BRC Rubber & Plastics Inc v. Continental Carbon Company
Filing
235
OPINION AND ORDER: The Court GRANTS BRC's motion for prejudgment interest 228 and FINDS that BRC is entitled to prejudgment interest at the rate of eight percent (8%) for the time periods and in the amounts requested, totaling $4 00,184.12. The Clerk is DIRECTED to enter a judgment in favor of BRC and against Continental in the amount of $842,683.37 in damages plus costs 227 at 31, plus prejudgment interest in the amount of $400,184.12. Signed by Magistrate Judge Susan L Collins on 12/3/2019. (lhc)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
FORT WAYNE DIVISION
BRC RUBBER & PLASTICS, INC., an Indiana )
corporation,
)
)
Plaintiff,
)
)
v.
)
)
CONTINENTAL CARBON COMPANY,
)
a Delaware corporation,
)
)
Defendant.
)
CAUSE NO. 1:11-cv-00190-SLC
OPINION AND ORDER
On August 22, 2019, this Court issued an Opinion and Order (the “Order”) setting forth
Findings of Fact and Conclusions of Law following a bench trial in this case filed by Plaintiff
BRC Rubber & Plastics, Inc. (“BRC”), against Defendant Continental Carbon Company
(“Continental”), concluding that BRC had proven by a preponderance of the evidence its claim
that Continental had repudiated a five-year Agreement to supply BRC with approximately 1.8
million pounds of carbon black annually.1 (ECF 227). The Court awarded BRC damages in the
amount of $842,683.37, which represents the costs that BRC incurred in purchasing carbon black
from another supplier as cover after Continental’s repudiation of the Agreement. (Id. at 30).
In the Order, the Court took under advisement BRC’s request for an award of prejudgment
interest, observing that BRC first requested prejudgment interest in the last sentence of its
proposed findings of fact and conclusions of law submitted after the trial. (Id. at 30-31). The
Court afforded the parties an opportunity to submit supplemental briefs on the issue, and these
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The Court presumes the reader is familiar with the lengthy factual and procedural background of this case (see,
e.g., ECF 127, 194, 227), so it will not be repeated here. The terms defined in the Order shall have same meaning
herein. Likewise, the transcripts of the trial (ECF 219, 220) will be referred to as “Tr. __,” and the exhibits
submitted at the trial as “Ex. __.”
briefs have now been considered. (See ECF 228, 229, 231, 234). For the following reasons, the
Court FINDS that BRC is entitled to prejudgment interest in the amount of $400,184.12.
A. Applicable Law
“The basic purpose of prejudgment interest is to put a party in the position it would have
been in had it been paid immediately. It is designed to ensure that a party is fully compensated
for its loss.” Am. Nat’l Fire Ins. Co. v. Yellow Freight Sys. Inc., 325 F.3d 924, 935 (7th Cir.
2003) (citations omitted); see Ind. Ins. Co. v. Sentry Ins. Co., 437 N.E.2d 1381, 1391 (Ind. Ct.
App. 1982) (“The award of prejudgment interest is founded solely upon the theory that there has
been a deprivation of the use of money or its equivalent and that unless interest is added the
injured party cannot be fully compensated for the loss suffered.” (citation omitted)). “In
diversity actions, federal courts must look to state law to determine the propriety of awarding
prejudgment interest.” Dale R. Horning Co. v. Falconer Glass Indus., Inc., 730 F. Supp. 962,
969 (S.D. Ind. 1990) (citing Travelers Ins. Co. v. Transp. Ins. Co., 846 F.2d 1048, 1051 (7th Cir.
1988)).
In Indiana, “[p]rejudgment interest is awarded where the damages are ascertainable in
accordance with fixed rules of evidence and accepted standards of valuation at the time the
damages accrued.” Cincinnati Ins. Co. v. BACT Holdings, Inc., 723 N.E.2d 436, 441 (Ind. Ct.
App. 2000) (citation and internal quotation marks omitted). “After it has been determined that a
party is liable for damages, prejudgment interest is appropriate only when a ‘simple
mathematical computation’ is required.” Id. (citation omitted); see Care Grp. Heart Hosp., LLC
v. Sawyer, 93 N.E.3d 745, 757 (Ind. 2018) (“An award of prejudgment interest in a contract
action is appropriate purely as a matter of law when the breach did not arise from tortious
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conduct, the amount of the claim rests on a simple calculation, and the trier of fact does not need
to exercise its judgment to assess the amount of damages.” (citations and footnote omitted)).
