Posted: March 4, 2015

Court awards post-judgment interest in fee dispute

In Shukla v. Sharma, 07 CV 2972 (E.D.N.Y. Dec. 24, 2014), Chief Judge Carol Bagley Amon addressed some thorny issues related to when, and at what rate, post-judgment interest accrues in a case with an intervening appeal to the Second Circuit.

In Shukla, the underlying action involved allegations that the plaintiff was “trafficked” to the United States under false pretenses to serve as a Hindu priest; this decision related to a fee dispute between defendants and their counsel.

The Court had originally awarded attorneys’ fees to defendants’ trial counsel and against defendants in January 2013. Defendants appealed that order. The Second Circuit largely affirmed, but reversed a portion of the judgment that awarded defense counsel “fees on fees” associated with litigating the fee dispute because the fee-shifting provision in counsel’s engagement letter on this topic was not mutual.

First, the Court determined that post-judgment interest should be begin to run from the date of the original award of attorneys’ fees, in January 2013, because that was when the judgment was “ascertained in a meaningful way” given the Second Circuit’s minor modification.

Next, the Court tackled when post-judgment interest should stop accruing, given that defendants had paid the sum to the court clerk pending appeal. The funds deposited with the court clerk did not accrue interest because, under the Eastern District’s local rules, a court order is required before the clerk may deposit funds in an interest-bearing account. Given that the funds defendants posted as a bond with the clerk did not accrue interest, the Court ruled that defendants would be liable for post-judgment interest until those funds were released to defense counsel by the clerk.

Last, the Court set the post-judgment interest rate. The engagement letter provided for interest accruing at 2% every month until the fees were paid. But because the contract did not specifically provide that this rate would apply to post-judgment interest, such interest was applied at the federal statutory rate.

Posted in EDNY, Attorney Fees
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