Doran Law Office v. Stonehouse Rentals, Inc.
Filing
125
MEMORANDUM AND ORDER granting 116 Motion to Correct Post Judgment Interest. Signed by Chief District Judge Julie A. Robinson on 2/11/2020. (hw)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
DORAN LAW OFFICE,
Plaintiff,
Case No. 2:14-2046-JAR-KGG
v.
STONEHOUSE RENTALS, INC.,
Defendant.
MEMORANDUM AND ORDER
The Court now considers Defendant Stonehouse Rental, Inc.’s Motion to Correct PostJudgment Interest (Doc. 116) pursuant to Fed. R. Civ. P. 60(a). The motion is fully briefed and
the Court is prepared to rule. For the reasons explained more fully below, Defendant’s motion is
granted.
I.
Background
The Court assumes the reader is familiar with the myriad proceedings before and orders entered
by this Court that precipitate the matter before it, which are incorporated by reference herein. The Court
will not restate the underlying facts in detail, but will provide excerpts from the record as needed to
frame its discussion of the matter presently before it.
For well over five years, Patrick Doran, d/b/a Doran Law Office (“Doran”), has been
pursuing his former client, Stonehouse Rentals, Inc. (“Stonehouse”) for unpaid legal fees.
Default judgment was entered against Stonehouse in the amount of $133,024.30, which included
pre-judgment interest at the rate of 10% per annum through the date of judgment, June 10, 2014,
1
the legal interest rate in Kansas under K.S.A. § 60-210.1 In connection with that filing, Doran
sent an email to the Court enclosing a proposed judgment in Word format, based on the Civil
Judgment Form AO 450, leaving the post-judgment rate blank.2 Chambers staff copied the same
10% interest rate in the post-judgment interest space of the proposed judgment.
Defendant moved to set aside the entry of default judgment pursuant to Fed. R. Civ. P.
60(b) and after an evidentiary hearing, this Court denied Defendant’s motion.3 Specifically, the
Court rejected Stonehouse’s argument that it was entitled to relief because the judgment was
void for lack of proper service or due to excusable neglect under Rule 60(b)(1), (4), and (6).4
The Tenth Circuit Court of Appeals affirmed this Court’s findings.5
Doran registered the judgment in various state courts and proceeded to execute on the
judgment via Marshal’s sales in Douglas County, Kansas. When Doran sought confirmation of
the sale of property in Baldwin City, Kansas, where it made a credit bid on four properties
owned by Stonehouse, this Court found that Doran’s judgment had been partially satisfied when
Doran received payments from third parties totalling $133,000.6
Doran subsequently renewed its motion to confirm Marshal’s sale of the property and
contends that it is entitled to 10% per annum in post-judgment interest, which totals nearly
$60,000.7 In response, Stonehouse seeks correction of the judgment to reflect that the proper
1
Doc. 8.
2
https://www.uscourts.gov/sites/default/files/ao450.pdf
3
Doc. 19.
4
Id. at 15–25.
5
Doran Law Office v. Stonehouse Rentals, Inc., 678 F. App’x 733 (10th Cir. 2017).
6
Doc. 109.
7
Doc. 119.
2
post-judgment rate of interest is that which is set forth in 28 U.S.C. § 1961, or 0.106%.8 The
Court now considers Stonehouse’s motion.
II.
Legal Standard
28 U.S.C. § 1961(a) provides:
Interest shall be allowed on any money judgment in a civil case
recovered in a district court. . . . Such interest shall be calculated
from the date of the entry of judgment, at a rate equal to the
weekly average 1-year constant maturity Treasury yield, as
published by the Board of Governors of the Federal Reserve
System, for the calendar week preceding the date of the judgment.
The Director of the Administrative Office of the United States
Courts shall distribute notice of that rate and any changes in it to
all Federal judges.
Section 1961 applies only to post-judgment interest, and not to pre-judgment interest.9
Awarding post-judgment interest is mandatory.10 In cases founded on diversity jurisdiction, the
post-judgment interest rate on a federal judgment is established by federal law, not state law.11
Fed. R. Civ. P. 60(a) addresses certain types of clerical error and provides as follows:
Corrections Based on Clerical Mistakes; Oversights and
Omissions. The court may correct a clerical mistake or a mistake
arising from oversight or omission whenever one is found in a
judgment, order, or other part of the record. The court may do so
on motion or on its own, with or without notice. But after an
appeal has been docketed in the appellate court and while it is
pending, such a mistake may be corrected only with the appellate
court’s leave.
