Macheca Transport Co et al v. Philadelphia Indemnity Insurance Company

Filing 425

MEMORANDUM AND ORDER : IT IS HEREBY ORDERED that plaintiffs' motions to alter or amend judgment and for a new trial [Doc. ## 411 and 413 ] are denied.. Signed by District Judge Carol E. Jackson on 11/28/12. (KKS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
MACHECA TRANSPORT COMPANY,
d/b/a GATEWAY COLD STORAGE, et al.
Plaintiffs,
vs.
PHILADELPHIA INDEMNITY
INSURANCE COMPANY,
Defendant.

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No. 4:04-CV-178 (CEJ)

MEMORANDUM AND ORDER
This matter is before the Court on the plaintiffs’ motion pursuant to Fed. R. Civ.
P. 59(e) to alter or amend the judgment entered on March 7, 2012. In the alternative,
plaintiffs move for a new trial under Fed. R. Civ. P. 59(a). Defendant opposes both
motions, and the issues have been fully briefed.
Plaintiffs brought this action seeking payment under an insurance policy issued
by defendant. After the Eighth Circuit found in favor of plaintiffs on the issue of
coverage, the case was remanded for a jury trial on the issue of damages. Macheca
Transp. v. Philadelphia Indem. Ins. Co., 649 F.3d 661 (8th Cir. 2011). A jury
determined that plaintiffs were entitled to damages in the amount of $90,981.28 for
property damage, $54,238.84 for lost business income, and $29,743.88 for necessary
expenses as a result of the covered loss. (Doc. #404). Final judgment was entered on
March 7, 2012. (Doc. #407).
Prior to the filing of this case, plaintiffs received payments from Travelers
Insurance Company (“Travelers”) under a concurrent insurance policy for the same

