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Architectural Contractors, Inc. v. Schilli Transportation Services, Inc.

United States District Court, W.D. Arkansas, Fayetteville Division

December 29, 2014

ARCHITECTURAL CONTRACTORS, INC. and THE CINCINNATI INSURANCE COMPANY, INC. Plaintiffs
v.
SCHILLI TRANSPORTATION SERVICES, INC., Defendant

MEMORANDUM OPINION AND ORDER

TIMOTHY L. BROOKS, District Judge.

Currently before the Court are Plaintiffs Architectural Contractors, Inc.'s ("ACI") and The Cincinnati Insurance Company, Inc.'s ("CIC") Motion for Costs and Prejudgment Interest and brief in support (Docs. 47 and 48); Defendant Schilli Transportation Services, Inc.'s ("Schilli") Response in Opposition and brief in support (Docs. 50 and 51); and Plaintiffs' Reply (Doc. 52). For the reasons explained herein, Plaintiffs' Motion (Doc. 47) is GRANTED IN PART AND DENIED IN PART. The Court grants Plaintiffs' request for prejudgment interest and costs, but declines to award Plaintiffs' total cost request of $3, 435.45. Instead, the Court awards Plaintiffs $2, 840.45 in costs and $15.83 in prejudgment interest.

I. BACKGROUND

Plaintiffs brought suit against Schilli, pursuant to the Carmack Amendment of the Interstate Commerce Act, 49 U.S.C. §14706, for damages sustained to certain wall panels transported by Schilli to ACI's job site in Springdale, Arkansas. Schilli denied that its driver, Douglas Edwards, delivered the panels in damaged condition, and contended that at least some of the damages claimed by ACI were unforeseeable. Schilli further contended that Plaintiffs' claim was barred by a nine-month statute of limitations. The case came on for a one-day bench trial on December 1, 2014. For the reasons set forth in its Opinion and Order (Doc. 49), the Court found for Plaintiffs. The Court awarded Plaintiffs $6, 375.76 in compensatory damages, which represents the replacement cost of the 55 damaged wall panels and fasteners.

Plaintiffs now request an award of prejudgment interest and costs, and supports its request with a number of exhibits, including: a Bill of Costs (Doc. 47-1); invoices for the depositions conducted on Jean McMillian and Douglas Edwards (Doc. 47-2); and an affidavit written by Plaintiffs' counsel confirming that the itemization is accurate (Doc. 47-3). The Court will address Plaintiffs' requests for prejudgment interest and costs in turn.

II. DISCUSSION

A. Prejudgment Interest

Plaintiffs seek an award of prejudgment interest, but fail to make a specific request or brief a calculation methodology. Schilli disputes that Plaintiffs are entitled to an award of prejudgment interest due to the unreasonable delay in reporting any damage to Schilli. Schilli also contends it should not be ordered to pay interest because the issue of liability was highly challenged, and the Court's ruling was closely decided. In the alternative, Schilli requests that any prejudgment interest begin on May 23, 2013, the date Plaintiffs first reported the loss to Schilli.

Schilli's liability was determined at trial, and the Court calculated the amount of damages through the invoices introduced into evidence. Because Plaintiffs' damages were reasonably ascertainable from the date of accrual, Plaintiffs are entitled to prejudgment interest. See Stroh Container Co. v. Dephi Industries, Inc., 783 F.2d 743, 752 (8th Cir. 1986). The basic purpose of prejudgment interest is to ensure that a party is fully compensated for its loss. See City of Milwaukee v. Cement Div. Nat'l Gypsum Co., 515 U.S. 189, 195 (1995). Further, it is appropriate to award compound, rather than simple interest in federal cases. "[A]bsent special circumstances, compound, not simple, interest ought to be awarded in Carmack Amendment cases." Am. Nat'l Fire Ins. Co. v. Yellow Freight Sys. Inc., 325 F.3d 924, 937 (7th Cir. 2003).

