Alkon v. United States

Opinions of the United

2001 Decisions States Court of Appeals

for the Third Circuit

1-22-2001

Alkon v. United States

Precedential or Non-Precedential:

Docket 00-3439

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Filed January 19, 2001

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 00-3439

THOMAS ALKON

v.

UNITED STATES OF AMERICA; G&C ENTERPRISES;

RIGGER & ERECTORS; LEBRON ASSOCIATES; SPILLIS

CANDELA AND PARTNERS, INC.

United States of America,

Appellant

Appeal from the District Court of the V irgin Islands

(Division of St. Croix)

(D.C. Civ. No. 95-cv-00139)

District Judge: Honorable John P. Fullam

Argued

December 4, 2000

Before: MANSMANN and ALITO, Circuit Judges,

and ACKERMAN, District Judge.*

(Filed: January 19, 2001)

_________________________________________________________________

* Honorable Harold A. Ackerman, United States District Judge, sitting by

designation.

Gordon C. Rhea, Esquire (ARGUED)

Alkon, Rhea & Hart

2115 Queen Street

Christiansted, St. Croix

USVI 00820

Counsel for Appellee

Curtin V. Gomez, Esquire

Office of United States Attorney

United States Courthouse

5500 Veterans Building, Suite 260

Charlotte Amalie, St. Thomas

USVI 00802-6924

Denise A. Hinds, Esquire

Office of United States Attorney

1108 King Street, Suite 201

Christiansted, St. Croix

David W. Ogden,

Assistant Attorney General

James A. Hurd, Jr.,

United States Attorney

Robert S. Greenspan

Daniel L. Kaplan (ARGUED)

Attorneys, Appellate Staff

United States Department of Justice

Civil Division, Room 9114

601 D Street, N.W.

Washington, DC 20530-0001

Counsel for Appellant

OPINION OF THE COURT

MANSMANN, Circuit Judge.

In this personal injury action filed against the United

States pursuant to the Federal Tort Claims Act, 28 U.S.C.

S 1346, the United States appeals from an order of the

District Court directing that the United States pay interest

on a judgment entered against it at the rate set forth in the

Virgin Islands Code, 5 V.I.C.S 426, rather than pursuant to

2

the generally applicable rate formula set forth at 28 U.S.C.

S 1961. We are convinced that the calculation should have

been undertaken in accordance with the pr ovisions of

section 1961. Accordingly, we will reverse the order of the

District Court.

I.

Thomas Alkon, a St. Croix attorney, was seriously injured

in a fall on the stairs at the Federal Courthouse on St.

Croix. Following a bench trial in an action br ought

pursuant to the Federal Tort Claims Act, Alkon was

awarded a judgment in the amount of $2,463,750. 1 The

United States paid the judgment and interest on that

judgment calculated according to the for mula set forth in

28 U.S.C. S 1961.

Thereafter, Alkon filed a motion in the District Court

seeking to have interest due on the judgment r ecalculated

at the higher 9% rate set in 5 V.I.C. S 426. The motion was

granted. This timely appeal followed.

II.

This appeal requires that we deter mine which of two

statutory provisions controls the calculation of interest

applicable to the judgment awarded in this action. We begin

by noting that in almost all instances, the calculation of

interest on a judgment rendered against the United States

in a civil action is governed by the pr ovisions of 28 U.S.C.

S 1961.2

_________________________________________________________________

1. The United States filed an appeal, and the order entering judgment in

favor of Alkon was affirmed. Alkon v. United States, 185 F.3d 861 (3d

Cir. 1999).

2. Prior to 1982, section 1961 provided that interest on civil judgments

obtained in district courts would be calculated at the rate set by state

law. The interest rate on FTCA judgments against the United States,

however, was set at 4% by 28 U.S.C. S 2411. In 1982, Congress deleted

section 2411's uniform rate applicable to FTCA judgments and made

section 1961 applicable to such judgments. Congr ess also established a

uniform rate for district court judgments under section 1961, changing

the prior practice of determining inter est rates in accordance with state

law. Section 1961 now reads as follows:

3

The District Court held that section 1961 should not

apply in this case because the District Court of the Virgin

Islands is not a "district court" for purposes of the statute.

Accordingly, the District Court found that interest on the

judgment awarded to Alkon should be calculated with

reference to 5 V.I.C. S 426, which provides that: "The rate of

interest on judgments and decrees for the payment of

money shall be 9 percent per annum."

