Alkon v. United States ( 2001 )

Opinions of the United
2001 Decisions States Court of Appeals
for the Third Circuit
1-22-2001
Alkon v. United States
Precedential or Non-Precedential:
Docket 00-3439
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Filed January 19, 2001
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-3439
THOMAS ALKON
v.
UNITED STATES OF AMERICA; G&C ENTERPRISES;
RIGGER & ERECTORS; LEBRON ASSOCIATES; SPILLIS
CANDELA AND PARTNERS, INC.
United States of America,
Appellant
Appeal from the District Court of the V irgin Islands
(Division of St. Croix)
(D.C. Civ. No. 95-cv-00139)
District Judge: Honorable John P. Fullam
Argued
December 4, 2000
Before: MANSMANN and ALITO, Circuit Judges,
and ACKERMAN, District Judge.*
(Filed: January 19, 2001)
_________________________________________________________________
* Honorable Harold A. Ackerman, United States District Judge, sitting by
designation.
Gordon C. Rhea, Esquire (ARGUED)
Alkon, Rhea & Hart
2115 Queen Street
Christiansted, St. Croix
USVI 00820
Counsel for Appellee
Curtin V. Gomez, Esquire
Office of United States Attorney
United States Courthouse
5500 Veterans Building, Suite 260
Charlotte Amalie, St. Thomas
USVI 00802-6924
Denise A. Hinds, Esquire
Office of United States Attorney
1108 King Street, Suite 201
Christiansted, St. Croix
David W. Ogden,
Assistant Attorney General
James A. Hurd, Jr.,
United States Attorney
Robert S. Greenspan
Daniel L. Kaplan (ARGUED)
Attorneys, Appellate Staff
United States Department of Justice
Civil Division, Room 9114
601 D Street, N.W.
Washington, DC 20530-0001
Counsel for Appellant
OPINION OF THE COURT
MANSMANN, Circuit Judge.
In this personal injury action filed against the United
States pursuant to the Federal Tort Claims Act, 28 U.S.C.
S 1346, the United States appeals from an order of the
District Court directing that the United States pay interest
on a judgment entered against it at the rate set forth in the
Virgin Islands Code, 5 V.I.C.S 426, rather than pursuant to
2
the generally applicable rate formula set forth at 28 U.S.C.
S 1961. We are convinced that the calculation should have
been undertaken in accordance with the pr ovisions of
section 1961. Accordingly, we will reverse the order of the
District Court.
I.
Thomas Alkon, a St. Croix attorney, was seriously injured
in a fall on the stairs at the Federal Courthouse on St.
Croix. Following a bench trial in an action br ought
pursuant to the Federal Tort Claims Act, Alkon was
awarded a judgment in the amount of $2,463,750. 1 The
United States paid the judgment and interest on that
judgment calculated according to the for mula set forth in
28 U.S.C. S 1961.
Thereafter, Alkon filed a motion in the District Court
seeking to have interest due on the judgment r ecalculated
at the higher 9% rate set in 5 V.I.C. S 426. The motion was
granted. This timely appeal followed.
II.
This appeal requires that we deter mine which of two
statutory provisions controls the calculation of interest
applicable to the judgment awarded in this action. We begin
by noting that in almost all instances, the calculation of
interest on a judgment rendered against the United States
in a civil action is governed by the pr ovisions of 28 U.S.C.
S 1961.2
_________________________________________________________________
1. The United States filed an appeal, and the order entering judgment in
favor of Alkon was affirmed. Alkon v. United States, 185 F.3d 861 (3d
Cir. 1999).
2. Prior to 1982, section 1961 provided that interest on civil judgments
obtained in district courts would be calculated at the rate set by state
law. The interest rate on FTCA judgments against the United States,
however, was set at 4% by 28 U.S.C. S 2411. In 1982, Congress deleted
section 2411's uniform rate applicable to FTCA judgments and made
section 1961 applicable to such judgments. Congr ess also established a
uniform rate for district court judgments under section 1961, changing
the prior practice of determining inter est rates in accordance with state
law. Section 1961 now reads as follows:
3
The District Court held that section 1961 should not
apply in this case because the District Court of the Virgin
Islands is not a "district court" for purposes of the statute.
