interest based on Ill.Rev.Stat. ch. 17, § 6402 and postjudgment
interest based on Ill.Rev.Stat. ch. 110, § 2-1303. Presently
pending before this Court is plaintiff's second motion to amend
the judgment seeking an increased award of interest. Plaintiff
contends that this Court erred in awarding postjudgment
interest pursuant to Ill.Rev. Stat. ch. 110, § 2-1303 (1983),
and instead should have awarded interest based on the federal
postjudgment interest statute, 28 U.S.C. § 1961 (as amended
effective Oct. 1, 1982). Defendant has not filed a response.
For the following reasons, plaintiff's second motion to alter
or amend the judgment is denied.
On April 1, 1985, this Court granted summary judgment in
favor of Lazzara and against Esser in the amount of $150,000.
The basis for the judgment was that Esser had wrongfully
failed to procure an excess liability insurance policy for
Lazzara, which caused a judgment to be entered against Lazzara
in a Florida state court in the amount of $150,000. The
Florida judgment was entered on May 5, 1982. Shortly after
this Court granted summary judgment in his favor, Lazzara made
a motion to amend the judgment to include interest and
attorneys' fees from May 5, 1982 through April 1, 1985.
Lazzara requested that interest be calculated pursuant to
Fla.Stat.Ann. § 55.03 (West 1985), the "interest on a judgment"
statute, at the rate of 12% per annum.
After an exhaustive conflict of laws analysis, however, this
Court determined that a district court sitting in Illinois and
following Illinois substantive law had absolutely no interest
to apply a Florida interest statute to a judgment rendered in
an Illinois diversity action. This Court determined that the
Illinois prejudgment interest statute was the appropriate
statute under which interest should be calculated and,
consequently, awarded Lazzara interest based on Ill.Rev.Stat.
ch. 17, § 6402 (1983) at the rate of 5% per annum from May 5,
1982 through April 1, 1985.
Lazzara also requested postjudgment interest from the date
summary judgment was rendered (April 1, 1985) until the date
that the judgment was satisfied. This Court, following
Merit Insurance Co. v. Leatherby Insurance Co., 728 F.2d 943
(7th Cir. 1984), awarded Lazzara post-judgment interest at the
highest rate allowed in Illinois, 9% per annum, based on
Ill.Rev.Stat. ch. 110, § 2-1303.*fn1 This Court also denied
Lazzara's request for attorneys' fees because no evidence
existed that Esser's delay in settling the action amounted to
an unreasonable or vexatious delay.
On July 16, 1985, this Court issued its opinion awarding
Lazzara interest based on these two Illinois statutes, citing
the Merit case for the proposition that although Illinois has
two postjudgment interest statutes which conflict as to the
rate of interest, the defendant should not be able to profit
from his wrongdoing, and, consequently, the interest should be
calculated at the higher of the two rates. After reading this
Court's July 16, 1985 opinion, Lazzara apparently is still
unsatisfied with his recovery for he has once again come to
this Court seeking to amend or alter his judgment. Despite the
fact that he himself requested that the Florida interest
statute be applied in his first motion to alter or amend the
judgment, Lazzara now argues that this Court instead should
have applied the federal interest statute, 28 U.S.C. § 1961 (as
amended, effective Oct. 1, 1982).
28 U.S.C. § 1961, as amended, provides for interest to be
granted on any money judgment entered in a civil case "at a
equal to the coupon issue yield equivalent (as determined by
the Secretary of the Treasury) of the average accepted auction
price for the last auction of 52 week United States Treasury
bills settled immediately prior to the date of judgment." In
plaintiff's initial motion to amend his judgment, however,
plaintiff did not request interest to be awarded pursuant to
this statute. Plaintiff apparently was unaware of the
existence of the federal postjudgment interest statute because
he made no mention of it whatsoever and indeed requested
post-judgment interest as available under Florida law.*fn2
In Weitz Company, Inc. v. Mo-Kan Carpet, Inc., 723 F.2d 1382
(8th Cir. 1983), the Eighth Circuit considered the application
of 28 U.S.C. § 1961 in its post-amendment form to a diversity
action. The Eighth Circuit determined that the federal interest
statute was applicable to the computation of postjudgment
interest. Id. at 1386.*fn3 In a dissenting opinion, however,
Judge Swygert, Senior Circuit Judge of the Seventh Circuit
sitting by designation, emphasized that "Congress has only
limited authority to dictate the law that applies in a federal
court sitting in a diversity action." Id. at 1387. According to
the Erie doctrine, "Congress has no power to declare
substantive rules of common law applicable in a state. . . ."
Erie Railroad v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822,
82 L.Ed. 1188 (1938). He found that it is doubtful whether the
Constitution empowers Congress to proscribe the rate of
interest due on judgments granted in diversity cases when the
claim is based solely on state law because "[j]udgment interest
is an item of substantive damages." Weitz, supra, 723 F.2d at
1387, citing Restatement (Second) of Conflict of Laws § 171
comment C (1971). Judge Swygert determined that the federal
interest statute does not apply in a diversity action in which
the claim is based exclusively on state law in the absence of a
specific provision for such diversity claims within the
statute. Id. at 1388.
This Court finds that Judge Swygert's dissent is more
persuasive than the majority opinion in Weitz on that issue.
Federal courts sitting in diversity must apply the substantive
law of the state in which they sit to assure that the outcome
of federal court adjudication of diversity cases is
substantially the same as the result that would have obtained
in state court and to avoid forum shopping that would otherwise
result. This Court cannot conceive that Congress, which has
long been considering abolishing diversity jurisdiction
altogether because of the ever-increasing federal caseload,
would have adopted a federal interest statute applicable in
diversity cases which would increase rather than decrease the
number of federal cases without mentioning one word about its
applicability to diversity cases in the legislative history.
Certainly, Congress did not intend such a result.
Accordingly, this Court holds that 28 U.S.C. § 1961 as
amended does not apply to actions in which jurisdiction is
based on diversity of citizenship.*fn4 This case is a
diversity action in which the claim rests exclusively on state
law. Consequently, this Court finds that Ill.Rev.Stat. ch.
110, § 2-1303 controls the determination of postjudgment
interest in the instant controversy.
Thus, plaintiff's second motion to amend the judgment
seeking postjudgment interest under 28 U.S.C. § 1961 is denied.