UNITED STATES DISTRICT COURT                             
                   DISTRICT OF MINNESOTA                                

________________________________________________________________________  

In Re: RFC and ResCap Liquidating     Case No. 13-cv-3451 (SRN/HB)        
Trust Litigation                                                          

                                 MEMORANDUM OPINION                     
                                       AND ORDER                        

This document relates to:                                                 

ResCap Liquidating Trust v. Home Loan                                     
Center, Inc., Case No. 14-cv-1716 (SRN/HB)                                


SUSAN RICHARD NELSON, United States District Judge                        

I.   INTRODUCTION                                                         
   Before the Court is the Motion for Prejudgment Interest [Doc. No. 4739] filed by 
Plaintiff ResCap Liquidating Trust (“ResCap”).  For the reasons set forth below, Plaintiff’s 
motion is granted in part and denied in part.                             
II.  BACKGROUND                                                           
   The facts of this litigation have been thoroughly addressed in prior rulings, which 
are incorporated by reference.  In brief, Residential Funding Company, LLC (“RFC”) 
commenced this action against Defendant Home Loan Center, Inc. (“HLC”) on December 
16, 2013.1  (Residential Funding Company, LLC v. Home Loan Center, Inc., No. 14-cv-

1Pursuant to bankruptcy proceedings in the U.S. Bankruptcy Court for the Southern District 
of New York, ResCap ultimately succeeded to all of RFC’s rights and interests and now 
controls it.  (Residential Funding Company, LLC v. Home Loan Center, Inc., 14-cv-1716, 
First Am. Compl. [Doc. No. 1-2] ¶ 13.)   Thus, although RFC was the initial plaintiff in 
this suit, the parties ultimately stipulated to the substitution of ResCap as the sole plaintiff.  
1716 (SRN/HB), Affs. of Service [Doc. No. 1-15]) (indicating that service of the Complaint 
was effected on December 16, 2013); Minn. R. Civ. P. 3.01(a) (stating that an action is 

“commenced” upon service of process).                                     
   In the years preceding its bankruptcy, RFC was in the business of acquiring and 
securitizing residential mortgage loans from a number of originating lenders, including 
HLC.  (See Scheck Decl. [Doc. No. 3258], Ex. 10 (Horst Dep. at 620–23); id., Ex. 36 
(Ruckdaschel Dep. at 40–41); id., Ex. 19 (Corr. Hawthorne Rpt. ¶ 17).)  RFC then sold the 
pooled  loans  into  residential  mortgage-backed  securitization  (“RMBS”)  trusts  (“the 

Trusts”).  (See id., Ex. 19 (Corr. Hawthorne Rpt. ¶ 17).)  The relationships between RFC 
and the originating lenders, including HLC, were governed by contracts and a detailed 
document known as the Client Guide.  (Id.)  Pursuant to the terms of the Client Guide, HLC 
made various representations and warranties (“R&Ws”) concerning the quality of the loans 
that  it  sold  to  RFC.    (Id.)    In  addition,  the  Client  Guide  contained  the  following 

indemnification  provision:    “[HLC]  also  shall  indemnify  GMAC-RFC2  and  hold  it 
harmless against all court costs, attorney’s fees and any other costs, fees and expenses 
incurred by GMAC-RFC in enforcing the Client Contract.”  (Client Guide § A212).   



(See Sept. 6, 2018 Order [Doc. No. 4350].)  The Court therefore refers to RFC in a historical 
sense, and references to “Plaintiff” are to ResCap.                       

2 RFC was a wholly owned subsidiary of GMAC Residential Holding Company, LLC, 
(“GMAC”).  (See Residential Funding Co., LLC v. Home Loan Center, Inc., 14-cv-1716 
(SRN/HB), First Am. Compl. ¶ 13.)                                         
   Just as HLC made R&Ws to RFC pursuant to the Client Guide, RFC made various 
R&Ws to the Trusts concerning the quality of the loans pursuant to the contracts between 

RFC and the Trusts.  (Scheck Decl., Ex. 19 (Corr. Hawthorne Rpt. ¶ 17.)  Ultimately, the 
loans in the RFC-sponsored securitizations experienced a high rate of default.  (Id. ¶ 19.)  
The Trusts and some of their monoline insurers experienced significant financial losses.  
(Id.)   In approximately 2008, multiple entities demanded that RFC repurchase its loans 
and/or filed lawsuits against RFC to recoup their losses.  (Id. ¶ 20. )   
   In May 2012, RFC filed for Chapter 11 relief in the U.S. Bankruptcy Court for the 

Southern  District  of  New  York  (“Bankruptcy  Court”).    It  ultimately  entered  into 
comprehensive  settlements  with  the  Trusts  and  monoline  insurers,  subject  to  the 
Bankruptcy Court’s approval.  In December 2013, in a 134-page ruling, the Bankruptcy 
Court set forth its reasons for confirming and approving RFC’s bankruptcy plan, including 
the settlements.  (See id., Ex. 28 (Bankr. Findings of Fact).)            

   In this litigation, RFC asserted breach of contract and indemnification claims under 
Minnesota state law based on the losses and liabilities it incurred in the Bankruptcy Court 
settlements.  (Residential Funding Company, LLC v. Home Loan Center, Inc., No. 14-cv-
1716 (SRN/HB), First Am. Compl. [Doc. No. 1-2] ¶¶ 78–85; 86–89.)  Following the 
consolidation of this case with numerous other cases brought in a “first wave” by RFC, the 

parties engaged in intensive discovery.  The case against HLC was the only of the first-
wave cases to go to trial, as Plaintiff and other Defendants settled many of the actions.  
Shortly before the HLC trial, pursuant to the parties’ stipulation, ResCap withdrew its 
breach of contract claim and proceeded to trial against HLC solely on its indemnification 
claim.  (See Oct. 4, 2018 Order on Stip. [Doc. No. 4515].)                

   The Court presided over the jury trial between ResCap and HLC from October 15 
through November 8, 2018.  On November 8, 2018, the jury found HLC liable, and  
required it to indemnify ResCap for its underlying losses and liabilities.  (See Redacted 
Jury Verdict [Doc. No. 4705].)  It awarded ResCap damages in the amount of $28.7 million.  
(Id.)                                                                     
   ResCap  now  moves  for  an  award  of  prejudgment  interest,  comprised  of  the 

following:    (1)  $14,066,931.50  in  preverdict  prejudgment  interest  running  from  the 
commencement  of  this  action  through  the  jury’s  verdict;  (2)  preverdict  prejudgment 
interest on any award of attorney’s fees and costs, as determined by the Court; and (3) 
postverdict prejudgment interest running from the date of the verdict through entry of final 
judgment at a rate of 10% per annum on the total of the jury’s award, any attorney’s fees 

and costs, and preverdict interest.                                       
   HLC opposes the motion, arguing that:  (1) the jury’s damages award was for “future 
damages,” which are not subject to prejudgment interest; (2) Plaintiff is not entitled to 
prejudgment interest on any award of attorney’s fees and costs; (3) any award of preverdict 
interest should be reduced in light of Plaintiff’s dilatory requests for damages discovery; 

and (4) Plaintiff is not entitled to postverdict prejudgment interest.    
III.  DISCUSSION                                                          
   A.  Preverdict Prejudgment Interest from Commencement of Action Through 
     Jury Verdict                                                       

   ResCap asserts that 

 governs the application of preverdict 
prejudgment interest for the following reasons:  (1) the value of its claim had to be 
determined by litigation; (2) the proper damages methodology was disputed; (3) there were 
significant  variations  in  Plaintiff’s  damages  methodologies;  and  (4)  the  amount  of 
Plaintiff’s claim was dependent on the jury’s discretion.  (Pl.’s Mem. Supp. Mot. for 
Prejudgment Int. (“Pl.’s Mem.”) [Doc. No. 4741] at 4–6.)  Thus, ResCap argues that it is 
entitled to prejudgment interest on the jury’s award.                     
   In its opposition, HLC does not dispute the general applicability of 

 to awards of prejudgment interest.  Rather, it argues that ResCap is not entitled to 
preverdict interest on the jury’s damages award because the damages constitute “future 
damages” for liabilities that ResCap has yet to pay.  (Def.’s Opp’n Mem. (“Def.’s Opp’n”) 
[Doc. No. 4778] at 4–9.)                                                  
   Because ResCap’s indemnification claim was asserted under state law, Minnesota 

law governs Plaintiff’s request for prejudgment interest.  See Ewald v. Royal Norwegian 
Embassy, No. 11-cv-2116 (SRN/SER), 

, at *21 (D. Minn. Apr. 13, 2015) 
(stating general rule that “prejudgment interest is a substantive remedy governed by state 
law when state-law claims are brought in federal court.”).  Under 

, 
“[w]hen a judgment or award is for the recovery of money, . . . , interest from the time of 

the verdict . . . until judgment is finally entered shall be . . . added to the judgment or 
award.”  

