Colony Insurance Company v. Advanced Particle Therapy LLC et al

Filing 19

ORDER granting in part Plaintiff's 17 Amended Motion for Attorney Fees and Prejudgment Interest. Court grants in part Plaintiff's amended motion for prejudgment interest and additional damages, using Virginia's six percent prejudgmen t interest rate. Plaintiff is entitled to $890,362.82 in damages, $56,987.98 in prejudgment interest, and $16,902.50 in attorney's fees, bringing the total damages award to $964,253.30. Court directs the Clerk to enter default judgment in favor of Plaintiff in the amount of $964,253.30. Signed by Judge Cynthia Bashant on 3/13/2018. (jah)

1
2
3
4
5
6
7
8
9
10

UNITED STATES DISTRICT COURT

11

SOUTHERN DISTRICT OF CALIFORNIA

12
13

COLONY INSURANCE COMPANY,
Plaintiff,

14
15

Case No.: 17-cv-01427-BAS-AGS
ORDER GRANTING IN PART
AMENDED MOTION FOR
PREJUDGMENT INTEREST AND
ADDITIONAL DAMAGES

v.

16
17
18

ADVANCED PARTICLE THERAPY,
LLC, et al.,

[ECF No. 17]

Defendants.

19
20
21

Presently before the Court is an amended motion for prejudgment interest and

22

additional damages filed by Plaintiff Colony Insurance Company (“Colony”) against

23

Defendant Advanced Particle Therapy, L.L.C. (“APT”). Previously, the Court granted

24

Plaintiff’s motion for default judgment and denied Plaintiff’s request for prejudgment

25

interest, permitting leave to amend. APT has not opposed this motion.

26
27

For the following reasons, the Court GRANTS IN PART Plaintiff’s amended
motion for prejudgment interest and additional damages. (ECF No. 17.)

28
–1–
17cv1427

1

I.

LEGAL STANDARD

2

Under Rule 8(a)(3), a plaintiff’s demand for relief must be specific, and he “must

3

‘prove up’ the amount of damages.” Philip Morris USA Inc. v. Banh, No. CV 03–4043

4

GAF (PJWx), 2005 WL 5758392, at *6 (C.D. Cal. Jan. 14, 2005); Elektra Entmn’t Grp.,

5

Inc. v. Bryant, No. CV 03- 6371 GAF(JTLx), 2004 WL 783123, at *5 (C.D. Cal. Feb. 13,

6

2004) (“Plaintiffs must ‘prove up’ the amount of damages that they are claiming”). Rule

7

54(c) limits the relief that can be sought in a motion for entry of default judgment to that

8

identified in the complaint. Fed. R. Civ. Proc. 54(c) (“A default judgment must not differ

9

in kind from, or exceed in amount, what is demanded in the pleadings.”). See also PepsiCo,

10

238 F. Supp. 2d at 1174 (stating that a default judgment “shall not be different in kind from

11

or exceed in amount that prayed for in the [complaint]”). Also, a defaulting defendant is

12

not deemed to have admitted facts concerning damages alleged in the complaint. See id. at

13

1177 (citing Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987))

14

(“Upon entry of default, all well pleaded facts in the complaint are taken as true, except

15

those relating to damages.”).

16
17

II.

DISCUSSION

18

The only outstanding matter before the Court relating to damages is the amount of

19

prejudgment interest to which Plaintiff is entitled. To make Colony whole, prejudgment

20

interest should be awarded beginning at the time that Colony incurred each injury. See Gen.

21

Motors Corp. v. Devex Corp., 461 U.S. 648, 651 (1983) (awarding prejudgment interest on

22

royalty payments from the time each payment became due).

23

Colony brought this action seeking to convince the Court to apply California’s ten

24

percent per annum prejudgment interest rate as opposed to Virginia’s six percent per annum

25

prejudgment interest rate.1 Applying California’s ten percent prejudgment interest award,

26
27
28

1

Usually, the burden is on the party advocating for a foreign law to show why that
particular foreign law applies. See Bruno v. Eckhart Corp., 280 F.R.D 540, 545 (C.D. Cal.
2012). However, in the context of a default judgment, the burden is on the plaintiff to
–2–
17cv1427

1

Colony argues it is entitled to $94,999.24 in prejudgment interest. (ECF No. 17.) On the

2

other hand, applying Virginia’s six percent prejudgment interest award entitles Colony to

3

$56,987.98 in prejudgment interest. (Id.)

