Flatiron Acquisition Vehicle, LLC v. CSE Mortgage LLC

Background

The court had previously resolved the remaining claims in the case except attorneys’ fees. It had awarded defendants $334,041.49 in attorneys’ fees on their counterclaim for breach of the Settlement Agreement, which was governed by Tennessee law. In a separate memorandum issued the same day as this order, the court awarded CSE $326,137.64 in attorneys’ fees and costs because CSE was a prevailing party under the Purchase Agreement, which was governed by New York law.

Tennessee Award

The court considered whether to add prejudgment interest—interest intended to compensate for the loss of use of money before judgment—to the $334,041.49 Tennessee award. Under Tennessee law, the decision is based on equity and is within the trial court’s discretion. Relevant considerations include whether the obligation and its amount were sufficiently certain and whether awarding interest would be fair under the circumstances.

The court concluded that prejudgment interest would not be equitable. The amount at issue was uncertain, and the dispute was complex and heavily litigated. The court also noted that both parties had breached the Settlement Agreement. Although defendants obtained judgment on their counterclaim because they were the first to cure their default, they were not wholly innocent because they had also breached the agreement. The court therefore did not impose prejudgment interest on the Tennessee Award.

New York Award

The court concluded that prejudgment interest was required for the $326,137.64 New York Award. New York law generally makes prejudgment interest mandatory when money is awarded for breach of a contract, unless the action is equitable in nature. The court determined that this award resulted from a contract breach, not equitable relief.

The court selected March 17, 2019, as the starting date because that was the date on which it dismissed Flatiron’s claims under the Purchase Agreement, making CSE a prevailing party entitled to attorneys’ fees. Interest would accrue at 9% per year through the date of judgment.

Disposition

Judge Gregory H. Woods directed the Clerk to enter judgment in favor of defendants CI and CF jointly for $334,041.49 and in favor of CSE for $326,137.64, plus prejudgment interest at 9% per year from March 17, 2019, through the date of judgment. Post-judgment interest would accrue at the rate set by 28 U.S.C. § 1961. The court also directed the Clerk to terminate all outstanding motions and close the case.