Accordingly, the District Court found that interest on the
judgment awarded to Alkon should be calculated with
reference to 5 V.I.C. S 426, which provides that: "The rate of
interest on judgments and decrees for the payment of
money shall be 9 percent per annum."
_________________________________________________________________
S 1961. Interest
(a) Interest shall be allowed on any money judgment in a civil
case
recovered in a district court. Execution therefor may be levied by
the
marshal, in any case where, by the law of the State in which such
court is held, execution may be levied for inter est on judgments
recovered in the courts of the State. Such interest shall be
calculated from the date of the entry of the judgment, at a rate
equal to the coupon issue yield equivalent (as deter mined by the
Secretary of the Treasury) of the average accepted auction price
for
the last auction of fifty-two week United States T reasury bills
settled
immediately prior to 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.
(c)(1) This section shall not apply in any judgment of any court
with respect to any internal revenue tax case. Interest shall be
allowed in such cases at the underpayment rate or overpayment rate
(whichever is appropriate) established under section 6621 of the
Internal Revenue Code of 1986.
(2) Except as otherwise provided in paragraph (1) of this
subsection, interest shall be allowed on allfinal judgments against
the United States in the United States Court of Appeals for the
Federal [C]ircuit, at the rate pr ovided in subsection (a) and as
provided in subsection (b).
(3) Interest shall be allowed, computed, and paid on judgments of
the United States Court of Federal Claims only as pr ovided in
paragraph (1) of this subsection or in any other pr ovision of law.
(4) This section shall not be construed to af fect the interest on
any
judgment of any court not specified in this section.
4
In reaching this conclusion, the District Court found that
strict construction of the term "district court" as used in
section 1961 is appropriate in light of the pr ohibition set
forth in section 1961(c)(4): "[Section 1961] shall not be
construed to affect the interest on any judgment of any
court not specified in this section."
In order to determine whether Congr ess did, in fact,
intend that the interest formula set forth in section 1961
not apply to FTCA judgments obtained in the District Court
of the Virgin Islands, the District Court first looked to 28
U.S.C. S 451. That section reads in part:
The term "court of the United States" includes the
Supreme Court of the United States, courts of appeals,
district courts constituted by chapter 5 of this title,
including the Court of International T rade and any
court created by Act of Congress the judges of which
are entitled to hold office during good behavior.
The terms "district court" and "district court of the
United States" mean the courts constituted by chapter
5 of this title.
Chapter 5 of Title 28, 28 U.S.C. SS 81-144, provides for the
constitution of the district courts of the fifty states, the
District of Columbia, and Puerto Rico. As the District Court
in this matter recognized,
Conspicuously absent from the [Chapter V] list are the
district courts of the Virgin Islands, Guam, and the
Northern Mariana Islands, which were established
pursuant to 48 U.S.C. SS 1611, 1424, and 1694,
respectively.
Alkon v. United States, No. 139F/1995, mem. opinion at 2
(D.V.I. Feb. 15, 2000).
According to the District Court, since the District Court
of the Virgin Islands was not constituted by Chapter 5, it is
not a "district court" for purposes of 28 U.S.C. S 1961; that
section, therefore, does not establish the applicable interest
rate. The District Court summarized its holding as follows:
While the matter is not altogether free fr om doubt, I
conclude for several reasons that the corr ect rate of
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post-judgment interest to be awarded in the District
Court of the Virgin Islands is the 9% rate prescribed by
5 V.I.C. S 426. First, I must consider the mandatory
language of 28 U.S.C. S 1961(c)(4), which limits the
application of that section to only those courts
specified therein. . . . Second, I am r eluctant to
substantially invalidate a section of the Vir gin Islands
Code absent some compelling reason to do so. 3 Finally,
calculating interest on judgments against the United
States at the same rate as other Virgin Islands
judgments is consistent with the overall theme of the
Federal Tort Claim Act itself, which is to r ender the
government liable to the same extent as private
tortfeasors.
Alkon v. U. S., mem. op. at 3.
III.
We agree with the District Court that r esolution of the
issue raised in this appeal turns on whether Congress
intended to mandate a technical reading of the term
"district court" as used in 28 U.S.C. S 1961(a) when it
provided in 28 U.S.C. S 1961(c)(4) that:"[t]his section
[providing for the calculation of inter est rates] shall not be
construed to affect the interest on any judgment of any
court not specified in this section." W e do not, however,
agree with the District Court's conclusion that the term
"district court" must be read to exclude application of
section 1961 to judgments entered against the United
States pursuant to the FTCA in the District Court of the
Virgin Islands.
