Jo Ann Howard and Associates, P.C. et al v. Cassity et al
Filing
2508
MEMORANDUM AND ORDER - IT IS HEREBY ORDERED that Plaintiffs' Motion to Amend Judgment to Include Prejudgment Interest under Missouri Revised Statutes Section 408.020 [ECF No. 2388] is DENIED. Signed by District Judge E. Richard Webber on November 20, 2015. (MCB)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
JO ANN HOWARD &
ASSOCIATES, P.C., et al.,
Plaintiffs,
vs.
J. DOUGLAS CASSITY, et al.,
Defendants.
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Case No. 4:09CV01252 ERW
MEMORANDUM AND ORDER
This matter comes before the Court on Plaintiffs’ Motion to Amend Judgment to Include
Prejudgment Interest under Missouri Revised Statutes Section 408.020 [ECF No. 2388].
I.
BACKGROUND
Plaintiffs 1 asserted claims against PNC Bank for breach of fiduciary duty and negligence.
At trial, the jury found Alleigant 2 breached its fiduciary duties as trustee and was negligent. 3 A
jury returned a verdict against PNC Bank awarding Plaintiffs $355,500,000 in compensatory
damages and $35,550,000 in punitive damages. Plaintiffs now seek prejudgment interest on the
entire judgment amount which equals $178,821,369.00. Plaintiffs have also submitted a
supplemental calculation of prejudgment interest in the amount of $54,866,102.00 should the
Court determine Plaintiffs are only entitled to prejudgment interest on claims already paid by the
Special Deputy Receiver.
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Plaintiffs includes Jo Ann Howard, the Special Deputy Receiver of Lincoln Memorial Life Insurance Company,
Memorial Service Life Insurance Company, and National Prearranged Services, Inc., the National Organization of
Life and Health Insurance Guaranty Associations, and the State Guaranty Associations.
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PNC Bank is the successor-in-interest to Allegiant Bank, the tortfeasor.
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The facts as presented at trial are explained more fully in this Court’s Memorandum and Order on PNC Bank’s
Motion for Judgment as a Matter of Law, or in the Alternative, New Trial.
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II.
DISCUSSION
Missouri Revised Statutes § 408.040.3 governs prejudgment interest in tort actions. 4
This statute states “in tort actions, if a claimant has made a demand for payment of a claim or an
offer of settlement of a claim, to the party, parties . . . and the amount of the judgment or order
exceeds the demand for payment or offer of settlement, then prejudgment interest shall be
awarded . . .” Mo. Rev. Stat. § 408.040.3. The statute lists four requirements for a demand or
offer. Id. Both Plaintiffs and PNC Bank agree Plaintiffs have not satisfied the requirements of
this statute and it does not apply. However, a plaintiff may recover prejudgment interest under §
408.020 when “the defendant’s tortious conduct confers a benefit upon the defendant.” Vogel v.
A.G. Edwards & Sons, Inc., 801 S.W.2d 746, 757 (Mo. Ct. App. 1990); see also Ogg v.
Mediacom, LLC, 382 S.W.3d 108, 118 (Mo. Ct. App. 2012). This statute provides:
Creditors shall be allowed to receive interest at the rate of nine percent per
annum, when no other rate is agreed upon, for all moneys after they become due
and payable, on written contracts, and on accounts after they become due and
demand of payment is made; for money recovered for the use of another without
the owner’s knowledge of the receipt, and for all other money due or to become
due for the forbearance of payment whereof an express promise to pay interest
has been made.
Mo. Rev. Stat. § 408.020. The general rule is this statute applies when the amount due is
liquidated. Farmland Indus., Inc. v. Frazier-Parrott Commodities, 111 F.3d 588, 592 (8th Cir.
1997). The amount due is liquidated when it is “fixed and determined or readily ascertainable by
computation or a recognized standard.” Columbia Mut. Ins. Co. v. Long, 258 S.W.3d 469, 480
(Mo. Ct. App. 2008).
Plaintiffs assert they are entitled to prejudgment interest because Allegiant received a
benefit from its tortious conduct. Plaintiffs argue Allegiant’s fees as a trustee, $60,000 per year,
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State law determines prejudgment interest. Swope v. Siegel-Robert, Inc., 243 F.3d 486, 497 (8th Cir. 2001).
