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Sovereign Bank v. Remi Capital, Inc.

United States District Court, D. New Jersey

September 24, 2018



          PETER G. SHERIDAN, U.S.D.J.

         This matter comes before the court on Remi Capital, Inc. and Erik A. Kaiser's (collectively "Defendants") motion to declare the consent judgment satisfied pursuant to Fed.R.Civ.P. 60(b)(5) and L. Civ. R. 79.3, or in the alternative, to declare the consent judgment partially satisfied, to compel Plaintiff to produce documents reflecting all payments by any defendants and reflecting the assignment of mortgages by Defendant Remi Capital, Inc., and to calculate any amount that remains due under the consent judgment. In response, Plaintiffs argue that the consent judgment has not been satisfied.

         The parties entered into a consent judgment on September 1, 2010, date for $ 1, 560, 430.24. (Consent Judgment, ECF No. 52). The Consent Judgment is silent on any applicable interest rate. (See Id. "It is on this 1st day of September 2010 ORDERED that judgment is entered jointly and severally against Defendants in the amount of $1, 560, 430.24"). Currently, the parties agree that the gross amount collected on the consent judgment is $1, 526, 891.67. (See Cert, of Eisman, ECF No. 76, at¶¶ 8-9). Of that amount, Plaintiff Sovereign Bank, through its assignee and successor in interest Jenzack Partners, LLC, contends that only $1, 446, 721.92 of the net payment has been applied to the consent judgment. Plaintiff argues that $80, 169.75 must be deducted from the amount collected to reimburse Plaintiff for expenses it advanced in connection with the Receiver's Sale. (Id. at ¶¶ 11-14). Specifically, Plaintiff argues that after a receiver was appointed to, among other things, sell Defendant Kaiser's Manhattan condominium, Jenzack advanced $80, 169.75 for expenses incurred by the Receiver in connection with the Receiver's Sale. (Id. at ¶¶ 10-12).

         Plaintiff further contends that Defendants owe an additional $937, 845.37, based on post-judgment interest that has accrued at the rate of prime plus 6%, pursuant to the language of the contracts underlying this case. (Id. at ¶ 15). Plaintiff points to language in the Guaranty and Promissory note underlying this action, which each state that the interest rate to be applied to any judgment shall be six percent (6%). (See Guaranty and Promissory Note, ECF Nos. 76-2, 76-3).

         In response, Defendants argue that Kaiser has made payments totaling $807, 554.33 and Co-Defendant REMI has paid at least $719, 337.34, totaling $1, 526, 891.67. (Cert. Of Fiorenzo, ECF No. 56, Ex. D). Defendants further contend that the $80, 169.75 should be credited against the Judgment, so that the total owed on the judgment is $1, 526, 891.67, and not $1, 446, 721.92. Defendants also argue that, at the time of the Pretrial Conference, the parties contemplated the sale of a residential mortgage (the "Keller Loan") that, if completed, would further reduce the amount remaining on the Consent Judgment. Finally, Defendants argue that the judgment is subject to the Federal Statutory Post-Judgment Interest Rate, and not the purported 6% rate pursuant to the underlying contracts.

         For the reasons set forth below, this court finds the Federal Statutory Post-Judgment Interest Rate applies, and that Defendants may conduct discovery upon Plaintiff Sovereign Bank to determine the status of any payments made by REMI, including the status of the sale of the Keller Loan.

         Standard of Law

         Federal Rule of Civil Procedure 60 (b)(5) allows district courts to "relieve a party ... from a final judgment, order, or proceeding... [when] the judgment has been satisfied." Under this rule, district courts may mark judgments as partially satisfied. Savitsky v. Mazzella, 318 Fed.Appx. 131, 133 (3d Cir. 2009) (citing BUC Intern. Corp. v. International Yacht Council Ltd., 517 F.3d 1271, 1274-75 (11th Cir. 2008)); see also Bd. of Trs. of the Nat'l Elevator Indus. Health Ben. Plan v. McLaughlin, No. 12-4322, 2017 U.S. Dist. LEXIS 211027, at *8 (D.N.J. Dec. 20, 2017).

         I. The Federal Statutory Post-Judgment Interest Rate Applies.

         The consent judgment itself is silent as to post-judgment interest rate. However, Plaintiffs interpret this silence to mean the underlying contracts' 6% interest rate applies. In response, Defendants argue that pursuant to 28 U.S.C. § 1961, the Federal Statutory Post-Judgment interest rate applies:

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[.] the date of the judgment. . . Interest shall be computed daily to the date of payment. . . and shall be compounded annually.

         Accordingly, Defendants argue that the applicable interest rate, fixed by the Federal Reserve Bank, is 0.26%. (See Fiorenzo Cert. Ex. U (ECF No. 56-2, page 176)). Further, Defendants argue the doctrine that obligations of contract merge into a judgment applies: "When the plaintiff recovers a valid and final personal judgment, his original claim is extinguished and rights upon the judgment are substituted for it. The plaintiffs original claim is said to be 'merged' in the judgment." Stendardo v. Fed. Nat'l Mortg. Ass'n, 991 F.2d 1089, 1099 (3d Cir. 1993) (quoting Restatement (Second) of Judgments § 18 cmt. a (1982)).

         To support its argument that the Federal Statutory Post-Judgment Interest Rate does not apply, plaintiff cites Westinghouse Credit Corp. v. D'Urso, 371 F.3d 96, 101 (2d Cir. 2004), where the court determined that "parties may by contract set a post-judgment rate at which interest shall be payable." Westinghouse Credit Corp., 371 F.3d at 101. However, the court also explained that "[m]ost fundamentally, such contracts must actually indicate the parties' intent to deviate from § 1961 ... 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." Id. at 102. Plaintiff also cite Resolution Trust Corp. v. Kolea, No. 90-6287, U.S. Dist. LEXIS 10653 (E.D.Pa July 25, 1995) to support their contention that "parties are free to stipulate a different [post-judgment interest] rate, consistent with state usery and other applicable laws." However, the court explained "[t]he calculation of interest on the judgment ... is instead controlled by the provisions made by the parties and approved by [the district judge]" and not a contract previously entered into by the parties. Id.

         At present, there is no "clear, unambiguous and unequivocal" language in the consent judgment that indicated the parties intent to deviate from § 1961. At the time the consent judgment was entered, Plaintiff did not request that the interest rate applicable to the consent judgment be set at 6% pursuant to any underlying contract. On its face, it is clear from the consent judgment that the parties did not intend to deviate from § 1961. Further, any original claims plaintiffs may have had merged into the consent judgment. For ...

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