Examples of cases where prejudgment interest is appropriate
include those for breach of contract when the damages were
principal payments made under a promissory note; the amount of a
mechanics’ lien for a contractor’s unpaid bills for a remodeling
project; and an amount stipulated to at a damages hearing. In these
cases, the amount of damages was clear and did not require any
interpretation or judgment on the part of the trier of fact.
WESCO Distrib., Inc. v. ArcelorMittal Ind. Harbor LLC, 23 N.E.3d 682, 714 (Ind. Ct. App.
2014) (internal citations omitted).
Notwithstanding the foregoing, prejudgment interest “has been allowed even where some
degree of judgment must be used to measure damages.” Cincinnati Ins. Co., 723 N.E.2d at 441.
Prejudgment interest on damages may be appropriate even though
the fact finder has to use some degree of judgment in measuring
damages; the question in each case must turn on its facts
depending on whether the jury appears to have been able to make a
computation “according to known standards of value,” or whether
its award was by necessity largely a matter of subjective judgment
about the value of certain losses. In resolving this question, factors
such as the difference between the jury award and the amount
sought, the nature and completeness of plaintiff’s proof and the
nature of the defendant’s proof on damages, if any, are relevant.
Pub. Serv. Co. of Ind., Inc. v. Bath Iron Works Corp., 773 F.2d 783, 796 (7th Cir. 1985) (internal
citation omitted) (applying Indiana law).
A request for prejudgment interest raised for the first time in a post-trial motion is timely.
See Brooms v. Regal Tube Co., 881 F.2d 412, 424 n.9 (7th Cir. 1989), overruled in part on other
grounds by Saxton v. Am. Tel. & Tel. Co., 10 F.3d 526, 533 n.12 (7th Cir. 1993). That is, a
plaintiff does not waive a request for prejudgment interest by failing to raise it in the complaint
or even the final pretrial order. See RK Co. v. See, 622 F.3d 846, 853 (7th Cir. 2010) (stating
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that a failure to request prejudgment interest in a final pretrial order did not result in waiver);
Brenton H. v. Bd. of Educ. of City of Chi., No. 10-cv-1360, 2011 WL 4501408, at *6 (N.D. Ill.
Sept. 28, 2011) (rejecting defendant’s argument that plaintiff had waived prejudgment interest
where he did not raise it in his complaint). “[A]n award of prejudgment interest is generally not
considered a matter of discretion.” INS Investigations Bureau, Inc. v. Lee, 784 N.E.2d 566, 578
(Ind. Ct. App. 2003); see also AM Gen. LLC v. Demmer Corp., No. 3:12-CV-00333-WCL-RBC,
2015 WL 1256370, at *10 (N.D. Ind. Mar. 18, 2015).
“Prejudgment interest is computed from the time the principal amount was demanded or
due and is allowable at the permissible statutory rate when no contractual provision specifies the
interest rate.” Cincinnati Ins. Co., 723 N.E.2d at 441. Where the parties have not agreed to an
interest rate, Indiana law supplies a rate of eight percent per annum.2 Care Grp. Heart Hosp.,
LLC, 93 N.E.3d at 757 (citing Ind. Code § 24-4.6-1-102); see also Firstmark Standard Life Ins.
Co., 699 N.E.2d at 693.
C. Discussion
1. BRC’s Proposed Calculation of Prejudgment Interest
In its motion, BRC seeks an award of prejudgment interest in the amount of $383,561.12,
plus $184.70 per day until the Court enters the judgment in BRC’s favor. BRC arrives at this
amount by calculating the difference between the cost of carbon black that it purchased from a
another supplier, Sid Richardson, as cover after Continental repudiated the Agreement,3 and the
2
Prejudgment interest is not compounded absent an underlying agreement of the parties. Firstmark Standard Life
Ins. Co. v. Goss, 699 N.E.2d 689, 693-94 (Ind. Ct. App. 1998).
3
BRC entered into an agreement with Sid Richardson in October 2011, whereby Sid Richardson supplied carbon
black to BRC from January 1, 2012, to December 31, 2014. (ECF 227 at 12 (citing Tr. 63; Ex. 67)).
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cost of carbon black that BRC would have purchased from Continental under the Agreement.
(ECF 229 at 4-5).
At trial, Michael Cornwell, BRC’s vice president of materials, provided a spreadsheet
comparing the price BRC paid to Sid Richardson for orders of carbon black to the price BRC
would have paid to Continental under the Agreement. (Tr. 65-66; Ex. 72). Per the spreadsheet,
BRC paid Sid Richardson $287,577.48 more for carbon black in 2012, $280,679.99 more for
carbon black in 2013, and $274,425.90 more for carbon black in 2014 than BRC would have
paid to Continental under the Agreement. (ECF 229 at 4; Ex. 72).