loss covered by the policy issued by defendant. At trial, the jurors were instructed
that they were not to award damages for “any amount already paid by Travelers
Insurance Company.” (Doc. #403).
Plaintiffs assert the same grounds for relief in each of their post-judgment
motions. First, they contend that they are entitled to an award of prejudgment interest
on their damages from December 1, 2001 through March 31, 2012. Second, they claim
that their damages were improperly reduced by the amounts paid to plaintiffs by
Travelers.
Prejudgment Interest
Mo. Rev. Stat. § 408.020 governs the award of prejudgment interest “for all
moneys after they become due and payable, on written contracts . . . after they
become due and demand of payment is made[.]” Three requirements must be met
before such interest can be awarded on a claim: “(1) the expenses must be due; (2)
the claim must be liquidated or the amount of the claim reasonably ascertainable; and
(3) the obligee must make a demand on the obligor for the amount due.” Jablonski v.
Barton Mut. Ins. Co., 291 S.W.3d 345, 350 (Mo. Ct. App. 2009) (quoting Lucent
Techs., Inc. v. Mid–West Elecs., Inc., 49 S.W.3d 236, 246 (Mo. App. 2001)). “The
award of prejudgment interest in a case in which [S]ection 408.020 is applicable is not
a matter of court discretion; it is compelled.” Comens v. SSM St. Charles Clinic Med.
Group, Inc., 335 S.W.3d 76, 82 (Mo. Ct. App. 2011).
The requirement that the claim be reasonably ascertainable was discussed by
the court in Comens:
The mere fact that a party denies liability or defends a claim against him
[or her], or even the existence of a bona fide dispute as to the amount
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of the indebtedness, does not preclude recovery of interest....” Columbia
Mut. Ins., 258 S.W.3d at 480 (quoting Twin River Constr. Co. v. Pub.
Water Dist. No. 6, 653 S.W.2d 682, 695 (Mo.App. E.D.1983)). “To hold
otherwise would allow [the opposing party] to accrue pecuniary benefit
unfairly by the simple expedient of producing conflicting estimates of
value.” Columbia Mut. Ins., 258 S.W.3d at 480 (quoting Catron v.
Columbia Mut. Ins. Co., 723 S.W.2d 5, 8 (Mo. banc 1987) (Robertson, J.,
concurring)). An exact calculation of damages need not be presented in
order for the claim to be considered liquidated. City of Sullivan v.
Truckstop Restaurants, Inc., 142 S.W.3d 181, 195 (Mo. App. E.D.2004).
Damages may still be ascertainable, even in the face of “a dispute over
monetary value or the parties' experts compute different estimates of the
loss.” Jablonski v. Barton Mut. Ins. Co., 291 S.W.3d 345, 350 (Mo. App.
W.D. 2009).
Comens, 335 S.W.3d at 82. Often, where the method of valuation is set forth in an
insurance contract and undisputed, Missouri courts have found damages to have been
sufficiently ascertainable to support a prejudgment-interest award. See, e.g., Columbia
Mut. Ins. Co. v. Long, 258 S.W.3d 469, 480 (Mo. Ct. App. 2008) (“the amount due was
fixed, by the insurance policy itself, as the value of the stolen cattle”); Jablonski, 291
S.W.3d at 350 (collecting cases).
As to the demand requirement, ‘[i]f a demand for payment was not made prior
to filing of a lawsuit, then the filing itself constitutes a demand.” Watters v. Travel
Guard Int'l, 136 S.W.3d 100, 111 (Mo. Ct. App. 2004)(internal citations omitted).
Here, plaintiffs have failed to show that the damages ultimately awarded to them
meet the criteria for an award of prejudgment interest. First, the parties’ insurance
contract provided that defendant was to pay for a covered loss “within 30 days after
we receive sworn proof of loss, if: ... (a) We have reached agreement with you on the
amount of “loss”; (b) An appraisal award has been made; or (c) Final judgment has
been entered.” (Doc. #98-6). Because only the third condition—final judgment—has
occurred, payment for plaintiffs’ loss was not due prior to the entry of the March 7,
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2012 judgment.
Even assuming that payment was due when plaintiffs made a formal demand for
payment by filing their complaint, the methods for determining the amounts of
coverage for property damage, lost business income, and extra expenses were
disputed and uncertain until the jury rendered its verdict. For property damage, the
parties’ contract provided that the value of covered property in the event of loss is the
replacement cost basis but not more than “the least of: . . . ; or (c) The amount you
actually spend that is necessary to repair or replace the lost or damaged property . .
. If the repairs or replacement are not made as soon as reasonably possible after the
‘loss,’ the value of the property will be actual cash value.” (Doc. #98-6). Plaintiffs
maintained throughout the trial that they intended to make repairs to their damaged
storage facility but were not reasonably able to do so. This was the basis for their claim
that their business income losses continued to accrue throughout the course of this
litigation. In fact, plaintiffs even claimed that the coverage limit for lost business
income coverage should not apply under these circumstances. As such, the method
that would apply in determining plaintiffs’ property damage was indeterminable
because plaintiffs’ continued to represent that actual repairs would be made—an action
that would affect not only the correct valuation method, but whether damages were
fixed or continuing to accrue.
As to the valuation of lost business income, these same legal positions pursued
by plaintiffs made the method of determining loss business income too uncertain to
justify an award of prejudgment interest. Plaintiffs’ argued in their motions in limine
that the provisions of the contract limiting loss business income to a 120-day
“restoration period” and limiting coverage to $500,000.00 should not apply. (Doc. ##
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338, 339). Thus, there was a real dispute as to the method for determining the amount
of lost business income in controversy because plaintiffs claimed that the methodology
set forth in the parties’ contract should be disregarded.
Similarly, coverage for “extra expenses” was defined in the parties’ contract as
the “necessary expenses you incur during the ‘period of restoration’ that you would not
have incurred” if there had been no loss. Id. Since plaintiffs took the position that the
“period of restoration” limitation as described in the contract should not apply, the
methodology for determining the amount of “extra expense” coverage owed by
defendant was in dispute even after liability for that coverage had been found.
Also, each of these damage categories was uncertain because, as discussed
below, plaintiffs continued to argue that they are entitled to recover damages for
amounts already paid to them by Travelers under a concurrent insurance policy.
Although several courts in Missouri have held that a claim by a defendant creditor for
offset or contribution does not render a damage award unliquidated, e.g. A.G. Edwards
& Sons, Inc. v. Drew, 978 S.W.2d 386, 397 (Mo. Ct. App. 1998), the other insurance
payments made here were paid long before plaintiffs filed this suit. As such, plaintiffs’
position that they were entitled to a double recovery on a single loss—which runs
contrary to well-established Missouri law—created an additional uncertainty as to the
amount to be paid by defendant in the event that plaintiffs were entitled to coverage.
Because the Court finds that plaintiffs’ damages were neither due nor readily
ascertainable prior to the entry of judgment, prejudgment interest is not appropriate
under Mo. Rev. Stat. § 408.020.
In addition to the elements required under § 408.020, Missouri courts have
noted that “[t]he trial court may be guided by equitable principals of justice and
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fairness when determining whether to award prejudgment interest.” City of Sullivan
v. Truckstop Restaurants, Inc., 142 S.W.3d 181, 195 (Mo. Ct. App. 2004) (citing A.G.
Edwards & Sons, Inc., 978 S.W.2d at 396). Equitable principals do not support
plaintiffs’ request for prejudgment interest because the damage-valuations demanded
by plaintiffs were inconsistent with Missouri law. Also compelling from an equitable
standpoint, the amount of damages awarded by the jury ($174,964.00) is less than
the settlement offer of $200,000 made by defendant in February 2005. Thus, this is
not an instance where defendant will “accrue pecuniary benefit unfairly by the simple
expedient of producing conflicting estimates of value.” Columbia Mut. Ins., 258 S.W.3d
at 480.
Deduction of the Travelers’ Payments
Plaintiffs next argue that the Court incorrectly instructed the jury that plaintiffs
were not entitled to damages for losses that were already covered by the payments
Travelers made under a concurrent policy. They claim that the Court should amend its
judgment to reflect the amount of the Travelers’ payments or, in the alternative, grant
them a new trial under Fed. R. Civ. P. 59(a).
The crux of plaintiffs’ argument—that the “collateral source rule” should apply
to preserve the “benefit of the bargain” expected from plaintiffs’ concurrent insurance
policies—ignores Missouri law, as well as the terms of the parties’ contract. Like many
commercial insurance policies, plaintiffs’ policy with defendant contains an “other
insurance” clause.1 An “other insurance clause” is a provision “inserted in insurance