4
5

To decide which prejudgment interest rate applies, the Court employs a choice-oflaw analysis.

6
7

a. Choice of Law Analysis

8

Federal courts apply the choice of law doctrine of the state in which they sit. Klaxon

9

v. StentorElec. Mfg. Co., 313 U.S. 487, 496 (1941). Because the Court has diversity

10

jurisdiction over Plaintiff’s state contract claims, California’s choice of law provisions

11

apply. In this case, the contract at issue does not contain a choice of law provision. (ECF

12

No. 17.) Absent a choice of law provision, the Court applies a common law government

13

interest test.2

14

The first step in a government interest test is to “identify the applicable rule of law

15

in each potentially concerned state and [] show it materially differs from the law of

16

California.” Costco Wholesale Corp. v. Liberty Mut. Ins. Co., 472 F. Supp. 2d 1183, 1198

17

(S.D. Cal. 2007) (quoting Wash. Mut. Bank, FA v. Super. Ct., 15 P.3d 1071, 1080 (2001)).

18

If the laws are materially different, the second step is to “determine what interest, if any,

19

each state has in having its own law applied to the case.” Id. (quoting Wash. Mut. Bank, 15

20
21
22
23
24
25
26
27
28

sufficiently “prove up” damages. See Philip Morris USA Inc. 2005 WL 5758392, at *6.
Therefore, in this context, the burden is on Colony to prove that California law applies. See
Datatel Sol., Inc. v. Keane Telecom Consulting, LLC, No. 2:12-CV-1306-GEB-EFB, 2015
WL 411238, at * 5 (E.D. Cal. Jan. 30, 2015).
2
California courts can also apply a statutory choice of law test in contract
interpretation disputes. Under California Civil Code section 1646, if a contract is silent
regarding place of performance, courts apply the law where the contract was “made.” For
reasons that follow, the Court finds that the outcome does not differ because the contract
was made in Virginia. See Costco Wholesale Corp. v. Liberty Mut. Ins. Co., 472 F. Supp.
2d 1183, 1197 (S.D. Cal. 2007) (applying the state of the insurer for where the contract
was made).
–3–
17cv1427

1

P.3d at 1080). If that step is satisfied, then the third and final step is to “select the law of

2

the state whose interests would be ‘more impaired’ if its law were not applied.’” Id.

3

(quoting Wash. Mut. Bank, 15 P.3d at 1081).

4
5

1. Material difference

6

“A state’s law is materially different than California law if application of the other

7

state’s law leads to a different result.” Costco 472 F. Supp. 2d at 1200 (citing Stonewall

8

Surplus Lines Ins. Co., v. Johnson Controls, Inc., 17 Cal. Rptr. 2d 713, 716 (Cal. Ct. App.

9

1993)). Virginia’s prejudgment interest award is six percent while California’s award is ten

10

percent. Va. Code Ann. § 6.2-302 (West 2010); Cal. Civ. Code § 3289 (West 2018).

11

Consequently, Colony is entitled to $94,999.24 in prejudgment interest under California

12

law, and $56,987.98 under Virginia law. Thus, given the resulting difference of nearly

13

$40,000, the laws are materially different.

14
15

2. Any Interest

16

Because there is a material difference in applying Virginia’s law over California’s

17

law, the Court must determine whether each state has an interest in the outcome of this

18

litigation. See Costco, 472 F. Supp. 2d at 1198.

19

California has an interest in applying its own law because it is the forum state.

20

Rosenthal v. Fonda, 862 F.2d 1398, 1402 (9th Cir. 1988). “Generally, the preference is to

21

apply California law, rather than choose the foreign law as a rule of decision.” Id. (quoting

22

Strassberg v. N. Eng. Mut. Life Ins. Co., 575 F.2d 1262, 1264 (9th Cir. 1978)). Likewise,

23

Virginia has an interest in the outcome of this litigation because Plaintiff is incorporated in

24

Virginia, has its principal place of business there, and presumably made the contract there.

25

(Compl. ¶ 1, ECF No. 1.) Thus, both Virginia and California have a legal interest in the

26

outcome of this litigation.

27
28
–4–
17cv1427

1

3. Comparative Impairment

2

Moving on to the third and final step, the Court finds that the failure to apply

3

California’s law would minimally impair California’s interests, while failure to apply

4

Virginia’s law would substantially impair Virginia’s interests.