, subd. 1(a).  Where the judgment or award exceeds $50,000, 
subject to certain exceptions that are inapplicable here, “the interest rate shall be ten percent 

per year until paid.”  

 subd. 1(c)(2).                                
   The  Minnesota  Supreme  Court  has  recognized  that  preverdict  interest  is  “not 
conventional ‘interest,’” but rather, “it is an element of damages awarded to provide full 
compensation by converting time-of-demand . . . damages into time-of-verdict damages.”  
Marvin Lumber & Cedar Co. v. PPG Indus., Inc., 

, 918 (8th Cir. 2005) (citing 
Lienhard v. State, 

 (Minn. 1988)).  It is designed to “compensate[ ] 

[the plaintiff] for the loss of the use of money occasioned by the defendant’s conduct.”  
Poehler v. Cincinnati Ins. Co., 

 (Minn. 2017) (citing Lienhard, 

)).  Additionally, the preverdict interest statute aims to promote good faith 
settlement negotiations.  Skifstrom v. City of Coon Rapids, 

 (Minn. 
Ct. App. 1994).                                                           

   Where  damages  “are  not  readily  ascertainable,”  preverdict  interest  “should  be 
calculated exclusively under section 549.09.”  Hogenson v. Hogenson, 

 (Minn.  Ct. App.  2014).   For instance,  section 549.09 applies “when there exist 
numerous methods of computing damages which reach vastly different results.”  Matthew 
v. Unum Life Ins. Co. of Am., 

 (8th Cir. 2011); see also Hutchinson Utils. 

Comm’n v. Curtiss-Wright Corp., 

, 242 (8th Cir. 1985) (finding damages not 
readily  ascertainable  where  plaintiff  submitted  two  different  methods  of  computing 
damages, the court used a third method, and damages were “further complicated” by 
possible issues concerning allocation of damages between defendants).  Plaintiff here 
developed  three  damages  methodologies,  two  of  which  were  precluded  on  summary 
judgment, and the case also involved allocation issues among the originating lenders.   

   Also, where the value of a claim must be determined by litigation, as was the case 
here, it is not “readily ascertainable.”  Hogenson, 

.  HLC strongly 
contested ResCap’s valuation, although it did not develop its own damages methodology.  
(See May 28, 2015 Hr’g Tr. [Doc. No. 509] at 95, 96; Trial Tr. [Doc. No. 4722] at 2797.) 
Moreover, Minnesota courts have also found that where damages depend upon a jury’s 
discretion, they are not readily ascertainable.  See Potter v. Hartzell Propeller, 

 (Minn. 1971); Noble v. C.E.D.O., Inc., 

 (Minn. Ct. App. 
1985).   As noted, the damages in this case were awarded by a jury.       
   This case involved multiple damages methodologies, and the value of Plaintiff’s 
claim was determined by litigation and a jury verdict.  Accordingly, the Court finds that 
the damages in this case were not readily ascertainable, and are subject to the provisions of 

 for awards of prejudgment interest, absent some exception.   
         1.   Future Damages                                            
   HLC  points  to  a  limited  statutory  exception  under  §  549.09  which  excludes 
prejudgment interest for “judgments or awards for future damages,” and argues that it 
applies here.  

, subd. 1(b)(2).  Under HLC’s theory, “[w]hen a plaintiff 

pursues an indemnity claim for ‘liabilities’ as opposed to ‘losses,’ it seeks a form of ‘future 
damages’ within the meaning of Section 549.09,” that are not subject to an award of 
prejudgment interest.  (Def.’s Opp’n at 5.)  HLC contends that Minnesota courts recognize 
that indemnity claims for “losses” seek to recover past losses, whereas indemnity claims 
for “liabilities” seek to recover future losses.  (Id. at 6–7) (citing Christy v. Menasha Corp., 

, 776–77 (Minn. 1973); Aetna Cas. & Sur. Co. v. Bros., 

 

(Minn. 1948)).  The jury’s award here, HLC argues, was for future damages for “liabilities” 
that Plaintiff has yet to pay.  (Id. at 7.)  Thus, HLC contends that Plaintiff is not entitled to 
prejudgment interest on its indemnity claim.  (Id.)                       
   As the Court recognized in its ruling on the parties’ cross motions for summary 
judgment,  under  Minnesota  law,  “parties  may  contract  for  indemnity  against  losses 
suffered as well as for indemnity against liabilities incurred.”  (SJ Order [Doc. No. 4307] 

at 82) (citing Johnson v. Johnson, 

 (Minn. Ct. App. 2017)).  Under the 
Client Guide, HLC contracted to indemnify RFC for “liabilities as well as for out-of-pocket 
losses,” including “from all . . . judgments.”  (Id.) (citing Client Guide § A212).  This Court 
found that the Bankruptcy Court’s Confirmation Order approving the Second Amended 
[Bankruptcy] Plan was a final judgment.   (Id. at 83.)   Pursuant to that judgment and the 

Bankruptcy plan, as of December 2013, RFC incurred indemnifiable liabilities, for which 
the jury in this case ultimately awarded $28.7 million in damages.        
   This was not an award of future damages, nor did the jury’s award include any such 
relief.  As Plaintiff notes, future damages are those that are “more likely to occur than not 
to occur” in the future, such as damages for future pain and suffering or lost profits.  See 

Pietrzak v. Eggen, 

 (Minn. 1980).  Here, Plaintiff recovered damages 
for losses and liabilities incurred over five years ago—not for future damages.  As the Court 
noted in its summary judgment order, albeit in the context of a statute-of-limitations 
argument, “final and actual liability is required for the accrual of an indemnification claim” 
in Minnesota.  (SJ Order at 146) (citing Metro. Prop. & Cas. Ins. Co. v. Metro Transit 
Comm’n, 

 (Minn. 1995)).  The Court held that Plaintiff’s indemnity 

claim accrued when its liability “became finally fixed and ascertained,” in December 2013, 
when the Bankruptcy Court approved the underlying settlements.  (Id. at 148.)  Plaintiff 
incurred damages as of that date, not in the future.                      
   While HLC argues that these liabilities are nonetheless future damages because 
Plaintiff has not paid them yet, (Def.’s Opp’n at 1), the Court disagrees.  As ResCap 
observes, whether or not it is able to pay its creditors, or has paid them, is irrelevant to an 

award of prejudgment interest, “because it has no bearing on the fact that HLC has owed 
Plaintiff money since December 2013, when Plaintiff incurred an indemnifiable liability 
and commenced this action.”  (Pl.’s Reply [Doc. No. 4800] at 4.)  HLC cites no authority 
to the contrary.  Rather, Minnesota courts have rejected the argument that unpaid liabilities, 
or liabilities paid by a third party, constitute “future damages” under 

.  

See Jonas v. End Health Ctr., Inc., No. C5-95-1407, 

, at *4 (Minn. Ct. 
App. Mar. 12, 1996) (affirming plaintiff’s entitlement to prejudgment interest for incurred 
medical expenses, even though the plaintiff did not pay them); Ruhland v. Carr’s Tree 
Serv., Inc., 

 (Scott Cty., Minn. Dist. Ct.  Aug. 11, 2008) (awarding 
prejudgment interest on amounts paid by insurance providers for plaintiff’s past damages).  

In Jonas, the Minnesota Court of Appeals explained, “There is no question that someone 
was liable for the medical bills when those bills were sent.  The question is not when the 


3 The Westlaw version of Ruhland does not contain internal page numbers.   
damages were ‘paid’ but when they were ‘incurred’—the statute does not distinguish 
between special damages that are paid by third parties and those that are not.”  

, at *4.  Likewise, the court in Ruhland explained, “[

] is 
concerned with all damages that were incurred, not simply those that were paid,” and past 
damages were certainly incurred, “regardless of who ultimately paid the bills.”  

.   The same is true here.                                         
   HLC argues that Plaintiff “pursued a damages theory at trial focused solely on 
RFC’s liabilities in the form of allowed claims,”  (Def.’s Opp’n at 7), but ResCap did not 

present any evidence at trial regarding damages likely to occur in the future.  See Children’s 
Broad. Corp. v. Walt Disney Co., 

, 869 (8th Cir. 2004) (finding that because 
plaintiff’s expert used future earnings to determine the present value of plaintiff’s loss, but 
did not seek future damages, prejudgment interest was properly awarded on plaintiff’s 
damages).  HLC’s misplaced focus on “liabilities” versus “losses” ignores the fact that 

Plaintiff sought, and obtained, damages that were incurred before the verdict:  the damages 
that RFC incurred when settling its claims in Bankruptcy Court.    In short, the damages 
here are not “future damages.”  As such, they are not subject to the limited exception that 
excludes prejudgment interest on awards of future damages.                
   Moreover, if the Legislature meant to include damages that have not been “paid” as 

a form of future damages, ineligible for prejudgment interest, it knew how to do so.  Other 
subdivisions of 

 refer to disbursements “paid or incurred” by the 
judgment creditor.  See 

, subds. 3 & 4.  The exception for future 
damages, however, contains no language suggesting that “unpaid” damages are future 
damages.   See 

  subd.  1(b)(2).  It merely states that preverdict interest shall not be 
allowed on “judgments or awards for future damages.”  Jd. 
    The Court finds that Plaintiff is therefore entitled to prejudgment interest under 

 on the jury’s award of $28.7 million.  This award serves the statute’s 
objectives  of  compensating  Plaintiff  for  the  lost  use  of  its  money  occasioned  by 
Defendant’s conduct, Poehler, 