For purposes of calculating prejudgment interest, BRC contends that its damages
“became readily ascertainable at the conclusion of 2012.” (ECF 229 at 5); see Hooker Bldgs.,
Inc. v. Smalley, 691 N.E.2d 1256, 1258 (Ind. Ct. App. 1998) (“A party is entitled to an award of
[prejudgment] interest only where the amount of damages is readily ascertainable in accordance
with fixed rules of evidence and accepted standards of valuation. Damages are readily
ascertainable where the trier of fact need not exercise its judgment to assess the amount of
damages.” (citations omitted)). BRC calculates its prejudgment interest as follows:
(a)
$287,577.48 (BRC’s damages for calendar year 2012), multiplied by eight
percent (Indiana’s statutory rate of interest), for the period of January 1, 2013, to
the date of judgment; plus
(b)
$280,679.99 (BRC’s damages for calendar year 2013), multiplied by eight
percent, for the period of January 1, 2014, to the date of judgment; plus
(c)
$274,425.90 (BRC’s damages for calendar year 2014), multiplied by eight
percent, for the period of January 1, 2015, to the date of judgment.
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(ECF 229 at 5; ECF 229-2). BRC states that the per diem amount of prejudgment interest is
$184.70. (ECF 229 at 5; ECF 229-2).
2. Continental’s Arguments
In response, Continental agrees that Indiana law applies to the issue of prejudgment
interest, that the applicable simple interest rate under Indiana law is eight percent, and that
raising the issue of prejudgment interest for the first time in a post-trial brief does not result in
waiver. (ECF 231 at 1). Nor does Continental dispute the time periods for which BRC seeks
prejudgment interest. Continental does dispute, however, that the amount of damages in this
matter required only a “simple mathematical computation.” (Id. at 3).
On that point, Continental emphasizes that BRC had a duty to mitigate its damages once
Continental repudiated the Agreement, and that “good faith and reasonableness of BRC’s cover
remedy was at the center of the Court’s determination of damages in this case.” (Id. at 6). As
Continental points out, the Court explained in the Order that “[t]he test of proper cover is
whether at the time and place the buyer acted in good faith and in a reasonable manner, and it is
immaterial that hindsight may later prove that the method of cover used was not the cheapest or
most effective.” (ECF 227 at 28 (citing U.C.C. § 2-712, cmt 2)).
To that end, Continental states that it offered evidence that BRC would have paid much
less for all of its carbon black if it had accepted Continental’s offer to enter into a new contract
with Continental in August of 2011. (ECF 231 at 6; see ECF 227 at 12 (“Huntley believed that
Continental offered superior economics compared to its competitors that could have saved BRC
over $1 million during the life of the contract. (Tr. 349; Ex. 64). Ultimately, the two parties did
not reach a new agreement. (E.g., Tr. 255).”))). Continental contends that it offered evidence
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that BRC’s decision to enter into a three-year contract with Sid Richardson “was dictated by a
desire to line up a damages case in the lawsuit, not for normal business reasons.” (ECF 231 at 67). Continental acknowledges that the Court ultimately rejected these arguments, finding that
“[e]vidence shows that BRC’s reasons for rejecting Continental’s offer went beyond the terms of
a potential contract—that is, BRC lacked confidence in Continental as a supplier.” (ECF 231
(quoting ECF 227 at 28-29)).
As Continental sees it, the Court’s conclusion that BRC’s lack of trust in Continental
influenced BRC’s choice to secure a higher-price cover means that the determination of damages
in this matter was not a “simple mathematical computation.” Rather, Continental urges that the
Court had to exercise its judgment in awarding damages by assessing BRC’s subjective
explanations for its decision and the objective reasonableness of that decision, negating the
availability of prejudgment interest. While Continental acknowledges that prejudgment interest
has been awarded in some cases even though “some degree of judgment must be used to measure
damages,” Cincinnati Ins. Co., 723 N.E.2d at 440, Continental contends that the instant
circumstances are not analogous to those cases. (See ECF 231 at 7-9 (citations omitted)).
3. Analysis
As stated above, BRC produced a spreadsheet at trial comparing the price of carbon
black that BRC paid to Sid Richardson for years 2012, 2013, and 2014, versus the price that
BRC would have paid to Continental under the Agreement. (Ex. 72). The “simple mathematical
calculation” of the difference between the two prices constitutes BRC’s damages in this action.