In declining to adopt a reading of section 1961 which
would make it inapplicable to the judgment obtained here,
we are guided by our decision in In r e Jaritz, 151 F.3d 93
(3d Cir. 1998). There, we were asked to determine whether
28 U.S.C. S 155 authorized the Third Cir cuit Judicial
_________________________________________________________________
3. A finding that interest, in this matter , should be calculated with
reference to section 1961 would not invalidate 5 V.I.C. S 426. Section
426 would still be applied to calculate inter est on judgments rendered by
the Territorial Court of the Vir gin Islands.
6
Council to transfer bankruptcy judges to the V irgin Islands.
This determination hinged on a narrow question: "[W]hat
did Congress intend when it used the ter m ``judicial district'
in section 155." Id. at 97. "Did it use the term in a generic
sense to refer to the geographic area in which a district
court exercises judicial authority in bankruptcy matters, or
did it intend its scope to be limited to the geographic area
in which an Article III district court exercises judicial
authority over such matters." Id.
In order to answer this question, we first considered the
statutory text, finding nothing that would "limit[ ] its scope
to judicial districts having an Article III district court." Id.
at 97. We next considered relevant legislative history, and
again failed to find any indication to suggest"an intent to
restrict the authorization conferred by section 155 to Article
III districts." Id.
Not finding the statutory text or the legislative history to
be dispositive, we "inquire[d] whether the broader or the
narrower reading of ``judicial district'[would] best service
Congress's objectives in enacting Chapter 6 and section
155 in particular." Id. at 98. W e identified the objective of
Chapter 6 as the creation of "a reor ganized bankruptcy
system in which a specialized corps of full-time bankruptcy
judges would assist district court judges in adjudicating
bankruptcy matters." Id. We identified the objective of
section 155 as the "efficient and effective use of that corps
of full-time bankruptcy judges." Id. Interpreting Congress's
use of the term "judicial district" in light of the purpose
underlying the statute, we were unable to discern "any
reason Congress might have wished to gar ner the
efficiencies provided by [section 155] for judicial districts
having an Article III district court and not for judicial
districts having an Article IV district court which exercises
the jurisdiction of an Article III by virtue of the legislation
that created it." Id.
Finally, we addressed the dilemma posed by the
application of 28 U.S.C. S 451's limited definition of a
"district court" as a court constituted under Article III. We
wrote:
While we, of course, recognize that a definitional
section like section 451 must presumptively be taken
7
as reflecting the Congressional intent when a defined
term is used even in subsequent legislation, it is not
controlling where consideration of the ter m's immediate
context and its place in the overall Congressional
scheme clearly indicate that it is being used not as a
defined term of art but in its commonly understood
sense.
Id. at 100.
We found support for our analysis of the applicability of
section 451 in the Supreme Court's decision in Int'l
Longshoremen's & Warehousemen's Union v. Juneau Spruce
Corp., 342 U.S. 237 (1952). There, the IL WU filed suit
against Juneau Spruce in the District Court for the
Territory of Alaska, alleging violations of the Labor
Management Relations Act. Section 303(b) of that Act
provided that an action for violation of its pr ovision could
be brought "in any district court of the United States."
Addressing whether the District Court of Alaska had
jurisdiction over the matter, the Supr eme Court accorded
great weight to the underlying purpose of the LMRA,
concluding that:
[S]ince Congress lifted the restrictive requirements
which might preclude suit in courts having the district
courts' jurisdiction, we think it is more consonant with
the uniform, national policy of the Act to hold that
those restrictions were lifted as r espects all courts
upon which the jurisdiction of a district court has been
conferred. That reading of the Act does not, to be sure,
take the words "district court of the United States" in
their historic, technical sense. But literalness is no
sure touchstone of legislative purpose. The purpose
here is more closely approximated, we believe, by
giving the historic phrase a looser, mor e liberal
meaning in the special context of this legislation.