8
The historical 1-Year treasury Constant Maturity Rates from the Board of Governors of the Federal
Reserve are available on the Federal Reserve’s website for download at the following location:
https://www.federalreserve.gov/datadownload/Download.aspx?rel=H15&series=bf17364827e38702b42a58cf8eaa3
f78&lastObs=&from=&to=&filetype=csv&label=include&layout=seriescolumn&type=package
9
Caldwell v. Life Ins. Co. of N. Am., 287 F.3d 1276, 1287 (10th Cir. 2002).
10
Bancamerica Commercial Corp. v. Mosher Steel of Kan., Inc., 103 F.3d 80, 81 (10th Cir. 1996).
11
See Youngs v. Am. Nutrition, Inc., 537 F.3d 1135, 1146 (10th Cir. 2008).
3
“Rule 60(a) may be relied on to correct what is erroneous because the thing spoken, written, or
recorded is not what the person intended to speak, write, or record.”12 “Rule 60(a) may not be
used to change something that was deliberately done, even though it was later discovered to be
wrong.”13 A correction under Rule 60(a) should require no additional proof.14
Rule 60(a) does not limit the time within which the court may correct a judgment for such
errors, and action in this regard may be taken “at any time.”15 A correction under Rule 60(a) is
appropriate when a “flaw lies in the translation of the original meaning to the judgment.”16 The
rule does not apply, however, to relief from substantive errors in judgment.17 “In other words,
Rule 60(a) does not allow the Court to substantively alter a judgment, but rather to make the
judgment accurately reflect the underlying order(s).”18 Thus, “in order for an error to be clerical,
there must be some inconsistency between what was expressed during the proceedings and what
the judgment reflects.”19
III.
Discussion
In opposing correction of the judgment, Doran first suggests that the parties may have
bargained for the 10% post-judgment rate. “[P]arties may contract to, and agree upon, a post-
12
McNickle v. Bankers Life & Cas. Co., 888 F.2d 678, 682 (10th Cir. 1989) (citing Allied Materials Corp. v.
Superior Prods. Co., 620 F.2d 224, 226 (10th Cir. 1980)).
13
United States ex rel. Belt Con Const., Inc. v. Metric Const., Inc., No. CIV02-1398 JB/LAM, 2010 WL
1405993, at *6 (D.N.M. Mar. 22, 2010) (citing McNickle, 888 F.2d at 682).
14
See, e.g., Trujillo v. Longhorn Mfg. Co., 694 F.2d 221, 226 (10th Cir. 1982).
15
Morrison Knudsen Corp. v. Ground Improvement Techniques, Inc., 532 F.3d 1063, 1085 (10th Cir. 2008).
16
United States v. Griffin, 782 F.2d 1393, 1396 (7th Cir. 1986).
17
Id. at 1397.
18
In re Mascio, No. 03-12994 HRT, 2014 WL 2621201, at *7 (Bankr. D. Colo. June 12, 2014).
19
United States v. Cotton, 235 F. Supp. 2d 989, 990 (E.D. Wisc. 2002) (citing Griffin, 782 F.2d at 1396–
97).
4
judgment interest [rate] other than that specified in § 1961.”20 “But to do so, they must
specifically contract around the general rule that a cause of action reduced to judgment merges
into the judgment and the contractual interest rate therefore disappears for post-judgment
purposes.”21 “If parties want to override the general rule on merger and specify a post-judgment
interest rate, they must express such intent through clear, unambiguous and unequivocal
language.”22 No such agreement appears in the record before the Court. Instead, Doran points to
language in the Complaint that Stonehouse had been advised in writing that “legal interest” was
charged on unpaid bills. This language cuts against Doran’s argument against awarding interest
under § 1961—if the parties had bargained for the contract rate, there was no reason for Doran to
leave a blank on the proposed judgment for the Court to fill in. Because there is no evidence that
the parties contracted for a post-judgment rate percentage, the federal rate applies.
Accordingly, there is no real dispute that the post-judgment rate of 10% is an error. In its
Motion for Clerk’s Entry of Default Judgment, Doran sought pre-judgment interest at the Kansas
statutory rate of 10% per annum, but made no such request for post-judgment interest, leaving
the rate blank for the Court to complete. It is apparent that something went wrong when the
clerk filled in the blank for post-judgment interest. Thus, the dispute before the Court turns on
whether the error is best characterized as a “clerical mistake or a mistake arising from oversight
or omission” that may be corrected under Rule 60(a) at any time or as a “mistake or
inadvertence” that may be corrected under Rule 60(b)(1) on motion filed within one year.
