Mountainside v. Vt Mutual Ins ( 2024 )

"ermont Superior Court
Filed 06/20/24
Washington Unit
VERMONT SUPERIOR COURT CIVIL DIVISION
Washington Unit Case No. 22-CV-04513
65 State Street
Montpelier VT 05602
802-828-2091
.vermontjudiciary.org
Mountainside Condominium Association v. Vermont Mutual Insurance
ENTRY REGARDING MOTION
Title: Motion to Confirm Supplemental Arbitration Award and Add Post-Judgment
Interest (Motion: 8)
Filer: Stephen D. Ellis, Esq. and Carl "Ott" Lindstrom, Esq.
Filed Date: April 17, 2024
This arbitration case involves the questions whether the insured,
Mountainside Condominium Association ("Mountainside"), is entitled to post-
judgment interest on (1) an arbitration award and (2) a supplemental prejudgment
interest award between the dates they were issued and the dates they were
satisfied. The awards were issued at different times, and each award has been
satisfied by the insurer, Vermont Mutual Insurance Company ("Vermont Mutual").
Mountainside also makes a belated request for an award of its attorneys' fees.
Procedural History
This case was initially arbitrated in November 2022. Mountainside filed an
application in December 2022 for the Court to confirm the arbitration award and
award it pre-award, or prejudgment, interest. The Court issued a decision on
December 1, 2023, confirming the award and remanding the case to the arbitrators
to decide whether Mountainside was entitled to prejudgment interest and, if so, the
amount of such interest. See Opinion and Order on Cross-Motions for Summary
Judgment at 13-14 (Vermont Super. Ct. December 1, 2023) (Tomasi, J.). Following
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remand, the arbitrators issued a supplemental award dated April 12, 2024, stating
that Mountainside did not waive its claim for interest and that Vermont Mutual
owed Mountainside “interest in the amount of $510,905.” See Exh. E to Opposition.
The parties agree that Vermont Mutual satisfied the judgment award of
$2,031,366 on November 16, 2022, twelve days after the award was issued by the
arbitrators, and that it satisfied the prejudgment interest award on April 25, 2024,
thirteen days after that award was issued by the arbitrators. Opposition at 2–3;
Reply at 2. Mountainside now seeks to have the Court confirm the supplemental
prejudgment interest award and add statutory interest to both the judgment award
of $2,031,366 and to the prejudgment interest award of $510,905.
The Court makes the following determinations.
Analysis
I. Interest
Courts construing confirming awards under the Federal Arbitration Act have
discretion to award post-judgment interest on arbitrators’ awards. Waterside Ocean
Navigation Co., Inc. v. Int’l Navigation Ltd., 737 F.2d 150, 154 (2d Cir. 1984) (trial
courts may grant post-judgment interest to arbitration awards). “A confirmed
arbitration award made under the Federal Arbitration Act, as this one was, bears
interest from the date of the award not from the date of the judgment confirming
it.” Sun Ship, Inc. v. Matson Navigation Co., 785 F.2d 59, 63 (3d Cir. 1986); accord
New York Hotel and Motel Trades Council, AFL-CIO v. Navika Capital Grp. LLC,
2022 1617748, at *3 (D.N.J. 2022); In re Arb. Between Westchester Fire Ins. Co. v.
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Massamont Ins. Agency, Inc., 420 F. Supp. 2d 223, 226 (S.D.N.Y. 2005) (“Post-
award, prejudgment interest is generally awarded at the discretion of the district
court, and there is a presumption in favor of awarding such interest.”).
The Court is persuaded by those decisions and concludes that it retains
discretion to award interest in arbitration cases.
As a general matter, Vermont law provides that post-judgment interest shall
be added to judgments at the rate of 12% annually, 9 V.S.A. § 41a(a); 12 V.S.A. §
2903(c); and out-of-state courts have applied similar provisions in the context of
arbitration awards, see Roberts v. Del Webb Cmtys., Inc., No. 1 CA-CV 13-0119,
2015 WL 770366, at *6-7 (Ariz. Ct. App. Feb. 24, 2015) (applying state law to
requests for pre and post-judgment interest awards following FAA arbitration);
Barrett v. Inv. Mgmt. Consultants, Ltd., 190 P.3d 800, 804 (Colo. App. 2008)
(awarding post-judgment interest based on state law in FAA arbitration case); 26th
Street Hospitality, LLP v. Real Builders, Inc., 879 N.W.2d 437, 449 (N.D. 2016)
(awarding post-judgment interest to FAA arbitrator’s award pursuant to rate set
forth in parties’ contract).
Vermont, however, does not allow post-judgment interest to be calculated on
prejudgment interest amounts. Court clerks are directed to add post-judgment
interest only to “the full amount of principal included in the judgment” when
preparing a writ of execution. Vt. R. Civ. P. 69. The Reporter’s Notes to the 1981
amendment of Rule 69 clarify that the Court clerk is to “calculate[] the per diem
interest on the amount of the judgment, exclusive of the amount of prejudgment
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interest” and that the rule “does not . . . allow interest on interest.” See also Town
of Ira v. Vt. League of Cities and Towns & Cas. Intermunicipal Fund, Inc., 2014 VT
115, ¶ 17, 198 Vt. 12 (describing “interest on interest” as “invalid” under Vermont
law); Quinlan v. Hamel, 143 Vt. 147, 149 234 (1983) (noting “interest on interest” is
improper but finding rule inapplicable to circumstances), abrogated on other grds by
d’Arc Turcotte v. Est. of LaRose, 153 Vt. 196 (1989).