_________________________________________________________________

S 1961. Interest

(a) Interest shall be allowed on any money judgment in a civil

case

recovered in a district court. Execution therefor may be levied by

the

marshal, in any case where, by the law of the State in which such

court is held, execution may be levied for inter est on judgments

recovered in the courts of the State. Such interest shall be

calculated from the date of the entry of the judgment, at a rate

equal to the coupon issue yield equivalent (as deter mined by the

Secretary of the Treasury) of the average accepted auction price

for

the last auction of fifty-two week United States T reasury bills

settled

immediately prior to the date of the judgment. The Director of the

Administrative Office of the United States Courts shall distribute

notice of that rate and any changes in it to all Federal judges.

(b) Interest shall be computed daily to the date of payment except

as provided in section 2516(b) of this title and section 1304(b) of

title 31, and shall be compounded annually.

(c)(1) This section shall not apply in any judgment of any court

with respect to any internal revenue tax case. Interest shall be

allowed in such cases at the underpayment rate or overpayment rate

(whichever is appropriate) established under section 6621 of the

Internal Revenue Code of 1986.

(2) Except as otherwise provided in paragraph (1) of this

subsection, interest shall be allowed on allfinal judgments against

the United States in the United States Court of Appeals for the

Federal [C]ircuit, at the rate pr ovided in subsection (a) and as

provided in subsection (b).

(3) Interest shall be allowed, computed, and paid on judgments of

the United States Court of Federal Claims only as pr ovided in

paragraph (1) of this subsection or in any other pr ovision of law.

(4) This section shall not be construed to af fect the interest on

any

judgment of any court not specified in this section.

4

In reaching this conclusion, the District Court found that

strict construction of the term "district court" as used in

section 1961 is appropriate in light of the pr ohibition set

forth in section 1961(c)(4): "[Section 1961] shall not be

construed to affect the interest on any judgment of any

court not specified in this section."

In order to determine whether Congr ess did, in fact,

intend that the interest formula set forth in section 1961

not apply to FTCA judgments obtained in the District Court

of the Virgin Islands, the District Court first looked to 28

U.S.C. S 451. That section reads in part:

The term "court of the United States" includes the

Supreme Court of the United States, courts of appeals,

district courts constituted by chapter 5 of this title,

including the Court of International T rade and any

court created by Act of Congress the judges of which

are entitled to hold office during good behavior.

The terms "district court" and "district court of the

United States" mean the courts constituted by chapter

5 of this title.

Chapter 5 of Title 28, 28 U.S.C. SS 81-144, provides for the

constitution of the district courts of the fifty states, the

District of Columbia, and Puerto Rico. As the District Court

in this matter recognized,

Conspicuously absent from the [Chapter V] list are the

district courts of the Virgin Islands, Guam, and the

Northern Mariana Islands, which were established

pursuant to 48 U.S.C. SS 1611, 1424, and 1694,

respectively.

Alkon v. United States, No. 139F/1995, mem. opinion at 2

(D.V.I. Feb. 15, 2000).

According to the District Court, since the District Court

of the Virgin Islands was not constituted by Chapter 5, it is

not a "district court" for purposes of 28 U.S.C. S 1961; that

section, therefore, does not establish the applicable interest

rate. The District Court summarized its holding as follows:

While the matter is not altogether free fr om doubt, I

conclude for several reasons that the corr ect rate of

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post-judgment interest to be awarded in the District

Court of the Virgin Islands is the 9% rate prescribed by

5 V.I.C. S 426. First, I must consider the mandatory

language of 28 U.S.C. S 1961(c)(4), which limits the

application of that section to only those courts

specified therein. . . . Second, I am r eluctant to

substantially invalidate a section of the Vir gin Islands

Code absent some compelling reason to do so. 3 Finally,

calculating interest on judgments against the United

States at the same rate as other Virgin Islands

judgments is consistent with the overall theme of the

Federal Tort Claim Act itself, which is to r ender the

government liable to the same extent as private

tortfeasors.

Alkon v. U. S., mem. op. at 3.

III.

