CIT Communications Finance Corporation v. Wes-Tech Automation Solutions, LLC et al

Filing 105

MEMORANDUM Opinion signed by the Honorable John F. Grady on 5/11/2011. Mailed notice(cdh, )

08-6458.111-RSK

May 11, 2011

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CIT COMMUNICATIONS FINANCE CORP.,
Plaintiff,
v.
WES-TECH AUTOMATION SOLUTIONS,
LLC, RICHARD GILCHRIST, RALLY
CAPITAL SERVICES, LLC, and
HOWARD B. SAMUELS
Defendants.

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No. 08 C 6458

MEMORANDUM OPINION
Before the court is the plaintiff’s motion for prejudgment
interest. We grant the plaintiff’s motion for the reasons explained
below.
DISCUSSION1
After a bench trial, Judge Coar entered judgment in favor of
plaintiff CIT Communications Finance Corp. (“CIT”), and against
defendant Wes-Tech Automation Solutions, LLC (“Wes-Tech”), on CIT’s
claims

for

conversion

and

implied

contract/quantum

meruit.

(Judgment Order, DKT #82.) On its quantum meruit claim, Judge Coar
awarded CIT $11,142.87 — the rental value of CIT’s telephone
equipment during the six months that Wes-Tech used it without

1/

We will assume that the reader is familiar with Judge Coar’s memorandum
and opinion, dated August 17, 2010.

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paying CIT — “plus interest.”
DKT # 81, at 23.)2

(Id.; see also Mem. Op. and Order,

As a preliminary matter, Wes-Tech points out

that Judge Coar did not specify whether he intended to award
prejudgment or post-judgment interest.
Interest on Award ¶ 4.)

(Def.’s Resp. to Mot. for

We conclude that he awarded both.

Judge

Coar provided in his order that interest would be calculated on the
“restitution award,” not the total amount of the judgment.

Post-

judgment interest, which the plaintiff is entitled to recover
whether or not the district court specifically provides for it,
would apply to the full judgment amount.

See Bell, Boyd & Lloyd v.

Tapy, 896 F.2d 1101, 1104 (7th Cir. 1990).
CIT requests prejudgment interest of $3,953.00, which it
calculates using the prime rate, compounded monthly.

Wes-Tech

argues that CIT is not entitled to any prejudgment interest, or if
it is, we should apply the Illinois Interest Act’s rate (5%) and
impose simple rather than compound interest ($3,051.32, by WesTech’s calculation).

Wes-Tech argues that the Illinois Interest

Act does not authorize prejudgment interest on quantum meruit
awards. But as CIT points out, Illinois courts distinguish between
legal and equitable claims when awarding prejudgment interest.

In

“actions at law” prejudgment interest is recoverable “only under
the Interest Act or if the parties’ agreement provides for it.”

2/
Judge Coar concluded that CIT had not proven with reasonable certainty
its damages from Wes-Tech’s conversion of the equipment, and awarded nominal
damages of $1 on that claim. (Mem. Op. and Order at 18-20, 24.)

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Prignano v. Prignano, 934 N.E.2d 89, 108 (Ill. App. Ct. 2010).
When

the

plaintiff’s

claim

is

equitable,

“‘the

allowance

of

interest lies within the sound discretion of the judge and is
allowed

where

warranted

by

equitable

considerations.’”

Id.

(quoting Tri-G, Inc. v. Burke, Bosselman & Weaver, 856 N.E.2d 218,
257 (Ill. 2006)).

Quantum meruit is an “equitable theory . . .

founded on the implied promise of a recipient of services to pay
for such valuable services, as otherwise the recipient would be
unjustly enriched.”

Carlton at the Lake, Inc. v. Barber, 928

N.E.2d 1266, 1272 (Ill. App. Ct. 2010).

Therefore, prejudgment

interest was recoverable and Judge Coar acted well within his
discretion to award it in this case.

See Santamarina v. Sears,

Roebuck & Co., 466 F.3d 570, 572 (7th Cir. 2006) (under the law of
the case doctrine, we may overturn the decision of another district
judge in the same case only “if there is a compelling reason, such
as a change in, or clarification of, law that makes clear that the
earlier ruling was erroneous.”).
As for the appropriate rate, the Illinois Supreme Court has
held that the prime interest rate, rather than the statutory rate,
better approximates the plaintiff’s loss.

See In re Estate of

Wernick, 535 N.E.2d 876, 888 (Ill. 1989) (“Over the past century,
however, the statutory rate for prejudgment interest has not been
changed to reflect the escalating interest rates in the market. As
a result, the statutory rate does not provide an accurate measure

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of compensation for money wrongfully withheld.”); see also In the
Matter of Oil Spill by Amoco Cadiz Off Coast of France on March 16,
1978, 954 F.2d 1279, 1331 (7th Cir. 1992) (“Prejudgment interest at
the market rate puts both parties in the position they would have
occupied had compensation been paid promptly.”). Compound interest
is the “norm” in federal litigation.

American Nat. Fire Ins. Co.

v. Yellow Freight Sys., Inc., 325 F.3d 924, 938 (7th Cir. 2003).
But this is a diversity case, and the claim at issue was decided as
a matter of Illinois law.

On the other hand, Wes-Tech relies

exclusively on the Interest Act to support its argument for simple
interest, (see Def.’s Resp. to Mot. for Interest on Award ¶ 9),
whereas Judge Coar exercised his equitable authority to award
prejudgment interest.
of

Appeals’

See Prignano, 934 N.E.2d at 108.

observation

that

compound

interest

Our Court

“more

fully

compensate[s]” the plaintiff, see American Nat. Fire Ins., 325 F.3d
at 938, holds true for federal and state law claims alike.

We

conclude

is

that

appropriate.

compounding

interest

at

the

prime

rate

Because Wes-Tech has not disputed CIT’s calculation,

we will assume that CIT has accurately calculated the prejudgment
interest amount.
CONCLUSION
CIT’s motion for prejudgment interest (95) is granted.

Wes-

Tech is ordered to pay CIT prejudgment interest in the amount of
$3,953.00.

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DATE:

May 11, 2011

ENTER:

___________________________________________
John F. Grady, United States District Judge