Fairmont Specialty Insurance Co v. 1039012 Ontario Inc et al
Filing
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OPINION AND ORDER, GRANTING 65 MOTION to Alter or Amend Judgment filed by Kimberly Spoa-Harty, Jesse Harty. The judgment is amended to include prejudgment interest in the amount of $207,342.38. Signed by Judge William C Lee on 11/13/12. (kjp)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
FAIRMONT SPECIALTY INSURANCE
COMPANY,
)
)
)
Plaintiff,
)
)
v.
) Cause No. 2:10 CV 070
)
1039012 ONTARIO, INC, d/b/a HUMMER )
TRANSPORTATION, LTD., KIMBERLY )
SPOA-HARTY, AND JESSE HARTY,
)
)
Defendants.
)
____________________________________/
KIMBERLY SPOA-HARTY AND JESSE )
HARTY,
)
)
Counter-claimants
)
)
v.
)
)
FAIRMONT SPECIALTY INSURANCE )
COMPANY
)
)
Counter-Defendant
)
OPINION AND ORDER
After being injured in an accident with a tractor-trailer, Defendants Kimberly Spoa-Hoarty
and Jesse Harty (“the Hartys”) filed suit in state court against 1039012 Ontario Inc, d/b/a Hummer
Transportation, Ltd (“Ontario”), the lessee of the tractor-trailer involved in the accident and Hummer
Transportation, Inc. (“Hummer”), the lessor of the tractor-trailer. A state court jury awarded the
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Hartys in excess of five million dollars.1 Thereafter, the Hartys sought payment of Ontario’s liability
under the judgment from Plaintiff, Fairmont Specialty Insurance Co. (“Fairmont”), based upon an
MCS-90 endorsement policy issued to Ontario. Fairmont, in turn, filed the present declaratory
judgment action wherein it named Ontario, and the Hartys as defendants. On August 19, 2011, the
undersigned granted, in part, the Hartys’ Motion for Summary Judgment and concluded that the
MCS-90 endorsement policy was applicable to this case. [DE 53]. After requesting supplemental
briefing on the issue of prejudgment interest as well as the amount the Hartys’ were entitled to under
the endorsement policy, the court ordered Fairmont to pay the full amount of the policy limits. With
respect to prejudgment interest, the court interpreted the Hartys’ request to be a request for postjudgment interest on the underlying judgment and determined that the state court that entered the
judgment should assess post-judgment interest.2 The Clerk was directed to enter judgment in favor
of the Hartys in the amount of $1,000,000.
The Hartys have now filed the present Motion to Alter or Amend Judgment [DE 65] seeking
to clarify their request for prejudgment interest. For the following reasons, the Hartys’ Motion will
be GRANTED. The judgment will be amended to include prejudgment interest in the amount of
$207,342.38..
APPLICABLE STANDARD
Motions to alter or amend a judgment serve a limited function. To prevail on a Rule 59(e)
motion to amend judgment, a party must “clearly establish” (1) that the court committed a manifest
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Kimberly Spoa-Harty was awarded $4,270,000. Her husband, Jesse, was awarded $950,000.
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The Court interpreted the Hartys’ request to be seeking duplicative interest – one for postjudgment interest in the state action and a request for prejudgement interest in the federal action.
Accordingly, the Court denied the Hartys’ request.
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error of law or fact, or (2) that newly discovered evidence precluded entry of judgment. Harrington
v. City of Chicago, 433 F.3d 542, 546 (7th Cir.2006). The parties may not introduce evidence
previously available but unused in the prior proceeding or tender new legal theories. Id. The Seventh
Circuit has explained that a “manifest error” occurs when “the [c]ourt has patently misunderstood
a party, or has made a decision outside the adversarial issues presented to the [c]ourt by the parties,
or has made an error not of reasoning but of apprehension.” Bank of Waunakee v. Rochester Cheese
Sales, Inc., 906 F.2d 1185, 1191 (7th Cir.1990); see also Oto v. Metro. Life Ins. Co., 224 F.3d 601,
606 (7th Cir.2000) (describing “manifest error” as a “wholesale disregard, misapplication, or failure
to recognize controlling precedent”).
DISCUSSION
In its motion, the Hartys assert that the Court failed to understand their argument seeking
prejudgment interest. In particular, they take issue with the court’s conclusion that they sought a
duplicate recovery and argue that there can be no duplicative interest recovery as the Court
interpreted the issue in its original order. According to the Hartys, the judgment obtained against
Ontario in state court accrues post-judgment interest from the date of verdict to the date of
satisfaction in the amount of 8% per annum. See Ind. Code §24-4.6-1-101. As for prejudgment
interest against Fairmont, the Hartys contention is two-fold. First, they assert that they are entitled
to prejudgment interest because their damages for breach of the insurance contract are ascertainable.
