[00:00:01] Speaker 03:
The first case for argument this morning is 181487, US versus American Home Assurance Company.

[00:00:10] Speaker 03:
Mr. Shelley, whenever you're ready.

[00:00:13] Speaker 03:
I knew you all suggested that we consolidate these cases, and we decided not to do that.

[00:00:18] Speaker 03:
But it seems to us that you were issues in the first.

[00:00:22] Speaker 03:
So you might not need all of the time you're allotted for the first case.

[00:00:25] Speaker 00:
Thank you, Your Honor.

[00:00:26] Speaker 00:
That's perfectly fine with us.

[00:00:29] Speaker 00:
But it might be more convenient to do it all at once, but it doesn't matter.

[00:00:33] Speaker 00:
There are just two issues in this case.

[00:00:36] Speaker 00:
One of the first issues is whether our client, American Home Assurance, is a subsurity to Lincoln National, which is the insurance assurity that the government spent six years attempting to collect the duties involved in this case.

[00:00:53] Speaker 00:
And that process didn't work out because I think

[00:00:57] Speaker 00:
Lincoln National went into bankruptcy, and it's no longer a company.

[00:01:02] Speaker 03:
Yeah, and it seems kind of, I don't doubt that there's anything that can be done, but what struck me was that because they went after Liberty first, there are a lot of years that elided, which now you are charged with prejudgment interest.

[00:01:17] Speaker 03:
That's right.

[00:01:18] Speaker 03:
So I understand why you're troubled by that fact.

[00:01:24] Speaker 03:
Both the sureties here are equally liable, right?

[00:01:28] Speaker 03:
They have equal liability.

[00:01:30] Speaker 00:
They're equally liable for the month.

[00:01:32] Speaker 03:
And they have identical obligations in the contract.

[00:01:36] Speaker 00:
Well, American Home, I believe, had a continuous bond in this case, which limited its liability to $1 million.

[00:01:41] Speaker 00:
Right.

[00:01:42] Speaker 00:
But aside from that, so what's the argument?

[00:01:46] Speaker 00:
Well, then the question was whether, because we contend that American surety is a sub-surety to Lincoln,

[00:01:53] Speaker 00:
that Lincoln should have had first obligation.

[00:01:55] Speaker 00:
And that should have been the focus of the government.

[00:01:58] Speaker 03:
But no legal document compels that or suggests that, right?

[00:02:02] Speaker 00:
No, it's just the factual situation of the cases that we believe makes a distinction.

[00:02:10] Speaker 00:
Because if they were fully liable as co-assurities, then there would be the possibility of equal,

[00:02:21] Speaker 00:
of American AHAC being able to seek partial payment from Lincoln National.

[00:02:31] Speaker 03:
I saw somewhere in the record they're defunct now.

[00:02:35] Speaker 00:
They're defunct now.

[00:02:36] Speaker 00:
So that wouldn't be an opportunity.

[00:02:37] Speaker 00:
This issue was relevant, much more relevant a long time ago than it is today.

[00:02:42] Speaker 03:
Want to move on to your second issue?

[00:02:44] Speaker 00:
The second issue is one that's involved in both this case and

[00:02:49] Speaker 00:
in five of the cases in the next oral argument, which is when the amount, what dates the single transaction bonds, the bonds that are at issue, pre-judgment interest should begin to run and when should it not run.

[00:03:08] Speaker 00:
argue that the determination of liability for the bonds was in the summary judgment in the original district.

[00:03:14] Speaker 01:
But no damages amount.

[00:03:15] Speaker 01:
There was no determination of the precise damages at the time of summary judgment.

[00:03:19] Speaker 00:
Well, we believe that the amount of liability was pretty precisely determined at that point.

[00:03:26] Speaker 01:
Where in the opinion was it determined?

[00:03:28] Speaker 00:
The opinion with the other way we were arguing that it should have been determined because it was clear in Yes, in particularly a case will discuss in the next that's like okay say say a contract case or a patent case or any other kind of case

[00:03:42] Speaker 01:
liability is decided first.

[00:03:44] Speaker 01:
Maybe the parties don't have meaningful dispute between them about what the damages amount might be, but you still don't have a determination of damages until the judge actually enters a judgment on the damages, even if there is no meaningful dispute, even if the record is clear and no reasonable jury could go otherwise.

[00:04:01] Speaker 01:
you still don't have an actual judgment, a determination of damages, until the judge enters it.

[00:04:06] Speaker 01:
And so I feel like you're asking us to ignore the fact that there was none at the summary judgment stage, because it seems to you that it was clear what the amount would have been.

[00:04:14] Speaker 00:
Well, the judge didn't determine an amount, I believe.

