Federal Mogul Corporation v. Insurance Company of the State of Pennsylvania
OPINION and ORDER re 139 accepting in part and rejecting in part pltf's proposed form of final judgment. The Court OVERRULES Defendant's first objection and SUSTAINS the second, and it ACCEPTS IN PART and REJECTS IN PART Plaintiff' s proposed judgment. In light of the rulings in this opinion and order, the parties should now be capable of agreeing to a judgment conforming to the Court's rulings. The Court accordingly directs the parties to submit a stipulated proposed judgment within seven days of this opinion and order. Signed by District Judge Nancy G. Edmunds. (CBet)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
Honorable Nancy G. Edmunds
INSURANCE COMPANY OF THE STATE
OPINION AND ORDER ACCEPTING IN PART AND REJECTING IN PART
PLAINTIFF'S PROPOSED FORM OF FINAL JUDGMENT 
This case involves an insurance dispute between Plaintiff Federal-Mogul Corporation
and Defendant Insurance Company of the State of Pennsylvania. The question now before
the Court is whether to accept Plaintiff's proposed form of final judgment, and it arises
under unusual circumstances. On October 8, 2015, this Court issued an opinion and order
granting partial summary judgment in Plaintiff's favor. (Dkt. 102.) Sixteen months later, the
parties determined that they shared an interest in appealing that opinion immediately and
avoiding the expenses of trial. Accordingly, the parties consented on February 16, 2017
to the filing of an Amended Complaint that mooted the only issue remaining in this case.
(See Dkt. 136.) The parties also reported an intent to stipulate to a proposed final
judgment. (Id.) Based on those submissions, the Court permitted the filing of an Amended
Complaint and directed the parties to submit a proposed final judgment. (Dkt. 137.) Since
then, the parties' nascent harmony has dissolved, and no stipulated judgment was ever
Instead, Plaintiff has filed a proposed judgment, and Defendant has objected on two
grounds, both of which relate to Plaintiff's ability to recover prejudgment interest. (Dkt. 139;
Dkt. 140.) Defendant first objects that Plaintiff may not collect prejudgment "penalty"
interest under Michigan Compiled Laws (M.C.L.) § 500.2006(4). Second, Defendant
objects that Plaintiff is not entitled to prejudgment interest of any kind after October 8, 2015,
the date this Court granted partial summary judgment in Plaintiff's favor. For the reasons
that follow, the Court OVERRULES Defendant's first objection and SUSTAINS the second
objection. As a result, the Court ACCEPTS IN PART and REJECTS IN PART Plaintiff's
The facts related to Plaintiff's entitlement to prejudgment interest span a labyrinthine
procedural history. Plaintiff's claims date back to 2011, when a flood caused significant
losses at Plaintiff's Rojana Industrial Park (the Rojana Facility), which Defendant insured.
The alleged losses included both "Property Damage Loss" (damage to tangible property)
and "Time Element Loss" (loss incurred due to a break in operations). According to the
Amended Complaint, Plaintiff submitted an initial claim for partial payment of $25 million,
and Defendant paid that entire claim on February 15, 2012. (Dkt. 138 at ¶ 16.) Then, on
February 23, 2012, Plaintiff requested another payment of $18 million. (Id. at ¶ 17.)
Defendant responded to Plaintiff's second claim in April 2012, refusing to pay more than
$5 million and arguing that a High Hazard Flood Sublimit of $30 million limited the coverage
for both "Property Damage Loss" and "Time Element Loss." (Id. at ¶¶ 18-19.) Plaintiff
disagreed and filed suit, alleging that Defendant was in breach of contract.
Plaintiff filed its initial Complaint on May 5, 2012. The Complaint estimated that the
losses related to the flood totaled $88 million. (Dkt. 1 at ¶¶ 12-15.) It did not mention
prejudgment penalty interest under M.C.L. § 500.2006(4), but it did pray for "all other just
and proper relief." (Id. at ¶ 80.)
