DECISION AND ORDER
Charles E. Buckley ("Plaintiff" or "Buckley") commenced a civilaction sounding in breach of contract against Brown PlasticsMachinery, LLC ("Brown"); Plastics Machinery, LP ("PMLP"); andPlastics Machinery Management, Inc. ("PMMI") (collectively"Defendants") on May 24, 2004. Approximately eight months later,on February 10, 2005, a jury returned a verdict in Buckley'sfavor awarding him damages for his contract claim. On that sameday, this Court entered a judgment consistent with the jury'sverdict in the amount of $758,277.1 Pursuant to Rule59(e) of the Federal Rules of Civil Procedure,2 Buckley filed a timely Motionto Amend the Judgment to Include Prejudgment Interest.3The issues raised by Plaintiff's motion are three-fold: (1)whether Buckley is entitled to prejudgment interest; (2) if so,at what rate is the interest to be calculated; and (3) ifinterest is appropriate, and the rate is determined, from whatpoint does the prejudgment interest accrue. The first two issuespresent minimal challenge, while the third requires the Court tolook to the decisional law of the Supreme Court of Rhode Island,and federal courts applying Rhode Island law, for direction.4 The Rhode IslandSupreme Court has not yet been confronted with such an issue in asimilar context, and therefore, has afforded this Court withlimited guidance; however, several cases (both state and federal)provide insight regarding the policy-laden topic of prejudgmentinterest. Based upon the pertinent evidence offered at trial, andafter a comprehensive examination of the applicable statutes andcase law, this Court concludes that Plaintiff's motion shall begranted with respect to amending the Judgment to includeprejudgment interest. However, for the reasons detailed below,the prejudgment interest to be added to the Judgment will be inthe amount of $65,316.60, rather than the $371,555.73 whichPlaintiff is seeking in his motion.
Plaintiff was employed with Brown as its President and ChiefExecutive Officer until August 31, 2001. At that point, Plaintiffceased employment with Brown, and the two parties entered into awritten agreement entitled, "Charles E. Buckley Transition"("Transition Agreement"). On September 4, 2001, the TransitionAgreement was signed by Plaintiff and Larry W. Gies, VicePresident of Brown. The Transition Agreement contained enumeratedrights and responsibilities of the two parties. In essence, the agreement obligated Plaintiff (1) not to compete with Brown, or any of itssubsidiaries or affiliates; (2) not to hire or interfere with anyof the employees of Brown, or its subsidiaries or affiliates; and(3) not to solicit or interfere with any of the customers of thesame, from September 1, 2001, through March 1, 2003. Plaintiffalso retained his investment in PMLP. In return, Brown was tomake payments to Plaintiff, which included equity appreciationrights ("EARs").5 Following the signing of the TransitionAgreement, Plaintiff received only a portion of thepayments.6 Defendants contended at trial that Plaintiffreceived all benefits that were immediately due, and that the EARpayments were subject to conditions that had not yet been met andwere dependant on reference to the terms of a separate agreement.Plaintiff filed this lawsuit claiming Defendants had breached theTransition Agreement by failing to make the payments set forth inthe document. Following a jury trial, a verdict was returned forPlaintiff, awarding damages in the amount of $758,277. AfterJudgment was entered on the verdict, Plaintiff moved to amend theJudgment to include prejudgment interest. II. Discussion
A. Prejudgment Interest
This case is before the Court under federal diversityjurisdiction pursuant to 28 U.S.C. § 1332 (2005). "In diversitycases, state law must be applied in determining whether and howmuch pre-judgment interest should be awarded." Fratus v.Republic Western Ins. Co., 147 F.3d 25, 30 (1st Cir. 1998); seealso Vulcan Automotive Equipment, Ltd. v. Global Marine Engine& Parts, Inc., 240 F. Supp. 2d 156, 160-61 (D.R.I. 2003) ("Inorder to determine the amount of interest owed plaintiff, thisCourt must apply the laws of the State of Rhode Island, becausethis case arises under federal diversity jurisdiction. . . .").Therefore, the first two issues to be addressed in Plaintiff'smotion: (1) whether he is entitled to prejudgment interest, and(2) if so, at what rate is the interest to be calculated, aregoverned by R.I. Gen. Laws § 9-21-10.7 Putting asideDefendants' Motion for Judgment as a Matter of Law,8 allparties are in agreement that, based on the language of § 9-21-10, Buckley is entitled to prejudgment interest on theawarded damages, at a rate of twelve percent per annum. Theparties' contentions are supported by the decisions of theSupreme Court of Rhode Island. See Joni Auto Rentals, Inc. v.Weir Auto Sales, Inc., 491 A.2d 328, 329-30 (R.I. 1985)(upholding trial justice's award of prejudgment interest inbreach of contract claim under § 9-21-10); N. SmithfieldTeachers Ass'n v. N. Smithfield Sch. Comm., 461 A.2d 930, 934(R.I. 1983) (reaffirming its prior holding in Aiello Constr.,Inc. v. Nationwide Tractor Trailer Training & Placement Corp.,413 A.2d 85 (R.I. 1980), that § 9-21-10 applies to judgments inactions for damages for breach of contract).
