Sovereign Bank v. Remi Capital Inc

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______________

No. 21-2289
______________

SOVEREIGN BANK

v.

REMI CAPITAL, INC; ERIK A. KAISER, Individually

*Jenzack Partners, LLC, as assignee for Sovereign Bank,
Appellant

*(Pursuant to Rule 12(a), Fed. R. App. P.)
______________

APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(D.C. No. 3-09-cv-01580)
District Judge: Honorable Peter G. Sheridan
______________

Argued: May 25, 2022
______________

Before: GREENAWAY, JR., PORTER, and PHIPPS, Circuit
Judges.
 (Opinion Filed: September 15, 2022)

Howard J. Bashman [ARGUED]
Suite 400
500 Office Center Drive
Fort Washington, PA 19034

Peter R. Bray
Bray & Bray
100 Misty Lane
Lanidex Executive Center
Parsippany, NJ 07054

Alissa L. Poynor
Riemer & Braunstein
100 Cambridge Street
22nd Floor
Boston, MA 02114
Counsel for Appellant

Joseph B. Fiorenzo
Stephen M. Klein [ARGUED]
Mark S. Olinsky
Sills Cummis & Gross
The Legal Center
One Riverfront Plaza
11th Floor
Newark, NJ 07102
Counsel for Appellee
______________

OPINION
______________

2
GREENAWAY, JR., Circuit Judge.

Parties settle their civil disputes. They enter into
agreements wherein plaintiffs dismiss their case or defendants
consent to entry of a judgment. The cases end. It is incumbent
on the parties to detail, with precision and with clarity, the
bargain they have struck. The failure to do so in an agreement,
or in a consent judgment that reflects or incorporates that
agreement, precludes a district court from enforcing an
otherwise silent provision one party asks it to divine. Here, the
District Court correctly discharged a consent judgment that
was satisfied as written. Accordingly, we will affirm the
District Court’s final order discharging the judgment in this
case.

I. BACKGROUND

This appeal arises out of an action to collect on a
defaulted loan originated over a decade ago. Sovereign Bank
(“Sovereign”) was a federally chartered savings bank
headquartered in Pennsylvania. 1 REMI Capital, Inc. (“REMI”)
is a Delaware corporation, with its principal place of business
in New Jersey. Erik A. Kaiser is an individual residing in New
York. On January 25, 2007, Sovereign entered into a loan
agreement with REMI, extending to REMI a $15 million line
of credit to help REMI fund the origination or acquisition of
mortgage loans for residential property (the “Loan

1
In the years since this action was instituted, Sovereign Bank
moved its headquarters to Boston, Massachusetts, and
rebranded as Santander Bank, N.A.

3
Agreement”). In connection with the Loan Agreement,
Sovereign and REMI executed a promissory note in the amount
of $15 million (the “Promissory Note”). On that same date,
Kaiser executed a suretyship agreement guaranteeing all of
REMI’s obligations under the Loan Agreement and
Promissory Note (the “Suretyship Agreement”). The
Suretyship Agreement contains a choice-of-law provision
providing that Pennsylvania law governs interpretation of the
agreement. 2

As relevant here, Sovereign and Kaiser agreed that “any
judgment entered against [Kaiser] pursuant to [the Suretyship
Agreement] shall bear interest until paid at the Prime Rate plus
six percent (6%) per annum, and not at the statutory rate of
interest after judgment, and shall be collectible as part of any
judgment under this Agreement.” App. 93.

Eventually, REMI defaulted. On February 6, 2009,
Sovereign sent REMI a default notice. Sovereign filed a
complaint against REMI and Kaiser on April 3, 2009.
Ultimately, the parties resolved the case by agreement, which
the District Court entered as a consent judgment on September
1, 2010, in the amount of $1,560,430.24 (the “Consent

2
We focus on the language of the Suretyship Agreement
because Appellants’ opening brief only seeks to enforce the
contractual rate of interest against Kaiser solely on the basis of
his guaranty. The language of the Suretyship Agreement,
including the choice-of-law provision, thus governs Kaiser’s
obligations with respect to the loan underlying this action.
REMI Capital does not appear to have participated in this
appeal, without objection from either party, and its obligations
under the Promissory Note are no longer relevant to this action.