Around a year later, in July 2013, the parties filed cross-motions for summary
judgment. (Dkt. 20; Dkt. 31.) Defendant argued, inter alia, that: (1) the $30 million sublimit
applied because the Rojana Facility was within a 100-year floodplain; and (2) this sublimit
applied to Plaintiff's Time Element Loss (as opposed to simply the Property Damage Loss).
(Dkt. 31, at 12, 16.) On December 10, 2013, this Court granted summary judgment in
Plaintiff's favor, finding that Defendant had not established that the Rojana Facility was
within a 100-year floodplain. (Dkt. 63.) As a result, the Court did not reach the issue of
whether the sublimit applied to Plaintiff's Time Element Loss. In conjunction with that
decision, the Court entered a judgment dismissing the case. (Dkt. 64.)
Three months after that, on March 4, 2014, the Court entered a Corrected and
Stipulated Form of Amended Judgment. (Dkt. 77.) Therein, the parties stipulated that
Plaintiff's Time Element Loss was $25,093,533 and that the Property Damage Loss was
$39,406,467, totaling $64,500,000. (Id.) The Court then entered judgment in favor of
Plaintiff in the amount of $34,500,000 because Defendant had already paid Plaintiff
$30,000,000. (Id.) The Amended Judgment also stated that Plaintiff was "entitled to
prejudgment interest in the amount of $1,219,407.39." (Id.) The Amended Judgment did
not mention penalty interest.
Defendant then appealed, and the Sixth Circuit reversed and remanded on May 18,
2015. Federal-Mogul Corp. v. Insurance Co. of the State of Penn., 612 F. App'x 325 (6th
Cir. 2015). The Sixth Circuit held that this Court applied the incorrect standard when
determining whether the Rojana Facility was located within a 100-year floodplain, and it
provided instructions for reconsidering the issue. Id. at 329. The Sixth Circuit declined to
address whether the $30 million sublimit applied to Plaintiff's Time Element Loss. Id.
Following the reversal and remand, Plaintiff sought permission to file a second motion
for summary judgment as to whether the $30 million sublimit applied to Plaintiff's Time
Element Loss. (Dkt. 87.) Plaintiff also proposed a schedule for considering the remaining
issues in a piecemeal, sequential fashion. (Id.) The Court permitted Plaintiff to file the
second motion for summary judgment and adopted the proposed schedule, finding that it
would advance this litigation in an orderly fashion. The parties then supplied briefing and
oral argument regarding whether the sublimit applied to Plaintiff's Time Element Loss.
Then, on October 8, 2015, this Court issued an opinion and order granting partial
summary judgment in Plaintiff's favor, holding that the sublimit did not apply to Plaintiff's
Time Element Loss.1 (Dkt. 102.) This order also stated that Plaintiff was entitled to
$25,093,533, the amount of Time Element Loss stipulated by the parties. (Id.) As a result
of that decision, the parties' dispute narrowed to the $9,406,467 of unpaid Property
Damage Loss, the recovery of which depended on whether the Rojana Facility was located
within a 100-year floodplain. Because that issue remained unresolved, the Court's October
8, 2015 decision did not dispose of the case, was not accompanied by a judgment, and did
not mention prejudgment interest. Since then, the Court has ruled on motions to exclude
expert testimony and set the case for trial on April 4, 2017.
The Court entered an amended order to correct a typographical error on October 15,
2015. (Dkt. 103.)
Then, in February 2017, two months before trial was set to begin, Plaintiff filed an
unopposed motion seeking leave to file an amended and supplemental complaint "to moot
the only remaining issue [whether the Rojana Facility was located in a 100-year floodplain]
in this case by voluntarily limiting the relief Plaintiff seeks, thus allowing an appeal and
hopefully saving the parties the expense and delay of a trial." (Dkt. 134, at 6.) Plaintiff
offered to "relinquish, with prejudice, its loss amount of $9,406,467 attributable to unpaid
property damage if [Plaintiff] is able to thereby moot the need for the expense of trial."2 (Id.
at 7.) Six days later, the parties filed a stipulation consenting to the filing of an Amended
Complaint that mooted the only issue remaining in this case. (See Dkt. 136.) The parties
also reported an intent to stipulate to a proposed final judgment. (Id.)