There is disagreement, however, over the point in time fromwhich the interest is to be calculated. Looking to what appearsto be plain and unambiguous language within the statute, theCourt is instructed that prejudgment interest "shall be added . . .from the date the cause of action accrued." R.I. Gen. Laws §9-21-10 (emphasis added). It is the interpretation of this phrasethat is at the core of the parties' dispute. The applicable caselaw (both state and federal) interpreting § 9-21-10, provides noclear answer. Moreover, while § 9-21-10 appears to mandate thatthe clerk shall include prejudgment interest in every civiljudgment in accordance with the terms of the statute, thissection has been interpreted so as not to abrogate the court'sdiscretion to determine whether or to what extent a prevailing party may beentitled to such prejudgment interest. See Holmes v. Bateson,583 F.2d 542 (1st Cir. 1978) (concluding that the federaldistrict court maintained discretion to determine thatprejudgment interest under § 9-21-10 ought to be imposed);Commercial Assocs. v. Tilcon Gammino, Inc., 801 F. Supp. 939(D.R.I. 1992), aff'd, 998 F.2d 1092 (1st Cir. 1993)(same).9 In this case, there is no compelling reason toignore the directive of the statute; therefore, Plaintiff'smotion is appropriate for the application of § 9-21-10. Thequestion is how the statute is to be applied.
1. Interpretation of § 9-21-10
In Buckley's Motion to Amend, he confidently asserts, "thisaction accrued on September 4, 2001, the date the contract wassigned and the date the EAR payment became payable to [him]." (Pl.'s Mem. at 2.) It follows, according to Buckley, thatprejudgment interest ought to begin running from that point intime. For Buckley, the calculation of the interest, based on thetime the action accrued, is a simple, straight forward matter,which does not call for a lengthy discussion.
In contrast, Defendants maintain that if the Court determinesthat prejudgment interest is appropriate, Plaintiff's cause ofaction did not accrue for purposes of § 9-21-10 on September 4,2001, but rather on May 24, 2004, the date Plaintiff filed thislawsuit. Defendants aver that May 24, 2004, the filing date, isthe earliest possible point from which prejudgment interest canbe triggered. In order to resolve this question, this Court looksto decisions of the Rhode Island Supreme Court, as well as thefederal courts applying Rhode Island law, for guidance.