Unlike in cases before this Court solely on the basis of diversity jurisdiction, wherein the Supreme Court's ruling in Erie R.R. v. Tompkins, 304 U.S. 64 (1938), dictates that the issue of prejudgment interest be determined with reference to various state laws, see Capella Univ., Inc. v. Executive Risk Specialty Ins. Co., 617 F.3d 1040, 1052 (8th Cir. 2010) (internal citation omitted), the present action is before the Court on a federal question and therefore federal law governs the rate of prejudgment interest, see Bishop v. Pennington Cnty., 2009 WL 1364887, at *2 (D. S.D. May 14, 2009) (citing Mansker v. TMG Life Ins. Co., 54 F.3d 1322, 1330 (8th Cir. 1995)).

The first issue the Court must address is the appropriateness of awarding prejudgment interest in this case. This Court is not aware of any reason why prejudgment interest would be inappropriate in this action. The awarding of prejudgment interest "ensure[s] that an injured party is fully compensated for its loss, " City of Milwaukee, 515 U.S. at 195, by requiring that "[o]ne who has had the use of money owing to another... pay interest from the time payment should have been made, " Miller v. Robertson, 266 U.S. 243, 257-58 (1924). Here, the Court has determined that Schilli has had use of $6, 375.76 which rightfully was owed to Plaintiffs as of May 23, 2013. Therefore the award of prejudgment interest in this case is appropriate.

The next issue to be resolved is the correct date on which prejudgment interest should begin to accrue. Prejudgment interest typically accrues from the date of the loss or from the date on which the claim accrued. See W.Va. v. United States, 479 U.S. 305, 310 n.2 (1987). The Court has broad discretion in making this determination. Indep. Bulk Transp., Inc. v. The Vessel "Morania Abaco, " 676 F.2d 23, 25 (2d Cir.1982). The parties have suggested two different dates for the Court's consideration. Plaintiffs contend that the relevant date is the date of loss, while Schilli argues that the date the claim was made is the proper date for prejudgment interest to accrue. The facts revealed that Plaintiffs did not make a claim until nearly two years after the shipment arrived in damaged condition, and therefore the Court finds that it is equitable for the interest to run from the date Plaintiff first alerted Schilli as to the loss, May 23, 2013, through the date of the Court's Opinion and Order on December 10, 2014.

Finally, this Court must decide the applicable rate of prejudgment interest. Plaintiffs have not submitted any calculations regarding interest rates; however, Schilli provided a rate schedule from the United States Department of Treasury, dating from 2013. The appropriate rate of interest is left to the discretion of the district court. See N.Y. Marine & Gen. Ins. Co. v. Tradeline (L.L.C.), 266 F.3d 112, 130-31 (2d Cir. 2001). See also Werner Enterprises, Inc. v. Westwind Mar. Int'l, Inc., 554 F.3d 1319, 1328 (11th Cir. 2009) ("In the absence of a controlling statute, the choice of a rate at which to set the amount of prejudgment interest is also within the discretion of a federal court."). "That decision is guided by principles of reasonableness and fairness, by relevant state law, and by the relevant fifty-two week United States Treasury bond rate, which is the rate that federal courts must use in awarding post-judgment interest.'" In re Int'l Admin. Serv., Inc., 408 F.3d at 710 (quoting Indus. Risk Insurers v. M.A.N. Gutehoffnungshutte GmbH, 141 F.3d 1434, 1447 (11th Cir. 1998) (citing 28 U.S.C. § 1961)). Although 28 U.S.C. § 1961 does not concern prejudgment interest, the Eighth Circuit has concluded that § 1961 provides the proper measure for determining rates of both prejudgment and postjudgment interest. Mansker, 54 F.3d at 1331. The annual yields on those treasury securities since May 2013 to the present have fluctuated from a low of.11% in May 2013, to a high of.21% when the Court's Order was entered on December 10, 2014. When the annual yields are averaged, the resulting rate is.16%. When compounded annually, this rate provides a return of $15.83.[1]

Accordingly, Plaintiffs are entitled to recover an interest rate of.16% compounded annually from May ...


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