2015 WL 3540411
E.D.N.Y.2015Background
- NPN (plaintiff) sued NOI (defendant) and others for breach of a distributorship agreement and related state-law claims; several co-defendants defaulted or were reinstated during the litigation.
- A jury in January 2015 found for NPN on breach of contract and awarded $4,433,263 in "out of pocket" damages to August 6, 2009, but awarded zero lost profits for 2009–2017.
- Court later vacated $133,192 of the award (employee severance pay) and directed recalculation, yielding a revised damages figure of $4,300,071.
- NPN sought pre-judgment interest under CPLR § 5001 (9% per annum), post-judgment interest under 28 U.S.C. § 1961(a), and costs; NOI contested pre-judgment interest on amounts attributable to debt-incurred reliance costs.
- The Court considered whether awarding prejudgment interest on the recalculated award (including amounts based on debt incurred in reliance) would constitute a double recovery or windfall.
- The Court granted the amended damages ($4,300,071), awarded prejudgment interest of $2,115,281.50 (Aug 6, 2009–Jan 23, 2015 at 9%), and granted post-judgment interest as unopposed; directed parties to submit a proposed amended judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Entitlement to prejudgment interest on the recalculated damages | NPN: mandatory under CPLR §5001 for breach-of-contract damages; seeks statutory interest on the full recalculated award | NOI: prejudgment interest should be denied for amounts reflecting debt-incurred reliance costs absent evidence of interest paid or required; risk of double recovery | Court: awarded prejudgment interest on the full recalculated award; rejected NOI's double-recovery argument here |
| Whether awarding interest on amounts tied to debt would be a windfall/double recovery | NPN: seeks statutory interest as compensation for loss of use of money, not to duplicate interest payments to third parties | NOI: relies on Bulk Oil to argue interest on amounts used to pay third-party debt would duplicate recoveries | Court: Bulk Oil disallowed interest only where award would duplicate reimbursement of loan payoff; here no double recovery, so interest allowed |
| Need for trial evidence separating debts vs. other reliance costs | NPN: no special verdict required; did not need itemized trial evidence to claim statutory interest on awarded damages | NOI: argued NPN failed to distinguish debts incurred in reliance and so cannot recover interest on debt component | Court: rejected need for separate trial evidence or special verdict; allowed interest on entire recalculated award |
| Post-judgment procedure and entry of amended judgment | NPN: requested amended judgment reflecting recalculated damages and interest; proposed judgment to be submitted jointly | NOI: sought stays and appealed; previously posted supersedeas bond | Court: directed parties to file a joint proposed amended judgment consistent with rulings; case remains open due to outstanding default motions |
Key Cases Cited
- Bulk Oil (U.S.A.), Inc. v. Sun Oil Trading Co., 697 F.2d 481 (2d Cir. 1983) (discusses when prejudgment interest would produce double recovery and permits interest only to the extent it compensates true loss of use)
- Schwimmer v. Allstate Ins. Co., 176 F.3d 648 (2d Cir. 1999) (prejudgment interest in diversity actions governed by state law)
- New England Insurance Co. v. Healthcare Underwriters Mutual Insurance Co., 352 F.3d 599 (2d Cir. 2003) (recognizes mandatory nature of CPLR §5001 prejudgment interest in non-equitable contract cases)
- D'Addario & Co., Inc. v. Embassy Industries, Inc., 20 N.Y.3d 113 (N.Y. 2012) (discusses mandatory prejudgment interest under New York law)
- Elvin Associates v. Aretha Franklin, 735 F. Supp. 1177 (S.D.N.Y. 1990) (declined prejudgment interest on unpaid debts where no evidence interest would be owed; Court here declined to follow that approach)
- Indu Craft, Inc. v. Bank of Baroda, 87 F.3d 614 (2d Cir. 1996) (post-judgment interest is mandatory under 28 U.S.C. §1961)