, and encouraging settlement.  Adams v. 
Toyota Motor Corp., 

, 919 (8th Cir. 2017) (citing Burniece v. Ill. Farmers Ins. 
Co., 

 (Minn. 1987)).  All of the Defendants in this consolidated action 
were well aware of the additional economic risk of incurring prejudgment interest and 
attorney’s fees, if they were to lose at trial.  In fact, that risk likely animated many, if not 
all, of the settlements in this consolidated action.  HLC chose to proceed to trial, where it 
lost. 
    Preverdict prejudgment interest  here  shall  run  from the  commencement of this 
action on December  16, 2013, when service was effective, through November 8, 2018, 
when the jury rendered its verdict, and shall be at the statutory rate of ten percent per year. 
See 

, subd. 1(b); 1(c)(2).  Prejudgment preverdict interest on the jury’s 
award is calculated as follows: 

Interest for 2016 is higher because it was a leap year.  (See Heeman Decl. [Doc. No. 
4742] 4 8.) 
                                    11 

            1/1/2017 – 12/31/2017  $2,870,000.00                        
            1/1/2018 – 11/8/2018   $2,453,260.27                        
            TOTAL                 $14,066,931.50                        

   In sum, as an element of Plaintiff’s damages, it is entitled to $14,066,931.50 in 
preverdict prejudgment interest on the jury’s award of $28.7 million.     
   B.  Prejudgment Interest on Attorney’s Fees                          
   ResCap has filed a separate petition for an award of attorney’s fees and costs, which 
is under advisement.  (See Pl.’s Mot. for Atty’s Fees [Doc. No. 4852].)  In the instant 
motion, Plaintiff also seeks prejudgment interest on any award of attorney’s fees and costs.  
(Pl.’s Mem. at 7–10.)  However, HLC argues that such interest is prohibited by 

, subd. 1(b)(5), which provides that preverdict interest shall not be awarded for 
“that portion of any verdict, award or report which is founded upon interest, or costs, 
disbursements, attorney fees, or other similar items added by the court or arbitrator.”  

, subd. 1(b)(5) (emphasis added); (Def.’s Opp’n at 9–15.)     
   As noted, the parties here stipulated that attorney’s fees would be determined by the 

Court. (Oct. 10, 2018 Stip. [Doc. No. 4570].)   However, neither this stipulation nor the 
law dictates that an award of attorney’s fees in this action is “added by the Court,” and 
therefore excepted from prejudgment interest, as HLC acknowledges.  (Def.’s Opp’n at 12, 
n.2); see also St. Jude Med., S.C., Inc. v. Biosense Webster, Inc., 12-cv-621 (ADM/TNL), 

, at *10 (D. Minn. Nov. 24, 2014) (stating that parties’ stipulation that 

court would determine attorney’s fees did not cause attorney’s fees to be “added by the 
court” for purposes of prejudgment interest).                             
   Where attorney’s fees are the subject matter of the lawsuit, awarding prejudgment 
interest on a judgment for attorney’s fees is permitted.  Gaughan v. Gaughan, 

 (Minn. Ct. App. 1990).  Such fees are not considered to be “added by the court” 
under 

, subd. 1(b)(5).                                
   Plaintiff argues that its attorney’s fees are “part and parcel of [its] contractual 
indemnity claim,” (Jan. 31, 2019 Hr’g Tr. [Doc. No. 4976] at 16) (citing Vesta State Bank 
v. Indep. State Bank of Minn., Nos. CO-96-115, CO-96-1129, CO-96-795, 

, at *6–7 (Minn. Ct. App. Nov. 12, 1996)), and therefore, its fees are part of the 

subject matter of this lawsuit.  It first points to Section A212 of the Client Guide, which 
provides for indemnification for “all court costs, attorney’s fees and any other costs, fees 
and expenses” incurred by RFC in enforcing its agreement with HLC. (Pl.’s Mem. at 8.)  
Plaintiff then relies on the Minnesota Supreme Court’s statement in United Prairie Bank-
Mountain Lake v. Haugen Nutrition & Equipment, 

 (Minn. 2012), that 

“when a party seeks attorney fees under the express provisions of a contract, the fees are 
an agreed element of damages available under the contract and are not collateral,” and are 
a “direct consequence of [the defendants’] breach.”                       
   But United Prairie arose in a different context, addressing the question of whether, 
under the Minnesota Constitution, the determination of attorney’s fees must be made by a 

jury.  

 at 56–63.  It did not concern prejudgment interest, nor did it involve a third-party 
lawsuit or underlying lawsuit.  Instead, for the first time under Minnesota law, the court 
held that where a contract provides for an award of attorney’s fees, the right to such fees is 
a legal claim, not an equitable one, and is subject to a jury trial.  

.   
   Yet United Prairie did not overrule long-standing Minnesota precedent holding that 
attorney’s fees due under a contract are not “part of the original debt,” and are “not really 

due when suit is brought, for the services of the attorney are not then fully performed.”  
Campbell v. Worman, 

 (1894).  A claim for attorney’s fees under a 
promissory note, for example, is not “part of the cause of action alleged,” nor is it “a distinct 
cause of action.”  First State Bank of Grand Rapids v. Cohasset Wooden Ware Co., 

 (1917).   Instead, as the dissent in United Prairie observed, such claims are 
“not to be submitted with the issues upon which the liability of a defendant depends,”  

 (Dietzen, J. dissenting) (quoting First State Bank, 161 N.W.2d at 399), as 
the right to contractual attorney’s fees “does not accrue until the payee incurs the liability.”  
Campbell, 

.                                                 
   When considering the application of prejudgment interest  to an attorney’s fee 
award,  Minnesota  courts  generally  distinguish  between  attorney’s  fees  incurred  in 

underlying litigation, which are often the subject of a subsequent lawsuit to recover fees, 
and attorney’s fees that arise contemporaneously in a single suit.        
        1.   Underlying Litigation                                      
   As to attorney’s fees arising from underlying litigation, in Seaway Port Authority of 
Duluth  v.  Midland  Insurance  Co.,  

  (Minn.  Ct.  App.  1988),  a 

declaratory  judgment  suit,  the  Minnesota  Court  of  Appeals  affirmed  an  award  of 
prejudgment interest associated with Seaway’s costs of defending itself in underlying bond 
default actions. The court observed that “the costs and fees for which [the plaintiff] is 
reimbursed have not been ‘added by the court’ to this judgment, they are the subject matter 
of the judgment itself.”  

.  The court did not address the question of whether 
attorney’s fees related to the declaratory judgment action itself were subject to prejudgment 

interest, however.                                                        
   Relying on Seaway, in Gaughan, the Minnesota Court of Appeals found that where 
the action arose out of an attorney’s retainer agreement, the unpaid legal fees were the 
subject matter of the lawsuit.  450 N.W.2d at 343–44.  The law firm in question had sought 
relief in two separate proceedings, filing a civil suit for breach of contract and filing an 
application  for  an  attorney’s  lien  in  an  existing  family  law  action,  where  the  firm 

represented a party in dissolution proceedings.  

 at 340–41.  The trial court consolidated 
the proceedings and entered an attorney’s lien in the law firm’s favor.  

.  On 
appeal, despite the appellate court’s finding that the legal fees were the subject matter of 
the lawsuit, it denied prejudgment interest because such interest “is authorized only for 
money judgments,” and an attorney’s lien is not considered a money judgment.  

 at 344 

(citing 

, subd. 1(a)).  Accordingly, the Minnesota Court of Appeals 
held that the fees were not eligible for prejudgment interest in a statutory attorney’s lien 
action.5  

 (comparing the attorney’s lien statute, 

, which 
contained no language regarding prejudgment interest, with mechanic’s lien statute, 

 (1988), under which prejudgment interest was expressly available).  


5 However, the Minnesota Court of Appeals also found that the two proceedings were 
improperly consolidated, and remanded the matter to the trial court.  Gaughan, 

.  This suggests that if the law firm chose to proceed with its civil contract suit and 
prevailed, any resulting damages award would be subject to prejudgment interest, as the 
limitations of the attorney’s lien statute would not be implicated.       
   In Vesta State Bank, a fraud lawsuit, the trial court added the plaintiff’s attorney’s 
fees  from  two  underlying  actions  as  consequential  damages,  but  declined  to  award 

prejudgment interest on the fees pursuant to 

, subd. 1(b)(5).  

, at *6.  The Minnesota Court of Appeals reversed the decision on prejudgment 
interest, ruling that attorney’s fees arising from the underlying actions were subject to 
prejudgment interest, because they were “part of the damage being compensated, rather 
than additional awards to [the plaintiff] ‘added by the court.’”  

 at 6–7.  
        2.   Fees Contemporaneously Incurred                            

   In certain circumstances, Minnesota courts have awarded prejudgment interest on 
attorney’s fees contemporaneously incurred in the litigation at hand.  For instance, in 
Kraus-Anderson Construction Co. v. Transportation Insurance. Co., No. A10-698, 

, at *13 (Minn. Ct. App. 2011), after an arbitration award was entered against 
Kraus-Anderson related to defective construction work, the company brought a declaratory 

judgment action against several insurance companies for breach of their duty to defend.  

 at *1–2.  The Minnesota Court of Appeals affirmed an award of prejudgment interest 
for Kraus-Anderson’s attorney’s fees incurred in the second lawsuit. 