2. Accrual Based on Damages
The Rhode Island Supreme Court has held that in a breach ofcontract action, the focus of the inquiry under § 9-21-10 is thepoint at which the plaintiff actually began to suffer damages.See Blue Ribbon Beef Co., Inc. v. Napolitano, 696 A.2d 1225,1229 (R.I. 1997); Jolicoeur Furniture Co., Inc. v. Baldelli,653 A.2d 740, 755 (R.I. 1995); Miller v. Dixon IndustriesCorp., 513 A.2d 597, 602-03 (R.I. 1986). It is also clear thatthe point at which the contract is breached is not per se thepoint of accrual for prejudgment interest. In Blue Ribbon BeefCo., the court held that, although the plaintiff's breach of contract cause of action accrued forpurposes of statute-of-limitations on the date of the breach,prejudgment interest under § 9-21-10 did not accrue until twoyears later. 696 A.2d at 1229-30. In that case, the plaintiffsuffered damages from lost-profits after its municipal landlord,the city of Providence, breached its lease agreement. Id. at1227. Following a bench trial, a Rhode Island Superior Courtjustice entered a judgment in favor of the plaintiff whichincluded interest from the date of the breach. Id. On appeal,the city claimed that the trial justice erred by includinginterest on the plaintiff's damages from the date of the breach,rather than the from the date the plaintiff's "damages actuallybegan to accrue." Id. Because the trial justice found that theplaintiff did not sustain any damages until a point in time afterthe breach of the contract, the Supreme Court held that it wasthis date, after the breach, from which prejudgment interestshould have been calculated. Id. 1228-29. The court cited §9-21-10, and acknowledged that "[p]rejudgment interest generallybegins from the date the cause of action accrues." Id. at 1229.In support of its holding, the court cited two prior decisionswhere it had held that the date of breach was not the date ofaccrual for prejudgment interest purposes. Id. (citingJolicoeur Furniture Co., 653 A.2d at 755 (holding that althoughbreach of contract occurred in 1987, accrual of prejudgmentinterest on the resulting damages was delayed two years until the plaintiffs had satisfied conditions precedent toits performance); and Miller, 513 A.2d at 602-03 (holding, forthe purpose of § 9-21-10, the plaintiff's claim properly accruedon the date he first could have exercised his stock options,rather than on the earlier date he alleged his employmentcontract was breached)).
The Rhode Island Supreme Court has repeatedly pointed to thedual purposes to be served by imposing prejudgment interest aspart of the remedy for breach of contract: (1) to promote earlysettlement of claims, and (2) to compensate plaintiffs for theloss of use of money rightfully owed. See Martin,559 A.2d at 1031; Murphy v. United Steelworkers of America Local No. 5705,AFL-CIO, 507 A.2d 1342, 1346 (R.I. 1986); DiMeo v. Philbin,502 A.2d 825, 826 (R.I. 1986). Whether one of these purposes ismore important than the other however, is not clear. CompareMurphy, 507 A.2d at 1346 (explaining that prejudgment interest"serves two purposes: it promotes early settlements, and moreimportantly, it compensates persons for the loss of use of moneythat was rightfully theirs") (emphasis added), with DiMeo,502 A.2d at 826 ("[T]he Legislature's primary intention was notto add interest but to establish a device to encouragesettlements of cases. . . .") (emphasis added). In a case such asthis (and no doubt many like it) both purposes are in play. Thepoint from which prejudgment interest accrues is the date fromwhich Plaintiff's damages actually began, or put another way, from the point at which he was entitled to his money, anddid not receive it; however, where, as here, the precise momentat which the rights to payments vested in Plaintiff under thecontract is in dispute, another method of determining the date ofaccrual, one which serves the dual purposes of the statute, maywell be appropriate.
3. Accrual Based on Demand/Time of Filing
Defendants claim that the accrual date is not September 4,2004, because: (1) Plaintiff did not expect or request payment onthat date; (2) no payment to Plaintiff was owed on the Beringerpayments on that date; and (3) to set the accrual date at thatpoint would not further the policies underlying the statute.According to Defendants, the correct point from which to measurean award of prejudgment interest, if any is to be awarded at all,is the date of filing because that is when Buckley made anunequivocal demand for payment to which he believed he wasentitled, and is the earliest date Buckley's claim could havebeen settled. Defendants maintain this conclusion is consistentwith the purpose of prejudgment interest.
Support for a "time of filing" or "date of demand" point ofaccrual under § 9-21-10 is found in Fratus, 147 F.3d 25. InFratus, the First Circuit interpreted § 9-21-10 such that "theinterest is automatically added by the clerk of courts from thedate of demand until the judgment is entered." Id. at 30. In a footnote following this statement, the court stated: "Under R.I.Gen. Laws § 9-21-10, pre-judgment interest is technicallycalculated from `the date the cause of action accrued.' Since thecause of action in this case is a demand of performance on acontract, the date of accrual for the cause of action was thedate of demand, i.e., the date the action was filed." Id. atn. 6 (citing Restatement (Second) of Contracts § 354 cmt. b(1981)) (emphasis added).