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its ability to market itself as a full service bank because of the large NPS trusts it held, and its
avoidance of a $25 million break-up fee in its merger with National City Bank when it passed the
trusts to a successor trustee constitute benefits so as to allow prejudgment interest. PNC Bank
asserts the exception is much narrower than Plaintiffs prescribe. According to PNC Bank, the
exception has been applied only to tort cases in which the defendant wrongfully obtained, used,
or retained the plaintiff’s money or property. There is no case in Missouri which explicitly states
the exception for prejudgment interest is limited as PNC Bank suggests. However, a close look
at the case law reveals the exception has not been applied in any other circumstances.
In Ogg v. Mediacom, LLC, defendant Mediacom, LLC, laid cables on Plaintiffs’ property
through an easement held by the Missouri State Highway and Transportation Commission and an
electric utility company. 382 S.W.3d 108, 111 (Mo. Ct. App. 2012). The Missouri Court of
Appeals for the Western District of Missouri held Mediacom exceeded the scope of the easement
and did not have authority to install the cables without Plaintiffs’ permission. Id. The measure
of damages was the loss in fair market value to the property which was determined through
comparable fiber optic easement transactions introduced by experts. Id., at 118. The Court ruled
prejudgment interest may be recovered because Mediacom benefitted from its trespass on
Plaintiffs’ property.
In Rois v. H.C. Sharp Company, Stephen Rois sought unpaid commissions from his
former employer H.C. Sharp Company. 203 S.W.3d 761, 763 (Mo. Ct. App. 2006). H.C. Sharp
filed a counterclaim against Rois for breach of fiduciary duty seeking the profits Rois diverted to
his own business, Millennium. Id. The trial court ruled Rois breached his fiduciary duties to
H.C. Sharp and granted it prejudgment interest on the profits Rois diverted. Id. The Missouri
Court of Appeals for the Eastern District of Missouri affirmed the trial court stating Rois’ breach
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of fiduciary duty is “tortious conduct which conferred a benefit on him in the form of the profits
Millennium generated to the detriment of [H.C.] Sharp.” Id., at 766.
In Vogel v. A.G. Edwards & Sons, Inc., Plaintiffs hired Fred Prewitt, a stock broker for
A.G. Edwards & Sons to manage Plaintiffs’ investment accounts. 801 S.W.2d 746, 748 (Mo. Ct.
App. 1990). The investment accounts lost a large amount of value during the time Prewitt
managed the accounts. Id. Plaintiffs asserted Prewitt breached his fiduciary duty by trading
excessively in their accounts solely to earn commission, not for the benefit of Plaintiffs. Id.
Plaintiffs characterized this trading as “churning” of their accounts. Id. Plaintiffs won at trial
and were awarded prejudgment interest. Id., at 757. The Missouri Court of Appeals for the
Eastern District of Missouri held recovery of prejudgment interest was appropriate and Plaintiffs
fit into the exception because “[t]he claimed breach of fiduciary duty here is tortious conduct
which would confer a benefit upon Prewitt, the broker; namely, his commissions.” Id. The
measure of damages was the commissions charged on the trades which constituted churning. Id.
In all of these cases, cited by Plaintiffs, the defendants benefitted from the wrongful
obtainment, retention, or use of the plaintiffs’ property or money. Plaintiffs did not cite a case,
and the Court was unable to find a case, where defendants benefitted in some way from their
tortious conduct but did not wrongfully obtain, retain, or use the plaintiff’s property or money.
Here, Allegiant did not wrongfully obtain, retain, or use Plaintiffs’ property and Plaintiffs did not
seek to recover in damages the benefits they allege Allegiant gained from its tortious conduct.
The Court hesitates to expand an exception beyond the reach of the Missouri courts. Especially,
in a situation such as this, where the general rule is prejudgment interest is not allowed in tort
cases and there is a specific statute delineating the procedure a party must follow to obtain
prejudgment interest in tort cases. See Vogel, 801 S.W.2d at 757; Mo. Rev. Stat. § 408.040. If
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the Court were to adopt Plaintiffs’ argument, the exception would subsume the rule and would
allow prejudgment interest in the majority of tort cases, which would effectively nullify the
requirements of the statute. The Court will not award prejudgment interest to Plaintiffs.
Accordingly,
IT IS HEREBY ORDERED that Plaintiffs’ Motion to Amend Judgment to Include
Prejudgment Interest under Missouri Revised Statutes Section 408.020 [ECF No. 2388] is
DENIED.
So Ordered this 20th day of November, 2015.
E. RICHARD WEBBER
SENIOR UNITED STATES DISTRICT JUDGE
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