A “Cautionary Tale” on Post-Judgment Interest when Court of Appeals Directs Entry of Money Judgment

It’s always frustrating when you have to litigate over issues stemming from a court’s failure to do something that it should have done or even was required to do. Just ask the Oakland Raiders, who saw their new trial order reversed because the trial judge’s order did not satisfy the Code of Civil Procedure. The issue also arises in California courts where the trial court fails to rule on objections to evidence in the context of a summary judgment motion. The consequences of such failure have been discussed on a number of blogs recently, and The Appellate Practitioner has an excellent post regarding the Supreme Court’s recent grant of review in a case on that issue.

In Planned Parenthood v. American Coalition, case no. 06-35733 (Feb. 11, 2008), we see an example in the context of a federal requirement; specifically, where the Federal Rules of Appellate Procedure impose an obligation ot the Court of Appeals and the court fails to honor it.

The rule at issue is FRAP 37(b), which provides that “[i]f the court modifies or reverses a judgment with a direction that a money judgment be entered in the district court, the mandate must contain instructions about the allowance of interest.” In a previous appeal in the case, the Ninth reversed a punitive damages award as violative of due process and remanded for retrial unless the creditors accepted the judgment with a reduced punitive damages component, but the court failed to include in its mandate the date on which interest started to accrue on the judgment. The trial court entered a new judgment allowing for accrual of post-judgment interest as of the date of the original judgment.

The Ninth holds that failure to specify a judgment accrual date where required by FRAP 37(b) precludes a district court from entering the newly mandated judgment with interest accruing from the date of the original judgment. Interest accrues from the date where the amount of the judgment is “meaningfully ascertained.” and this ordinarily means the date of the mandate from the Court of Appeals if the mandate directs entry of a money judgment different from that in the original judgment.

Here, however, the judgment creditors get interest from the date of the original judgment in any event. The court recognizes that its omission was inadvertent and that despite the reduction in punitive damages on remand, the creditors’ right to interest on the reduced amount had been “meaningfully ascertained” in the original trial. Accordingly, it exercises its right to recall its prior mandate and amends it to include interest from the date of the original judgment.

That said, the court makes clear that it is affording this courtesy only because its prior jurisprudence was unclear, and that litigants should treat this case as a cautionary tale:

Henceforth, we expect that litigants in this circuit will clearly understand that if we modify or reverse a judgment with a direction that a money judgment be entered in the district court, our mandate must contain instructions about the allowance of post-judgment interest. Fed. R. App. 37(b). If our mandate omits such instructions, a party that believes it is entitled to interest from a date other than the date of entry of judgment on remand must expeditiously seek reform of the mandate.

Professor Martin calls this “an entirely just and equitable opinion.” I think that’s correct. But keep the court’s caution in mind.

I think a federal court litigant in this situation can have much more peace of mind than a party in a California case involving a new trial or summary judgment situation mentioned above. A party can expect a ruling one way of the other on a motion to recall and amend the mandate. Pleas to California trial courts to rule definitively on evidentiary objections often fall on deaf ears. And a party seeking a new trial is prohibited from doing too much to facilitate the trial court’s compliance with new trial procedures. Nonetheless, this greater peace of mind only applies if the party remembers to “expeditiously seek reform of the mandate.”

Appellate Powerhouse Launches Punitive Damages Blog

200711271650.jpgNew to the blogroll is the California Punitive Damages blog, launched recently by appellate powerhouse Horvitz & Levy. I’m told by Curt Cutting, one of the regular contributors at the new blog (and, I’m pleased to say, a regular reader of The California Blog of Appeal), that besides covering appellate decisions on the topic, the blog will cover “proposed legislation, academic commentary, significant decisions from other jurisdictions, and anything else that relates to California punitive damages litigation.”

Congratulations to you and your fellow contributors on your launch, Curt!

Discounted Third Party Purchase of Medical Account Doesn’t “Hanif-y” Plaintiff’s Recovery

Mention Hanif v. Housing Authority (1988) 200 Cal.App.3d 635 to a personal injury lawyer, and he’ll likely bristle.  Hanif, along with Nishihama v. City and County of San Francisco (2001) 93 Cal.App.4th 298, held that an injured tort plaintiff may recover only the amount of medical expenses he or she paid or incurred, even if the reasonable value of those services is much higher.  Thus, a medical provider who writes down the bill or accepts a lesser amount from an insurer as payment in full effectively reduces the potential recovery of the plaintiff.

Should the same rule apply if the medical provider sells the plaintiff’s account (including a lien against plaintiff’s potential recovery) to a third party financial services company at a discount, even though plaintiff remains liable (now to the financial services company) for the full amount of the services?  No, says the Third District Court of Appeal in Katiuzhinsky v. Perry, case no. C050376 (June 29, 2007).  As long as the plaintiff legitimately incurs the medical expenses and remains liable for their payment, plaintiff may recover the billed amount regardless of the discount at which his account was sold to the third party.

Judicial Council Soliciting Comments on Proposed Civil Jury Instruction Revisions

The Judicial Council of California is seeking comments on proposed changes to civil jury instructions regarding punitive damages.  The proposed changes are intended to bring the instructions in line with the U. S. Supreme Court’s 5-4 decision last February in Philip Morris USA v. Williams, which held that the imposition of punitive damages to punish a defendant for harm to non-parties is unconstitutional because it is a taking of property without due process.

Go here for a link to the proposed changes, a link for the on-line submission of comments, and information for submitting comments by mail. The deadline for submissions is July 13, 2007.

Emotional Distress Damages for Statutory Habitability Action

In McNairy v. C. K. Realty, case no. B178918 (May 22, 2007), the Second District Court of Appeal holds that tenants may recover emotional distress damages in an action under Civil Code section 1942.4 against their landlord for breach of statutory habitability standards. Reasoning that the term “actual damages” in the statute (since amended, but still allowing for “actual damages”) has a plain meaning that includes emotional distress damages, the court rejects the landlord’s contention that emotional distress damages in such actions will lead to windfall recoveries. The statute requires severe and prolonged habitability problems, which naturally lead to inconvenience:

Generally, the residential tenant who has suffered a breach of the warranty does not lose money. He instead cannot bathe as frequently as he would like or at all if there is inadequate hot water; he must worry about rodents harassing his children or spreading disease if the premises are infested; or he must avoid certain rooms or worry about catching a cold if there is inadequate weather protection or heat. Thus discomfort and annoyance are the common injuries caused by each breach and hence the true nature of the general damages the tenant is claiming. (Quotation marks and citation omitted.)

The court notes other states had construed similar statutes to include emotional distress damages, and that other “actual damages” provisions in the California codes had been construed to include emotional distress damages. Finally, because the damages were awarded on a statutory cause of action rather than an action for breach of the lease contract, the award of emotional distress damages was not an impermissible award of tort damages in a contract action.