Commercial Division Blog
Placing Disputed Funds in Escrow Did Not Stop Liability for Post-Judgment Interest
On September 10, 2019, the First Department issued a decision in Triadou SPV S.A. v. CF 135 Flat LLC, 2019 NY Slip Op. 06453, holding that placing funds in an escrow account did not stop accrual of post-judgment interest, explaining:
Defendants' deposit of full payment on the judgments entered against it to a court monitored escrow account (the Monitorship Account) was not unconditional, such that it did not stop the accrual of post-judgment interest. Although the Monitorship Order expressly directed the Monitor to collect the judgment amounts and expressly provides for the collection of pre- and post-judgment interest, such funds could not be further transferred until further order of the court. Moreover, the Monitorship Order reflects that the parties were not waiving any rights, defenses or claims not set forth in the agreed order by stipulating to the appointment of such Monitor. Accordingly, defendants' payment to the Monitorship Account was conditioned on defendants preserving both their defenses to plaintiff's claims, and defendants' direct claims to those funds.
Contrary to defendants' arguments, the payment to the Monitorship Account was not a deposit to the court, as it was not pursuant to an order of the court, made upon motion. Rather under the circumstances, the Monitorship Account functioned simply as an escrow account while the defendants continued to oppose plaintiff's claims and pursue their own.
(Internal quotations and citations omitted).
The New York statutory rate of prejudgment interest is 9 percent--several times the prevailing Federal Reserve funds rate. This means that, for an old claim (or a claim that has been litigated for a long time), the interest award can be as big as the base damages. Contact Schlam Stone & Dolan partner John Lundin at firstname.lastname@example.org if you or a client have questions regarding the statute of limitations or the calculation of interest on a damages award.