[00:04:17] Speaker 00:
But it was not finalized until further arguing through.

[00:04:21] Speaker 03:
But some of that was in dispute, right?

[00:04:22] Speaker 03:
Not in necessarily all the cases.

[00:04:24] Speaker 03:
But in some of the cases, the actual amount was in dispute.

[00:04:28] Speaker 03:
So how was it meaningfully ascertained if it was still in play and in dispute?

[00:04:35] Speaker 00:
Because of the facts of the situation, it's a very simple situation.

[00:04:38] Speaker 00:
There was a certain amount of liability under the interest provisions.

[00:04:43] Speaker 00:
mandatory 6% rate, and there's a time limit.

[00:04:46] Speaker 00:
So it's really just a question of which time you apply to that equation to determine the liability.

[00:04:52] Speaker 03:
No, that's the issue, whether it was 2015 or 2018.

[00:04:54] Speaker 03:
And that has to do with whether or not we think at the summary judgment stage, the damages were meaningfully ascertained.

[00:05:01] Speaker 03:
And as Judge Moore points out,

[00:05:04] Speaker 03:
I mean, the case wasn't resolved.

[00:05:06] Speaker 03:
And even the damages were, to some extent, still in dispute and in play, right?

[00:05:14] Speaker 00:
They were to the extent that there were some issues, legal issues, that were considered by the court in the final decision.

[00:05:23] Speaker 00:
This case is perhaps the most different.

[00:05:29] Speaker 00:
It's different from some of the cases that we will talk about in the other appeal.

[00:05:33] Speaker 03:
But they're all kind of unique, or hopefully they are, because all of this has to do with something that happened in 2001 and 2002.

[00:05:39] Speaker 03:
Yes, Your Honor.

[00:05:42] Speaker 03:
And unfortunately for you, you're liable for 6% interest.

[00:05:48] Speaker 03:
for all of that period, which I think you said amounts to half of the damage award.

[00:05:55] Speaker 00:
It does.

[00:05:55] Speaker 00:
We're just arguing that an additional three-year period should not have been applied, because at the time of the summary judgment determination, all the facts were there for the court to have made a final determination, but for other issues that were still in dispute.

[00:06:23] Speaker 02:
Good morning.

[00:06:26] Speaker 02:
May it please the court.

[00:06:28] Speaker 02:
I'll start with the surety, co-surety, or surety issue.

[00:06:33] Speaker 03:
The law may well be on your side, but it doesn't seem a little harsh or inequitable.

[00:06:39] Speaker 03:
Assume hypothetically, and I think it's close to this case, that the government was going after the other surety for a long period of time.

[00:06:47] Speaker 03:
And then they changed course, and they go after this gentleman's client.

[00:06:54] Speaker 03:
As things turned out, as a result of that, they're liable for years and years and years of 6% interest annually starting at the time of the liquidation back in 2001 and 2002, right?

[00:07:08] Speaker 02:
I think it's my understanding the 6% under the 580, that doesn't start accruing into the first demand.

[00:07:17] Speaker 03:
So they weren't being charged a higher interest until... So if you're going after Liberty and then you decide for whatever reason you're going to change course, then their interest does not run until you actually make the demand specifically to them.

[00:07:30] Speaker 02:
It's my understanding that the interest under 580, that's the 6% that you were referring to.

[00:07:36] Speaker 02:
That doesn't begin until the first demand.

[00:07:39] Speaker 02:
I think the interest that AHAC is referring to is the interest under 1505D, which I understand is a smaller percentage of interest.

[00:07:47] Speaker 02:
I'm not sure what the actual rate is, but that accrues on the post-liquidation.

[00:07:54] Speaker 02:
Up until the face you know the amount of that would start to run even before 30 days right 30.

[00:07:59] Speaker 02:
It's there.

[00:08:00] Speaker 02:
I think it's 30 days after the Bill is due or or them duties aren't paid so It might seem inequitable, but the 6% didn't start running until the date of their first demands and As the court pointed out the bonds are identical it sets forth the obligations the sureties are co-equals and

[00:08:24] Speaker 02:
The government has the option to go and seek recovery after both sureties or either one of them.

[00:08:34] Speaker 02:
In this case, we chose to seek our recovery from AHAC.

[00:08:39] Speaker 03:
So here the difference between the two companies is AHAC was a continuous transaction bonds and the other company was single transaction bonds?

[00:08:48] Speaker 02:
Yes, AHAC was a continuous bond holder.

[00:08:51] Speaker 02:
Lincoln General was the single transaction bondholder.

[00:08:54] Speaker 03:
But your view as to the liability of each is not influenced by that distinction between the two?

[00:09:00] Speaker 02:
No, it's not.