.  The court 
concluded that because attorney’s fees in a declaratory judgment action “arise directly as a 
result of an insurer’s breach of its duty to defend and are recoverable as contract damages 

of that breach,” they qualify as “the subject matter of the lawsuit,” which are not “added 
by the court” and thus fall outside the scope of 

 subd. 1(b)(5). 

  
   ResCap argues that the facts of this case are similar those in Kraus-Anderson.  (Pl.’s 
Mem. at 10.)  But Kraus-Anderson did not involve a contractual provision for attorney’s 
fees.  Instead, the fees were awarded pursuant to Minnesota’s exception to the “American 
rule” that allows for recovery of attorney’s fees for a successful duty-to-defend declaratory 

judgment action against an insurer.  

, at *13–14 (citing Morrison v. 
Swensen, 

 (Minn. 1966)). The Minnesota Supreme Court has explicitly 
recognized the narrowness of the “Morrison exception,” which only applies to a duty-to-
defend claim against an insurer.  See In re Silicone Implant Ins. Coverage Litig., 

 (Minn. 2003) (stating that Morrison is limited to duty-to-defend claims).  
   Similarly, in St. Jude, 

, at *9–10, the Court held that prejudgment 

interest was properly applied to an attorney’s fee award.  The Court granted summary 
judgment to St. Jude against St. Jude’s competitor, Biosense, and a former St. Jude 
employee, who had left to work for Biosense, on claims of breach of contract and tortious 
interference.  

 at *1–2.  A jury awarded damages to St. Jude, and the Court ordered 
Biosense to pay attorney’s fees under the “third-party exception to the ‘American rule,’” 

based on the costs St. Jude was forced to incur in suing the individual employee.  

 The 
Court also awarded prejudgment interest on the attorney’s fees, which were “one portion 
of the judgment for compensatory damages based on Biosense’s tortious interference.” 

.                                                                   
   However, in Select Comfort Corp. v. Arrowood Indemnity Co., No. 13-cv-2975 

(JNE/FLN), 

, at *9 (D. Minn. Aug. 20, 2015), a different judge of this 
Court declined to follow Kraus-Anderson and St. Jude and denied prejudgment interest on 
attorney’s fees in a third-party action.  In Select Comfort, the plaintiff sued its insurer for 
some of the costs it had incurred to defend itself in the “Stearns” litigation brought by 
consumers over defective mattresses.   

 at *1–2.  As Judge Ericksen explained, 

   Minnesota courts have explained that 

, subd. 1(b)(5) 
   “does not preclude adding prejudgment interest to a judgment for attorney 
   fees  when  the  fees  are  the  subject  matter  of  the  lawsuit.”  Gaughan  v. 
   Gaughan,  

  (Minn.  Ct.  App.  1990).    But  Select 
   Comfort’s [attorney fees award]—regardless of the rationale underlying it—
   is not the subject matter of this lawsuit; its Stearns defense costs are.  To the 
   extent that the unpublished decisions offered by Select Comfort reach a 
   different  conclusion,  the  Court  does  not  find  them  persuasive.  Select 
   Comfort’s Morrison award falls squarely within the plain language of the 
   exclusion at 

, subdivision 1(b)(5), and Select Comfort 
   cites no other authority by which pre-judgment interest may be added. 

.                                                                
   Defendant correctly notes “the unpublished decisions” that Judge Ericksen refers to 
includes Kraus-Anderson.  (Def.’s Opp’n at 14 n.4) (noting that while the Court did not 
mention these cases by name, the Plaintiff’s unpublished legal authorities included Kraus-
Anderson).  As in Select Comfort, the attorney’s fees and costs incurred in this suit were 
not  the subject matter of this litigation.  Had Plaintiff sought to recover here the attorney’s 
fees that it incurred in defending itself in the underlying lawsuits or in Bankruptcy Court, 
it  could  plausibly  claim  that  such  fees  formed  part  of  its  damages.    But  Plaintiff’s 
indemnification claim was the subject matter of this litigation, and it did not involve 
damages for RFC’s underlying attorney’s fees.  Now, however, Plaintiff seeks to recoup 
its attorney’s fees and costs incurred in this very litigation.  The Court finds that the fees 
and costs here fall under the exception that excludes prejudgment interest on awards of 
attorney’s fees and costs added by the court.  

, subd. 1(b)(5).   
   Moreover, Defendant correctly observes that the attorney’s fees here are unlike 
damages incurred as of the date of the commencement of suit, which are properly subject 

to prejudgment interest to account for the lost time-value of money.  See 

,  subd.  1(b).    Rather,  here,  ResCap  seeks  to  recover  prejudgment  interest  on 
attorney’s fees that it incurred after the commencement of this litigation—fees that greatly 
increased shortly before and during trial.                                
   For all of the forgoing reasons, the Court declines to award prejudgment interest on 
any potential award of attorney’s fees.   As noted, Plaintiff’s attorney’s fee petition remains 

under advisement and a separate order will be forthcoming.                
   C.  Whether a Reduction is Appropriate                               
   HLC argues that if the Court awards any preverdict prejudgment interest, it should 
reduce the award in light of “Plaintiff’s extraordinary delay in seeking discovery related to 
its allocation theory of damages.”  (Def.’s Opp’n at 15.)  HLC asserts that even though 

 governs the award of prejudgment interest, it does not displace the 
common law, (id.) (citing Hogenson, 

, under which courts have the 
discretion to reduce or even deny preverdict interest.  (Id.) (citing Val-U Const. Co. of S.D. 
v. Rosebud Sioux Tribe, 

, 582 (8th Cir. 1998)).               
   The Eighth Circuit has advised that “prejudgment interest should ordinarily be 

granted unless exceptional or unusual circumstances exist making the award of interest 
inequitable.”  Stroh Container Co. v. Delphi Indus., Inc., 

, 752 (8th Cir. 1986).  
In fact, some Minnesota courts have held that the language of 

 
mandates an award of prejudgment interest, eliminating any discretion to reduce an award.  
See Tate v. Scanlan Int’l, Inc., 

 (Minn. Ct. App. 1987).   

   This Court has presided over this consolidated litigation for more than four years.  
During this time, the Court held 38 monthly status conferences and presided over numerous 
motion hearings and teleconferences dedicated to resolving the parties’ discovery disputes 
and streamlining these cases for trial or settlement.  Even if this Court has the discretion to 
reduce or eliminate an award of prejudgment interest under Minn. State. § 549.09, the 
Court declines to do so.  Delays in this litigation occurred on both sides, prompted by 

numerous factors, including the complexity of legal issues, allocation, and the breadth of 
evidence.  See Stroh, 783 F.2d at 752 (denying request to reduce prejudgment interest 
where any delays were “simply those reasonably to be expected in the course of ordinary 
litigation.”).  Nor is there any allegation of bad faith on the part of ResCap.  ResCap’s 
conduct does not render the award of prejudgment interest inequitable.  In fact, the contrary 

is true—reducing or denying prejudgment interest would be inequitable to ResCap, which 
has been deprived of the interest on the damages that it incurred over five years ago.   
   D.  Postverdict Prejudgment Interest                                 
   Finally, ResCap seeks postverdict prejudgment interest, running from verdict to 
entry of final judgment.  (Pl.’s Mem. at 10–11.)  HLC argues that because Plaintiff is not 

entitled to preverdict prejudgment interest on the jury’s award or ResCap’s attorney’s fees 
and costs, it is likewise not entitled to postverdict prejudgment interest.  (Def.’s Mem. at 
17.)                                                                      
   Under  Minnesota  law,  “[b]ecause  preverdict  interest  is  part  of  compensatory 
damages, it is part of a prevailing party’s judgment or award.”  Hogenson, 

.  In Hogenson, the defendant argued that the plaintiff should have received postverdict 
prejudgment interest only on the damages that the jury awarded, not on the sum of damages 
plus preverdict interest.  

  The Minnesota Court of Appeals rejected this argument.  Thus, 
when awarding postverdict prejudgment interest, courts may “include[e] the preverdict 
interest in the total sum of the award upon which postverdict, prejudgment interest [is] 
calculated.”  

                                                         

   The Court thus finds that Plaintiff is entitled to postverdict prejudgment interest on 
its damages award, inclusive of preverdict prejudgment interest on the jury’s award.   
IV.   ORDER                                                               
   1.   Plaintiff’s Motion for Prejudgment Interest [Doc. No. 4739] is GRANTED 
        IN PART and DENIED IN PART.                                     

   2.   Plaintiff is awarded $14,066,931.50 in preverdict prejudgment interest on the 
        jury’s damages award from commencement of the litigation through the 
        jury’s verdict on November 8, 2018.                             
   3.   Plaintiff is awarded postverdict prejudgment interest on the total award of 
        damages, inclusive of preverdict prejudgment interest on the jury’s award.   