We agree with the District Court that r esolution of the

issue raised in this appeal turns on whether Congress

intended to mandate a technical reading of the term

"district court" as used in 28 U.S.C. S 1961(a) when it

provided in 28 U.S.C. S 1961(c)(4) that:"[t]his section

[providing for the calculation of inter est rates] shall not be

construed to affect the interest on any judgment of any

court not specified in this section." W e do not, however,

agree with the District Court's conclusion that the term

"district court" must be read to exclude application of

section 1961 to judgments entered against the United

States pursuant to the FTCA in the District Court of the

Virgin Islands.

In declining to adopt a reading of section 1961 which

would make it inapplicable to the judgment obtained here,

we are guided by our decision in In r e Jaritz, 151 F.3d 93

(3d Cir. 1998). There, we were asked to determine whether

28 U.S.C. S 155 authorized the Third Cir cuit Judicial

_________________________________________________________________

3. A finding that interest, in this matter , should be calculated with

reference to section 1961 would not invalidate 5 V.I.C. S 426. Section

426 would still be applied to calculate inter est on judgments rendered by

the Territorial Court of the Vir gin Islands.

6

Council to transfer bankruptcy judges to the V irgin Islands.

This determination hinged on a narrow question: "[W]hat

did Congress intend when it used the ter m `judicial district'

in section 155." Id. at 97. "Did it use the term in a generic

sense to refer to the geographic area in which a district

court exercises judicial authority in bankruptcy matters, or

did it intend its scope to be limited to the geographic area

in which an Article III district court exercises judicial

authority over such matters." Id.

In order to answer this question, we first considered the

statutory text, finding nothing that would "limit[ ] its scope

to judicial districts having an Article III district court." Id.

at 97. We next considered relevant legislative history, and

again failed to find any indication to suggest"an intent to

restrict the authorization conferred by section 155 to Article

III districts." Id.

Not finding the statutory text or the legislative history to

be dispositive, we "inquire[d] whether the broader or the

narrower reading of `judicial district'[would] best service

Congress's objectives in enacting Chapter 6 and section

155 in particular." Id. at 98. W e identified the objective of

Chapter 6 as the creation of "a reor ganized bankruptcy

system in which a specialized corps of full-time bankruptcy

judges would assist district court judges in adjudicating

bankruptcy matters." Id. We identified the objective of

section 155 as the "efficient and effective use of that corps

of full-time bankruptcy judges." Id. Interpreting Congress's

use of the term "judicial district" in light of the purpose

underlying the statute, we were unable to discern "any

reason Congress might have wished to gar ner the

efficiencies provided by [section 155] for judicial districts

having an Article III district court and not for judicial

districts having an Article IV district court which exercises

the jurisdiction of an Article III by virtue of the legislation

that created it." Id.

Finally, we addressed the dilemma posed by the

application of 28 U.S.C. S 451's limited definition of a

"district court" as a court constituted under Article III. We

wrote:

While we, of course, recognize that a definitional

section like section 451 must presumptively be taken

7

as reflecting the Congressional intent when a defined

term is used even in subsequent legislation, it is not

controlling where consideration of the ter m's immediate

context and its place in the overall Congressional

scheme clearly indicate that it is being used not as a

defined term of art but in its commonly understood

sense.

Id. at 100.

We found support for our analysis of the applicability of

section 451 in the Supreme Court's decision in Int'l

Longshoremen's & Warehousemen's Union v. Juneau Spruce

Corp., 342 U.S. 237 (1952). There, the IL WU filed suit

against Juneau Spruce in the District Court for the

Territory of Alaska, alleging violations of the Labor

Management Relations Act. Section 303(b) of that Act

provided that an action for violation of its pr ovision could

be brought "in any district court of the United States."

Addressing whether the District Court of Alaska had

jurisdiction over the matter, the Supr eme Court accorded

great weight to the underlying purpose of the LMRA,

concluding that:

[S]ince Congress lifted the restrictive requirements

which might preclude suit in courts having the district

courts' jurisdiction, we think it is more consonant with

the uniform, national policy of the Act to hold that

those restrictions were lifted as r espects all courts

upon which the jurisdiction of a district court has been

conferred. That reading of the Act does not, to be sure,

take the words "district court of the United States" in

their historic, technical sense. But literalness is no

sure touchstone of legislative purpose. The purpose

here is more closely approximated, we believe, by

giving the historic phrase a looser, mor e liberal

meaning in the special context of this legislation.