Based on those submissions, on February 16, 2017, the Court granted Plaintiff leave
to file an Amended Complaint and directed the parties to submit a proposed final judgment.
(Dkt. 137.) Plaintiff immediately filed its Amended Complaint, which reiterates the original
Complaint's prayer for all "just and proper relief" and does not explicitly seek penalty
interest. (Dkt. 138.) The Court never received any stipulated final judgment, however,
because the parties could not resolve a dispute over Plaintiff's entitlement to prejudgment
interest. (See Dkt. 139; Dkt. 140.)
Around a month later, on March 10, 2017, Plaintiff filed its Proposed Form of Final
Judgment. (Dkt. 139-2.) Therein, Plaintiff seeks an award of penalty interest under M.C.L.
§ 500.2006(4) in the amount of $5,710,483.23, as well as prejudgment interest under
Earlier, Defendant had filed a motion for a certificate of appealability as to the Court's
October 8, 2015 decision, and Plaintiff had opposed it. (Dkt. 106; Dkt. 107.) The motion
was denied. (Dkt. 109.)
M.C.L. § 600.6013(8) in the amount of $2,927,192.07. (Id.) Plaintiff calculates the §
500.2006(4) penalty interest from May 3, 2014 (60 days after this Court entered its
Corrected and Stipulated Form of Amended Judgment with the stipulated amount of Time
Element Loss) until March 15, 2017 (the date Plaintiff estimated this Court would enter final
judgment).3 Plaintiff calculates its § 600.6013(8) prejudgment interest from May 3, 2012
(the day Plaintiff filed its initial Complaint) until March 15, 2017.
Plaintiff also filed an Alternative Proposed Final Judgment that seeks penalty interest
under § 500.2006(4) and prejudgment interest § 600.6013(8) "in amounts to be
determined." (Dkt. 139-3.) Defendant objects to both of Plaintiff's proposals. (Dkt. 140.)
Defendant objects to two aspects of Plaintiff's proposed forms of final judgment.
Defendant first argues that Plaintiff may not collect any prejudgment "penalty" interest
under M.C.L. § 500.2006(4). Second, Defendant argues that Plaintiff is not entitled to
prejudgment interest of any kind after October 8, 2015, the date this Court granted partial
summary judgment to Plaintiff on the issue of Time Element Loss. For the reasons that
follow, the Court overrules the first objection and sustains the second.
A. Whether Plaintiff Is Entitled to "Penalty" Interest Under M.C.L. § 500.2006(4)
M.C.L. § 500.2006(4) allows a claimant under an insurance policy to recover twelve
percent interest from an insurer following a delay in payment on a claim. Its purpose is to
punish insurers for dilatory practices in making payments to an insured. Yaldo v. North
Pointe Ins. Co., 578 N.W.2d 274, 277 (Mich. 1998). The statute provides as follows: "If
That estimated date of entry is baffling because, under Eastern District of Michigan
Local Rule 58.1(c), Defendant had seven days to object to Plaintiff's proposal.
benefits are not paid on a timely basis, the benefits paid bear simple interest from a date
60 days after satisfactory proof of loss was received by the insurer at the rate of 12% per
annum, if the claimant is the insured or a person directly entitled to benefits under the
insured's insurance contract." M.C.L. § 500.2006(4). Where, as here, the insured is a firstparty claimant, penalty interest accrues "irrespective of whether the claim is reasonably in
dispute." Griswold Props., L.L.C. v. Lexington Ins. Co., 741 N.W.2d 549, 557 (Mich. Ct.
App. 2007). Application of the statute is therefore "fairly mechanical." Palmer Park Square,
LLC v. Scottsdale Ins. Co., 2017 WL 227958, at *2 (E.D. Mich. Jan. 19, 2017).