4
Judgment”). Prior to entry of the Consent Judgment, the
parties had the following discussion on the record before the
District Court regarding the terms of settlement.

THE COURT: Good afternoon.
Thank you for coming. Thank you
for bringing your clients. Is there
a settlement? Or what are we
doing, a consent judgment?

MR. HOFFMAN (counsel for
REMI and Kaiser): I guess that's
correct.

THE COURT: So[,] I think what
we should do is place the terms of
the consent judgment on the
record.

MR. BARLIA (counsel for
Sovereign Bank): Okay.

MR. HOFFMAN: The parties
have agreed, your Honor, that the
Court can enter judgment against
the defendants in a sum to be
computed as follows – I’ve not
done the math, I apologize, your
Honor.

THE COURT: All right.

5
 MR. HOFFMAN: The top
number is $2,364,780.24, minus
$992 – $992,350; again,
$992,350, plus legal fees in the
amount of $188,000.

THE COURT: All right. We'll
compute that all out. At the
present time I’ll have an order
drafted, and then the parties can
sign it today. Are you willing to
do that?

…

THE COURT: But that will end
the case[,] correct? And the
judgment is against both Mr.
Kaiser and [REMI]?

MR. HOFFMAN: That is correct,
your Honor.

MR. BARLIA: That is correct.

App. 402-03.

Counsel for the parties signed the Consent Judgment
thereafter. The Consent Judgment provides, in its entirety:

This matter having been brought
before the Court pursuant to a
status conference; and the parties

6
 having amicably resolved the
matter and consented to a
judgment against defendants
REMI Capital, Inc. and Erik A.
Kaiser (collectively,
“Defendants”) in favor of
Sovereign Bank (“Plaintiff”); and
for good cause having been
shown;

It is on this 1st day of September
2010 ORDERED that judgment is
entered jointly and severally
against Defendants in the amount
of $1,560,430.24.

App. 11. The Consent Judgment was silent as to any applicable
interest rate.

On July 16, 2012, Sovereign Bank assigned and
transferred to Jenzack Partners, LLC (“Jenzack”), all of the
bank’s right, title, and interest in and to the Consent Judgment.
Jenzack, as assignee, is the Appellant in this action.

On December 8, 2017, Kaiser filed a motion to declare
that judgment had been satisfied pursuant to Fed. R. Civ. P.
60(b)(5). On September 24, 2018, the District Court entered
an order denying the motion. The District Court also ordered
that: (1) the applicable interest rate is the Federal statutory
post-judgment interest rate, fixed by the Federal Reserve Bank,
at 0.26%; and (2) REMI may serve discovery on Sovereign
Bank to determine the status of loans and other payments
REMI made towards the Consent Judgment. In determining

7
that the statutory rate of interest applied, the District Court
observed that no clear, unambiguous, and unequivocal
language in the Consent Judgment demonstrated an intent to
depart from the rate of interest provided by 28 U.S.C. § 1961.

On October 17, 2018, Jenzack appealed the District
Court’s September order. In its appeal, Jenzack sought to
reverse the portion of the District Court’s order applying the
federal statutory post-judgment interest rate. Then, as now,
Jenzack argued that the applicable interest rate is the rate
contained in the contracts underlying the Consent Judgment.
In a not precedential opinion, we declined to review the District
Court’s order because it was not yet final under 28 U.S.C. §
1291. Sovereign Bank v. Remi Cap., 810 F. App’x. 101, 104-
05 (3d Cir. 2020). We explicitly left open the question as to
which interest rate was proper. Id. at 105.

On June 17, 2021, the District Court entered a final
order, denying reconsideration of its earlier order setting the
post-judgment rate of interest at the federal statutory rate,
declaring post-judgment discovery complete, confirming the
amount of money already paid by Kaiser to Jenzack, and
discharging the Consent Judgment. Jenzack timely appealed.