   4.   Plaintiff is denied prejudgment interest on any award of attorney’s fees and 
        costs.                                                          
Dated: March 18, 2019                   s/Susan Richard Nelson            
                                      SUSAN RICHARD NELSON              
                                      United States District Judge      

               UNITED STATES DISTRICT COURT                             
                   DISTRICT OF MINNESOTA                                

________________________________________________________________________  

In Re: RFC and ResCap Liquidating     Case No. 13-cv-3451 (SRN/HB)        
Trust Litigation                                                          

                                 MEMORANDUM OPINION                     
                                       AND ORDER                        

This document relates to:                                                 

ResCap Liquidating Trust v. Home Loan                                     
Center, Inc., Case No. 14-cv-1716 (SRN/HB)                                


SUSAN RICHARD NELSON, United States District Judge                        

I.   INTRODUCTION                                                         
   Before the Court is the Motion for Prejudgment Interest [Doc. No. 4739] filed by 
Plaintiff ResCap Liquidating Trust (“ResCap”).  For the reasons set forth below, Plaintiff’s 
motion is granted in part and denied in part.                             
II.  BACKGROUND                                                           
   The facts of this litigation have been thoroughly addressed in prior rulings, which 
are incorporated by reference.  In brief, Residential Funding Company, LLC (“RFC”) 
commenced this action against Defendant Home Loan Center, Inc. (“HLC”) on December 
16, 2013.1  (Residential Funding Company, LLC v. Home Loan Center, Inc., No. 14-cv-

1Pursuant to bankruptcy proceedings in the U.S. Bankruptcy Court for the Southern District 
of New York, ResCap ultimately succeeded to all of RFC’s rights and interests and now 
controls it.  (Residential Funding Company, LLC v. Home Loan Center, Inc., 14-cv-1716, 
First Am. Compl. [Doc. No. 1-2] ¶ 13.)   Thus, although RFC was the initial plaintiff in 
this suit, the parties ultimately stipulated to the substitution of ResCap as the sole plaintiff.  
1716 (SRN/HB), Affs. of Service [Doc. No. 1-15]) (indicating that service of the Complaint 
was effected on December 16, 2013); Minn. R. Civ. P. 3.01(a) (stating that an action is 

“commenced” upon service of process).                                     
   In the years preceding its bankruptcy, RFC was in the business of acquiring and 
securitizing residential mortgage loans from a number of originating lenders, including 
HLC.  (See Scheck Decl. [Doc. No. 3258], Ex. 10 (Horst Dep. at 620–23); id., Ex. 36 
(Ruckdaschel Dep. at 40–41); id., Ex. 19 (Corr. Hawthorne Rpt. ¶ 17).)  RFC then sold the 
pooled  loans  into  residential  mortgage-backed  securitization  (“RMBS”)  trusts  (“the 

Trusts”).  (See id., Ex. 19 (Corr. Hawthorne Rpt. ¶ 17).)  The relationships between RFC 
and the originating lenders, including HLC, were governed by contracts and a detailed 
document known as the Client Guide.  (Id.)  Pursuant to the terms of the Client Guide, HLC 
made various representations and warranties (“R&Ws”) concerning the quality of the loans 
that  it  sold  to  RFC.    (Id.)    In  addition,  the  Client  Guide  contained  the  following 

indemnification  provision:    “[HLC]  also  shall  indemnify  GMAC-RFC2  and  hold  it 
harmless against all court costs, attorney’s fees and any other costs, fees and expenses 
incurred by GMAC-RFC in enforcing the Client Contract.”  (Client Guide § A212).   



(See Sept. 6, 2018 Order [Doc. No. 4350].)  The Court therefore refers to RFC in a historical 
sense, and references to “Plaintiff” are to ResCap.                       

2 RFC was a wholly owned subsidiary of GMAC Residential Holding Company, LLC, 
(“GMAC”).  (See Residential Funding Co., LLC v. Home Loan Center, Inc., 14-cv-1716 
(SRN/HB), First Am. Compl. ¶ 13.)                                         
   Just as HLC made R&Ws to RFC pursuant to the Client Guide, RFC made various 
R&Ws to the Trusts concerning the quality of the loans pursuant to the contracts between 

RFC and the Trusts.  (Scheck Decl., Ex. 19 (Corr. Hawthorne Rpt. ¶ 17.)  Ultimately, the 
loans in the RFC-sponsored securitizations experienced a high rate of default.  (Id. ¶ 19.)  
The Trusts and some of their monoline insurers experienced significant financial losses.  
(Id.)   In approximately 2008, multiple entities demanded that RFC repurchase its loans 
and/or filed lawsuits against RFC to recoup their losses.  (Id. ¶ 20. )   
   In May 2012, RFC filed for Chapter 11 relief in the U.S. Bankruptcy Court for the 

Southern  District  of  New  York  (“Bankruptcy  Court”).    It  ultimately  entered  into 
comprehensive  settlements  with  the  Trusts  and  monoline  insurers,  subject  to  the 
Bankruptcy Court’s approval.  In December 2013, in a 134-page ruling, the Bankruptcy 
Court set forth its reasons for confirming and approving RFC’s bankruptcy plan, including 
the settlements.  (See id., Ex. 28 (Bankr. Findings of Fact).)            

   In this litigation, RFC asserted breach of contract and indemnification claims under 
Minnesota state law based on the losses and liabilities it incurred in the Bankruptcy Court 
settlements.  (Residential Funding Company, LLC v. Home Loan Center, Inc., No. 14-cv-
1716 (SRN/HB), First Am. Compl. [Doc. No. 1-2] ¶¶ 78–85; 86–89.)  Following the 
consolidation of this case with numerous other cases brought in a “first wave” by RFC, the 

parties engaged in intensive discovery.  The case against HLC was the only of the first-
wave cases to go to trial, as Plaintiff and other Defendants settled many of the actions.  
Shortly before the HLC trial, pursuant to the parties’ stipulation, ResCap withdrew its 
breach of contract claim and proceeded to trial against HLC solely on its indemnification 
claim.  (See Oct. 4, 2018 Order on Stip. [Doc. No. 4515].)                

   The Court presided over the jury trial between ResCap and HLC from October 15 
through November 8, 2018.  On November 8, 2018, the jury found HLC liable, and  
required it to indemnify ResCap for its underlying losses and liabilities.  (See Redacted 
Jury Verdict [Doc. No. 4705].)  It awarded ResCap damages in the amount of $28.7 million.  
(Id.)                                                                     
   ResCap  now  moves  for  an  award  of  prejudgment  interest,  comprised  of  the 

following:    (1)  $14,066,931.50  in  preverdict  prejudgment  interest  running  from  the 
commencement  of  this  action  through  the  jury’s  verdict;  (2)  preverdict  prejudgment 
interest on any award of attorney’s fees and costs, as determined by the Court; and (3) 
postverdict prejudgment interest running from the date of the verdict through entry of final 
judgment at a rate of 10% per annum on the total of the jury’s award, any attorney’s fees 

and costs, and preverdict interest.                                       
   HLC opposes the motion, arguing that:  (1) the jury’s damages award was for “future 
damages,” which are not subject to prejudgment interest; (2) Plaintiff is not entitled to 
prejudgment interest on any award of attorney’s fees and costs; (3) any award of preverdict 
interest should be reduced in light of Plaintiff’s dilatory requests for damages discovery; 

and (4) Plaintiff is not entitled to postverdict prejudgment interest.    
III.  DISCUSSION                                                          
   A.  Preverdict Prejudgment Interest from Commencement of Action Through 
     Jury Verdict                                                       

   ResCap asserts that 

 governs the application of preverdict 
prejudgment interest for the following reasons:  (1) the value of its claim had to be 
determined by litigation; (2) the proper damages methodology was disputed; (3) there were 
significant  variations  in  Plaintiff’s  damages  methodologies;  and  (4)  the  amount  of 
Plaintiff’s claim was dependent on the jury’s discretion.  (Pl.’s Mem. Supp. Mot. for 
Prejudgment Int. (“Pl.’s Mem.”) [Doc. No. 4741] at 4–6.)  Thus, ResCap argues that it is 
entitled to prejudgment interest on the jury’s award.                     
   In its opposition, HLC does not dispute the general applicability of 

 to awards of prejudgment interest.  Rather, it argues that ResCap is not entitled to 
preverdict interest on the jury’s damages award because the damages constitute “future 
damages” for liabilities that ResCap has yet to pay.  (Def.’s Opp’n Mem. (“Def.’s Opp’n”) 
[Doc. No. 4778] at 4–9.)                                                  
   Because ResCap’s indemnification claim was asserted under state law, Minnesota 

law governs Plaintiff’s request for prejudgment interest.  See Ewald v. Royal Norwegian 
Embassy, No. 11-cv-2116 (SRN/SER), 

, at *21 (D. Minn. Apr. 13, 2015) 
(stating general rule that “prejudgment interest is a substantive remedy governed by state 
law when state-law claims are brought in federal court.”).  Under 

, 
“[w]hen a judgment or award is for the recovery of money, . . . , interest from the time of 

the verdict . . . until judgment is finally entered shall be . . . added to the judgment or 
award.”  