342 U.S. at 242-43.

In Jaritz, we concluded that the analysis undertaken in

Juneau Spruce applied with equal force:

Although the term "judicial district" as defined

elsewhere in the Judicial Code refers only to the

8

specifically enumerated district courts, the purpose of

section 155 -- ensuring maximally efficient use of

judicial resources -- is "mor e closely approximated" by

a more pragmatic and flexible construction of that term.4

151 F.3d at 101.

Recognizing that our resolution of the question presented

in Jaritz is relevant to the issue raised here, the District

Court in this matter cited Jaritz, r elying on our opinion to

support its conclusion that in light of the section 1961(c)(4)

limitation, the meaning of the term "district court" as used

in 1961(a) should be restricted to the definition set forth in

28 U.S.C. S 451. The District Court also concluded that

"calculating interest on judgments against the United

States at the same rate as other Virgin Islands judgments

is consistent with the overall theme of the Federal Tort

Claims Act itself, which is to render the gover nment liable

to the same extent as private tortfeasors." Alkon v. U.S.,

mem. op. at 4.

IV.

While we agree with the District Court that this matter

should be resolved with reference to the analysis in Jaritz,

we are convinced that faithful adherence to that analysis

better supports the view that the interest rate applicable to

the judgment in this case should be calculated in

accordance with section 1961 rather than pursuant to the

Virgin Islands Code. First, the language of section 1961

itself does not -- even considering the section c(4) limitation

-- unequivocally preclude its application to the District

Court for the Virgin Islands.

The legislative history of section 1961, too, is devoid of

any reference to the Virgin Islands and does not suggest

why Congress might have intended that FTCA judgments

reached in the District Court of the Vir gin Islands not be

subject to the provisions of section 1961. What scant

legislative history there is suggests the opposite. Section

_________________________________________________________________

4. We then found that, section 155 notwithstanding, bankruptcy judges

could be authorized to serve temporarily in judicial districts of Article

IV

courts under the provisions of an alter nate statutory section.

9

1961 was amended, as part of the Federal Courts

Improvement Act of 1982, to standardize the calculation of

interest rates applicable to civil judgments obtained in

federal court. Instead of continuing the practice of

calculating interest on civil judgments in accordance with

varying state formulae, Congress intended, in amending

section 1961, to "set[ ] a realistic and [uniform] rate of

interest on judgments" which would be "applicable to all

litigation in the Federal courts." S. Rep. No. 97-275, at 30

(1981), reprinted in 1982 U.S.C.C.A.N. p. 11, 40 (emphasis

added).5

Nothing in the legislative history supports the notion that

Congress, in drafting the 1961(c)(4) limitation, had the

District Court for the Virgin Islands or any other non-

Article III court in mind. In view of the emphasis on rate

uniformity, we cannot agree with the District Court that

Congress intended that judgments in the V irgin Islands be

subject to an interest rate not prevailing anywhere else in

the federal system.

We are also convinced that under the approach outlined

in Jaritz, the definition of "district court" and its use in

section 1961 should be assessed, not, as the District Court

found, in terms of the scope of the Federal T ort Claims Act,

but in terms of section 1961 itself. The District Court

wrote, "[C]alculating interest on judgments against the

United States at the same rate as other Vir gin Islands

judgments is consistent with the overall theme of the

Federal Tort Claims Act itself, which is to r ender the

government liable to the same extent as private

tortfeasors." Alkon v. U.S., mem. op. at 3. We focus instead

on the legislative intent underlying section 1961 and are

convinced that in amending that section Congr ess intended

_________________________________________________________________

5. Although section 1961 does explicitly mention the Court of Appeals for

the Federal Circuit and the Court of Federal Claims, it is likely that

this

mention flows from the fact that these courts were created pursuant to

the Federal Courts Improvement Act of 1982. Section 1961 was amended

as part of that same legislation and sought, by r eference to these

courts,

to clarify certain aspects of their operation. W e cannot infer from the

specific mention of these courts that Congr ess intended that section

1961 not apply to judgments obtained in the District Court of the Virgin

Islands.

10

to place all FTCA litigants obtaining judgments against the

United States in a district court on the same footing;

reading the term "district court" so as to exclude the

District Court of the Virgin Islands would destroy the very

uniformity that Congress sought to achieve.