[00:09:06] Speaker 02:
As for the post-judgment, pre-judgment interest issue, we take note and we agree with the court's acknowledgment that there was no entry of judgment in this case until January 2018.

[00:09:22] Speaker 02:
The opinion that was issued in 2015 was not a judgment.

[00:09:27] Speaker 02:
It was actually opinion.

[00:09:28] Speaker 02:
It didn't set the course.

[00:09:30] Speaker 03:
But the case they rely on, is it Kaiser?

[00:09:32] Speaker 02:
Yes.

[00:09:33] Speaker 03:
That doesn't require a final judgment, right?

[00:09:36] Speaker 03:
That just requires that damages be meaningfully, I think the language is meaningfully ascertainable.

[00:09:44] Speaker 03:
Yes.

[00:09:45] Speaker 03:
They could have said, when judgment is final, they didn't.

[00:09:48] Speaker 03:
So where does the government get

[00:09:51] Speaker 02:
Applying that Kaiser I mean are you just saying Kaiser doesn't apply it has it has no effect on this case Or you saying that Kaiser means that the judgment was fine Kaiser is consistent with the government's position and that there needs to be a final not a final judgment at least a judgment that actually triggers the interest provisions under 1961 you you can't let judges and

[00:10:16] Speaker 01:
state the wrong standard, especially when it affects your case.

[00:10:19] Speaker 01:
You need to listen more carefully to the questions.

[00:10:21] Speaker 01:
She said Kaiser says the standard is meaningfully ascertainable.

[00:10:26] Speaker 01:
That means two people could figure it out.

[00:10:28] Speaker 01:
But that's not the standard under Kaiser, is it?

[00:10:30] Speaker 01:
What is it?

[00:10:31] Speaker 01:
I agree.

[00:10:31] Speaker 02:
It's meaningfully ascertained.

[00:10:32] Speaker 01:
Accertained.

[00:10:34] Speaker 01:
Has been ascertained already by someone.

[00:10:37] Speaker 01:
Right.

[00:10:37] Speaker 01:
But that's a critical difference for the government, isn't it?

[00:10:39] Speaker 01:
Because if they're right, the damages could be figured out by someone.

[00:10:42] Speaker 01:
So you have to listen carefully to the questions and jump in.

[00:10:45] Speaker 01:
OK.

[00:10:46] Speaker 02:
Thank you.

[00:10:48] Speaker 02:
Back to the actual decision, the decision in Kaiser dealt with judgments.

[00:10:54] Speaker 02:
And one of the parties in that case actually wanted the interest to start accruing at the time of the verdict.

[00:11:01] Speaker 02:
And the court was very clear.

[00:11:03] Speaker 02:
The court said, by linking all post-judgment activity to the entry of a judgment, the courts have been provided a uniform time from which to determine post-judgment issues.

[00:11:13] Speaker 02:
The court went on to say that we conclude that post-judgment interest probably runs from the date of the entry of judgment.

[00:11:19] Speaker 02:
There was only one entry of judgment in this case.

[00:11:22] Speaker 02:
That's reflected in the docket.

[00:11:23] Speaker 02:
It's actually reflected in the opinion.

[00:11:25] Speaker 02:
At the end of the opinion, the court instructed the parties to confer and submit a proposed judgment.

[00:11:32] Speaker 02:
So in terms of Kaiser holds that the entry of the judgment

[00:11:36] Speaker 02:
is what triggers 1961.

[00:11:38] Speaker 02:
And that's how the actual entry actually accrues pursuant to the statute based on the date of the entry of judgment.

[00:11:44] Speaker 02:
Here, only one entry of judgment.

[00:11:46] Speaker 03:
And what statutes were in play here?

[00:11:48] Speaker 03:
Was 1961 another statute in play in this case?

[00:11:53] Speaker 02:
It was, for purposes of post-judgment interest, it was 1961.

[00:11:57] Speaker 02:
And there were two versions, but that is irrelevant here.

[00:12:02] Speaker 02:
For purposes of our argument, we're just looking at the portion when post-judgment interest begins to accrue.

[00:12:19] Speaker 03:
You have nothing further?

[00:12:28] Speaker 03:
You have rebuttal time if you need it.

[00:12:31] Speaker 00:
On page three, we indicate that when Customs finally did seek payment from American Home Assurance Company, it assessed the interest that accumulated during the time period when they were seeking interest against Lincoln National, not from when AHAC got involved in the process.

[00:12:54] Speaker 00:
We think that they were trying to get interest from a much longer period where we were not involved in their attempts to collect interest during the earlier part of this time period.

[00:13:08] Speaker 03:
All right, everyone stay where you are.