Interest Accrual on Attorney's Fee Awards

I. INTRODUCTION In 1984, MidAmerica Federal Savings & Loan Association sued Shearson/American Express, Inc. for violations of Oklahoma Securities Act and breach of fiduciary duty in connection with MidAmerica's purchase of fifty million dollars in investment trusts from Shearson.1 MidAmerica prevailed, and on July 23, 1986, district court entered for MidAmerica and granted it right to recover attorney's fees. On April 22, 1991, court set MidAmerica's attorney's fee award at $512,197.15.3 Following April 22, 1991 MidAmerica and Shearson disputed proper date to begin interest accrual on attorney's fee award4 under 28 U.S.C. § 1961(a),5 federal interest statute: July 23, 1986 or April 22, 1991 attorney's fee judgment.6 Attorney's fee disputes, such as MidAmerica's and Shearson's, usually include two judgments.7 The first i.e., July 23, 1986, is merits judgment.8 At (also known as on jury verdict),9 court enters for prevailing party and grants prevailing party right to recover attorney's fees.10 The second i.e., April 22, 1991, follows a separate hearing by court to determine specific amount or quantum of attorney's fees to award.11 It is called quantum judgment, because this determines amount of attorney's fees to be awarded.12 The United States Courts of Appeals are split on whether interest accrual under § 1961(a) begins on date of or exact quantum judgment.13 The split of authority results from fact that § 1961(a) does not distinguish between two judgments in attorney's fee cases.14 The interest statute, § 1961(a), provides that interest accrual begins on the date of . . . judgment.15 The Fifth, Sixth, Eighth, Ninth, Eleventh, and Federal Circuit Courts of Appeals have held that interest accrual under § 1961(a) begins on date of judgment.16 The circuits have reasoned that § 1961(a) compensates prevailing parties for delays in payment of damage awards from date prevailing party becomes fully entitled to its damage award.17 Furthermore, because prevailing party becomes entitled to its attorney's fee award on date of prevailing party is entitled to interest under § 1961(a) from date of judgment.18 Under approach, MidAmerica would be entitled to approximately $200,000 in interest-at then-prevailing rate of approximately 7%-for delay in payment between and exact quantum judgment.19 The Third, Seventh, and Tenth Circuit Courts of Appeals, conversely, have held that interest accrual under § 1961(a) begins on date of exact quantum judgment.20 The exact quantum circuits have reasoned that term judgment in § 1961(a) is short for judgment.21 Furthermore, because exact quantum is for a specific amount of money (in attorney's fee cases), interest accrual under § 1961(a) begins on date of exact quantum judgment.22 Under exact quantum approach, MidAmerica would not have been entitled to collect $200,000 in interest that accrued between and exact quantum judgments.23 This Article argues that date of is correct date to begin interest accrual on attorney's fee awards under § 1961(a). Part II introduces § 1961(a), provides statutory language relevant to interest accrual dispute, and discusses United States Supreme Court's interpretation of § 1961(a). Part III defines and exact quantum approaches to interest accrual dispute. Part IV argues that approach provides correct solution to interest accrual dispute, because approach remains consistent with statutory language of § 1961(a), advances legislative intent behind § 1961(a), and is supported by public policy. …