II. JURISDICTION AND STANDARD OF REVIEW

The parties in this case are completely diverse, and the
amount in dispute is greater than $75,000. The District Court
had jurisdiction pursuant to 28 U.S.C. § 1332. The District
Court entered a final order in this case and Jenzack timely
appealed. We have jurisdiction pursuant to 28 U.S.C. § 1291.

“We review grants or denials of relief under Rule 60(b),
aside from those raised under Rule 60(b)(4), under an abuse of

8
discretion standard.” Budget Blinds, Inc. v. White, 536 F.3d
244, 251 (3d Cir. 2008). Here, our “review of the District
Court’s ruling with respect to . . . post-judgment interest”
concerns interpretation of 28 U.S.C. § 1961 and “requires de
novo review.” Traveler Cas. & Sur. Co. v. Ins. Co. of N. Am.,
609 F.3d 143, 157 (3d Cir. 2010).

III. DISCUSSION

Jenzack asks us to slalom past an intervening settlement
agreement and a plainly written consent judgment to award it
more than a million dollars in post-judgment interest. We
choose a different path. We are not convinced that interest
should accrue at the Prime Rate plus six percent, as had been
set forth in the Suretyship Agreement.

The doctrine of merger provides that “[w]hen the
plaintiff recovers a valid and final personal judgment, his
original claim is extinguished and rights upon the judgment are
substituted for it. The plaintiff’s original claim is said to be
‘merged’ in the judgment.” In re Stendardo, 991 F.2d 1089,
1099 (3d Cir. 1993) (quoting Restatement (Second) of
Judgments § 18 cmt. a). “It is immaterial whether the judgment
was rendered upon a verdict or upon a motion to dismiss or
other objection to the pleadings or upon consent, confession,
or default.” Restatement (Second) of Judgments § 18 cmt. a.
A successful plaintiff in a contract action, for example, may no
longer pursue remedies on the basis of the underlying contract
once a judgment is entered on that claim. Instead, he or she
“may maintain proceedings by way of execution for
enforcement of the judgment” or “maintain an action upon the
judgment.” Id., cmt. c.

9
 Interest on a party’s defaulted obligation, then, ceases
to accrue at a previously stipulated rate upon entry of a
judgment. At that moment, interest on the new obligation, the
judgment to be satisfied, accrues at the rate provided by statute
or court rule. Cf. Stendardo, 991 F.2d at 1095 (“[C]ourts have
consistently held that the doctrine of merger . . . entitles a
mortgagee post-judgment to the legal rate of interest rather
than the rate specified in the mortgage. Because the mortgage
merges into the judgment, its terms specifying the contractual
interest rate no longer exist to bind the parties.”)

In federal money judgments, 28 U.S.C. § 1961 governs
the rate at which interest accrues. 3 Both parties agree that
while § 1961 provides a default rule, it may be modified by
private agreement. They suggest that the rule announced by
the Second Circuit in Westinghouse Credit Corp. v. D’Urso
should govern: “[i]f parties want to override the general rule
on merger and specify a post-judgment interest rate, they must
express such intent through ‘clear, unambiguous and
unequivocal’ language.” 371 F.3d 96, 102 (2d Cir. 2004)
(quoting Banque Nationale de Paris v. 1567 Broadway
Ownership Assocs., 669 N.Y.S.2d 568, 569 (N.Y. App. Div.
1998)). The Fifth, Seventh, Ninth, and Tenth Circuits have
concluded the same. See In re Lift & Equip. Serv., Inc., 816
F.2d 1013, 1018 (5th Cir. 1987); Cent. States, Se. & Sw. Areas
Pension Fund v. Bomar Nat’l, Inc., 253 F.3d 1011, 1020 (7th
Cir. 2001); Citicorp Real Est., Inc. v. Smith, 155 F.3d 1097,

3
Section 1961 provides that interest “shall be calculated from
the date of entry of the judgment, at a rate equal to the weekly
average 1-year constant maturity Treasury yield, as published
by the Board of Governors of the Federal Reserve System, for
the calendar week preceding[] the date of the judgment.”

10
1107-08 (9th Cir. 1998); Soc’y. of Lloyd’s v. Reinhardt, 402
F.3d 982, 1004 (10th Cir. 2005). But see Broad St. Energy Co.
v. Endeavor Ohio, LLC, 806 F.3d 402, 410-11 (6th Cir. 2015)
(declining to apply interest rate specified in escrow agreement
to judgment).

