DIVERSIFIED CREDIT EXTENSION CORP. v. COOK

206 F. Supp.2d 39 (2002) | Cited 0 times | D. Maine | June 26, 2002

MEMORANDUM OF DECISION AND ORDER ON DEFENDANT DAVID H. COOK'S MOTION FOR RELIEF FROM JUDGMENT (Docket No. 52)

Before the Court for action on the papers, and after hearing oralargument of counsel, is Defendant David H. Cook's Motion for Relief FromJudgment (Docket No. 52). At issue is the interpretation of this Court'sJudgment, entered herein on December 10, 1991 (Docket No. 26), in respectto the amount of interest the Court intended to accrue on the amount ofthe Judgment. This judge is the one who signed that Judgment. It was aJudgment proposed by counsel for signature by the Court. At the time ofits proposal, no situation was brought to the attention of the Court thatwould indicate that the Judgment presented any situation that was out ofthe usual course for issuance of such a judgment.1

The Judgment contains a finding as to the amount of the Judgment,consisting of the total amount of the principal due on the underlyingpromissory note ($2,274,053.31) and the interest accrued thereon to thedate of judgment ($162,397.30). The Judgment then makes a finding,"Additional interest is accruing at the rate of $607.45 per day."(Emphasis added.) Judgment on Guarantees and Judgment of Foreclosure andSale (Docket No. 26) at 2, ¶ 4. The Judgment subsequently providesthat on default of the judgment debtors, including Defendant David H.Cook, to pay "the aforesaid principal, interest and attorneys fees as setforth herein within ninety (90) days of the entry of this Judgment," id.at 2, a foreclosure sale of the property collateral to the promissorynote and mortgage shall occur and an execution shall issue "for anydeficiency upon compliance with the procedure set forth in the [MaineForeclosure Statute, 14 M.R.S.A. § 6321 et seq.]" Id. at 2-3.

The claim of the Plaintiff here is that the combined effect of theseprovisions of the Judgment reflects an intent by the Court in entering theJudgment that interest should accrue on the amount of deficiencyremaining after application of the proceedsof the foreclosure sale insatisfaction of the amount of the Judgment at the combined rate of 9.75%(the rate provided for in the note for interest accrued before entry ofany judgment) and 4.98% (the applicable rate for post-judgment interestpursuant to 28 U.S.C. § 1961), or an aggregate rate of 14.73%. On thattheory, Plaintiff contends that Defendant owes the amount of$2,282,303.74 in addition to the amount that has already been paid insatisfaction of the Judgment.2

The Court had in mind when it executed the Judgment for entry hereinthat it was entering a judgment for a total amount of $2,436,450.61 plusinterest from the date of entry of judgment forward at the applicablestatutory rate under 28 U.S.C. § 1961, plus any taxable costs andallowable attorneys' fees. Period.3 The finding as to what the dailyamount of accrual of interest had previously been under the promissorynote was immaterial to the Court in formulating the amount of theJudgment. It was simply a context-providing, factual artifact. The noteprovided, in any event, for a variable rate of interest. All of this isclearly so because the Court made no finding of or provision for any rateof interest under the note, gave no indication that interest was tocontinue under the note after entry of judgment4 and could not haveintended to adopt as binding in futuro the amount of $607.45 per day asthe basis for a continuing interest accrual because the Court well knewthat there would be a foreclosure sale and that the chances that that perdiem amount would thereafter be warranted or accurate were, at best,highly unlikely.

The Court could not have determined that any daily accrual of interestwas accurate since the rate of interest under the note was variable. TheCourt intended that the Plaintiff should ultimately recover the amount ofthe deficiency after the application of the proceeds of the foreclosureplus interest at the usual post-judgment interest rate as prescribed by28 U.S.C. § 1961.

Accordingly, Defendant David H. Cook's Motion for Relief From Judgment(Docket No. 52) is hereby GRANTED, and it is hereby DECLARED that theaforesaid Judgment has been SATISFIED by Defendant David H. Cook'spayment of $1,580,986.54 made on June 17, 2002, and the Court FINDS thatthe Execution herein issued on the original Judgment is fully SATISFIED.It is ORDERED that all existing liens of record to secure the payment ofthe amount of the aforesaid Judgment be forthwith discharged of record byPlaintiff in a manner sufficient to provide Defendant David H. Cook witha title clearof all defects in consequence of said Judgment and theExecution entered thereon and that the original Execution be endorsed"Satisfied" by Plaintiff and be delivered to Defendant David H. Cook.

So ORDERED.

1. This judge plays "a special role" in interpreting an orderpromulgated by him. Martha's Vinyard Scuba Headquarters, Inc. v. TheUnidentified, Wrecked and Abandoned Steam Vessel, 833 F.2d 1059, 1066-67(1st Cir. 1987); see also Witty v. Dukakis, 3 F.3d 517, 520 (1st Cir.1993).

2. Precisely stated, the facts are that the foreclosure yielded a netamount of $1,575,000.00 to be credited against the amount of theJudgment, resulting in a deficiency on the Judgment of $969,445.18 as ofMay 27, 1992. Defendant Cook has also paid the amount of such deficiencyplus the amount of $611,189.48 for interest thereon at a rate of 4.98%(pursuant to § 1961) from May 27, 1992, to June 17, 2002, plus $354.87for taxable costs. The parties do not dispute the amount of any taxablecosts. Defendant Cook does dispute Plaintiff's contention that he isresponsible for additional interest accruing on the deficiency at therate prescribed in the original promissory note. The total amount thathas been paid to date towards satisfaction of the original Judgment is$3,155,989.54, including interest at 4.98% from May 27, 1992, to June17, 2002.

3. See, generally, Kaiser Aluminum & Chemical Corp. v. Bonjorno,494 U.S. 827, 838 (1990).

4. The usual rule is that a contract rate of interest ends on entry ofa judgment on the underlying debt absent an express statement of acontrary intention, the underlying debt merging into the judgment.Thompson v. Getz. 178 F.2d 325, 327 (1st Cir. 1949) (applyingMassachusetts law).

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