Lan Associates' contractual debts, including Defendant here. Section 502(b)(2) simply has no effect on the obligation to repay the contractual interest and no application to Plaintiff's non-bankruptcy action against Defendant.
Defendant's reliance on In re United States Lines, Inc., 199 Bankr. 476 (Bankr. S.D.N.Y. 1996) is misplaced. The court in that case considered an objection to a creditor's claim for postpetition interest filed against the bankruptcy estate of the debtor. See id. at 478. The court disallowed the claim for postpetition interest under § 502(b)(2). See id. at 481. The court made no decision whatsoever about the effect of § 502(b)(2) on the liability of a co-debtor for postpetition interest in a separate non-bankruptcy action.
Defendant relies upon the court's statement in United States Lines that the debtor's insurer "cannot be derivatively liable if this Court disallows the interest portion" of the creditor's claim under § 502(b)(2) to support his position that he is not liable for Lan Associates' postpetition interest. Id. at 483. This statement is hard to assess, however, because the opinion in United States Lines does not identify the nature of the insurer's liability, if any, to the debtor's creditors; in any case, to the extent the statement could be understood to mean that § 502(b)(2) discharges a co-debtor's liability for postpetition interest, I would decline to follow it as contrary to the decisions and reasoning set forth in Bruning, Leeper, and the other authorities cited above.
To conclude, § 502(b)(2) neither tolled the accrual of contractual interest under the commissions contract nor discharged Defendant's liability for the contractual interest, and accordingly, as a general partner of Lan Associates, Defendant is liable for the contractual interest due under the commissions contract.
II. COMPOUND OR SIMPLE INTEREST
Defendant objects to Plaintiff's calculation of the amount of interest on grounds that the interest should be calculated as simple interest at prime as of the date due, rather than as compounded interest based on a floating interest rate. Plaintiff has cited to no provision of the contract that provides for compounded interest or a floating interest rate, nor has Plaintiff cited any authority favoring its computation. In the absence of any provision in the contract otherwise, I will award simple interest based on the prime interest rate in effect on the date due.
III. PERIOD OF ACCRUAL
The contract states that if Lan Associates failed to make payments on the commissions "within the time limits set forth herein, then from the date due until paid, the delinquent amount shall bear interest at prime." Plaintiff asserts that the "date due" must be December 23, 1993
at the latest "because this was the date that the Bankruptcy Court ordered Plaintiff's Exclusive Agreement terminated and therefore it was that date that it became certain that Plaintiff would not receive its commissions." (Pl.'s Mot. Amend J. Include Contractual Interest, P 4 (footnote omitted).) Thus, Plaintiff calculated the amount of interest starting from December 23, 1993.
Defendant objects that "interest should only be awarded from the date of filing of the complaint herein, as that was the first time plaintiff made a demand against defendant under the contract." (Def.'s Opp. Pl.'s Mot. Amend J. for an Award of Interest from December 23, 1993, at 5.) Defendant makes no other objection to Plaintiff's identification of December 23, 1993 as the "date due" and devotes no more than the sentence just quoted to support its objection.
Defendant has cited no provision in the contract that expressly or impliedly provides that interest will not accrue until Plaintiff makes a demand for the commissions, nor have I been able to locate any such provision. Neither has Defendant cited any other authority that would impose such a condition on the parties. Under the plain language of the agreement, the only condition that must be satisfied before interest begins to accrue is that Lan Associates "fails to make payments within the time limits set forth herein." Defendant does not suggest that Lan Associates made timely payments. Therefore, I conclude that Defendant's objection must be denied, and there being no other objection, I will grant Plaintiff's request for an award as calculated from December 23, 1993 forward. An order will be entered accordingly.
Anita B. Brody, J.
AND NOW, this 19th day of June, 1997, IT IS ORDERED as follows:
(1) Plaintiff's Motion to Amend Judgment to Include Contractual Interest (document # 37) is GRANTED ;
(2) Plaintiff shall submit a new motion no later than July 3, 1997, requesting amendment of the judgment to include contractual interest in an amount equal to that which has accrued between December 23, 1993 and the approximate filing date of the new motion, calculated as simple interest based on the prime interest rate in effect on December 23, 1993; and
3. Defendant may file a response to the motion described in paragraph 2 of this Order no later than July 10, 1997, solely for purposes of contesting any inaccuracies in Plaintiff's calculations.
Anita B. Brody, J.