In reaching its conclusion, the Westinghouse court
reasoned that Ҥ 1961 is silent on the point, neither expressly
permitting nor ruling out deviations by private agreement.”
371 F.3d at 101. It also discerned that Congress’s use of
mandatory language in § 1961 was to “preclude[e] district
courts from exercising discretion over the rate of interest or
adopting an interest rate set by arbitrators” not to “limit[] the
ability of private parties to set their own rates through
contract.” Id.

The contract at issue in Westinghouse provided that “[i]f
and in the event payment . . . is not made on the due date,
interest shall be added to the Amount Due” at a specified
interest rate greater than the rate provided for by statute. Id. at
99. However, the Westinghouse court declined to apply the
stipulated rate of interest post-judgment because “[t]he parties
failed to state that this rate would apply to judgments rendered
on [the underlying obligation].” Id. at 102 (emphasis
supplied). The parties failed, in other words, to clearly,
unambiguously, and unequivocally express their intent that
judgments, not merely contract debts, should accrue interest at
the agreed-upon rate.

In Stendardo, a bankruptcy case, we recognized the
ability of parties to reflect in a mortgage that certain obligations
would survive a judgment. 991 F.2d at 1095. There, creditors
argued that a mortgage entitled them to recover certain post-
judgment expenses from the debtors notwithstanding the prior

11
entry of a foreclosure judgment in creditors’ favor. Id. at 1094.
The mortgage provided that, upon default by the debtor, the
creditor was entitled to recover for the payment of taxes and
insurance premiums. Id. at 1092. However, we discerned that
“[n]o language appears in the [m]ortgage at issue here that
indicate[d] the parties’ intent to preserve the [d]ebtors’
obligation to pay the relevant taxes and premiums beyond the
date of the [j]udgment.” Id. at 1095-96. Thus, the creditors
were not entitled to recover expenses incurred post-judgment.
Id.

Here, by contrast, the language in the Suretyship
Agreement is clear as crystal. The parties agreed, in no
uncertain terms, that judgments entered against Kaiser on the
basis of the Suretyship Agreement would accrue interest at the
Prime Rate plus six percent. So, the post-judgment interest rate
was not merged into the judgment. But holding that Jenzack is
not claim precluded is neither the end of the story, nor the
terminus of our analysis.

After the Suretyship Agreement, there was a settlement
agreement—and the judgment entered in this case was the
Consent Judgment transforming that settlement agreement into
a judicial decree. Accordingly, as the District Court correctly
surmised, the relevant question is whether the Consent
Judgment demonstrates clearly, unambiguously, and
unequivocally that the parties intended interest on the
judgment to accrue at a stipulated rate. Because the Consent
Judgment does not, we cannot accord Jenzack the relief sought.

The dissent concludes that “[w]ithout any reference to
post-judgment interest, the consent judgment does not
evidence a ‘mutual and clear’ intention to modify the
contractual post-judgment interest rate.” Diss. Op. at 6

12
(Phipps, J., dissenting) (quoting County of Morris v. Fauver,
707 A.2d 958, 967 (N.J. 1998)). It continues: “[n]or does the
consent judgment provide so much as a hint that it fully and
completely replaces the parties’ prior agreement; it resolves
only the amount of outstanding liability for loan obligations.
Thus, the consent judgment does not contractually modify the
agreed-upon post-judgment interest rate or fully replace the
parties’ prior agreement.” Id. But we are interpreting the
judgment itself, and the converse applies. The previously
agreed-upon post-judgment interest rate does not modify the
subsequently entered Consent Judgment.

The dissent’s conclusion divorces the Consent
Judgment from its context, fails to respect its nature as a
judicial instrument, and upends our practice of settlement.
Were we to adopt the dissent’s approach, district courts would
be inundated with arguments that, despite entry of a consent
judgment, parties intended this or that term to survive entry of
a judgment and the court need only look through their prior
agreements and see for itself.

