Sovereign General Insurance Services v. Scottsdale Insurance Company et al

Filing 208

ORDER signed by Judge Morrison C. England, Jr. on 1/6/2009 DENYING plaintiff Western Heritage's 164 Motion for Pre-Judgment Interest. (Marciel, M)

1 2 3 4 5 6 7 8 9 SOVEREIGN GENERAL INSURANCE SERVICES, INC., a California 10 corporation, 11 12 v. Plaintiff, ORDER No. 2:05-cv-00312-MCE-DAD Consolidated with 2:05-cv-01389-MCE-DAD UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

13 SCOTTSDALE INSURANCE COMPANY, an Ohio corporation, NATIONAL 14 CASUALTY COMPANY, a Wisconsin corporation, SCOTTSDALE 15 INDEMNITY COMPANY, an Ohio corporation, WESTERN HERITAGE 16 INSURANCE COMPANY, an Arizona corporation, R. MAX 17 WILLIAMSON, an individual, JOSEPH A. LUGHES, an 18 individual, and DOES 1 through 100, inclusive, 19 Defendants. 20 ______________________________ 21 WESTERN HERITAGE INSURANCE COMPANY, an Arizona corporation, 22 Plaintiff, 23 v. 24 SOVEREIGN GENERAL INSURANCE 25 SERVICES, INC., a California Corporation; MARTIN F. SULLIVAN, 26 SR. and GLORIA SULLIVAN, husband and wife, guarantors, 27 Defendants. 28 1

1

Judgment was originally rendered in this matter on

2 October 7, 2008, in accordance with the jury's verdict in the 3 amount of $715,113.29 reached at the conclusion of the trial on 4 Western Heritage's affirmative claims against Sovereign General 5 Insurance Company, Martin F. Sullivan, Sr., and Gloria Sullivan 6 ("Sovereign General"). Through the present Motion, Western

7 Heritage seeks to amend that judgment, in accordance with the 8 provisions of Federal Rule of Civil Procedure 59(e), to include 9 claimed prejudgment interest in the additional amount of 10 $307,872.27. 11 It is undisputed that a Rule 59(e) motion can be utilized to

12 request that a judgment be amended to provide for prejudgment 13 interest. 14 (1989). Osterneck v. Ernst & Whinney, 489 U.S. 169, 175 While Sovereign General does not dispute that Arizona

15 laws applies in determining whether Western Heritage is entitled 16 to prejudgment interest, it does argue that the damages awarded 17 by the jury were not "liquidated" in nature so as to entitle 18 Western Heritage to mandatory prejudgment interest under 19 Employer's Mutual Cas. Co. v. McKeon, 170 Ariz. 75, 77 (Ariz. 20 App. 1991); see also AMHS Ins. Co. v. Mutual Ins. Co., 258 F.3d 21 1090, 1103 (9th Cir. 2001) (citing Arizona law to this effect). 22 Under Arizona law, "[a] claim is liquidated if the evidence

23 furnishes data which if believed, makes it possible to compute 24 the amount with exactness, without reliance upon opinion or 25 discretion." Schade v Diethrich, 158 Ariz. 1, 14 (Ariz. 1988);

26 Employers Mutual Cas. Co. v. McKeon, 170 Ariz. at 78. 27 /// 28 /// 2

1 Such information, which gives the debtor sufficient data to 2 ascertain the precise amount owed, triggers the obligation to pay 3 prejudgment interest on the liquidated sum. 4 Mutual Ins. Co., 258 F.3d at 1103. 5 Consequently, in determining Western Heritage's entitlement AMHS Ins. Co. v.

6 to prejudgment interest here, the pertinent inquiry is whether or 7 not the amounts owed by Sovereign General, as ultimately awarded 8 by the jury following trial, were readily ascertainable without 9 any uncertainty or reference to expert opinion. The Court,

10 having heard the voluminous evidence adduced at trial concerning 11 Sovereign General's indebtedness to Western Heritage, concludes 12 that the amount owed cannot qualify under this standard for 13 prejudgment interest on liquidated damages. 14 The evidence showed that the amount owed to Western Heritage Indeed, exhibits offered at trial indicated

15 changed over time.

16 that Sovereign General's indebtedness changed from $1,511.184.56 17 (as of March 3, 2005), to $1,231,842.20 (as of September 30, 18 2005), to $738,129.03 (as of April 30, 2006), and finally to 19 $715,113.29 (as of April 30, 2008). Moreover, Western Heritage

20 elicited expert testimony to establish the alleged liquidated sum 21 owed, both at trial and in support of the instant Motion. 22 Despite the changing figures summarized above, for example, the 23 Fortenbaugh Declaration offered to support Western's claim for 24 prejudgment interest through this Motion purports to reflect open 25 accounts extending back to 2004. 26 /// 27 /// 28 /// 3

1

Given the ongoing payments that steadily reduced the amount

2 due as well as the complex nature of both the multiple open 3 accounts and the accounting systems utilized by the parties, 4 there is simply no way that the amount due, at any given time 5 prior to the judgment, could ever be determined with exactness, 6 without discretion, and absent the need for opinion and/or expert 7 testimony, all prerequisites that must be satisfied in order to 8 qualify as liquidated damages, and, in turn, prejudgment 9 interest. Western Heritage's Motion for Prejudgment Interest is

10 accordingly DENIED.1 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Because oral argument was not of material assistance, the Court ordered these matters submitted on the briefs. E.D. Cal. Local Rule 78-230(h). 4
1

IT IS SO ORDERED. Dated: January 6, 2009

_____________________________ MORRISON C. ENGLAND, JR. UNITED STATES DISTRICT JUDGE