The opinion of the court was delivered by: ZIEGLER
On November 13, 1972, plaintiffs filed a class action against defendants challenging various interest and accounting practices pertaining to the use of Bank Americard and Mastercharge. On August 26, 1977, the district court approved a settlement of the claims totaling 2.76 million dollars.
In three separate settlement agreements the parties resolved, inter alia, that defendants would pay interest on the settlement funds in an amount equal to the prevailing passbook savings rate. Interest was to be computed from the date of the order approving the settlement, i. e., August 26, 1977, to the date of the final award of counsel fees and costs.
Due to the ongoing and acrimonious controversy concerning fees for class counsel, distribution of the funds has been delayed. The monies remain deposited with defendants and are earning interest in excess of the passbook savings rate. The differential has been substantial. For example, in May of 1980, the dichotomy between the prime and passbook rates totaled 13.25 percent.
During the course of the fee proceedings required in this Circuit,
The Honorable Hubert I. Teitelbaum of this court recused himself from consideration of the question. An appeal was taken from that order and the issue is presently before the United States Court of Appeals for the Third Circuit. Accordingly, before we can address the merits of the instant motion, we must determine whether the appeal of the order of recusal divests this court of jurisdiction.
The filing of a timely and sufficient notice of appeal transfers jurisdiction from the district court to the Court of Appeals with respect to any matters involved in the appeal. 9 Moore's Federal Practice, P 203.11 at 739 (2d ed. 1979); S. E. C. v. Investors Security Corp., 560 F.2d 561, 568 (3d Cir. 1977). We are satisfied that the issue before the Court of Appeals bears no relation to any decision we may reach on plaintiffs' motion, see Silberman v. Bogle, 486 F. Supp. 70 (E.D.Pa.1980), and we hold that this court has jurisdiction to adjudicate the matter.
Plaintiffs contend the parties made a mutual mistake when they agreed that interest would be added to the settlement funds in an amount equal to the passbook savings rate. They argue that the parties did not foresee the rise in the prime rate or the delay engendered by the counsel fee dispute and the court should invoke the doctrine of mutual mistake to reform the settlement agreements to comport with the true intention of the parties.
The Restatement (Second) of Contracts § 293 (Tent. Draft No. 10, 1975) provides that "a mistake is a belief that is not in accord with existing facts." The erroneous belief must relate to the facts "as they exist at the time of the making of the contract." Id. at Comment a. Thus, "(a) party's prediction or judgment as to events to occur in the future, even if erroneous, is not a "mistake' as that word is defined here." Id. Illustration No. 2 to § 293 is instructive. It provides:
A contracts to sell and B to buy stock amounting to a controlling interest in C Corporation. At the time of making the contract, both A and B believe that C Corporation will have earnings of $ 1,000,000 during the following fiscal year. Because of a subsequent economic recession, C corporation earns less than $ 500,000 during that year. Although B may have shown poor judgment in making the contract, there was no mistake of either A or B, and the rules stated in this Chapter do not apply.
Id. at Comment a, Illustration 2.
In this case, plaintiffs' failure to forecast the rise in the prime rate may similarly reflect poor judgment. The prime rate rose to 12 percent in 1974 and we cannot say that the increase of the past few years was not anticipated by any of the parties. Moreover, in light of counsel's extensive experience in class action ...