Here, Plaintiff argues that the two conditions triggering § 500.2006(4) interest--proof
of loss and failure to pay--are present because: (1) Defendant received satisfactory proof
of loss when the parties stipulated to $25,093,533 of Time Element Loss in the March 4,
2014 Amended Judgment; and (2) Defendant failed to pay that stipulated amount within
sixty days. Defendant disagrees, opposing any award of penalty interest on four grounds,
each of which the Court addresses below.4
1. The Stipulation Constitutes Satisfactory Proof of Loss
Defendant first objects to Plaintiff's contention that the parties' stipulation to the
amount of Time Element Loss constitutes satisfactory proof of loss. (See Dkt. 144, at 3-4.)
Defendant argues that Plaintiff must prove through a motion or trial that it provided
satisfactory proof of loss. (See id. at 4.) The Court disagrees with Defendant.
As a threshold matter, Michigan's penalty interest statute "does not define what
constitutes 'satisfactory proof of loss.'" Decker Mfg. Corp. v. Travelers Indem. Co., 2015
Defendant does not dispute that it did not pay the stipulated amount of Time Element
Loss within sixty days of the stipulation.
WL 3902012, at *5 (W.D. Mich. June 25, 2015). However, the Sixth Circuit has observed:
"Although there is no discrete legal definition of when a proof of loss is 'satisfactory' for the
purposes of awarding interest, the Michigan courts have stated that '[t]he amount of loss
must be liquidated, known, or easily ascertained at the moment liability is denied for interest
to be properly awarded.'" ACME Roll Forming Co. v. Home Ins. Co., 31 F. App'x 866, 872
(6th Cir. 2002) (quoting Whitney v. Allstate Ins. Co., 238 N.W.2d 410, 413 (Mich Ct. App.
1975)); see also 13 COUCH ON INSURANCE § 189:59 (3d ed. 1999) (December 2016 update)
("An insurer has 'satisfactory proof of loss,' where proof is sufficient to fully apprise the
insurer of insured's claim."). And the Michigan Court of Appeals has explained that
satisfactory proof of loss, within the meaning of timely payment statute, "does not require
agreement of the parties as to the amount of damages, but is rather the process of the
insured providing the documents and evidence required by the insurer to begin processing
the claim." Griswold Props., 740 N.W.2d 659, 673, opinion reinstated in part, superseded
in part on other grounds, 741 N.W.2d 549.
Here, the stipulation to the amount of Time Element Loss deprives Defendant of any
basis for arguing that it did not receive satisfactory proof of loss. The United States
Supreme Court has stated that factual stipulations are formal concessions that are
conclusive in a case, withdrawing a fact from issue and dispensing wholly with the need for
proof of the fact. Christian Legal Soc. Chapter of the Univ. of Cal., Hastings Coll. of the
Law v. Martinez, 561 U.S. 661, 677-78 (2010) (citations omitted). As a result, when the
parties stipulated to the amount of Time Element Loss, it became not only "known" or
"easily ascertained" but conclusive for the purposes of this case. Defendant cannot
seriously argue that it was not fully apprised of or had not received the evidence necessary
to process Plaintiff's claim by the time of the stipulation; the stipulation reflects an
acknowledgment of the claimed damages. Accordingly, Defendant received satisfactory
proof of loss, at the latest, when the parties stipulated to the amount of loss.
The Court also rejects Defendant's argument that this issue involves a question of fact
that the Court cannot decide. Defendant's own briefing undermines its position, as it
asserts correctly that penalty interest may be awarded if "proven on undisputed facts."
(Dkt. 144, at 5.) Proof on undisputed facts is precisely what a stipulation offers. Christian
Legal Soc., 561 U.S. at 677-78. As the Supreme Court has stated, the "[d]etermination of
the meaning and effect of a stipulation . . . is not a factual finding. . . ." Braxton v. United
States, 500 U.S. 344, 350 (1991). Thus, the parties' disagreement over the meaning of the
stipulation does not give rise to a genuine factual dispute, and this Court is entitled to
decide the question of satisfactory proof of loss as a matter of law.
2. Defendant Received Fair Notice of Plaintiff's Request for Penalty Interest
Defendant next objects that Plaintiff cannot recover § 500.2006(4) interest because
Plaintiff did not provide fair notice of its intention to pursue penalty interest. Defendant
argues that, by requesting penalty interest for the first time in its Proposed Form of Final
Judgment, Plaintiff has prejudiced Defendant's ability to conduct necessary discovery and
properly litigate the issue. This Court rejects Defendant's argument.