This is in contrast to states that allow post-judgment interest to be calculated
on both the principal judgment and prejudgment interest amounts. See Casper
Lodging, LLC v. Akers, 871 N.W.2d 477, 500–01 (S.D. 2015) (“[A]n award of post-
judgment interest on an award of prejudgment interest does not result in an award
of interest on interest.”); Connecticut Valley Sanitary Waste Disposal, Inc. v.
Zielinski, 763 N.E.2d 1080, 1087 (Mass. 2002) (“[P]ostaward interest on an arbitral
award is calculated on the entire amount of the award, which includes both the
principal and interest.”).
The bulk of Mountainside’s request runs afoul of Vermont’s rule against
interest on interest and is denied on that basis. Given that rule, the Court is not
inclined to exercise any potential remaining discretion it may have to award
interest in this case. Even if that legal principle somehow did not apply on that
question, the request for additional interest is denied on an additional ground as
well.
The Court has only a limited scope of review on an issue that was before the
arbitrators and on which they issued a decision. See 9 U.S.C. § 11 (limitation on
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Court’s authority to modify arbitrators’ award); Brinckerhoff v. Brinckerhoff, 2005
VT 75, ¶ 5, 179 Vt. 532. When the interest issue was before the arbitrators on
remand, Mountainside asked, not only for prejudgment interest on the $2,031,366
principal award, but also for: (1) pre and post-judgment interest for the period
November 4, 2022, through November 16, 2022, on the $2,031,366 principal plus the
$510,905 prejudgment interest amounts, and (2) interest on the unpaid interest
amounts for the period November 16, 2022, through February 16, 2024. Exh. D to
Opposition at 14–15. The arbitrators declined to award this additional interest, as
evidenced by their decision on remand. As a result, Mountainside’s request for an
award of interest seeks relief that the arbitrators have already rejected.
The Court has severely limited power to alter arbitration awards under these
circumstances. See Shahi v. Ascend Fin. Servs., Inc., 2006 VT 29, ¶ 10, 179 Vt. 434(Courts defer to arbitrators’ award and do not revisit arbitrators’ decision de novo);
Brinckerhoff, 2005 VT 75, ¶ 5, 179 Vt. 532 (“The Court may ‘not reweigh the
evidence presented to the arbitrator or subject the merits of the controversy to
judicial review.’”) (quoting Matzen Constr., Inc. v. Leander Anderson Corp., 152 Vt.
174, 177 (1989) (additional quotation marks and citation omitted)). Mountainside
has simply not shown that its request for additional interest beyond that awarded
by the panel can satisfy the high standard needed to modify the arbitrators’ award.
While Mountainside’s request for interest for the few days that lapsed
between the principal award and when Vermont Mutual paid the award would not
amount to interest on interest, as noted above, its request for that period was made
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to and rejected by the arbitration panel. And Mountainside has set forth
insufficient bases for the Court to overturn that determination. Accordingly,
Mountainside’s requests for additional interest not awarded by the panel are
denied.
II. Attorneys’ Fees
In its reply memorandum, Mountainside asks the Court to exercise its
discretion to award Mountainside its attorneys’ fees. Reply at 2. Mountainside did
not raise this issue in its opening brief; and, at the appellate level, “‘[o]ur law is
clear that issues not raised in [a party’s] original brief may not be raised for the first
time in a reply brief.’” Vasseur v. State, 2021 VT 53, ¶ 15, 215 Vt. 224 (quoting
Maynard v. Travelers Ins. Co., 149 Vt. 158, 160 (1987)). Although trial courts may
retain greater flexibility and discretion in that regard, without doubt,
Mountainside’s request was tardy.
At all events, Vermont follows the “American Rule,” which is that in the
absence of a statute or contract to the contrary, each party pays its own attorneys’
fees. Town of Milton Bd. of Health v. Brisson, 2016 VT 56, ¶ 29, 202 Vt. 121.
Vermont law gives the Courts discretion to award fees in exceptional cases
involving wrongful acts or bad faith. Id. “[T]he exception is triggered only by
conduct that could be described as in bad faith, vexatious, wanton, oppressive, or
unreasonably obstinate.” Id. ¶ 30 (citing In re Gadhue, 149 Vt. 322, 329 (1987)).
Here, the Court cannot see a basis to conclude that Vermont Mutual acted in
bad faith or was vexatious, wanton, oppressive, or unreasonably obstinate when it:
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(1) took the position that Mountainside had contractually waived its right to
prejudgment interest or (2) argued that the arbitrators were not authorized to
arbitrate arbitrability. Even if Mountainside had timely raised the issue of
attorneys' fees in its opening brief, the Court concludes that it would not be
equitable to award Mountainside its fees in this case. Each side had potentially
meritorious claims. They were resolved by the Court and the panel. Fees are not
appropriate in this matter.
Conclusion
In light of the foregoing, the Court confirms the arbitrators' supplemental
award granting Mountainside prejudgment interest in the amount of $510,905. The
Court denies Mountainsides request for additional interest and attorneys' fees.
Electronically signed on Wednesday, 6.20.24,* per V.R.E.F. 9(d).
Th othv Tomasi
Superior Court Judge
*corrected date
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