Padgett v. City of Monte Sereno

Background

The court addressed Defendant A. Curtis Wright’s motions to vacate or modify two renewed judgments: one sought by Plaintiff Joseph Padgett and one sought by Padgett’s former counsel, Bustamante & Gagliasso.

An earlier judgment awarded Padgett $1 in nominal damages and $10,000 in punitive damages. After later proceedings, the court awarded Bustamante $471,056.64 in attorney fees, post-judgment interest, and $100,000 in litigation costs. The court also later awarded $155,804.22 for services by the McManis Faulkner firm and Hugo Torbet. The opinion states that Padgett acquired all rights of the Kallis & Associates firm in and related to the case, including the attorney-fee award, through bankruptcy proceedings.

Padgett applied to renew the 2010 judgment. The clerk initially declined to renew it based on the amounts requested, but the Ninth Circuit later directed entry of the renewed judgment, and the court directed the clerk to enter it. The opinion states, however, that no renewal of Padgett’s application had yet been entered when Wright filed the motion addressed here.

Bustamante separately applied to renew its judgment. The clerk entered a renewal on June 1, 2022, including $393,468.29 in judgment and claimed post-judgment interest. Bustamante’s calculation treated 0.354% as a weekly interest rate and annualized it to 18.408% by multiplying it by 52.

Recusal request and Padgett’s renewal

Padgett appeared to seek recusal of the judge based on the court’s earlier criticism of statements by Padgett’s counsel. The court found no basis for recusal because any possible bias or prejudice arose from conduct and rulings during the case, not from an outside source. The court emphasized that it held no bias against Padgett.

The court then held that California law allows a judgment renewal to be vacated, but the parties and court had identified no provision allowing the court to vacate an application for renewal before a renewal had been entered. Because no renewal had been entered for Padgett’s application, the court had nothing to vacate or modify. The court denied Wright’s motion concerning Padgett’s application without prejudice to refiling after the clerk entered a renewal. Earlier in the order, the court described this motion as denied as moot; the conclusion states that it was denied without prejudice.

Bustamante’s renewal and interest

The court interpreted its March 31, 2015 order as approving the federal post-judgment interest rate under 28 U.S.C. § 1961. Under that statute, the rate is based on the weekly average one-year constant-maturity Treasury yield for the calendar week preceding the judgment. The court found that the 0.354% figure referred to that Treasury yield, not to a weekly interest rate that could be multiplied by 52.

The court held that the 2015 order could not reasonably be read as approving an annualized 18.408% rate. It also stated that such a rate would conflict with § 1961 and would be usurious under the California Constitution.

Using Federal Rule of Civil Procedure 60(a), which permits correction of clerical mistakes or mistakes caused by oversight or omission, the court corrected the 2015 order. It changed the sentence stating, “Here, Plaintiffs request a weekly interest of 0.354 percent,” to state that the plaintiffs requested “the weekly average 1-year constant maturity Treasury yield of 0.354 percent.” The court said this correction reflected its original intent rather than a change of mind or a reconsideration of its prior calculations.

The court found that Bustamante’s judgment amount was correct, but that its claimed interest was based on the erroneous 18.408% rate. Under California law governing renewal of judgments, the court vacated the amount of post-judgment interest in Bustamante’s renewal. It found that the correct rate was 0.354% annually, accruing from March 31, 2015, through June 14, 2022. Because the parties had not submitted a calculation using that rate, the court directed Bustamante and Wright to file a joint statement with the correct calculation within 14 days. The court stated that it would then enter the correct interest amount as a renewed judgment.

Disposition

The court denied without prejudice Wright’s motion to vacate or modify Padgett’s application for and renewal of judgment. It granted in part Wright’s motion to vacate or modify Bustamante & Gagliasso’s renewal of judgment. The June 1, 2022 renewal was vacated in part, subject to the parties’ joint submission of the corrected interest calculation. The court also corrected the March 31, 2015 order under Rule 60(a).