Plaintiff expressly raised its right to penalty interest in its Proposed Form of Final
Judgment, and Defendant has exercised its opportunity to be heard, both through its
objections briefs and at a hearing before the Court. Furthermore, Defendant's complaints
that it was deprived of an opportunity to "discover the facts necessary to determine whether
benefits were paid on a timely basis" and "whether satisfactory proof of loss was received"
lack merit. (Dkt. 140, at 9-10.) The stipulation renders both of those concerns moot. All
of the facts related to Plaintiff's entitlement to penalty interest are stipulated and known to
both parties and the Court. Accordingly, this Court finds that Defendant has received fair
notice of Plaintiff's intention to pursue penalty interest.
3. M.C.L. § 500.2006(4) Interest Need Not Be Pled to Be Recovered
Third, Defendant objects that Plaintiff cannot recover § 500.2006(4) interest because
neither the Complaint nor the Amended Complaint pleads penalty interest. Defendant
argues that § 500.2006(4) interest must be pled to be recovered. To support that position,
Defendant cites a string of cases in which insureds pled penalty interest; however, none
of those decisions establishes that a failure to plead penalty interest would preclude its
recovery. In fact, Defendant has failed to identify any authority supporting its argument,
and the relevant authority suggests that M.C.L. § 500.2006(4) interest need not be pled to
According to Michigan courts, a request for penalty interest under § 500.2006(4) is
not a freestanding cause of action. Hastings Mut. Ins. Co. v. Mosher Dolan Cataldo &
Kelly, Inc., 2013 WL 1149790, at *18 (Mich. Ct. App. Feb. 14, 2013) ("This Court has held
several times that there is no private cause of action for damages under MCL 500.2006,
although a private person may recover penalty interest for a violation of this statute."),
vacated on other grounds, 838 N.W.2d 874 (Mich. 2013);Young v. Michigan Mut. Ins. Co.,
362 N.W.2d 844, 847 (Mich. Ct. App. 1984) ("There is no implied private cause of action
in tort for violation of M.C.L. § 500.2006."). Instead, it is a penalty that is "inseparable from
a claim on the [insurance] policy." Palmer Park Square, LLC v. Scottsdale Ins. Co., 2017
WL 227958, at *3 (E.D. Mich. Jan. 19, 2017). It thus appears that § 500.2006(4) interest
need not be pled substantively in an action, such as this one, that arises from an unpaid
insurance claim. Moreover, the Michigan Court of Appeals has explicitly stated: "The
omission of a requirement for the claimant to specially plead entitlement to the penalty is
consistent with the general principles that there is no private cause of action under MCL
500.6002, and the purpose of the statute is to penalize dilatory insurers rather than to
compensate claimants." Hastings Mut. Ins. Co., 2013 WL 1149790, at *19, vacated on
other grounds, 838 N.W.2d 874. As a result, the Court rejects Defendant's argument that
§ 500.2006(4) interest needs to be pled to be recovered.
Even if § 500.2006(4) interest needed to be specifically pled, Plaintiff could recover
such interest under Federal Rule of Civil Procedure 54(c). Rule 54(c) provides that any
final judgment other than default judgment "should grant the relief to which each party is
entitled, even if the party has not demanded that relief in its pleadings." Fed. R. Civ. P.