, subd. 1(a).  Where the judgment or award exceeds $50,000, 
subject to certain exceptions that are inapplicable here, “the interest rate shall be ten percent 

per year until paid.”  

 subd. 1(c)(2).                                
   The  Minnesota  Supreme  Court  has  recognized  that  preverdict  interest  is  “not 
conventional ‘interest,’” but rather, “it is an element of damages awarded to provide full 
compensation by converting time-of-demand . . . damages into time-of-verdict damages.”  
Marvin Lumber & Cedar Co. v. PPG Indus., Inc., 

, 918 (8th Cir. 2005) (citing 
Lienhard v. State, 

 (Minn. 1988)).  It is designed to “compensate[ ] 

[the plaintiff] for the loss of the use of money occasioned by the defendant’s conduct.”  
Poehler v. Cincinnati Ins. Co., 

 (Minn. 2017) (citing Lienhard, 

)).  Additionally, the preverdict interest statute aims to promote good faith 
settlement negotiations.  Skifstrom v. City of Coon Rapids, 

 (Minn. 
Ct. App. 1994).                                                           

   Where  damages  “are  not  readily  ascertainable,”  preverdict  interest  “should  be 
calculated exclusively under section 549.09.”  Hogenson v. Hogenson, 

 (Minn.  Ct. App.  2014).   For instance,  section 549.09 applies “when there exist 
numerous methods of computing damages which reach vastly different results.”  Matthew 
v. Unum Life Ins. Co. of Am., 

 (8th Cir. 2011); see also Hutchinson Utils. 

Comm’n v. Curtiss-Wright Corp., 

, 242 (8th Cir. 1985) (finding damages not 
readily  ascertainable  where  plaintiff  submitted  two  different  methods  of  computing 
damages, the court used a third method, and damages were “further complicated” by 
possible issues concerning allocation of damages between defendants).  Plaintiff here 
developed  three  damages  methodologies,  two  of  which  were  precluded  on  summary 
judgment, and the case also involved allocation issues among the originating lenders.   

   Also, where the value of a claim must be determined by litigation, as was the case 
here, it is not “readily ascertainable.”  Hogenson, 

.  HLC strongly 
contested ResCap’s valuation, although it did not develop its own damages methodology.  
(See May 28, 2015 Hr’g Tr. [Doc. No. 509] at 95, 96; Trial Tr. [Doc. No. 4722] at 2797.) 
Moreover, Minnesota courts have also found that where damages depend upon a jury’s 
discretion, they are not readily ascertainable.  See Potter v. Hartzell Propeller, 

 (Minn. 1971); Noble v. C.E.D.O., Inc., 

 (Minn. Ct. App. 
1985).   As noted, the damages in this case were awarded by a jury.       
   This case involved multiple damages methodologies, and the value of Plaintiff’s 
claim was determined by litigation and a jury verdict.  Accordingly, the Court finds that 
the damages in this case were not readily ascertainable, and are subject to the provisions of 

 for awards of prejudgment interest, absent some exception.   
         1.   Future Damages                                            
   HLC  points  to  a  limited  statutory  exception  under  §  549.09  which  excludes 
prejudgment interest for “judgments or awards for future damages,” and argues that it 
applies here.  

, subd. 1(b)(2).  Under HLC’s theory, “[w]hen a plaintiff 

pursues an indemnity claim for ‘liabilities’ as opposed to ‘losses,’ it seeks a form of ‘future 
damages’ within the meaning of Section 549.09,” that are not subject to an award of 
prejudgment interest.  (Def.’s Opp’n at 5.)  HLC contends that Minnesota courts recognize 
that indemnity claims for “losses” seek to recover past losses, whereas indemnity claims 
for “liabilities” seek to recover future losses.  (Id. at 6–7) (citing Christy v. Menasha Corp., 

, 776–77 (Minn. 1973); Aetna Cas. & Sur. Co. v. Bros., 

 

(Minn. 1948)).  The jury’s award here, HLC argues, was for future damages for “liabilities” 
that Plaintiff has yet to pay.  (Id. at 7.)  Thus, HLC contends that Plaintiff is not entitled to 
prejudgment interest on its indemnity claim.  (Id.)                       
   As the Court recognized in its ruling on the parties’ cross motions for summary 
judgment,  under  Minnesota  law,  “parties  may  contract  for  indemnity  against  losses 
suffered as well as for indemnity against liabilities incurred.”  (SJ Order [Doc. No. 4307] 

at 82) (citing Johnson v. Johnson, 

 (Minn. Ct. App. 2017)).  Under the 
Client Guide, HLC contracted to indemnify RFC for “liabilities as well as for out-of-pocket 
losses,” including “from all . . . judgments.”  (Id.) (citing Client Guide § A212).  This Court 
found that the Bankruptcy Court’s Confirmation Order approving the Second Amended 
[Bankruptcy] Plan was a final judgment.   (Id. at 83.)   Pursuant to that judgment and the 

Bankruptcy plan, as of December 2013, RFC incurred indemnifiable liabilities, for which 
the jury in this case ultimately awarded $28.7 million in damages.        
   This was not an award of future damages, nor did the jury’s award include any such 
relief.  As Plaintiff notes, future damages are those that are “more likely to occur than not 
to occur” in the future, such as damages for future pain and suffering or lost profits.  See 

Pietrzak v. Eggen, 

 (Minn. 1980).  Here, Plaintiff recovered damages 
for losses and liabilities incurred over five years ago—not for future damages.  As the Court 
noted in its summary judgment order, albeit in the context of a statute-of-limitations 
argument, “final and actual liability is required for the accrual of an indemnification claim” 
in Minnesota.  (SJ Order at 146) (citing Metro. Prop. & Cas. Ins. Co. v. Metro Transit 
Comm’n, 

 (Minn. 1995)).  The Court held that Plaintiff’s indemnity 

claim accrued when its liability “became finally fixed and ascertained,” in December 2013, 
when the Bankruptcy Court approved the underlying settlements.  (Id. at 148.)  Plaintiff 
incurred damages as of that date, not in the future.                      
   While HLC argues that these liabilities are nonetheless future damages because 
Plaintiff has not paid them yet, (Def.’s Opp’n at 1), the Court disagrees.  As ResCap 
observes, whether or not it is able to pay its creditors, or has paid them, is irrelevant to an 

award of prejudgment interest, “because it has no bearing on the fact that HLC has owed 
Plaintiff money since December 2013, when Plaintiff incurred an indemnifiable liability 
and commenced this action.”  (Pl.’s Reply [Doc. No. 4800] at 4.)  HLC cites no authority 
to the contrary.  Rather, Minnesota courts have rejected the argument that unpaid liabilities, 
or liabilities paid by a third party, constitute “future damages” under 

.  

See Jonas v. End Health Ctr., Inc., No. C5-95-1407, 

, at *4 (Minn. Ct. 
App. Mar. 12, 1996) (affirming plaintiff’s entitlement to prejudgment interest for incurred 
medical expenses, even though the plaintiff did not pay them); Ruhland v. Carr’s Tree 
Serv., Inc., 

 (Scott Cty., Minn. Dist. Ct.  Aug. 11, 2008) (awarding 
prejudgment interest on amounts paid by insurance providers for plaintiff’s past damages).  

In Jonas, the Minnesota Court of Appeals explained, “There is no question that someone 
was liable for the medical bills when those bills were sent.  The question is not when the 


3 The Westlaw version of Ruhland does not contain internal page numbers.   
damages were ‘paid’ but when they were ‘incurred’—the statute does not distinguish 
between special damages that are paid by third parties and those that are not.”  

, at *4.  Likewise, the court in Ruhland explained, “[

] is 
concerned with all damages that were incurred, not simply those that were paid,” and past 
damages were certainly incurred, “regardless of who ultimately paid the bills.”  

.   The same is true here.                                         
   HLC argues that Plaintiff “pursued a damages theory at trial focused solely on 
RFC’s liabilities in the form of allowed claims,”  (Def.’s Opp’n at 7), but ResCap did not 

present any evidence at trial regarding damages likely to occur in the future.  See Children’s 
Broad. Corp. v. Walt Disney Co., 

, 869 (8th Cir. 2004) (finding that because 
plaintiff’s expert used future earnings to determine the present value of plaintiff’s loss, but 
did not seek future damages, prejudgment interest was properly awarded on plaintiff’s 
damages).  HLC’s misplaced focus on “liabilities” versus “losses” ignores the fact that 

Plaintiff sought, and obtained, damages that were incurred before the verdict:  the damages 
that RFC incurred when settling its claims in Bankruptcy Court.    In short, the damages 
here are not “future damages.”  As such, they are not subject to the limited exception that 
excludes prejudgment interest on awards of future damages.                
   Moreover, if the Legislature meant to include damages that have not been “paid” as 

a form of future damages, ineligible for prejudgment interest, it knew how to do so.  Other 
subdivisions of 

 refer to disbursements “paid or incurred” by the 
judgment creditor.  See 

, subds. 3 & 4.  The exception for future 
damages, however, contains no language suggesting that “unpaid” damages are future 
damages.   See 

  subd.  1(b)(2).  It merely states that preverdict interest shall not be 
allowed on “judgments or awards for future damages.”  Jd. 
    The Court finds that Plaintiff is therefore entitled to prejudgment interest under 

 on the jury’s award of $28.7 million.  This award serves the statute’s 
objectives  of  compensating  Plaintiff  for  the  lost  use  of  its  money  occasioned  by 
Defendant’s conduct, Poehler, 