We can neither embrace nor endorse, a system that
permits or encourages parties to return to court under similar
circumstances. While that approach may suit a subsequent
action to enforce a settlement agreement recorded solely as a
contract, it is incumbent upon the parties to a consent judgment
to fully memorialize their agreement on the judgment’s face or
through incorporation of other documents by reference.

Within the context of this record, the settlement
agreement bears all the indicia of a substitute contract. 4 We

4
Under Pennsylvania law, “[t]he required essentials of a
novation are ‘the displacement and extinction of a valid

13
would be hard-pressed to conclude that when asked by the
District Court to place the terms of the consent judgment on
the record, the parties would specify only “the Court can enter
judgment against the defendants in a sum to be computed as
follows… The top number is $2,364,780.24, minus . . .
$992,350 . . . plus legal fees in the amount of $188,000,” but
yet also intend that the judgment would accrue interest at the
Prime Rate plus six percent. App. 402. And again, when the
District Court inquired as to whether the agreement on the just-
recited terms would “end the case,” the parties would respond
“that is correct,” if they intended to remain bound by this (and

contract, the substitution for it of a valid new contract . . . a
sufficient legal consideration for the new contract, and the
consent of the parties.’” Buttonwood Farms, Inc. v. Carson,
478 A.2d 484, 486 (Pa. Super. Ct. 1984) (emphasis removed)
(quoting Yoder v. T.F. Scholes, Inc., 173 A.2d 120, 121-22 (Pa.
1961)). The “intention of the parties to effect a novation or
substituted contract may be shown by other writings, or by
words, or by conduct or by all three.” Id. at 487.

Though our dissenting colleague makes much of the supposed
applicability of New Jersey law, the analysis is functionally
identical. “[A] novation is when the parties agree to substitute
a new validly executed contract for a previous contract” and
“requires that the parties intend to ‘extinguish the old
contract.’” GMAC Mortgage, LLC v. Willoughby, 165 A.3d
787, 188 (N.J. 2017) (quoting Wells Reit II—80 Park Plaza,
LLC v. Dir., Div. of Taxation, 999 A.2d 489, 497 (N.J. Super.
Ct. App. Div. 2010). “In order to effect a novation there must
be a clear and definite intention on the part of all concerned
that such is the purpose of the agreement.” Wells Reit II, 999
A.2d at 497.

14
only this) particular term of the underlying agreement. App.
403.

We need not parse out whether this recitation of the
agreement placed on the record is in fact a substitute contract.
The parties agreed to entry of the Consent Judgment, and we
are bound to interpret it “within its four corners, and not by
reference to what might satisfy the purposes of one of the
parties to it.” United States v. Armour & Co., 402 U.S. 673,
682 (1971). This is because “consent judgments should be
interpreted in a way that gives effect to what the parties have
agreed to, as reflected in the judgment itself or in documents
incorporated in it by reference.” SEC v. Levine, 881 F.2d 1165,
1179 (2d Cir. 1989). 5 Were the Consent Judgment or an
incorporated document ambiguous as to the applicable interest
rate, it may be relevant what a prior agreement said on that
point. See id.; cf. Harley-Davidson, Inc. v. Morris, 19 F.3d
142, 148 (3d Cir. 1994) (declining to consider evidence of an
“oral understanding” about the terms of a consent judgment
where the language of the judgment was unambiguous).

5
We emphasize that a consent judgment is not a contract but
a judicial decree, and that the parties’ prior contract does not
alter that judicial decree. See United States v. Swift, 286 U.S.
106, 115 (1932). This is particularly noteworthy here, where
the District Court may have been unaware of a separate interest
rate agreement. Preventing these backdoor amendments to
consent judgments is also important because, in some contexts,
district courts must assess a consent judgment’s substantive
fairness. See, e.g., SEC v. Citigroup Global Markets, Inc., 752
F.3d 285 (2d Cir. 2014) (district courts have a duty to
determine if consent decree is fair and reasonable for securities
litigation).