54(c). According to the Sixth Circuit, "[t]his rule affords district courts flexibility in crafting
relief so that a plaintiff may recover on a valid claim, regardless of counsel's pleading
errors." Yoder v. Univ. of Louisville, 417 F. App'x 529, 530 (6th Cir. 2011) (citing Colonial
Refrigerated Transp., Inc. v. Worsham, 705 F.2d 821, 825 (6th Cir. 1983)). But this
flexibility is not without limitations: "[A] plaintiff may obtain relief on an unpleaded theory of
recovery only if  he proves that theory,  he bases it on the wrongful act alleged in the
complaint, and  the defendant receives fair notice of the theory." Yoder, 417 F. App'x at
530 (citing Bluegrass Ctr., LLC v. U.S. Intec, Inc., 49 F. App'x 25, 31 (6th Cir. 2002)). In
other words, "[t]he relief need not have been tried by consent, but the only caveat is that
the opposing party must have had notice so as not to be prejudiced." Versatile Helicopters,
Inc. v. City of Columbus, Ohio, 548 F. App'x 337, 343 (6th Cir. 2013) (citation omitted); see
also In re Fasano/Harriss Pie Co., 848 F.2d 190 (Table) (6th Cir. 1988) ("[S]o long as the
plaintiffs' proof justifies the relief which is ultimately granted, and the defendant is not
thereby prejudiced, Rule 54(c) permits the court to grant relief not specifically requested.")
(internal citations omitted).
Here, all three requirements for relief under Rule 54(c) are met. First, the record
contains sufficient proof that Defendant received satisfactory proof of loss and then failed
to pay, as the Court discussed above. Second, Plaintiff's request for penalty interest arises
out of the wrongdoing alleged in the Amended Complaint, namely Defendant's failure to
pay an insurance claim. Third, Defendant has received fair notice of Plaintiff's theory, as
discussed above. Therefore, even if Plaintiff's failure to plead § 500.2006(4) interest might
otherwise preclude its recovery, Rule 54(c) would permit its recovery in this case. Yoder,
417 F. App'x at 530.
4. Plaintiff Has Not Waived Its Right to Pursue Penalty Interest
Defendant's final argument against an award of penalty interest is based on a theory
of waiver. Under Michigan law, waiver involves "a voluntary and intentional abandonment
of a known right." Johnson Controls, Inc. v. Jay Indus., Inc., 459 F.3d 717, 725 (6th Cir.
2006) (quoting Quality Prods. & Concepts Co. v. Nagel Precision, Inc., 666 N.W.2d 251,
258 (Mich. 2003)); see also CSX Transp., Inc. v. Benore, 154 F. Supp. 3d 541, 554-55
(E.D. Mich. 2015) (no "implied waiver" of a defense where party did not engage in "decisive
unequivocal conduct" indicating intent to waive). The Court finds no waiver here.
Defendant argues that Plaintiff waived its right to pursue penalty interest because
Plaintiff did not seek penalty interest before this Court's December 2013 judgment. But
Plaintiff's contention is that its entitlement to penalty interest arose five months later, in May
2014, so Defendant's argument misses the mark. For the same reason, Plaintiff's failure
to seek penalty interest before this Court's March 2014 Amended Judgment is also
immaterial. Under Plaintiff's theory, the stipulation incorporated in that Amended Judgment
is the proof of loss that forms the basis of its demand for penalty interest, so Plaintiff would
have had no reason to seek penalty interest in March 2014. And, as to Defendant's
argument that Plaintiff's failure to plead penalty interest amounts to waiver, this Court has
already found that Plaintiff can recover § 500.2006(4) interest without pleading it.
Outside of those untenable arguments, Defendant has not supplied or pinpointed any
evidence indicating that Plaintiff engaged in decisive, unequivocal conduct suggesting that
it would never seek penalty interest. Therefore, the Court rejects Defendant's final
argument against an award of penalty interest and OVERRULES Defendant's first objection
in its entirety.
B. Whether Prejudgment Interest Ceased Running on October 8, 2015
Defendant next objects that Plaintiff is not entitled to recover prejudgment interest of
any kind after October 8, 2015, the date this Court granted Plaintiff's motion for partial
summary judgment on its claim for Time Element Loss.
The parties agree that
prejudgment interest accrues until the date that the federal post-judgment interest
provisions are triggered. Under 28 U.S.C. § 1961(a), those provisions are triggered
following "the entry of the judgment." The question for this Court, therefore, is whether the
October 8, 2015 decision constitutes a "judgment" for the purposes of this statute.