, and encouraging settlement.  Adams v. 
Toyota Motor Corp., 

, 919 (8th Cir. 2017) (citing Burniece v. Ill. Farmers Ins. 
Co., 

 (Minn. 1987)).  All of the Defendants in this consolidated action 
were well aware of the additional economic risk of incurring prejudgment interest and 
attorney’s fees, if they were to lose at trial.  In fact, that risk likely animated many, if not 
all, of the settlements in this consolidated action.  HLC chose to proceed to trial, where it 
lost. 
    Preverdict prejudgment interest  here  shall  run  from the  commencement of this 
action on December  16, 2013, when service was effective, through November 8, 2018, 
when the jury rendered its verdict, and shall be at the statutory rate of ten percent per year. 
See 

, subd. 1(b); 1(c)(2).  Prejudgment preverdict interest on the jury’s 
award is calculated as follows: 

Interest for 2016 is higher because it was a leap year.  (See Heeman Decl. [Doc. No. 
4742] 4 8.) 
                                    11 

            1/1/2017 – 12/31/2017  $2,870,000.00                        
            1/1/2018 – 11/8/2018   $2,453,260.27                        
            TOTAL                 $14,066,931.50                        

   In sum, as an element of Plaintiff’s damages, it is entitled to $14,066,931.50 in 
preverdict prejudgment interest on the jury’s award of $28.7 million.     
   B.  Prejudgment Interest on Attorney’s Fees                          
   ResCap has filed a separate petition for an award of attorney’s fees and costs, which 
is under advisement.  (See Pl.’s Mot. for Atty’s Fees [Doc. No. 4852].)  In the instant 
motion, Plaintiff also seeks prejudgment interest on any award of attorney’s fees and costs.  
(Pl.’s Mem. at 7–10.)  However, HLC argues that such interest is prohibited by 

, subd. 1(b)(5), which provides that preverdict interest shall not be awarded for 
“that portion of any verdict, award or report which is founded upon interest, or costs, 
disbursements, attorney fees, or other similar items added by the court or arbitrator.”  

, subd. 1(b)(5) (emphasis added); (Def.’s Opp’n at 9–15.)     
   As noted, the parties here stipulated that attorney’s fees would be determined by the 

Court. (Oct. 10, 2018 Stip. [Doc. No. 4570].)   However, neither this stipulation nor the 
law dictates that an award of attorney’s fees in this action is “added by the Court,” and 
therefore excepted from prejudgment interest, as HLC acknowledges.  (Def.’s Opp’n at 12, 
n.2); see also St. Jude Med., S.C., Inc. v. Biosense Webster, Inc., 12-cv-621 (ADM/TNL), 

, at *10 (D. Minn. Nov. 24, 2014) (stating that parties’ stipulation that 

court would determine attorney’s fees did not cause attorney’s fees to be “added by the 
court” for purposes of prejudgment interest).                             
   Where attorney’s fees are the subject matter of the lawsuit, awarding prejudgment 
interest on a judgment for attorney’s fees is permitted.  Gaughan v. Gaughan, 

 (Minn. Ct. App. 1990).  Such fees are not considered to be “added by the court” 
under 

, subd. 1(b)(5).                                
   Plaintiff argues that its attorney’s fees are “part and parcel of [its] contractual 
indemnity claim,” (Jan. 31, 2019 Hr’g Tr. [Doc. No. 4976] at 16) (citing Vesta State Bank 
v. Indep. State Bank of Minn., Nos. CO-96-115, CO-96-1129, CO-96-795, 

, at *6–7 (Minn. Ct. App. Nov. 12, 1996)), and therefore, its fees are part of the 

subject matter of this lawsuit.  It first points to Section A212 of the Client Guide, which 
provides for indemnification for “all court costs, attorney’s fees and any other costs, fees 
and expenses” incurred by RFC in enforcing its agreement with HLC. (Pl.’s Mem. at 8.)  
Plaintiff then relies on the Minnesota Supreme Court’s statement in United Prairie Bank-
Mountain Lake v. Haugen Nutrition & Equipment, 

 (Minn. 2012), that 

“when a party seeks attorney fees under the express provisions of a contract, the fees are 
an agreed element of damages available under the contract and are not collateral,” and are 
a “direct consequence of [the defendants’] breach.”                       
   But United Prairie arose in a different context, addressing the question of whether, 
under the Minnesota Constitution, the determination of attorney’s fees must be made by a 

jury.  

 at 56–63.  It did not concern prejudgment interest, nor did it involve a third-party 
lawsuit or underlying lawsuit.  Instead, for the first time under Minnesota law, the court 
held that where a contract provides for an award of attorney’s fees, the right to such fees is 
a legal claim, not an equitable one, and is subject to a jury trial.  

.   
   Yet United Prairie did not overrule long-standing Minnesota precedent holding that 
attorney’s fees due under a contract are not “part of the original debt,” and are “not really 

due when suit is brought, for the services of the attorney are not then fully performed.”  
Campbell v. Worman, 

 (1894).  A claim for attorney’s fees under a 
promissory note, for example, is not “part of the cause of action alleged,” nor is it “a distinct 
cause of action.”  First State Bank of Grand Rapids v. Cohasset Wooden Ware Co., 

 (1917).   Instead, as the dissent in United Prairie observed, such claims are 
“not to be submitted with the issues upon which the liability of a defendant depends,”  

 (Dietzen, J. dissenting) (quoting First State Bank, 161 N.W.2d at 399), as 
the right to contractual attorney’s fees “does not accrue until the payee incurs the liability.”  
Campbell, 

.                                                 
   When considering the application of prejudgment interest  to an attorney’s fee 
award,  Minnesota  courts  generally  distinguish  between  attorney’s  fees  incurred  in 

underlying litigation, which are often the subject of a subsequent lawsuit to recover fees, 
and attorney’s fees that arise contemporaneously in a single suit.        
        1.   Underlying Litigation                                      
   As to attorney’s fees arising from underlying litigation, in Seaway Port Authority of 
Duluth  v.  Midland  Insurance  Co.,  

  (Minn.  Ct.  App.  1988),  a 

declaratory  judgment  suit,  the  Minnesota  Court  of  Appeals  affirmed  an  award  of 
prejudgment interest associated with Seaway’s costs of defending itself in underlying bond 
default actions. The court observed that “the costs and fees for which [the plaintiff] is 
reimbursed have not been ‘added by the court’ to this judgment, they are the subject matter 
of the judgment itself.”  

.  The court did not address the question of whether 
attorney’s fees related to the declaratory judgment action itself were subject to prejudgment 

interest, however.                                                        
   Relying on Seaway, in Gaughan, the Minnesota Court of Appeals found that where 
the action arose out of an attorney’s retainer agreement, the unpaid legal fees were the 
subject matter of the lawsuit.  450 N.W.2d at 343–44.  The law firm in question had sought 
relief in two separate proceedings, filing a civil suit for breach of contract and filing an 
application  for  an  attorney’s  lien  in  an  existing  family  law  action,  where  the  firm 

represented a party in dissolution proceedings.  

 at 340–41.  The trial court consolidated 
the proceedings and entered an attorney’s lien in the law firm’s favor.  

.  On 
appeal, despite the appellate court’s finding that the legal fees were the subject matter of 
the lawsuit, it denied prejudgment interest because such interest “is authorized only for 
money judgments,” and an attorney’s lien is not considered a money judgment.  

 at 344 

(citing 

, subd. 1(a)).  Accordingly, the Minnesota Court of Appeals 
held that the fees were not eligible for prejudgment interest in a statutory attorney’s lien 
action.5  

 (comparing the attorney’s lien statute, 

, which 
contained no language regarding prejudgment interest, with mechanic’s lien statute, 

 (1988), under which prejudgment interest was expressly available).  


5 However, the Minnesota Court of Appeals also found that the two proceedings were 
improperly consolidated, and remanded the matter to the trial court.  Gaughan, 

.  This suggests that if the law firm chose to proceed with its civil contract suit and 
prevailed, any resulting damages award would be subject to prejudgment interest, as the 
limitations of the attorney’s lien statute would not be implicated.       
   In Vesta State Bank, a fraud lawsuit, the trial court added the plaintiff’s attorney’s 
fees  from  two  underlying  actions  as  consequential  damages,  but  declined  to  award 

prejudgment interest on the fees pursuant to 

, subd. 1(b)(5).  

, at *6.  The Minnesota Court of Appeals reversed the decision on prejudgment 
interest, ruling that attorney’s fees arising from the underlying actions were subject to 
prejudgment interest, because they were “part of the damage being compensated, rather 
than additional awards to [the plaintiff] ‘added by the court.’”  

 at 6–7.  
        2.   Fees Contemporaneously Incurred                            

   In certain circumstances, Minnesota courts have awarded prejudgment interest on 
attorney’s fees contemporaneously incurred in the litigation at hand.  For instance, in 
Kraus-Anderson Construction Co. v. Transportation Insurance. Co., No. A10-698, 

, at *13 (Minn. Ct. App. 2011), after an arbitration award was entered against 
Kraus-Anderson related to defective construction work, the company brought a declaratory 

judgment action against several insurance companies for breach of their duty to defend.  

 at *1–2.  The Minnesota Court of Appeals affirmed an award of prejudgment interest 
for Kraus-Anderson’s attorney’s fees incurred in the second lawsuit. 