See Noble Roman's, Inc. v. Ward, 760 N.E.2d 1132, 1140 (Ind.Ct.App.2002) (“The test for
determining whether an award of prejudgment interest is appropriate is whether the damages are
complete and may be ascertained as of a particular time.”); and second, they contend that when the
parties do not agree on the interest rate, the rate of prejudgment interest according to Indiana statute
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is 8% per annum until payment of judgment. Ind.Code 24-4.6-1-102. Thus, the Hartys argue that
they are entitled to prejudgment interest from Fairmont at a rate of 8%, which equals $207,342.38..
They then go on to acknowledge that upon Fairmont’s payment of the $1 million policy limits and
the 8% in prejudgment interest to the Hartys, a partial satisfaction of the judgment entered against
Ontario will be entered thereby precluding them from receiving additional post-judgment interest
in the state court proceeding on the satisfied amount.
In response, Fairmont spends much of its brief arguing about whether the Hartys’ motion is
proper at all and devotes very little discussion to defending its position that the Court correctly
assessed no prejudgment interest against them. When Fairmont does address the issue of the amount
and/or propriety of interest, it argues that if the court does determine that prejudgment interest is
appropriate, it should be calculated based upon the federal prime rate of 3.25% and not Indiana’s
statutory rate. See Schmizzi v. Illinois Farmers Ins. Co., 928 F.Supp. 760, 788 (N.D. Ind. 1996)
citing Travelers Ins. Co. v. Transport Ins. Co., 846 F.2d 1048, 1053-54 (7th Cir. 1988) (“[A] federal
court must employ the federal rate of interest on judgments rather than Indiana's statutory interest
rate.”). Otherwise, Fairmont asserts no prejudgment interest is owing.
Having reviewed the briefs presently filed as well as the original briefing submitted by the
parties on this issue, the Court agrees with the Hartys that it made an error of misapprehension
thereby justifying an amendment to the judgment to award prejudgment interest. As the argument
is now articulated it appears that the Court’s concern of a duplicative interest award is not a
possibility. Moreover, the Court agrees with the Hartys that without the impediment of a double
recovery, the Court, sitting in diversity, is required to assess pre-judgment interest under Indiana
law. Travelers Ins. Co. v. Transport Ins. Co., 846 F.2d 1048, 1051 (7th Cir. Ind. 1988) (in a
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diversity action, state law determines the propriety of prejudgment interest); Medcom Holding Co.
v. Baxter Travenol Laboratories, Inc., 106 F.3d 1388, 1405 (7th Cir. 1997) (“In diversity cases
governed by Erie, federal courts look to state law to determine the availability of (and rules for
computing) prejudgment interest.”). Under Indiana law, “[o]nce it appears that the damages may
be ascertained with reasonable precision, an award of prejudgment interest is mandatory.” Hayes
v. Chapman, 894 N.E.2d 1047, 1054-55 (Ind. Ct. App. 2008) quoting Wash. County Mem'l Hosp.
v. Hattabaugh, 717 N.E.2d 929, 933–34 (Ind.Ct.App.1999). Thus, because the damages are easily
ascertainable as the policy limits of $1,000,000, Indiana law requires an award of prejudgment
interest to the Hartys.
As for whether to use the federal prime rate or Indiana’s statutory rate to calculate the award,
it is clear that the Schmizzi case cited by Fairmont is at odds with the federal precedent it cites for
its proposition that the federal rate is controlling and thus, cannot carry precedential weight in this
instance. Indeed, other courts have said as much. See, Micro Data Base Systems, Inc, v. State Bank
of India, 177 F.Supp.2d 881, 894 (N.D.Ind. 2001). (“[T]o the extent that Schmizzi awarded
prejudgment interest based upon federal law, ‘that decision is erroneous, and should be
disregarded.’”); see also, Travelers Ins. Co. v. Transport Ins. Co., 846 F.2d at 1051 (state law
applies to calculations of prejudgment interest in diversity cases). Thus, in cases such as this, where
the damages are ascertainable and there is no agreement as to the interest rate, Indiana courts apply
a prejudgment interest rate of 8%, pursuant to Indiana Code 24–4.6–1–102. According to the
Hartys’ calculations, prejudgment interest accruing at 8% is the equivalent of $219.178 in daily
interest. The total number of elapsed days from the date of the judgment against Ontario until the
judgment in this case is 946 days. Therefore, the total amount of prejudgment interest due is
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$207,342.38.3
CONCLUSION
Based on the foregoing, the Hartys’ Motion to Alter or Amend Judgment [DE 65] is
GRANTED. The Clerk is directed to amend the Clerk’s entry of judgment entered on June 20, 2012
to add prejudgment interest to the underlying judgment in the amount of $207,342.38.
Entered: This 13th day of November, 2012
s/ William C. Lee
United States District Court
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Neither this total or the manner of calculation using the 8% rate is disputed by Fairmont.
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