At trial, Continental did not challenge BRC’s method of calculating its damages as
reflected on the spreadsheet or the validity of such damages. Rather, Continental raised the
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affirmative defense of failure to mitigate, arguing that BRC failed to mitigate its damages by
electing higher-price cover from Sid Richardson over entering into a new, more economical
contract with Continental in August 2011. (See ECF 227 at 28-30). In advancing this defense,
Continental argued, in essence, that BRC’s damages amounted to what BRC would have paid for
carbon black under a new contract with Continental in August 2011, less what BRC would have
paid Continental for carbon black under the Agreement. (See ECF 226 at 34-35; ECF 227 at 28;
Tr. 349). But this damages scenario, too, involves just a “simple mathematical
calculation”—that is, subtracting one price of carbon black from another. Therefore, even if the
Court had adopted Continental’s version of damages, which it did not, prejudgment interest
would still be appropriate in this case.
In opposing an award of prejudgment interest, Continental attempts to distinguish the
instant circumstances from various cases in which prejudgment interest was awarded under
Indiana law even though some degree of judgment was used to measure damages. (ECF 231 at
7-9 (citing Cincinnati Ins. Co., 723 N.E.2d at 441 (awarding prejudgment interest despite that
“some degree of judgment” relating to the calculation of expenses incurred by the manufacturer
was added to the fixed daily coverage amount specified in the insurance policy); Harlan Sprague
Dawley, Inc. v. S.E. Lab Grp., 644 N.E.2d 615, 618 (Ind. Ct. App. 1994) (awarding prejudgment
interest on the plaintiff’s estimate of the value of lost animals and related labor costs); Ind. Bell
Tel. Co. v. Thrifty Call, Inc., No. IP 02-0170-C-H/K, 2005 WL 552260, at *4 (S.D. Ind. Feb. 11,
2005) (awarding prejudgment interest where the factfinder chose between one of three estimates
of total minutes of long distance calls))).4 Continental contends that all of the cited cases
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In turn, Indiana Bell Telephone Co. collects the following cases in which prejudgment interest was awarded despite
the exercise of “some judgment”:
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involved differing views of which “fixed standards of value” should apply, in contrast to “the
non-mathematical element that made the difference in this case” (ECF 231 at 9)—that is, BRC’s
lack of confidence in Continental as a supplier (id. at 7, 9).
But Continental’s attempt to distinguish these cases is unpersuasive. “While damages
that are the subject of a good faith dispute cannot allow for an award of prejudgment interest,
damages can still be ascertained through accepted standards of valuation and fixed rules of
evidence regardless of which party’s method of computation the jury selects.” Harlan Sprague
Dawley, Inc., 644 N.E.2d at 618 (citations omitted). Here, Continental did not dispute the
quantity of carbon black that BRC sought as cover—1.8 million pounds in each 2012, 2013, and
2014—or the amount BRC would have paid to Continental for the carbon black under the
Agreement.5 Thus, the only determination left to the factfinder was whether the cover price that
BRC paid to Sid Richardson for the carbon black was reasonable.
Luksus v. United Pacific Ins. Co., 452 F.2d 207 (7th Cir. 1971) (interest awarded
from various dates that sums owed for labor, services, rental of equipment,
bonuses, etc. were later found to be due); N.Y., Chicago & St. L. Ry. Co. v.
Roper, 176 Ind. 497, 96 N.E. 468 (1911) (interest award upheld where measure
of damages after fire was fair market value of house); Indiana Industries, Inc. v.
Wedge Products, Inc., Ind. App., 430 N.E.2d 419 (3d Dist. 1982) (interest
awarded for inventory even though original claim substantially differed from
damages subsequently sought, and from those awarded); N.Y. Central Ry. Co. v.
Churchill, 140 Ind. App. 426, 218 N.E.2d 372 (2d Div. 1966) (interest allowed
where fair market value of tractor, though disputed, was easily ascertainable
with a degree of certainty); Kubn v. Powell, 61 Ind. App. 131, 111 N.E. 639
(1916) (interest allowed despite dispute over amount due per bushel of corn
under unwritten contract).
Ind. Bell Tel. Co., 2005 WL 552260, at *3.
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While BRC initially sought damages for Continental’s alleged failure to supply all of BRC’s requirements of
carbon black (ECF 1, 6), this does not preclude prejudgment interest on BRC’s claim at trial that Continental failed
to supply the lesser amount of 1.8 million pounds of carbon black annually. “Where a good faith dispute exists
concerning a portion of a claim, interest is properly limited to the undisputed (ascertainable) portion of the claim.”
