Ins. Co., 53 Cal.3d 121, 132 (1991).
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Plaintiff is correct that an exception to section 1961

2

exists when the parties contractually agree to waive section

3

1961’s application.

4

387 F.3d 1021, 1023 (9th Cir. 2004) (citing Citicorp Real

5

Estate, Inc. v. Smith, 155 F.3d 1097, 1107-08 (9th Cir. 1998)

6

(promissory notes at issue included an express,

7

mutually-agreed upon interest rate in the case of default)).15

8

Here, however, as stated above, the contractual provision upon

9

which Plaintiff relies is a provision for interest in the

10

event of a late payment – not a provision that expressly

11

states that the parties agreed to a specified prejudgment or

12

postjudgment interest rate in the event of a dispute arising

13

out of the contract, nor is it one that clearly expresses the

14

parties’ intent to “contract around” section 1961.

15

Advisors, Inc. v. Fair Fin. Co., 605 F.3d 144 (2d Cir. 2010).

16

I therefore find that postjudgment interest shall be governed

17

as per section 1961(a), calculated “from the date of the entry

18

of the judgment, at a rate equal to the weekly average 1-year

19

constant maturity Treasury yield, as published by the Board of

20

Governors of the Federal Reserve System, for the calendar week

21

preceding the date of the judgment.”

22

Fid. Fed. Bank, FSB v. Durga Ma Corp.,

Cf. FCS

28 U.S.C. § 1961(a).

For the reasons stated above, IT IS ORDERED that

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15

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“[M]ost courts that have addressed the question have
held that parties may contract around § 1961 and agree to a
different postjudgment interest rate.” Jack Henry &
Associates, Inc. v. BSC, Inc., 753 F.Supp.2d 665, 667-68
(E.D.Ky. 2010) (citing FCS Advisors, Inc. v. Fair Finance Co.,
605 F.3d 144, 147-48 (2d Cir. 2010); In re Riebesell, 586 F.3d
782, 794 (10th Cir. 2009); Cent. States, SE & SW Areas Pension
Fund v. Bomar Nat’l, Inc., 253 F.3d 1011, 1020 (7th Cir. 2001);
In re Lift & Equip. Serv., Inc., 816 F.2d 1013, 1018 (5th Cir.
1987)).
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Plaintiff is awarded $734,095 in fees as follows:

2

ATTORNEY/

3

LEGAL ASSISTANT

HOURLY RATE

HOURS

FEE AWARD

4

William Farrer

$500

1,454

$727,000.00

5

Julie Lundgren

$50

141.9

$7,095.00

6

Total Fees

$734,095.00

7

It is further ORDERED that Plaintiff is entitled to

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postjudgment interest at the rate permitted by § 1961(a).

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Dated: January 4, 2012

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Bernard Zimmerman
United States Magistrate Judge

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