.  The court 
concluded that because attorney’s fees in a declaratory judgment action “arise directly as a 
result of an insurer’s breach of its duty to defend and are recoverable as contract damages 

of that breach,” they qualify as “the subject matter of the lawsuit,” which are not “added 
by the court” and thus fall outside the scope of 

 subd. 1(b)(5). 

  
   ResCap argues that the facts of this case are similar those in Kraus-Anderson.  (Pl.’s 
Mem. at 10.)  But Kraus-Anderson did not involve a contractual provision for attorney’s 
fees.  Instead, the fees were awarded pursuant to Minnesota’s exception to the “American 
rule” that allows for recovery of attorney’s fees for a successful duty-to-defend declaratory 

judgment action against an insurer.  

, at *13–14 (citing Morrison v. 
Swensen, 

 (Minn. 1966)). The Minnesota Supreme Court has explicitly 
recognized the narrowness of the “Morrison exception,” which only applies to a duty-to-
defend claim against an insurer.  See In re Silicone Implant Ins. Coverage Litig., 

 (Minn. 2003) (stating that Morrison is limited to duty-to-defend claims).  
   Similarly, in St. Jude, 

, at *9–10, the Court held that prejudgment 

interest was properly applied to an attorney’s fee award.  The Court granted summary 
judgment to St. Jude against St. Jude’s competitor, Biosense, and a former St. Jude 
employee, who had left to work for Biosense, on claims of breach of contract and tortious 
interference.  

 at *1–2.  A jury awarded damages to St. Jude, and the Court ordered 
Biosense to pay attorney’s fees under the “third-party exception to the ‘American rule,’” 

based on the costs St. Jude was forced to incur in suing the individual employee.  

 The 
Court also awarded prejudgment interest on the attorney’s fees, which were “one portion 
of the judgment for compensatory damages based on Biosense’s tortious interference.” 

.                                                                   
   However, in Select Comfort Corp. v. Arrowood Indemnity Co., No. 13-cv-2975 

(JNE/FLN), 

, at *9 (D. Minn. Aug. 20, 2015), a different judge of this 
Court declined to follow Kraus-Anderson and St. Jude and denied prejudgment interest on 
attorney’s fees in a third-party action.  In Select Comfort, the plaintiff sued its insurer for 
some of the costs it had incurred to defend itself in the “Stearns” litigation brought by 
consumers over defective mattresses.   

 at *1–2.  As Judge Ericksen explained, 

   Minnesota courts have explained that 

, subd. 1(b)(5) 
   “does not preclude adding prejudgment interest to a judgment for attorney 
   fees  when  the  fees  are  the  subject  matter  of  the  lawsuit.”  Gaughan  v. 
   Gaughan,  

  (Minn.  Ct.  App.  1990).    But  Select 
   Comfort’s [attorney fees award]—regardless of the rationale underlying it—
   is not the subject matter of this lawsuit; its Stearns defense costs are.  To the 
   extent that the unpublished decisions offered by Select Comfort reach a 
   different  conclusion,  the  Court  does  not  find  them  persuasive.  Select 
   Comfort’s Morrison award falls squarely within the plain language of the 
   exclusion at 

, subdivision 1(b)(5), and Select Comfort 
   cites no other authority by which pre-judgment interest may be added. 

.                                                                
   Defendant correctly notes “the unpublished decisions” that Judge Ericksen refers to 
includes Kraus-Anderson.  (Def.’s Opp’n at 14 n.4) (noting that while the Court did not 
mention these cases by name, the Plaintiff’s unpublished legal authorities included Kraus-
Anderson).  As in Select Comfort, the attorney’s fees and costs incurred in this suit were 
not  the subject matter of this litigation.  Had Plaintiff sought to recover here the attorney’s 
fees that it incurred in defending itself in the underlying lawsuits or in Bankruptcy Court, 
it  could  plausibly  claim  that  such  fees  formed  part  of  its  damages.    But  Plaintiff’s 
indemnification claim was the subject matter of this litigation, and it did not involve 
damages for RFC’s underlying attorney’s fees.  Now, however, Plaintiff seeks to recoup 
its attorney’s fees and costs incurred in this very litigation.  The Court finds that the fees 
and costs here fall under the exception that excludes prejudgment interest on awards of 
attorney’s fees and costs added by the court.  

, subd. 1(b)(5).   
   Moreover, Defendant correctly observes that the attorney’s fees here are unlike 
damages incurred as of the date of the commencement of suit, which are properly subject 

to prejudgment interest to account for the lost time-value of money.  See 

,  subd.  1(b).    Rather,  here,  ResCap  seeks  to  recover  prejudgment  interest  on 
attorney’s fees that it incurred after the commencement of this litigation—fees that greatly 
increased shortly before and during trial.                                
   For all of the forgoing reasons, the Court declines to award prejudgment interest on 
any potential award of attorney’s fees.   As noted, Plaintiff’s attorney’s fee petition remains 

under advisement and a separate order will be forthcoming.                
   C.  Whether a Reduction is Appropriate                               
   HLC argues that if the Court awards any preverdict prejudgment interest, it should 
reduce the award in light of “Plaintiff’s extraordinary delay in seeking discovery related to 
its allocation theory of damages.”  (Def.’s Opp’n at 15.)  HLC asserts that even though 

 governs the award of prejudgment interest, it does not displace the 
common law, (id.) (citing Hogenson, 

, under which courts have the 
discretion to reduce or even deny preverdict interest.  (Id.) (citing Val-U Const. Co. of S.D. 
v. Rosebud Sioux Tribe, 

, 582 (8th Cir. 1998)).               
   The Eighth Circuit has advised that “prejudgment interest should ordinarily be 

granted unless exceptional or unusual circumstances exist making the award of interest 
inequitable.”  Stroh Container Co. v. Delphi Indus., Inc., 

, 752 (8th Cir. 1986).  
In fact, some Minnesota courts have held that the language of 

 
mandates an award of prejudgment interest, eliminating any discretion to reduce an award.  
See Tate v. Scanlan Int’l, Inc., 

 (Minn. Ct. App. 1987).   

   This Court has presided over this consolidated litigation for more than four years.  
During this time, the Court held 38 monthly status conferences and presided over numerous 
motion hearings and teleconferences dedicated to resolving the parties’ discovery disputes 
and streamlining these cases for trial or settlement.  Even if this Court has the discretion to 
reduce or eliminate an award of prejudgment interest under Minn. State. § 549.09, the 
Court declines to do so.  Delays in this litigation occurred on both sides, prompted by 

numerous factors, including the complexity of legal issues, allocation, and the breadth of 
evidence.  See Stroh, 783 F.2d at 752 (denying request to reduce prejudgment interest 
where any delays were “simply those reasonably to be expected in the course of ordinary 
litigation.”).  Nor is there any allegation of bad faith on the part of ResCap.  ResCap’s 
conduct does not render the award of prejudgment interest inequitable.  In fact, the contrary 

is true—reducing or denying prejudgment interest would be inequitable to ResCap, which 
has been deprived of the interest on the damages that it incurred over five years ago.   
   D.  Postverdict Prejudgment Interest                                 
   Finally, ResCap seeks postverdict prejudgment interest, running from verdict to 
entry of final judgment.  (Pl.’s Mem. at 10–11.)  HLC argues that because Plaintiff is not 

entitled to preverdict prejudgment interest on the jury’s award or ResCap’s attorney’s fees 
and costs, it is likewise not entitled to postverdict prejudgment interest.  (Def.’s Mem. at 
17.)                                                                      
   Under  Minnesota  law,  “[b]ecause  preverdict  interest  is  part  of  compensatory 
damages, it is part of a prevailing party’s judgment or award.”  Hogenson, 

.  In Hogenson, the defendant argued that the plaintiff should have received postverdict 
prejudgment interest only on the damages that the jury awarded, not on the sum of damages 
plus preverdict interest.  

  The Minnesota Court of Appeals rejected this argument.  Thus, 
when awarding postverdict prejudgment interest, courts may “include[e] the preverdict 
interest in the total sum of the award upon which postverdict, prejudgment interest [is] 
calculated.”  

                                                         

   The Court thus finds that Plaintiff is entitled to postverdict prejudgment interest on 
its damages award, inclusive of preverdict prejudgment interest on the jury’s award.   
IV.   ORDER                                                               
   1.   Plaintiff’s Motion for Prejudgment Interest [Doc. No. 4739] is GRANTED 
        IN PART and DENIED IN PART.                                     

   2.   Plaintiff is awarded $14,066,931.50 in preverdict prejudgment interest on the 
        jury’s damages award from commencement of the litigation through the 
        jury’s verdict on November 8, 2018.                             
   3.   Plaintiff is awarded postverdict prejudgment interest on the total award of 
        damages, inclusive of preverdict prejudgment interest on the jury’s award.   

   4.   Plaintiff is denied prejudgment interest on any award of attorney’s fees and 
        costs.                                                          
Dated: March 18, 2019                   s/Susan Richard Nelson            
                                      SUSAN RICHARD NELSON              
                                      United States District Judge