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The provision here states that, if multiple policies cover the same loss,
defendant will only provide coverage in excess of the coverage limit of the other
insurance or, if the other insurance contains a similar provision, the proportion of
the loss in relation to the policies’ respective coverage limits. (Doc. #52-4, p.32).
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policies to vary or limit the insurer's liability when additional, concurrent insurance
exists to cover the same loss.” Farm Bureau Town & Country Ins. Co. of Missouri v.
Am. Alternative Ins. Corp., 347 S.W.3d 525, 532 (Mo. Ct. App. 2011) (quoting Planet
Ins. Co. v. Ertz, 920 S.W.2d 591, 593 (Mo. Ct. App. 1996)). Even if this cause is
discarded as mutually repugnant due to a similar provision in the Travelers policy, the
concurrently-covered losses are “prorated between the insurers as though neither
policy had an ‘other insurance’ clause,” i.e., “in proportion to the amount of coverage
by their respective policies.” Heartland Payment Sys., L.L.C. v. Utica Mut. Ins. Co., 185
S.W.3d 225, 231-32 (Mo. Ct. App. 2006). In the event that one insurer pays more then
their share of a concurrent loss, the other insurer may seek contribution. Id.; Farm
Bureau Town & Country Ins. Co. of Missouri v. Am. Alternative Ins. Corp., 347 S.W.3d
525, 532 (Mo. Ct. App. 2011).
Had plaintiffs received no coverage from either insurer, plaintiffs could have
sought the full amount of loss from each insurer and evidence of the concurrent
coverage offered for the purpose of reducing damages may well have been excluded.
See Heartland Payment Sys., L.L.C., 185 S.W.3d at 232 (“while an insured's right of
recovery is restricted to the actual amount of its loss, this does not bar it from
demanding full coverage from each insurer, as long as its demand is made in good
faith.”). However, since Travelers did not contest coverage and made payments to
plaintiffs prior to the filing of this lawsuit, plaintiffs were not entitled to recover for
those amounts already paid by Travelers for the same loss. As a result, the Court finds
no error with respect to the Travelers payments and plaintiffs’ motions for an amended
judgment or new trial on this basis are without merit.
Accordingly,
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IT IS HEREBY ORDERED that plaintiffs’ motions to alter or amend judgment
and for a new trial [Doc. ##411 and 413] are denied.

____________________________
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 28th day of November, 2012.

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