A review of the relevant precedent begins with the Supreme Court's decision in Kaiser
Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827 (1990). There, the jury issued a
verdict, and the district court entered a judgment but also held that the damages portion of
the verdict was not supported by the evidence. Id. at 830. The district court thus ordered
a limited retrial on the issue of damages, which resulted in a second judgment. Id. The
question for the Supreme Court was which of the judgments triggered the accrual of postjudgment interest. Id. at 835. The Court decided that post-judgment interest should be
calculated from the second judgment, explaining: "Where the judgment on damages was
not supported by the evidence, the damages have not been 'ascertained' in any meaningful
way." Id. at 836.
Since Kaiser, the Sixth Circuit has issued several published decisions clarifying when
an order constitutes a "judgment" for the purposes of the federal post-judgment interest
statute. In Coal Res., Inc. v. Gulf & W. Indus., Inc., the issue was whether post-judgment
interest began accruing after (1) an initial judgment awarding damages or (2) a later
judgment reducing those damages via remittitur. 954 F.2d 1263, 1274-75 (6th Cir. 1992).
The Sixth Circuit decided that the post-judgment interest should run from the initial
judgment because the damages "were sufficiently ascertained at the time[.]" Id. at 1275.
The court explained that "[t]he remittitur merely reduced the damages by a distinct amount
easily determined from the facts of the case." Id.
Two years later, in Adkins v. Asbestos Corp., Ltd., the competing decisions were: (1)
an original judgment that was vacated on appeal because it was not supported with specific
findings of fact and conclusions of law; or (2) a later judgment that provided specific
calculations of the plaintiffs' injuries and arrived at a different award. 18 F.3d 1349, 1352
(6th Cir. 1994). The Sixth Circuit selected the later judgment because "the damages
suffered by the plaintiffs were not meaningfully ascertained as required by [Kaiser] until the
trial court issued its second judgment." Id.
Next, in Skalka v. Fernald Envtl. Restoration Mgmt. Corp., the Sixth Circuit
harmonized Adkins and Coal Res. as follows: "We have applied Kaiser to hold that postjudgment interest runs from the date of any judgment that is not entirely set aside." 178
F.3d 414, 429 (6th Cir. 1999).
The Skalka court reviewed how the "meaningful
ascertainment" analyses proceeded in Kaiser and Coal Res., but it did not apply the test
because the issue there was whether a "partial, non-appealable judgment triggers the
accrual of post-judgment interest." Id. The Skalka court ultimately announced that postjudgment interest may begin running from "the date of entry of [an] initial, partial judgment
. . . even though that judgment was not yet appealable." Id.
Three years later, in Caffey v. Unum Life Ins. Co., the Sixth Circuit considered which
of three judgments triggered the post-judgment interest statute: (1) a first judgment granting
summary judgment to the plaintiff on her claim for disability benefits and for prejudgment
interest; (2) a second judgment revisiting the prejudgment interest issue because the first
judgment "failed to determine the applicable pre-judgment interest rate and the manner in
which accrued pre-judgment interest is to be calculated"; and (3) a third judgment
amending that award based on a new model for calculating interest. 302 F.3d 576, 587
(6th Cir. 2002). The Sixth Circuit determined that it would calculate post-judgment interest
from the date of the first judgment because that judgment's finding that the plaintiff was
entitled to prejudgment interest meant that the prejudgment interest award was "sufficiently
ascertained." Id. at 589. The court explained:
[T]he quantification of prejudgment interest in the instant case was merely a
mathematical function of the court's prior rulings concerning the underlying
damage amount and time period for which benefits were due. Although the
precise amount of the award fluctuated somewhat as the court modified its
method of calculation, these adjustments did not have the same effect as an
order vacating the award in its entirety. Nor does it matter to our analysis
that the district court's March 2 judgment was not an appealable final order.
Id. at 589-90 (internal citations omitted).