Here, the Plaintiff's damages arose from the TransitionAgreement which was the centerpiece of the trial. According tothe Transition Agreement Plaintiff would receive a percentage ofthe increase in the value of the two businesses Cumberland andBeringer, sold while Plaintiff was employed by Defendants. Theamounts due for these sales were $598,490, and $198,287respectively. The amount due for Beringer was to be paid on an installment basis, and subject to a somewhat ambiguouscondition.10 The amount due for Cumberland did notcontain any conditions.11
While the jury's verdict determined that Plaintiff was entitledto $758,277, the findings of the jury only set forth thatPlaintiff was, at the time of the suit, due such an amount. It isnot possible for this Court to accurately determine, based on thejury's verdict, the precise moment Plaintiff was originallyentitled to these funds. Unlike the prejudgment interest casesdecided by the Supreme Court of Rhode Island, where the dates ofthe plaintiffs' onset of actual damages were clearly identified,here no such date is discernable. See Blue Ribbon Beef Co.,Inc., 696 A.2d at 1228-29 (affirming trial justice's findingthat the plaintiff began to sustain damages, due to lost profits,at the beginning of fiscal year 1982, or June 1, 1981, based onevidence that the defendant's breach began to affect the sales growth ofthe plaintiff's business at that point); Miller,513 A.2d at 602-03 (affirming trial justice's finding that the plaintiff'sdamages from lost profits accrued on the specific dates he couldhave first exercised stock options); Jolicoeur Furniture Co.,Inc., 653 A.2d at 755 (remanding to Superior Court forcalculation of interest from date on which the plaintiffs fullycomplied with the terms of their agreement).12 Ratherthan speculate as to what the jury's verdict may haverepresented, this Court believes the best approach is to apply anequitable resolution that adopts the "time of filing" approachapplied by the First Circuit in Fratus.
In Fratus, the plaintiff's contract claim called for a demandof performance on a contract. 147 F.3d at 30. The First Circuitheld that the district court erred in failing to awardprejudgment interest to the plaintiffs from the date that theyfiled their complaint and demand for payment in the districtcourt. Id. at 31. Here, Plaintiff's claim can reasonably becharacterized as a demand for performance on the TransitionAgreement because he is claiming he is presently entitled to thepayments reflected in the agreement. Because a "date of damages"approach is impractical in this situation, and the Plaintiff's filing of his lawsuitprovides a clear date of demand for performance, this Court findsthat prejudgment interest as provided by § 9-21-10, began toaccrue on May 24, 2004, the date of Plaintiff's filing of thelawsuit.13 Furthermore, such a date reflects the jury'sfinding that the Plaintiff was entitled to the funds representedin the Transition Agreement at the time he filed thesuit.14
In coming to such a determination, the Court is mindful thatone of the dual purposes of prejudgment interest — encouragingearly settlements of suits — speaks not only to defendants, butto plaintiffs as well. By setting the point of accrual forprejudgment interest at the date of filing, plaintiffs arediscouraged from dragging their feet to the courthouse in hopesof increasing their judgment by application of the generous 12%interest rate.15 At the same time, the defendant'sincentive to settle is maintained. Therefore, prejudgement interest, runningfrom May, 24, 2004, to February 10, 2005, at a rate of twelvepercent per annum will be added to the judgment. This interest iscalculated to be $65,316.60.16
B. Post-judgment Interest
Plaintiff's Motion to Amend suggests that any post-judgmentinterest also be calculated at a rate of twelve percent as setforth in § 9-21-10.17 Defendants contend that such acalculation is incorrect, and that any post-judgment interestshould be calculated pursuant to federal law rather than theRhode Island statute. This Court agrees. In diversity actions, post-judgment interest must be calculatedaccording to the federal rate under 28 U.S.C. § 1961.18
Most circuits have ruled on this issue and have held that § 1961 is properly applied in diversity actions and therefore the federal rate of post-judgment interest applies. Therefore, relying on the plain language of the text and the rulings on this issue in other circuits, we adhere to established precedent and hold that § 1961 governs diversity actions and that post-judgment interest in the diversity case at bar should be calculated at the federal rate.Ramos Rosa v. Telemundo CATV, Inc., 966 F. Supp. 137, 140(D.P.R1997) (citing Bailey v. Chattem, Inc., 838 F.2d 149 (6thCir. 1988); Nissho-Iwai Co. Ltd. v. Occidental Crude Sales,Inc., 848 F.2d 613 (5th Cir. 1988); Weitz Co. Inc. v. Mo-KanCarpet, Inc., 723 F.2d 1382 (8th Cir. 1983); Northrop Corp. v.Triad Int'l Marketing, S.A., 842 F.2d 1154 (9th Cir. 1988);G.M. Brod & Co., Inc. v. U.S. Home Corp., 759 F.2d 1526 (11thCir. 1985)); see also Fratus, 147 F. 3d at 30, n. 5 (notingthat post-judgment interest in federal diversity cases is to be calculated in accord with28 U.S.C. § 1961). Based on the procedures set forth in § 1961,post-judgment interest shall be calculated at the rate of 2.95percent per annum, and therefore Plaintiff's request thatpost-judgment interest be calculated at 12 percent per annum isdenied.
