Jerrold M. Metcoff et al. v. NCT (2014)

MEMORANDUM OF DECISION ON MOTION FOR POSTJUDGMENT INTEREST (# 635)

This matter is before the court concerning the plaintiffs, Jerrold M. Metcoff and David B. Wilson's motion, as judgment creditors, for postjudgment interest.   Pursuant to General Statutes § 37–3a, they seek interest at the rate of 10% per annum on the judgment entered in their favor on February 17, 2011 against defendant Michael J. Parrella, Sr. (defendant).  Defendant filed an objection (# 638), to which the plaintiffs replied (# 639).   After consideration, the court issues this memorandum of decision.

I

Background

The background of this matter is summarized in the court's (Stevens, J.) decision, dated February 17, 2011, 52 Conn.Sup. 363, 364–65, 50 A.2d 1004, affirmed, 137 Conn.App. 578, 49 A.3d 282, cert. denied, 307 Conn. 924, 55 A.2d 566 (2012):  “This case was tried to a jury on the second substitute complaint (# 240) filed by the plaintiffs, Jerrold M. Metcoff and David B. Wilson, against the defendant Michael J. Parrella, Sr., and the corporate defendants NCT Group, Inc., Midcore Software, Inc., and Artera Group, Inc. The corporate defendants were defaulted for failure to appear, and the trial proceeded against them as a hearing in damages ․ The plaintiffs were the principals of a company called Midcore Software Inc. This company developed and marketed certain computer software called Midpoint.   On August 29, 2000, the plaintiffs executed a merger agreement for Midcore to be acquired by NCT Group.   Parrella was the chief executive officer of NCT Group, and he negotiated the contract on behalf of NCT Group.   After the merger, Midcore would become NCT Midcore.   Under the terms of the contract, the plaintiffs were entitled to receive NCT Group stock and certain royalties generated from the sale of Midcore products.   The gravamen of the plaintiffs' complaint is that they did not receive the stock or royalties promised to them under the agreement and that Parrella made false representations to them as part of the merger transaction ․ [T]he jury's verdict in favor of the plaintiffs included a finding that Parrella made intentional misrepresentations and violated the Connecticut Unfair Trade Practices Act, General Statutes § 42–110g (CUTPA).”  (Footnote omitted.)

The plaintiffs seek postjudgment interest as to counts 10, 13, and 24.   As set forth in the partial judgment, dated February 17, 2011, judgment entered on those counts against the defendant, respectively, for negligent representation, intentional misrepresentation, and violation of CUTPA.   It is undisputed that the unpaid balances due thereon remain:  as to Metcoffs claims, $1,081,026;  and as to Wilson's claims, $1,046,941.

In response, the defendant asserts that interest was awarded on other counts and that there is no factual predicate demonstrating that an equitable basis exists for an award of postjudgment interest.

II

Discussion

General Statutes § 37–3a provides, in relevant part, “interest at the rate of ten per cent a year, and no more, may be recovered and allowed in civil actions ․ as damages for the detention of money after it becomes payable.”

“[A]n award of interest is discretionary ․ Although § 37–3a does not use the word ‘wrongful’ to describe a compensable detention of money under the statute, [the Supreme Court] has long employed that term to describe such a detention.”  (Citation omitted;  footnote omitted;  internal quotation marks omitted.)  DiLieto v. County Obstetrics and Gynecology Group, P.C., 310 Conn. 38, 50, 74 A.3d 1212 (2013).

“In the context of § 37–3a, a wrongful detention of money, that is, a detention of money without the legal right to do so, is established merely by a favorable judgment on the underlying legal claim, so that the court has discretion to award interest on that judgment, without any additional showing of wrongfulness, upon a finding that such an award is fair and equitable ․ [T]he fact that a defendant has a legal right to withhold payment under the judgment during the pendency of an appeal is irrelevant to the question of whether the plaintiff is entitled to interest under § 37–3a.”  Id., 48–49.

“Interest is awarded ․ when the court determines that such an award is appropriate to compensate the plaintiff for the loss of the use of his or her money.”  Id., 54.  “[T]he policy behind any such provision is to compensate the successful party for the loss of the use of the money that he or she is awarded from the time of the award until the award is paid in full.”  (Internal quotation marks omitted.)  Id., 55.  “The important practical inquiry, ․ in each case in which interest is in question is, what is the date at which this legal duty to pay, as an absolute present duty, arose.”  (Internal quotation marks omitted.)  Id., 54.