15
Because the Consent Judgment is unambiguous, however, we
must conclude that the parties did not agree interest would
accrue at a stipulated rate. 6

We note that this is, however subtly, different from the
doctrine of merger-by-judgment as described by our dissenting
colleague. See Diss. Op. at 4-6. Sovereign’s contract claims
were not extinguished solely by entry of a judgment in this
case. Rather, the parties agreed to a settlement which they
recorded in a judicial decree. The nature of that decree, the
Consent Judgment, constrains us to interpret the subsequent
agreement by the parties within the confines of its text. True
to the contractual roots of the Consent Judgment, our analysis
more closely resembles application of the contractual principle
of merger than merger-by-judgment.

We join our sister circuits who have addressed the
question in holding that parties may contract to a rate of post-
judgment interest by demonstrating through clear,
unambiguous, and unequivocal language in their agreement an
intention to do so. We also conclude that the language in the
Suretyship Agreement underlying this breach of contract claim
clearly demonstrated the parties’ intent to be bound by a
stipulated rate of interest post-judgment. However, we cannot

6
Jenzack’s claim is fatally flawed for at least one other reason.
Even if we were persuaded that the parties agreed the interest
rate from the Suretyship Agreement should apply to the
Consent Judgment, our ability to effectuate relief by amending
the judgment itself is limited. Jenzack acknowledges that its
time to amend or appeal from the Consent Judgment is long
expired.

16
conclude that the District Court erred in discharging the
judgment because the intervening settlement agreement and
Consent Judgment demonstrated an intent to be bound by those
explicit terms in exchange for resolving the litigation. Within
the four corners of the Consent Judgment, there is no language
from which we may infer that the parties intended the judgment
to accrue interest at a different rate than is provided in § 1961.

IV. CONCLUSION

We will affirm the District Court’s final order
discharging the consent judgment as satisfied.

17
Sovereign Bank v. REMI Capital, Inc., No. 21-2289
PHIPPS, Circuit Judge, dissenting.

The Majority Opinion affords too much weight to the one-
sentence consent judgment entered by the District Court in this
case. That consent judgment resolved the parties’ dispute as to
the underlying liability for loan obligations, but it said nothing
about the post-judgment interest rate. That silence is not
surprising: through the Master Promissory Note, the parties
had previously agreed on the post-judgment interest rate, and
that issue was not mentioned in the pleadings, much less
disputed in the litigation. Nonetheless, the Majority Opinion
concludes that the consent judgment nullifies the parties’
previous agreement regarding the post-judgment interest rate
so that the statutory default rate of post-judgment interest
controls.

I respectfully dissent because the consent judgment does
not have that effect. A consent judgment is “a hybrid” between
a court order and a contract. Holland v. N.J. Dep’t of Corr.,
246 F.3d 267, 277 (3d Cir. 2001). And, as elaborated below,
neither the court-order nor the contractual characteristics of the
consent judgment in this case support the conclusion that it
supplants the parties’ prior agreed-upon post-judgment interest
rate.

I. The Merger-By-Judgment Doctrine Does Not
Apply Here.

A consent judgment has attributes of a court order, and one
of those qualities is the preclusive effect of a judgment. New
Jersey law, which determines the consent judgment’s

1
preclusive effect, 1 recognizes merger-by-judgment as a species
of claim preclusion. See Joseph L. Muscarelle, Inc. v. Dep’t of
Transp., 418 A.2d 1310, 1316 (N.J. Super. Ct. App. Div. 1980)
(“[A] consent judgment has the same res judicata effect as any
other judgment.”). Under that rule’s application, a judgment
for a plaintiff on a breach-of-contract claim extinguishes any
right that the plaintiff has to seek additional compensation for
the breach. See In re A & P Diversified Techs. Realty, Inc.,
1
The Majority Opinion mistakenly applies the choice-of-law
clause in the Suretyship Agreement, which provides that the
agreement is governed by Pennsylvania law. Because parties
cannot, through contract, determine the preclusive effect of a
federal court’s judgment, that clause has no bearing on the
merger-by-judgment analysis. Instead, the preclusive effect of
a judgment entered by a federal court exercising diversity
jurisdiction is governed by federal common law, which
incorporates the forum state’s preclusion rules. See Semtek
Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 508–09
(2001); see also Houbigant, Inc. v. Fed. Ins. Co., 374 F.3d 192,
205 (3d Cir. 2004) (“In a diversity action, we apply the
preclusion rules of the forum state, unless they are
incompatible with federal interests.” (citing Semtek, 531 U.S.
at 508–09)); 19 Arthur R. Miller, Federal Practice and
Procedure (Wright & Miller) § 4511 (3d ed. April 2022
update) (explaining that Semtek “directed that state preclusion
law be applied in diversity cases”). Rather than applying the
law of the forum state, New Jersey, the Majority Opinion
applies Pennsylvania law based on the choice-of-law clause in
the Suretyship Agreement. That undermines the Majority
Opinion’s central holding that the consent judgment fully and
completely replaces the parties’ prior agreements. It also
erodes the Majority Opinion’s interest in relieving courts of the
obligation to scour prior agreements between parties to assess
which provisions survive entry of judgment – by finding and
applying the choice-of-law clause in the Suretyship
Agreement, the Majority Opinion does just that.

