Sam Alberts, Trustee for the DCHC Liquidating Trus v. Daljit Mac, M.D.

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
GREATER SOUTHEAST COMMUNITY
HOSPITAL CORP. I, et al.,
Debtors.
____________________________
SAM J. ALBERTS, TRUSTEE FOR
THE DCHC LIQUIDATING TRUST,
Plaintiff,
v.
DALJIT MAC, M.D.,
Defendant.
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Case No. 02-02250
(Chapter 11)
(Jointly Administered)
Adversary Proceeding No.
04-10247
DECISION RE PREJUDGMENT INTEREST
After the trial of this matter, the plaintiff has filed a
proposed judgment which provides for “interest at the legal rate
from November 18, 2004 until the judgment is paid in full as
provided by 28 U.S.C. § 1961.” This language muddles the proper
treatment of prejudgment and postjudgment interest. First,
prejudgment interest runs until the entry of the judgment and,
with the principal obligation and any costs taxed, becomes part
The decision below is hereby signed. Dated: April
28, 2006.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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of the judgment amount upon which interest then runs from the
date of entry of the judgment as provided by 28 U.S.C. § 1961.
Second, prejudgment interest is generally at the prime rate, not
at the rate specified by § 1961. See Webster v. Harris Corp. (In
re NETtel Corp.), 327 B.R. 8 (Bankr. D.D.C. 2005). Moreover,
given the short-term nature of the loans that a prime rate
covers, it is appropriate to compute interest at the prime rate
on an annual basis. See In re NETtel Corp., 327 B.R. at 13-14.
See also Esser v. First Fed. Fin. Services, Inc. (In re Carini),
245 B.R. 319, 326 (Bankr. E.D. Wis. 2000) ("The plaintiff is also
entitled to pre-judgment interest . . . computed annually . . .
.”).
The adversary proceeding was commenced in November 2004, but
service of the complaint was not made until December 2004.
Prejudgment interest should be calculated from the date of
service of the complaint, December 15, 2004. Given the short-
term nature of the loans to which the prime rate applies and for
simplicity of calculation, it is appropriate to use the monthly
bank prime rate for December of each year that the proceeding has
been pending (5.15% for December 2004; and 7.15% for December
2005), with interest compounded on each anniversary.
The trustee seeks the recovery of an avoided transfer of
$8,110.00, plus a $150.00 filing fee, plus prejudgment interest.
The prejudgment interest will run on the basic amount to be
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1 The calculation of the amount owed is:
1.0515 x $8,110.00 = $8,527.67 owed at December 15, 2005.
.0715 x $8,527.67 x 134/365 = $223.85 in interest from
December 15, 2005, to April 28, 2006.
Total judgment before costs = $8,527.67 + $223.85 =
$8,751.52.
Prejudgment interest = $8,751.52 - $8,110.00 = $641.52.
2 Failure of the plaintiff to provide the court with a
calculation of prejudgment interest in other adversary
proceedings may result in the court's denying prejudgment
interest in the exercise of its discretion. The prime rates of
interest to be employed for the starting month and for each
succeeding anniversary are found on the Federal Reserve website
at www.federalreserve.gov/releases/h15/data.htm under the
category of “Bank prime loan” and the subcategory “monthly.”
3	O:\JUDGTEMP\Alberts vs Mac Decision re Prejudgment Interest.wpd
recovered, $8,110.00, not on the cost of $150.00. (Costs are
generally taxed after entry of the judgment, and the court is
unaware of any decision permitting the recovery of prejudgment
interest on costs.)
This results in a judgment owed as of April 28, 2006, of
$8,110.00, plus prejudgment interest of $641.52,1 plus costs of
$150.00, for a total judgment amount of $8,901.52.2 A judgment
follows.
[Signed and dated above.]
Copies to: Office of the United States Trustee; all counsel of
record.
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