Looking, as we did in Jaritz, at the statute itself, its

legislative history, and the purpose underlying the

enactment, we are satisfied that the ter m "district court" as

it is used in section 1961 should be read "not as a defined

term of art but in its commonly understood sense" to

include the District Court of the Vir gin Islands. In re Jaritz,

151 F.3d at 100.

V.

Adherence to the analysis set forth in Jaritz provides

sufficient reason for us to conclude that the interest

calculation in this matter is controlled by the provisions of

section 1961. In the interest of completeness, however, we

note that factors outside the scope of our decision in Jaritz

also favor application of section 1961.

First, the use of the term "district court" in 28 U.S.C.

S 2414 which authorizes the "payment offinal judgments

rendered by a district court . . . against the United States"

and in 28 U.S.C. S 1304, which refers to section 2414 and

appropriates amounts necessary to pay final judgments

against the United States and interest ther eon has not been

interpreted to exclude the District Court of the Virgin

Islands. To adopt the District Court's r eading of section

1961 would, as the government points out,"accord[ ] the

phrase `district court' one meaning as used in the

provisions authorizing the United States to pay such

judgments with interest, and another meaning as used in

the [closely related] provision specifying the rate of interest

owing on such judgments."

Second, we agree with the government that the District

Court's determination that the Vir gin Islands Code controls

the calculation of interest impinges upon the sovereign

immunity for interest of the United States. The United

States' waiver of sovereign immunity for inter est for

purposes of the FTCA is set forth at 31 U.S.C. S 1304 and

11

is subject to strict construction. See, e.g., Andrulonis v.

United States, 26 F.3d 1224, 1231 (2d Cir . 1994). The

District Court's analysis of section 1961 does not consider

the scope of the United States' waiver and, as the

government argues, "subjects the United States to greater

liability in [this] case," and "puts it at the mercy of the

Virgin Islands legislature mor e generally, requiring the

federal government to pay whatever rate of interest the

Virgin Islands legislature may enact."

Finally, we find support for our application of section

1961 in the provisions of S 1614(b) which were enacted as

part of the 1984 amendments to the Revised Or ganic Act of

1954. That section directs that the provisions of Title 28

"shall apply" to the District Court of the V irgin Islands

"[w]here appropriate." W e examined the reach of this

directive in Walker v. Gover nment of the Virgin Islands, 230

F.3d 82 (3d Cir. 2000), concluding:

[H]aving vested the District Court of the V irgin Islands

with the jurisdiction of the district courts of the United

States, Congress intended all of the pr ovisions of Title

28, which speak to procedure, jurisdiction, venue, and

particular proceedings (e.g., habeas), to apply, "[w]here

appropriate," to the District Court of the V irgin Islands.

Id. at 87.6 Alkon has been unable to identify and we have

not found any policy concern or other consideration that

would render the calculation of interest in this matter

pursuant to section 1961 "inappropriate." We agree with

the government that, "there is no plausible basis for

considering it `inappropriate' to apply the same rate of

interest to the judgments rendered by the District Court of

the Virgin Islands as is applied to judgments rendered by

the district courts of the fifty States and Puerto Rico." In

fact, in at least one Virgin Islands case, we applied section

_________________________________________________________________

6. The legislative history of 48 U.S.C. S 1614(b) indicates that Congress

intended that "the only exception to this extension [of Title 28 to the

District Court of the Virgin Islands] will be those provisions which are

in

conflict with specific legislation applicable to the Virgin Islands and

those

relating to judges who are appointed during good behavior." 130 Cong.

Rec. 23,790 (August 10, 1984) (statement of Sen. W eiker). The provisions

of section 1961 do not fall into either category.

12

1961 to the award of post-judgment inter est in a civil case,

never questioning that section's application. Dunn v. Hovic,

13 F.3d 58 (3d Cir. 1993).

In sum, we find that construction of the ter m "district

court" in related statutes, concerns bearing on sovereign

immunity, and the applicability of 48 U.S.C. S 1614(b)

bolster our analysis of the factors identified in Jaritz, and

provide additional support for applying section 1961 to

calculate the amount of interest owed on the judgment

awarded to Alkon.

VI.

We hold that interest on judgments obtained against the

United States in the District Court of the V irgin Islands

pursuant to the FTCA, should be calculated in accor dance

with the provisions of 28 U.S.C. S 1961. Accordingly, we will

reverse the order of the District Court.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

13