342 U.S. at 242-43.
In Jaritz, we concluded that the analysis undertaken in
Juneau Spruce applied with equal force:
Although the term "judicial district" as defined
elsewhere in the Judicial Code refers only to the
8
specifically enumerated district courts, the purpose of
section 155 -- ensuring maximally efficient use of
judicial resources -- is "mor e closely approximated" by
a more pragmatic and flexible construction of that term.4
151 F.3d at 101.
Recognizing that our resolution of the question presented
in Jaritz is relevant to the issue raised here, the District
Court in this matter cited Jaritz, r elying on our opinion to
support its conclusion that in light of the section 1961(c)(4)
limitation, the meaning of the term "district court" as used
in 1961(a) should be restricted to the definition set forth in
28 U.S.C. S 451. The District Court also concluded that
"calculating interest on judgments against the United
States at the same rate as other Virgin Islands judgments
is consistent with the overall theme of the Federal Tort
Claims Act itself, which is to render the gover nment liable
to the same extent as private tortfeasors." Alkon v. U.S.,
mem. op. at 4.
IV.
While we agree with the District Court that this matter
should be resolved with reference to the analysis in Jaritz,
we are convinced that faithful adherence to that analysis
better supports the view that the interest rate applicable to
the judgment in this case should be calculated in
accordance with section 1961 rather than pursuant to the
Virgin Islands Code. First, the language of section 1961
itself does not -- even considering the section c(4) limitation
-- unequivocally preclude its application to the District
Court for the Virgin Islands.
The legislative history of section 1961, too, is devoid of
any reference to the Virgin Islands and does not suggest
why Congress might have intended that FTCA judgments
reached in the District Court of the Vir gin Islands not be
subject to the provisions of section 1961. What scant
legislative history there is suggests the opposite. Section
_________________________________________________________________
4. We then found that, section 155 notwithstanding, bankruptcy judges
could be authorized to serve temporarily in judicial districts of Article
IV
courts under the provisions of an alter nate statutory section.
9
1961 was amended, as part of the Federal Courts
Improvement Act of 1982, to standardize the calculation of
interest rates applicable to civil judgments obtained in
federal court. Instead of continuing the practice of
calculating interest on civil judgments in accordance with
varying state formulae, Congress intended, in amending
section 1961, to "set[ ] a realistic and [uniform] rate of
interest on judgments" which would be "applicable to all
litigation in the Federal courts." S. Rep. No. 97-275, at 30
(1981), reprinted in 1982 U.S.C.C.A.N. p. 11, 40 (emphasis
added).5
Nothing in the legislative history supports the notion that
Congress, in drafting the 1961(c)(4) limitation, had the
District Court for the Virgin Islands or any other non-
Article III court in mind. In view of the emphasis on rate
uniformity, we cannot agree with the District Court that
Congress intended that judgments in the V irgin Islands be
subject to an interest rate not prevailing anywhere else in
the federal system.
We are also convinced that under the approach outlined
in Jaritz, the definition of "district court" and its use in
section 1961 should be assessed, not, as the District Court
found, in terms of the scope of the Federal T ort Claims Act,
but in terms of section 1961 itself. The District Court
wrote, "[C]alculating interest on judgments against the
United States at the same rate as other Vir gin Islands
judgments is consistent with the overall theme of the
Federal Tort Claims Act itself, which is to r ender the
government liable to the same extent as private
tortfeasors." Alkon v. U.S., mem. op. at 3. We focus instead
on the legislative intent underlying section 1961 and are
convinced that in amending that section Congr ess intended
_________________________________________________________________
5. Although section 1961 does explicitly mention the Court of Appeals for
the Federal Circuit and the Court of Federal Claims, it is likely that
this
mention flows from the fact that these courts were created pursuant to
the Federal Courts Improvement Act of 1982. Section 1961 was amended
as part of that same legislation and sought, by r eference to these
courts,
to clarify certain aspects of their operation. W e cannot infer from the
specific mention of these courts that Congr ess intended that section
1961 not apply to judgments obtained in the District Court of the Virgin
Islands.
10
to place all FTCA litigants obtaining judgments against the
United States in a district court on the same footing;
reading the term "district court" so as to exclude the
District Court of the Virgin Islands would destroy the very
uniformity that Congress sought to achieve.
