In Re: Transcare Corporation
- Lewis Kaplan
- 1:20-cv-06274
- U.S. District Court · Southern District of New York
- 5
In Re: Transcare Corporation: Judge Kaplan granted the trustee’s motion to amend Lynn Tilton’s judgment to add prejudgment interest at Delaware’s statutory rate.
The ruling directly affects Salvatore LaMonica as Chapter 7 trustee, Lynn Tilton, and the creditors of the jointly administered estates by allowing the judgment against Tilton to be amended to include prejudgment interest.
What happened
In Re: Transcare Corporation involved a motion by Salvatore LaMonica, the Chapter 7 trustee, to amend a judgment against Lynn Tilton. The judgment awarded $38.2 million for breach of fiduciary duty and included post-judgment interest, but it did not include prejudgment interest.
The trustee asked the court to add prejudgment interest at six percent per year from February 24, 2016, through the judgment date. Tilton argued that the trustee could not obtain that relief because the trustee’s own proposed judgment had omitted prejudgment interest. The court noted that Delaware law entitled the trustee to prejudgment interest as a matter of right.
The court granted the trustee’s motion under Rule 59(e) and directed the trustee to file a proposed amended judgment including prejudgment interest at the Delaware statutory rate. Judge Lewis A. Kaplan ruled that amending the judgment was necessary to avoid legal error and unfairness to creditors.
The detailed version
- In Re: Transcare Corporation · No. 1:20-cv-06274
- Lewis Kaplan
- Dec. 14, 2021
Background
The court had previously adopted the Bankruptcy Court’s recommendations concerning Lynn Tilton’s liability for breach of fiduciary duty and awarded $38.2 million in damages. On October 6, 2021, the court entered judgment against Tilton in the form proposed by Salvatore LaMonica, the Chapter 7 trustee for the jointly administered estates of TransCare Corporation and others. The judgment included post-judgment interest under 28 U.S.C. § 1961 but did not mention prejudgment interest.
The trustee moved under Federal Rule of Civil Procedure 59(e) to amend the judgment. He requested prejudgment interest at six percent per year from February 24, 2016, through the date of judgment. Tilton opposed the motion, arguing that the trustee’s failure to include prejudgment interest in the proposed judgment prevented relief based on clear legal error or manifest injustice.
Court’s Analysis
The court explained that Rule 59(e) relief is an extraordinary remedy generally limited to an intervening change in controlling law, newly discovered evidence, clear legal error, or the need to prevent manifest injustice. The court also recognized that it has considerable discretion when deciding whether to grant such a motion.
The court rejected Tilton’s argument that a party’s own omission automatically bars Rule 59(e) relief. It relied on Second Circuit authority indicating that post-judgment relief may be available when prejudgment interest is a routine award recoverable as a matter of right, even if the party failed to request it earlier. The court distinguished situations in which interest is part of the underlying substantive claim rather than a routine legal entitlement.
Tilton did not dispute that Delaware law entitled the trustee to prejudgment interest as a matter of right. Although the court had entered the judgment in the exact form proposed by the trustee, it concluded that the interests of justice required amendment to avoid clear legal error and manifest injustice to creditors.
Disposition
Judge Lewis A. Kaplan granted the trustee’s Rule 59(e) motion. The court ordered the trustee to file a proposed amended judgment that includes prejudgment interest at the Delaware statutory rate. The opinion does not state the resulting interest amount.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.