For the foregoing reasons, the Court hereby ORDERS as follows: 1. Plaintiff's Motion to Amend the Judgment to Include Prejudgment Interest is GRANTED; 2. Prejudgment interest shall be calculated at twelve percent per annum from May 24, 2004, to February 10, 2005; 3. The amended judgment shall be $823,593.60; and 4. Any post-judgment interest shall be calculated at 2.95 percent and pursuant to the procedures detailed in 28 U.S.C. § 1961.IT IS SO ORDERED.
1. Defendants point out in their post-trial memorandum thatthe Judgment entered by this Court is incorrect and ought to becorrected. Based on Defendants' calculations, the judgmentdiscrepancy amounts to $6. (Defs.' Mem. of Law in Supp. for J. asa Matter of Law, at 2; Defs.' Mem. of Law in Resp. and Opp'n toPl.'s M. to Am., at 5.)
2. "Any motion to alter or amend a judgment shall be filed nolater than 10 days after entry of the judgment." Fed.R.Civ.P.59(e). Plaintiff's motion was filed on February 18, 2005;judgment was entered on February 10, 2005. The First Circuit hasclearly stated: "Rule 59(e) motions are aimed at reconsideration,not initial consideration. Thus, parties should not use them toraise arguments which could, and should, have been made beforejudgment issued. Motions under Rule 59(e) must either clearlyestablish a manifest error of law or must present newlydiscovered evidence." Federal Deposit Ins. Corp. v. World Univ.,Inc., 978 F.2d 10, 16 (1st Cir. 1992) (emphasis in original)(internal citations and quotations omitted). While Defendantshave not raised any such argument with respect to Plaintiff'smotion, for clarity, this Court points out that Plaintiff's Rule59(e) motion is proper for raising the issue of prejudgmentinterest. See Crowe v. Bolduc, 365 F.3d 86, 92-93 (1st Cir.2004) (holding that Rule 59(e) is "the proper procedural vehiclefor motions seeking to revise a judgment to include an initialaward of prejudgment interest (whether mandatory ordiscretionary)"). In Crowe, the court limited its holding to"those cases in which the judgment, prior to the attemptedrevision, is altogether silent as to prejudgment interest." Id.at 93 n. 5.
3. Plaintiff also requests a determination on post-judgmentinterest. (Pl.'s Mem. of L. in Supp. of M. to Amend., at 3.) Theissue of post-judgment interest will be addressed in a separateportion of this decision.
4. As will be discussed, the matter before the Court, isgoverned in part by Rhode Island law.
5. The EARs in question involve the sale of two of Brown'ssubsidiaries, Cumberland Engineering ("Cumberland") andBeringer.
6. The Transition Agreement states the amount due for the saleof Cumberland is $598,490. This amount has been off-set by$38,506, in accord with the terms of the Transition Agreement.
7. R.I. Gen. Laws § 9-21-10(a) provides, in pertinent part: In any civil action in which a verdict is rendered or a decision made for pecuniary damages, there shall be added by the clerk of the court to the amount of damages interest at the rate of twelve percent (12%) per annum thereon from the date the cause of action accrued, which shall be included in the judgment entered therein.
8. Defendants' Renewed Motion for Judgment as a Matter of Law,or in the Alternative, for a New Trial is addressed in a separateOrder.