N. Ind. Pub. Serv. Co., 595 N.E.2d at 279; see also Gibson-Lewis Corp. v. N. Ind. Pub. Serv. Co., 524 N.E.2d 1316,
1319 (Ind. Ct. App. 1988) (“Because there was a good faith dispute as to whether Gibson was entitled to additional
compensation for work done on Column Row 25 and as to how much that work was worth, it was not error for the
trial court to limit pre-judgment interest to the undisputed portion of Gibson’s claim.”).
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On that point, Public Service Co. of Indiana, Inc. v. Bath Iron Works Corp., 773 F.2d 783
(7th Cir. 1985), is instructive. Public Service Co. of Indiana (“PSI”) brought negligence and
strict liability claims against Bath Iron Works Corp. (“Bath”), after a conical head PSI purchased
from Bath for use in a coal pulverizing mill allegedly failed. Id. Another plaintiff, Riley Stoker
Corporation (“Riley”), the manufacturer of the conical head, sued Bath for breach of the
contract, seeking to recover expenses it incurred in attempting to repair the conical head. Id.
Similar to Continental, Bath argued that because the jury had to determine whether the amounts
Riley incurred were reasonable, the jury had to exercise its subjective judgment, which
precluded prejudgment interest. Id. at 797. The Seventh Circuit Court of Appeals disagreed,
explaining:
In this case, virtually all of Riley’s proof on damages consisted of
invoices showing direct expenses that Riley incurred as the result
of its attempts to repair the conical head after it failed. Bath
argues that the jury had to determine whether these amounts were
reasonable and so had to use its subjective judgment, thus
precluding prejudgment interest. But juries often have to make
determinations about whether claimed damages are “reasonable,”
and if this were determinative, prejudgment interest would rarely
be awarded. Here Riley broke down for the jury what charges
were incurred for what purpose, and showed the specific amounts
that it had paid. Bath of course cross-examined Riley’s witnesses,
but presented no evidence of its own to indicate that some or all
items of damages were not properly attributable to the costs of
repair or were unreasonable in amount. The jury obviously
decided that some items were unreasonable for one reason or
another. Nevertheless, under all the circumstances, we believe that
Riley’s damages were ascertainable as of a particular time
according to known standards of value.
Id. at 796-97.
Here, the circumstances differ slightly from Public Service Co. of Indiana, Inc., in that
Continental did present its own evidence—in the form of Continental’s August 2011 proposal to
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BRC and the testimony of Darryl Huntley, Continental’s national sales manager—that BRC’s
proposed damages were unreasonable in amount. (See Exs. 62-64; Tr. 349). But that difference
does not preclude the guidance that Public Service Co. of Indiana, Inc., offers. Continental’s
failure-to-mitigate defense rested solely upon its own pricing proposal, which the Court easily
discarded, explaining that “the fact that Continental proved to be the cheapest option is
immaterial.” (ECF 227 at 29 (citing Huntington Beach Union High Sch. Dist. v. Cont’l Info. Sys.
Corp., 621 F.2d 353, 357 (9th Cir. 1980))). Further, in Public Service Co. of Indiana, Inc., the
Seventh Circuit found that Riley’s damages were ascertainable as of a particular time according
to known standards of value even though the jury found that some of Riley’s damages were
unreasonable. 773 F.2d at 797. Here, in contrast, BRC was awarded all of the damages it
requested at trial. (ECF 227 at 30); cf. WESCO Distrib., Inc., 23 N.E.3d at 714-15 (reversing
award of prejudgment interest, concluding that the jury exercised judgment in arriving at a
damages amount where the verdict was approximately ten million dollars less than the total
damages claimed by the plaintiff).
Considering all of the circumstances, the Court concludes that while it had to exercise
some degree of judgment in measuring damages, BRC’s damages were ascertainable as of a
particular time according to known standards of value. Consequently, BRC is entitled to
prejudgment interest at the rate of eight percent for the time periods and in the amounts
requested: $383, 561.12, plus $184.70 per diem through the date of judgment (90 days), which
totals $400,184.12.
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D. Conclusion
For the foregoing reasons, the Court GRANTS BRC’s motion for prejudgment interest
(ECF 228) and FINDS that BRC is entitled to prejudgment interest at the rate of eight percent for
the time periods and in the amounts requested, totaling $400,184.12. The Clerk is DIRECTED
to enter a judgment in favor of BRC and against Continental in the amount of $842,683.37 in
damages plus costs (ECF 227 at 31), plus prejudgment interest in the amount of $400,184.12.
SO ORDERED.
Entered this 3rd day of December 2019.
/s/ Susan Collins
Susan Collins
United States Magistrate Judge
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