5

Plaintiff argues that this Court should apply California’s prejudgment interest rate

6

for the following reasons: (1) Colony is a surplus lines insurer eligible to do business in

7

California; (2) APT has one of its proton therapy cancer treatment centers in California;

8

(3) APT has its principal place of business in California; (4) California is the forum state;

9

(5) Colony issued the contract to APT at its principal place of business in California; and

10

(6) “Colony intended that the Policy be a Policy for a California entity.” (ECF No. 17.)

11

The Court is not convinced. APT has four separate proton therapy cancer treatments

12

located in California, Texas, Georgia, and Maryland. (Compl. ¶ 4.) Indeed, the California

13

cancer treatment center is not at issue in this case; instead, this case involves the Dallas,

14

Texas center. (Id. ¶¶ 13-18.) It is also unlikely that both parties intended that each insurance

15

agreement would be subject to as many as four conflicting contract interpretations.

16

Plaintiff’s argument, therefore, ignores the “understanding that, barring extraordinary

17

circumstances, only one state's law should govern an insurance agreement.” Costco, 472

18

F. Supp. 2d at 1205 (quoting Md. Cas. Co. v. Cont’l. Cas. Co., 332 F.3d 145, 153 (2d Cir.

19

2003)). “Numerous jurisdictions have articulated the same view as to insurance policies

20

covering risks in multiple states.” Id. (applying the law of the insurer’s home state

21

regardless of where the loss occurred); see also Combs v. Int’l Ins. Co., 354 F.3d 568, 587

22

(6th Cir. 2004) (finding that where risks are dispersed across state boundaries, location of

23

any one risk “should make little difference”); Fallon v. Super. Chaircraft Corp., 884 F.2d

24

229, 234 (5th Cir. 1989) (describing how applying multiple states’ laws would “wreak

25

havoc on the insurance industry”). Additionally, the contract was made in Virginia, Colony

26

is incorporated in Virginia, and Colony has its principal place of business in Virginia.

27

(Compl. ¶ 1.)

28
–5–
17cv1427

For these reasons, the Court believes that the laws of Colony’s home state, Virginia,

1
2

should govern the analysis.

3
4

b. Colony “Proved Up” the Amount in Total Damages

5

To make Colony whole, prejudgment interest should be awarded beginning at the

6

time that Colony incurred each injury. See Gen. Motors Corp., 461 U.S. at 651. “The

7

prejudgment interest on each payment by Colony for the defense of APT in the Underlying

8

Actions was calculated on a per diem basis from the time the payment was made to

9

December 18, 2017, the date when the Court granted Colony’s motion for default

10

judgment.” (ECF No. 17.)

11

Applying Virginia’s six percent prejudgment interest rate at the time Colony

12

incurred each injury, Colony “proved up” a total of $56,987.98 in prejudgment interest.

13

(ECF No. 17) (providing a chart for calculating prejudgment interest from the date each

14

injury was realized); see also Gen. Motors Corp., 461 U.S. at 651.

15

In addition, Colony is entitled to $890,362.82 in damages from APT for defense fees

16

and costs incurred in the defense of APT in the multiple underlying actions. Previously,

17

the Court found Colony “proved up” damages amounting to $812,891.99. (ECF No. 10 at

18

7.) Colony now states (and proves up) that it is entitled to an increased amount of damages

19

because, since filing its motion for default judgment, it has made four additional payments

20

in the amount of $77,470.83 to defend APT in the underlying actions. (ECF No. 17 at 5-6;

21

see also Declaration of Patrick McGinley ¶¶ 3-20.) This brings Colony’s total damages for

22

defending APT to $890,362.82. Lastly, as stated in its previous order, Colony is entitled to

23

attorney’s fees totaling $16,902.50. (ECF No. 10.)

24
25

III.

CONCLUSION

26

In light of the foregoing, the Court GRANTS IN PART Plaintiff’s amended motion

27

(ECF No. 17) for prejudgment interest and additional damages, using Virginia’s six percent

28

prejudgment interest rate. Accordingly, Plaintiff is entitled to $890,362.82 in damages,
–6–
17cv1427

1

$56,987.98 in prejudgment interest, and $16,902.50 in attorney’s fees, bringing the total

2

damages award to $964,253.30. Consequently, the Court directs the Clerk of the Court to

3

enter a default judgment in favor of Plaintiff in the amount of $964,253.30.

4

IT IS SO ORDERED.

5
6

DATED: March 13, 2018

7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
–7–
17cv1427