In 2005, the Sixth Circuit returned to the post-judgment interest statute in Scotts Co.
v. Cent. Garden & Pet Co., 403 F.3d 781 (6th Cir. 2005), abrogated on other grounds by
Allied Indus. Scrap, Inc. v. OmniSource Corp., 776 F.3d 452, 453 (6th Cir. 2015). The
issue there was which of several judgments marked the date when prejudgment interest
stopped accruing and post-judgment interest began. Scotts, 403 F.3d at 792-93. After
rejecting several candidates because "the damages due were not sufficiently ascertained,"
the court chose a later judgment over an earlier judgment to remedy an "equitable
imbalance." Id. at 792-93.
In 2012, the Sixth Circuit revisited 28 U.S.C. § 1961 in its most recent published
decision on the matter, Stryker Corp. v. XL Ins. Am., 735 F.3d 349 (6th Cir. 2012). There,
the court held that an opinion that "contained findings relating to the amount of prejudgment interest that [a later opinion] did not completely vacate" was the "judgment" for
the purposes of § 1961(a). Id. at 361. Recognizing potential "tension with Scotts," the
Stryker court distinguished the cases as follows: "In Scotts, the first mention of prejudgment interest in the opinions of the district court was the final judgment, not any of the
earlier judgments. . . . Here, there is no question that pre-judgment interest was awarded
by the district court in the [earlier opinion]." Id. at 362.
Against this backdrop, the parties have offered competing tests for this Court to apply.
Plaintiff proposes that "the dividing line between pre- and post-judgment interest is the date
of the first judgment actually awarding prejudgment interest" (Dkt. 143, at 7), while
Defendant lobbies for the "meaningful ascertainment" test. Defendant's position is more
persuasive. First, Defendant's test enjoys greater support in the case law. While Plaintiff's
position relies on dicta from Stryker distinguishing that case from Scotts, Defendant's
proposal is based on the Supreme Court's ruling in Kaiser and Sixth Circuit precedent
spanning the past twenty-five years. Second, while the Stryker decision did not mention
the "meaningful ascertainment" test specifically, it did not expressly abrogate it, either.
Furthermore, in a decision issued after Stryker, the Sixth Circuit stated: "Since Kaiser, the
Sixth Circuit has applied the 'meaningful ascertainment [test]' for purposes of determining
when post-judgment interest should begin." Whitesell Corp. v. Whirlpool Corp., 496 F.
App'x 551, 557 (6th Cir. 2012). While the Whitesell decision is unpublished, it supplies
strong evidence that the "meaningful ascertainment" test survives in this circuit.
Having determined that the "meaningful ascertainment" test governs this issue, the
Court finds that its October 8, 2015 decision constitutes the "judgment" under 28 U.S.C.
§ 1961. In that decision, this Court awarded Plaintiff $25,093,533 on the issue of Time
Element Loss, so the damages were "ascertained in a meaningful way." Kaiser, 494 U.S.
at 836. Since then, the decision has not been "entirely set aside." Skalka, 178 F.3d at 429.
And this Court sees no "equitable imbalance" requiring redress. Scotts, 403 F.3d at 793.
"Nor does it matter to our analysis that [the October 8, 2015] judgment was not an
appealable final order." Caffey, 302 F.3d at 590. Calculating the interest will involve
"merely a mathematical function of the court's prior rulings concerning the underlying
damage amount and time period for which benefits were due." Id. Phrased differently, it
will "merely [alter] the damages by a distinct amount easily determined by the facts in the
case." Coal Res., 954 F.3d at 1275. Accordingly, the Court concludes that its October 8,
2015 decision marked the date when prejudgment interest stopped running and postjudgment interest began, and Defendant's second objection is SUSTAINED.
For the foregoing reasons, the Court OVERRULES Defendant's first objection and
SUSTAINS the second, and it ACCEPTS IN PART and REJECTS IN PART Plaintiff's
proposed judgment. In light of the rulings in this opinion and order, the parties should now
be capable of agreeing to a judgment conforming to the Court's rulings. The Court
accordingly directs the parties to submit a stipulated proposed judgment within seven days
of this opinion and order.
s/Nancy G. Edmunds
Nancy G. Edmunds
United States District Judge
Dated: May 25, 2017
I hereby certify that a copy of the foregoing document was served upon counsel of
record on May 25, 2017, by electronic and/or ordinary mail.
s/Carol J. Bethel
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