Tuesday, June 9, 2009

Reservation of Jurisdiction to Determine Prejudgment Interest is Improper

In Westgate Miami Beach, Ltd. v. Newport Operating Corp. (3D09-264), the Third District affirmed the trial court's order denying the movant's motion for prejudgment interest.

The trial court entered a judgment in favor of plaintiff, however, reserved jurisdiction to award prejudgment interest, costs and attorneys fees. Neither party objected to the trial court reserving jurisdiction and both parties believed the trial court could do so.

The plaintiff appealed the final judgment [arguing 7.7 million was insufficient]. In June 2008, the Third District issued its mandate in that appeal affirming the judgment. See Newport Operating Corp. v. Westgate Miami Beach, Ltd., 982 So. 2d 698 (Fla. 3d DCA 2008) (table).

After the issuance of the mandate by the Third District, the parties attended a hearing in the trial court on Plaintiff's motion to assess prejudgment interest. The trial court indicated it was going to deny the motion and the plaintiff petitioned the Third District for a writ of prohibition, writ of mandamus and to enforce the June mandate. Three different panels of the Third District denied each of the three filings.

In January 2009, the trial court entered the order it had previously indicated it was going to enter and denied the plaintiff's motion for prejudgment interest.
Citing McGurn v. Scott, 596 So. 2d 1042 (Fla. 1992), the Third District held that the original order appealed was not a final order. However, "While a judgment that reserves jurisdiction to award prejudgment interest technically is not a final order, the Florida Supreme Court in McGurn held that:

[I]f a trial court improperly renders such a judgment which appears to be, or has the attributes of a final judgment, the order will be deemed to have become a final judgment requiring review by immediate appeal. Further, because an appellate court’s jurisdiction is exclusive with respect to the subject matter of an appeal, once the appeal is taken the trial court will lack the jurisdiction to take any further action in the matter. Thus, the parties will be deemed to have waived any matter reserved for future adjudication by the trial court, with the exception of attorneys’ fees and costs.

Further, the fact that the trial court determined entitlement to prejudgment interest does not change the analysis. "The harshness of the ruling in McGurn is softened, to some extent, by Florida Rule of Civil Procedure 1.530(b), and Florida Rule of Appellate Procedure 9.600(b). Rule 1.530(b) empowers the plaintiff to file a motion for rehearing to correct the improper final judgment." Since the plaintiff did not seek to correct the improper final judgment, and waited until after a mandate was issued from the appellate court, the plaintiff waived its right to prejudgment interest.

Notably, Judge Cope issued a concurring opinion in which he agreed the court was bound by McGurn and that he agreed entirely with the majority opinion. He, however, believes McGurn should be revisited. He stated: "It would better serve that policy to modify the McGurn rule to eliminate the automatic waiver. An appeal containing an improper reservation of jurisdiction should be subject to dismissal on motion of a party, or the court. This is the procedure for dealing with other premature appeals, and it is hard to see a good reason why an improvident retention of jurisdiction should be treated differently."


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