A decision concerning “whether to grant interest under § 37–3a is primarily an equitable determination ․” Sosin v. Sosin, 300 Conn. 205, 227, 14 A.3d 307 (2011).  “[T]he court's determination [as to whether interest should be awarded under § 37–3a] should be made in view of the demands of justice rather than through the application of any arbitrary rule ․” (Internal quotation marks omitted.)  Id., 229.  “[T]he primary purpose of § 37–3a ․ is not to punish persons who have detained money owed to others in bad faith but, rather, to compensate parties that have been deprived of the use of their money.”  (Footnote omitted.)  Id., 230.

“[A] paramount factor for the trial court to consider in deciding whether to award postjudgment interest is the purpose of such interest, namely, to compensate the prevailing party for the loss of the use of the money owed from the date of the judgment until the date the judgment is paid ․ [T]he trial court should identify any other factors or considerations that may militate against an award of postjudgment interest.   In sum, the trial court should consider any and all factors that are relevant to its determination.”   (Citation omitted;  footnote omitted.)  DiLieto v. County Obstetrics and Gynecology Group, P.C., supra, 310 Conn. 59.   Postjudgment interest compensates plaintiffs for the loss of the use of their money “after the factfinder has determined that the money is due and owing, during the pendency of any appeals.”   Id., n.18.

The Supreme Court, in DiLieto v. County Obstetrics and Gynecology Group, P.C, supra, 310 Conn. 58–59, stated that the underlying conduct of the parties, including a defendant's rejection of reasonable offers to settle, is a relevant, equitable consideration.   Here, the court declines to consider the plaintiffs' contentions concerning recent settlement discussions, or that the defendant's appeal was a stall tactic, since these assertions are supported only by the argument of counsel.   The argument of counsel is not evidence.   “[R]epresentations of the [defendant's] counsel are not ‘evidence’ and certainly not ‘proof.’  “ Cologne v. Westfarms Associates, 197 Conn. 141, 153, 496 A.2d 476 (1985).  “Statements or comments made by attorneys in the course of ․ argument are not facts in evidence, and may not properly be considered ․” State v. Duntz, 223 Conn. 207, 236, 613 A.2d 224 (1992).   Also, the court is unpersuaded that the evidence presented shows that Pardev, LLC, of which defendant is the managing member, has refused to make a distribution.

“[Section] 37–3a(a) provides for a maximum rate of interest of 10 percent, with discretion afforded to the trial court to order interest at a lesser rate ․ [U]nder § 37–3a(a), an interest rate of less than 10 percent is presumptively valid, and therefore will be upheld, unless the party challenging the rate set by the court can demonstrate that it represents an abuse of discretion.”  (Citations omitted;  emphasis in original.)  Ballou v. Law Offices Howard Lee Schiff P.C., 304 Conn. 348, 365, 39 A.3d 1075 (2012).

Thus, under § 37–3a, in the exercise of the court's discretion, interest awards may be made at rates of less than 10 percent.   In awarding prejudgment interest at the rate of four percent, the court in Weber v. FujiFilm Medical Systems U.S.A., Inc., 993 F.Sup.2d 285, 305 (D.Conn.2013), stated, “Courts in Connecticut have recently found that awarding simple interest at a rate of four to six percent appropriately compensates a plaintiff for deprivation of the use of his or her money” (collecting cases in state and federal court;  citing lower interest rates).   See First American Title Insurance Co. v. 273 Water Street, LLC, judicial district of Hartford at Hartford, Docket No. HHD CV 08 4041234 (September 19, 2013, Vacchelli, J.) [56 Conn. L. Rptr. 842] (5 per cent postjudgment interest awarded).

The judgment has remained unpaid for over two years and ten months and the defendant presents no persuasive equitable argument as to why the plaintiffs should not be compensated for the loss of the use of their money since the entry of the judgment.   In the exercise of its discretion, in view of all the circumstances, including the underlying judgment and recent awards of interest by other courts, the court concludes that an award of postjudgment interest using the rate of four percent is fair and equitable and appropriately compensates the plaintiffs for the loss of the use of their money.

CONCLUSION

For the reasons stated above, postjudgment interest at the rate of four percent per annum is awarded as to the judgment on counts 10, 13, and 24, from the date thereof, February 17, 2011, until full payment is made.   It is so ordered.

BY THE COURT

ROBERT A. SHAPIRO

JUDGE OF THE SUPERIOR COURT

Shapiro, Robert B., J.