2
467 F.3d 337, 341 (3d Cir. 2006) (applying New Jersey law)
(“Under the merger doctrine, a contract is deemed to merge
with the judgment, thereby depriving a plaintiff from being
able to assert claims based on the terms and provisions of the
contractual instrument.”). More succinctly, the claim for
damages from a breach of contract merges into a judgment and
cannot be relitigated. See Culver v. Ins. Co. of N. Am.,
559 A.2d 400, 404 (N.J. 1989) (“The rule [of res judicata]
precludes parties from relitigating substantially the same cause
of action.”); see also Restatement (Second) of Judgments § 18
cmt. a (1982) (“When the plaintiff recovers a valid and final
personal judgment, his original claim is extinguished and rights
upon the judgment are substituted for it. The plaintiff’s
original claim is said to be ‘merged’ in the judgment.”);
Restatement (First) of Contracts § 444 (1932).

But the merger-by-judgment rule is not absolute. A
contractual obligation is not merged into the judgment if the
contract “clearly evidences an intent to preserve the
effectiveness of th[e] provision post-judgment.” A & P,
467 F.3d at 342 (alteration omitted) (quoting In re Stendardo,
991 F.2d 1089, 1095 (3d Cir. 1993)) (applying New Jersey
law). And here, the Master Promissory Note does exactly that.
It states that interest will accrue at “an annual rate (before and
after judgment) that shall be an additional six percent (6%)
above the [prime rate].” Master Promissory Note at 1 (Jan. 25,
2007) (JA83). Due to that unequivocal expression, the parties’
agreement on the post-judgment interest rate in the Master
Promissory Note falls outside the sweep of the merger rule. 2

2
To be sure, the statute setting the default rate for post-
judgment interest, see 28 U.S.C. § 1961, does not foreclose the
exception to the merger-by-judgment rule: every circuit to

3
 II. Under Principles of Contract Interpretation,
the Consent Judgment Did Not Modify the
Contractual Interest Rate or Completely
Replace the Parties’ Agreement.

Because it has attributes of a contract, a consent judgment
“is to be interpreted as a contract [under] the governing rules
of contract interpretation.” Harley-Davidson, Inc. v. Morris,
19 F.3d 142, 148 (3d Cir. 1994); see also Regan v. Regan,
587 A.2d 1330, 1333 (N.J. Super. Ct. Ch. Div. 1990)
(interpreting a consent judgment under the rules of contract
interpretation). As a baseline, the prior agreement
unequivocally specified a post-judgment interest rate of 6%
above the prime rate. 3 But it is possible for a consent judgment