20
Soc’y of Lloyd’s v. Reinhart, 402 F.3d 982, 1004 (10th Cir. 2005).
21
See id.
22
Id. (quotation omitted).
5
Here, there was no discretion in the mandatory award of post-judgment interest and
Doran left a blank for the insertion of the federal rate. This rate is posted weekly on the District
of Kansas website and parties routinely submit judgments with the post-judgment interest rate to
be filled in accordingly, depending on the date the judgment is entered.23 As a result, the entry
of the 10% post-judgment interest rate clearly was not intended by Doran and was an error
caused by clerical mistake and oversight. The federal rate on June 10, 2014, was 0.106% per
annum. This Court intended to award the proper amount, but due to a “blunder in execution,”
staff inserted the pre-judgment rate of 10% per annum—the clerk who filled in 10% in the blank
for post-judgment interest was “sleepwalking.”24 Consistent with Tenth Circuit precedent, such
a clerical error may be corrected under Rule 60(a) to reflect the accurate post-judgment rate.25
Doran further argues that Stonehouse’s previous motion to set aside default judgment did
not raise the issue of post-judgment interest, thus barring his argument at this time. That motion
was brought under Rule 60(b), however, and clerical mistakes in judgments like the one in this
case may be corrected by the Court at any time, “whenever one is found in a judgment, order, or
other part of the record.”26 Moreover, Rule 60(a) permits the district court to correct a clerical
error after the judgment is affirmed on appeal.27
23
See http://ksd.uscourts.gov/
24
United States v. Griffin, 782 F.2d 1393, 1397 (7th Cir. 1986).
25
See Morrison Knudsen Corp. v. Ground Improvement Techniques, Inc., 532 F.3d 1063, 1085 (10th Cir.
2008); United States ex rel. Belt Con Constr., Inc. v. Metric Constr., Inc., No. CIV02-1398 JM/LAM, 2010 WL
1405993, at *8, 11 (D.N.M. Mar. 22, 2010) (applying Morrison Knudsen); see also United States v. Griffin, 782
F.2d 1393, 1396–98 (7th Cir. 1986) (collecting cases).
26
Fed. R. Civ. P. 60(a); Morrison Knudsen, 532 F.3d at 1085 (explaining clerical mistakes in judgments
may be corrected by the court at any time) (citing McNickle v. Bankers Life & Cas. Co., 888 F.2d 678, 681–82 (10th
Cir. 1989)).
27
See Sartin v. McNair Law Firm PA, 756 F.3d 259, 268 (4th Cir. 2014) (“[Rule 60(a)] would lose much of
its vitality if it were not available to correct mistakes in final judgments, and nothing in the language of the Rule
suggests such a limitation.”) (citing United States v. Mansion House Ctr. N. Redev. Co., 855 F.2d 524, 527 (8th Cir.
6
Finally, while the Court’s correction of the post-judgment interest rate has a significant
effect on Doran’s amount of recovery, Rule 60(a) applies to all clerical errors. The Court’s order
will require Doran to calculate a new accounting of the balance remaining in light of the 0.106%
post-judgment rate.28 While this correction will benefit Stonehouse, it bears noting that Doran,
as both Plaintiff and an officer of the Court, has been on notice of the erroneous rate of interest
for over five years, as reflected in his sustained efforts to collect on his fee. Because the
judgment has yet to be fully satisfied, even with the corrected rate of interest, Doran will not
have to return any amount paid in satisfaction of the judgment. Instead, correction of the postjudgment interest rate has the effect of correcting a clerical mistake that would result in a
substantial windfall to Doran.
IT IS THEREFORE ORDERED BY THE COURT that Defendant Stonehouse
Rental, Inc.’s Motion to Correct Post Judgment Interest (Doc. 116) is GRANTED. A corrected
judgment pursuant to Fed. R. Civ. P. 60(a) shall enter in favor of Plaintiff Doran Law Office
awarding Plaintiff post-judgment interest at the rate of 0.106% per annum calculated from June
10, 2014.
IT IS SO ORDERED.
Dated: February 11, 2020
S/ Julie A. Robinson
JULIE A. ROBINSON
CHIEF UNITED STATES DISTRICT JUDGE
1988)). The Court notes that Stonehouse has been represented by at least four lawyers over the course of these
proceedings.
28
See Doc. 119, Exs. 1, 2 (calculating post-judgment interest at $58,421.26).
7
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