9. Notwithstanding the mandatory language of the statute,courts have exercised such discretion by carving out exceptionswhere prejudgment interest is denied all together. SeeTravelers Prop. & Cas. Corp. v. Old Republic Ins. Co.,847 A.2d 303 (R.I. 2004) (declining to impose prejudgment interest whereparties settled the matter after a jury verdict, but beforeresolution of an appeal because the settlement was reached withthe injured party before the rights had been finallyadjudicated); Cabral v. Dupont, 764 A.2d 114 (R.I. 2001)(holding that a specific agreement between the parties where acheck was deposited into an interest bearing account amounted toan exception to the statute); Martin v. Lumbermen's Mut. Cas.Co., 559 A.2d 1028 (R.I. 1989) (concluding that the family ofdecedent killed in automobile accident was not entitled toprejudgment interest, even though the insurance proceeds weredelayed, where the insurer offered to pay up to the policylimits, and the delay was caused entirely by the litigationcommenced by the family).
10. Paragraph 4 of the Transition Agreement states: A. EAR amount due for Cumberland $598,490. B. EAR amount due for Beringer $198,287. This amount will be paid on an installment basis based on the amounts paid by Dynisco on December 31, 2002, 2003, 2004 & 2005 (a portion, based on the calculation of the amount paid in January 2001 would be due immediately once the company has appropriate funds to afford payment).(Pl.'s Ex. 1.)
11. Precise determination of Plaintiff's "date of damages" isnot only complicated by the ambiguity of the conditions placed onthe Beringer payments, but also by evidence introduced at trialthat, while Plaintiff claimed the EAR payments were immediatelyand unconditionally due upon signing of the Transition Agreement,he may not have expected, nor requested payment until muchlater.
12. Evidence presented at trial, which the jury may haveconsidered in reaching its verdict, indicated that Plaintiff didnot expect, nor demand his EAR payments at the time theTransition Agreement was signed. The jury may have determinedthat, while Plaintiff may not have been entitled to the EARproceeds at the time of signing the agreement, or shortlythereafter, he was, nonetheless, entitled to them at the time hefiled his suit.
13. As Defendants pointed out at oral argument, Plaintiff wasfree to file his suit at any point following the signing of theTransition Agreement.
14. It may be noted that, with respect to the Beringer sale,the language of the Transition Agreement provides that paymentswill be made in installments, with the final installment date tobe December 31, 2005. Any claim put forth by Defendants assertingan injustice in paying interest on the final installment, whichtechnically has not yet come due, is off-set by the Court'sequitable "date of filing" determination.
15. A "date of filing" approach provides predictability andpromotes judicial efficiency, whereas a "date of damages"approach can lead to a dispute as to the precise date, whichfails to advance either of these objectives. See generallyBetty Campbell, Prejudgment Interest in Tennessee: It's a FineMess We're In! Proposed Statutory Solutions to the InequitableApplication of an Equitable Remedy, 34 U. Mem. L. Rev. 789(discussing the Tennessee prejudgment interest statute (whichlike § 9-21-10 grants courts discretion in awarding interest) andits shortcomings).
16. The calculation is as follows: $758,277 (judgment) × .12(12% per annum) = $90,993.24. $90,993.24 ÷ 365 (days in theyear) = $249.30 per day. $249.30 × 262 (number of days from May24, 2004, to February 10, 2005) = $65,316.60. See DiLuglio V.Providence Auto Body, Inc., 755 A.2d 757, 775 (R.I. 2000)(stating that "we disfavor compounding the interest on monetaryawards in a judgment when the legislature has not specificallyauthorized it," and pointing out that § 9-21-10 makes "no mentionof compounding interest").
17. With respect to post-judgment interest, § 9-21-10(a)states: "Post-judgment interest shall be calculated at the rateof twelve percent (12%) per annum and accrue on both theprincipal amount of the judgment and the prejudgment interestentered therein."
18. 28 U.S.C. § 1961 states, in pertinent part: (a) 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 the 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. [sic] 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. (b) Interest shall be computed daily to the date of payment except as provided in section 2516(b) of this title and section 1304(b) of title 31, and shall be compounded annually.