Looking, as we did in Jaritz, at the statute itself, its
legislative history, and the purpose underlying the
enactment, we are satisfied that the ter m "district court" as
it is used in section 1961 should be read "not as a defined
term of art but in its commonly understood sense" to
include the District Court of the Vir gin Islands. In re Jaritz,
151 F.3d at 100.
V.
Adherence to the analysis set forth in Jaritz provides
sufficient reason for us to conclude that the interest
calculation in this matter is controlled by the provisions of
section 1961. In the interest of completeness, however, we
note that factors outside the scope of our decision in Jaritz
also favor application of section 1961.
First, the use of the term "district court" in 28 U.S.C.
S 2414 which authorizes the "payment offinal judgments
rendered by a district court . . . against the United States"
and in 28 U.S.C. S 1304, which refers to section 2414 and
appropriates amounts necessary to pay final judgments
against the United States and interest ther eon has not been
interpreted to exclude the District Court of the Virgin
Islands. To adopt the District Court's r eading of section
1961 would, as the government points out,"accord[ ] the
phrase ``district court' one meaning as used in the
provisions authorizing the United States to pay such
judgments with interest, and another meaning as used in
the [closely related] provision specifying the rate of interest
owing on such judgments."
Second, we agree with the government that the District
Court's determination that the Vir gin Islands Code controls
the calculation of interest impinges upon the sovereign
immunity for interest of the United States. The United
States' waiver of sovereign immunity for inter est for
purposes of the FTCA is set forth at 31 U.S.C. S 1304 and
11
is subject to strict construction. See, e.g., Andrulonis v.
United States, 26 F.3d 1224, 1231 (2d Cir . 1994). The
District Court's analysis of section 1961 does not consider
the scope of the United States' waiver and, as the
government argues, "subjects the United States to greater
liability in [this] case," and "puts it at the mercy of the
Virgin Islands legislature mor e generally, requiring the
federal government to pay whatever rate of interest the
Virgin Islands legislature may enact."
Finally, we find support for our application of section
1961 in the provisions of S 1614(b) which were enacted as
part of the 1984 amendments to the Revised Or ganic Act of
1954. That section directs that the provisions of Title 28
"shall apply" to the District Court of the V irgin Islands
"[w]here appropriate." W e examined the reach of this
directive in Walker v. Gover nment of the Virgin Islands, 230
F.3d 82 (3d Cir. 2000), concluding:
[H]aving vested the District Court of the V irgin Islands
with the jurisdiction of the district courts of the United
States, Congress intended all of the pr ovisions of Title
28, which speak to procedure, jurisdiction, venue, and
particular proceedings (e.g., habeas), to apply, "[w]here
appropriate," to the District Court of the V irgin Islands.
Id. at 87.6 Alkon has been unable to identify and we have
not found any policy concern or other consideration that
would render the calculation of interest in this matter
pursuant to section 1961 "inappropriate." We agree with
the government that, "there is no plausible basis for
considering it ``inappropriate' to apply the same rate of
interest to the judgments rendered by the District Court of
the Virgin Islands as is applied to judgments rendered by
the district courts of the fifty States and Puerto Rico." In
fact, in at least one Virgin Islands case, we applied section
_________________________________________________________________
6. The legislative history of 48 U.S.C. S 1614(b) indicates that Congress
intended that "the only exception to this extension [of Title 28 to the
District Court of the Virgin Islands] will be those provisions which are
in
conflict with specific legislation applicable to the Virgin Islands and
those
relating to judges who are appointed during good behavior." 130 Cong.
Rec. 23,790 (August 10, 1984) (statement of Sen. W eiker). The provisions
of section 1961 do not fall into either category.
12
1961 to the award of post-judgment inter est in a civil case,
never questioning that section's application. Dunn v. Hovic,
13 F.3d 58 (3d Cir. 1993).
In sum, we find that construction of the ter m "district
court" in related statutes, concerns bearing on sovereign
immunity, and the applicability of 48 U.S.C. S 1614(b)
bolster our analysis of the factors identified in Jaritz, and
provide additional support for applying section 1961 to
calculate the amount of interest owed on the judgment
awarded to Alkon.
VI.
We hold that interest on judgments obtained against the
United States in the District Court of the V irgin Islands
pursuant to the FTCA, should be calculated in accor dance
with the provisions of 28 U.S.C. S 1961. Accordingly, we will
reverse the order of the District Court.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
13