examine the merger-by-judgment rule in the context of that
statute has held that parties may “override the general rule on
merger and specify a post-judgment interest rate” and thus
“contract out of § 1961.” Westinghouse Credit Corp. v.
D’Urso, 371 F.3d 96, 101–02 (2d Cir. 2004) (internal
quotation marks omitted); see also, e.g., Mid Atl. Cap. Corp. v.
Bien, 956 F.3d 1182, 1208 (10th Cir. 2020) (“[P]arties may
contract around the merger rule and specify a different
postjudgment interest rate.”); Tricon Energy Ltd. v. Vinmar
Int’l, Ltd., 718 F.3d 448, 457 (5th Cir. 2013) (“The merger rule
is not absolute; parties can contract for a non-statutory rate of
postjudgment interest.”).
3
See Hymel v. UNC, Inc., 994 F.2d 260, 265–66 (5th Cir.
1993) (concluding that parties contracted out of the statutory
default interest rate because their prior contract provided that
all unpaid amounts “shall bear interest from maturity until
paid, both before and after judgment, at the rate of 9% per
annum”); see also In re Lipitor Antitrust Litig., 868 F.3d 231,
265 (3d Cir. 2017); Gov’t Emps. Ret. Sys. of V.I. v. Gov’t of
V.I., 995 F.3d 66, 79 (3d Cir. 2021).

4
– as a new contractual agreement – to modify or replace a
previous agreement between the parties. Under New Jersey
law, which governs the interpretation of the consent judgment, 4
however, the consent judgment fails to modify the parties’
previously-agreed-upon post-judgment interest rate or to
replace their entire prior agreement.

The one-sentence consent judgment makes no mention of
either the post-judgment interest rate or the parties’ prior
agreement setting that rate:

This matter having been brought before the
Court pursuant to a status conference; and the
parties having amicably resolved the matter and
consented to a judgment against defendants
REMI Capital, Inc. and Erik A. Kaiser
(collectively, “Defendants”) in favor of

4
As the forum state, New Jersey’s choice-of-law rules
determine which state’s laws govern the interpretation of the
consent judgment. See Klaxon Co. v. Stentor Elec. Mfg. Co.,
313 U.S. 487, 496 (1941); Collins v. Mary Kay, Inc., 874 F.3d
176, 183 (3d Cir. 2017). New Jersey uses a most-significant-
relationship test under which “the law of the place where the
contract was made governs ‘unless the dominant and
significant relationship of another state to the parties and the
underlying issues dictates otherwise.’” N. Jersey
Neurosurgical Assocs., P.A. ex rel. Gil v. Clarendon Nat’l Ins.
Co., 949 A.2d 851, 856 (N.J. Super. Ct. App. Div. 2008)
(alteration omitted) (quoting State Farm Mut. Auto. Ins. Co. v.
Est. of Simmons, 417 A.2d 488, 493 (N.J. 1980)). Here, the
consent judgment was negotiated by the parties and entered in
New Jersey by the District Court, and no other state has a
dominant and significant relationship to the consent judgment
such that its law overcomes the application of New Jersey law.

5
 Sovereign Bank (“Plaintiff”); and for good cause
having been shown: It is on this 1st day of
September 2010 ORDERED that judgment is
entered jointly and severally against Defendants
in the amount of $1,560,430.24.

Consent Judgment (Sept. 1, 2010) (JA11). Without any
reference to post-judgment interest, the consent judgment does
not evidence a “mutual and clear” intention to modify the
contractual post-judgment interest rate. County of Morris v.
Fauver, 707 A.2d 958, 967 (N.J. 1998); see also Elliott &
Frantz, Inc. v. Ingersoll-Rand Co., 457 F.3d 312, 322 (3d Cir.
2006). Nor does the consent judgment provide so much as a
hint that it fully and completely replaces the parties’ prior
agreement; it resolves only the amount of outstanding liability
for loan obligations. Thus, the consent judgment does not
contractually modify the agreed-upon post-judgment interest
rate or fully replace the parties’ prior agreement.

***

A consent judgment is a duality of sorts: it is both a court
order and a contract. But neither component of that judgment-
contract duality supports the Majority Opinion’s conclusion
that this consent judgment replaces the parties’ agreed-upon
rate of post-judgment interest with the statutory default rate.
The preclusive effect of judgments does not apply here because
the parties’ prior agreement on the post-judgment interest rate
was not merged into the consent judgment. And under
principles of contract law, the consent judgment does not
provide any basis for modifying the parties’ agreed-upon post-
judgment interest rate or replacing their entire agreement.
Consequently, appellant is entitled to post-judgment interest at

6
the rate set by the parties’ agreement, not the default rate, and
I would reverse the judgment of the District Court.

7