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M. Osgood v. S. Osgood
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MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 1997 ME 192
Docket: Cum-96-827
Submitted
on Briefs: May 23, 1997
Decided: August 15, 1997
Panel: WATHEN, C.J., and ROBERTS, GLASSMAN, CLIFFORD, RUDMAN, and DANA, JJ.
MARGARET J. OSGOOD
v.
SARAH F. OSGOOD
WATHEN, C.J.
[¶1] Plaintiff Margaret J. Osgood appeals from the judgment entered
in the Superior Court (Cumberland County, Saufley, J.) in an action involving
the partition and sale of real estate and personal property held by Margaret
and her sister, defendant Sarah F. Osgood, as tenants in common. At issue
on appeal is the court's award of prejudgment interest. The court ordered
interest only from the date of an arbitration award that resulted from an
agreement to settle part of the action. Plaintiff claims an entitlement to
prejudgment interest from the date of the original complaint. We agree, but
only with respect to a portion of the award. Thus, we vacate the judgment.
[¶2] In 1992, Margaret filed a complaint for the partition of certain
real estate in Scarborough that she and Sarah inherited from their father
and held as tenants in common. This complaint was later amended to add a
second count seeking equitable distribution of the personal property located
on the real estate. Sarah counterclaimed seeking payment for the expense
of maintaining the real estate.
[¶3] Following the court's denial of Margaret's motion for a summary
judgment, the parties entered into a consent order of partition and sale
agreeing that the property would be placed on the market and sold if certain
conditions were satisfied. The order provided that if the parties were
unable to resolve disputes about various costs as well as the distribution of
personal property, a sum of money from the sale would be placed in escrow,
and the parties would submit to binding arbitration. When negotiations
regarding the personal property broke down, the disputed matters were
arbitrated. The arbitrator awarded $45,390.91 to Margaret as her share of
the personalty held by Sarah and for reimbursement of expenses and
unauthorized withdrawals. The arbitrator did not address the issue of
prejudgment interest in his decision. Margaret subsequently filed a motion
to confirm the arbitration award.
[¶4] The court confirmed the award of the arbitrator and concluded
that prejudgment interest should be awarded only for the period between
the dates of the arbitration award and judicial confirmation of that award.
The court reasoned that absent some other agreement, all issues are
considered to be submitted to arbitration for resolution and concluded that
it lacked authority to award interest predating the arbitration award.
Margaret appeals seeking interest on the entire award from the date of the
complaint.
[¶5] Although there is authority suggesting that interest may not be
added by a court in confirming an arbitration award, we conclude that the
hybrid before us is not an arbitration proceeding pursuant to Maine's
Uniform Arbitration Act. 14 M.R.S.A. §§ 5927-5949 (1980 & Supp. 1996).
This case began as and remains a civil action and was initiated by the filing
of a civil complaint. M.R. Civ. P. 2 ("[t]here shall be one form of action to be
known as 'civil action.'"). "Under the Rules there is only one action -- a "civil
action" -- in which all claims may be joined and all remedies are available."
Ross v. Bernard, 396 U.S. 531, 539 (1970). Although an arbitrator
subsequently decided issues in this case when the parties were unable to
resolve their disagreement in the framework of negotiation and settlement,
the arbitration proceedings did not alter the original character of the case as
a "civil action."
[¶6] Here, arbitration resulted from an order entered by consent and
was agreed to only after substantial litigation had occurred. Arbitration was
resorted to as a means of facilitating the resolution of issues that the parties
were unable to agree on in a protracted civil action. This is not an instance
in which a complaint is filed for the purpose of proceeding to arbitration,
compelling arbitration, or enforcing an arbitration award. The arbitration
here of specific issues was ancillary to and served the needs of the civil
action and did not materially alter its nature for purposes of the
prejudgment interest statute.
[¶7] Given the existence of a civil action, Margaret relies on the
mandatory language of the prejudgment interest statute to contend that she
is entitled to interest from the date of the original complaint, not merely, as
ordered by the court, from the date of the arbitration award. We review the
court's construction of the prejudgment interest statute for errors of law.
Fleet Bank of Maine v. Griffin, 690 A.2d 981, 983 (Me. 1997). In doing so,
we must give effect to the Legislature's intent. Intent is usually gleaned from
the plain meaning of the statute, construed to avoid absurd, illogical, or
inconsistent results. Id.
[¶8] The relevant statute provides: "In all civil actions, except those
actions involving a contract or note which contains a provision relating to
interest, prejudgment interest shall be assessed . . . ." 14 M.R.S.A. §
1602(1) (Supp. 1996). In actions not involving a notice of claim,
prejudgment interest accrues from the date on which the complaint is filed
until the date on which an order of judgment is entered. Id. "Civil action,"
broadly defined, includes both suits cognizable at law and in equity. M.R. Civ.
P. 81(a); Raymond v. Raymond, 480 A.2d 718, 724 (Me. 1984).
[¶9] The present case is complicated by the fact that $35,985 of the
award represents Margaret's share of jointly-owned personalty valued by the
arbitrator at current market value. Only the balance of the award,
$10,815.91, represents money damages for unpaid expenses or
unauthorized withdrawals from a joint account. Permitting prejudgment
interest in a case involving the equitable partition of jointly-held property
leads to an illogical result inconsistent with the purpose of the statute.
[¶10] Prejudgment interest, disapproved of at common law, was
created by the Legislature as a measure of damages to penalize defendants
for delay and to encourage the pretrial settlement of clearly meritorious
suits. Pierce v. Central Maine Power, Co., 622 A.2d 80, 85 (Me. 1993);
Purwin v. Robertson Enterprises, Inc., 506 A.2d 1152, 1155 (Me. 1986).
Such interest is designed to compensate an injured party for the inability to
use money rightfully belonging to that party between the date suit is filed
and the date judgment is entered Masters Machine Co., Inc. v. Brookfield
Athletic Shoe Co., Inc., 663 F.Supp. 439, 443 (D.Me. 1987) (citing
Inhabitants of Town of Norridgewock v. Inhabitants of Town of Hebron, 152
Me. 280, 283, 128 A.2d 215, 217 (1957)). Awarding prejudgment interest
to the prevailing party in civil actions for damages appropriately furthers
these purposes.
[¶11] Actions for partition, however, are distinguishable from actions
for damages. The institution of a "civil action" for partition is merely a
vehicle for the exercise of the right to divide property. Because that right
does not depend on either the unlawful taking or detention of property, or
any injury thereto, 59A Am. Jur. 2d Partition §3 (1987), such an action is
not necessarily premised on a wrong by the defendant. The parties are
simply severing their joint ownership and requesting division and
distribution of the property by the court. In a partition action, an award of
"prejudgment interest" in addition to a share of the property valued at
current market value would result in a windfall for the first joint-owner to
seek partition. The present case involves both an action for partition of
personalty and an action for money damages. We conclude that prejudgment
interest should have been awarded from the date of the complaint, but only
on $10,815.91, the sum awarded for money damages.
The entry is:
Judgment vacated and remanded for an
award of prejudgment interest on
$10,815.91 from the date of the
complaint.
Attorney for plaintiff:
U. Charles Remmel, II, Esq.
Kelly, Remmel & Zimmerman
P O Box 597
Portland, ME 04112-0597
Attorney for defendant:
Clarke C. Hambley, Esq.
Givertz, Lunt, Hambley & Scheffee, P.A.
P O Box 4801
Portland, ME 04112-4801
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