Zurich American Insurance Company et al v. Intermodal Maintenance Services, Inc.
Filing
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ORDER granting Plaintiffs' 78 Motion for Prejudgment Interest. Signed by Judge Howard D. McKibben on 9/3/2015. (Copies have been distributed pursuant to the NEF - KR)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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ZURICH AMERICAN INSURANCE
COMPANY, a foreign corporation,
individually and as subrogee for
its insureds UNION PACIFIC
RAILROAD COMPANY AND UNION
PACIFIC MOTOR FREIGHT COMPANY;
DISCOVER PROPERTY & CASUALTY
INSURANCE COMPANY, a foreign
corporation, individually and as
subrogee for its insureds UNION
PACIFIC RAILROAD COMPANY and
UNION PACIFIC MOTOR FREIGHT
COMPANY,
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3:13-cv-00512-HDM-VPC
ORDER
Plaintiffs,
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vs.
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INTERMODAL MAINTENANCE SERVICES,
INC., a foreign corporation; DOES
I-X, inclusive; and ROE INSURANCE
COMPANIES XI-XX, inclusive; and
MOE CORPORATIONS XXI-XXX,
inclusive,
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Defendants.
_________________________________
Before the court is plaintiffs Zurich American Insurance
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Company and Discover Property & Casualty Insurance Company’s
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(“plaintiffs”) motion for prejudgment interest, filed April 16,
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2015 (#78). Defendant Intermodal Maintenance Services (“defendant”)
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filed a response (#79) and plaintiffs replied. (#80).
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Background
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The present action involves claims of indemnity and
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contribution in a subrogation matter stemming from an underlying
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action for personal injuries sustained by Bert Brasher, a truck
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driver for Devine Intermodal. Plaintiffs were the defending and
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indemnifying insurance companies for Union Pacific Motor Freight
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Company and Union Pacific Corporation. That action was resolved in
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the Second Judicial District Court for the State of Nevada in and
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for the County of Washoe, when plaintiffs paid a total settlement
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of $2,000,000 to Bert and Linda Brasher.
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On September 18, 2013, plaintiffs filed the instant complaint
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asserting claims for relief for Breach of Contract, Express
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Indemnity, Implied and Equitable Indemnity, and Contribution. The
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parties submitted cross-motions for summary judgment and at a
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hearing on February 26, 2015, the court granted summary judgment in
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favor of plaintiffs on the express indemnity and breach of contract
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claims. A written order was filed on March 20, 2015. Judgment was
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rendered in the amount of $2,589,313, which represents the
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$2,000,000 settlement payment to the Brashers and $589,313 in
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attorneys’ fees and costs plaintiffs incurred in the underlying
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case. Defendant filed a notice of appeal on April 10, 2015.
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The Motion
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Plaintiffs move for prejudgment interest. Defendant asserts:
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1) the court has no jurisdiction to hear the motion; 2) plaintiffs’
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motion is untimely; 3) courts have discretion to choose whether
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state or federal prejudgment interest rules apply in the event of a
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conflict between state and federal laws; 4) plaintiffs never filed
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and/or served an offer of settlement and therefore cannot recover
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prejudgment interest under Neb. Rev. Stat. 45-103.2 Section 1; 5)
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the $2,000,000 settlement paid to underlying plaintiff Bert Brasher
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was not a liquidated claim; and 6) as the ramp contractor agreement
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is silent as to prejudgment interest and the parties never
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stipulated to prejudgment interest, none should be awarded.
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Analysis
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A) Jurisdiction
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Preliminarily, the court must determine whether it has
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jurisdiction to consider the motion brought by plaintiffs.
“[A] postjudgment motion for discretionary prejudgment
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interest constitutes a motion to alter or amend the judgment under
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Rule 59(e).” Osterneck v. Whinney, 489 U.S. 169, 175 (1989).
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Defendants contend that by filing their notice of appeal, they
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divested this court of jurisdiction; however, “if a party files a
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notice of appeal after the court announces or enters a judgment -
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but before it disposes of a [motion under Rule 59(e)] - the notice
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becomes effective . . . when the order disposing of the last such
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remaining motion is entered.” FED. R. APP. P. 4(B)(i). Therefore,
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defendant’s notice of appeal does not transfer jurisdiction to the
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court of appeals until after this court adjudicates any timely
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brought motion to alter or amend the judgment.
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Plaintiffs had 28 days from the entry of judgment to file
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their motion. “A motion to alter or amend a judgment must be filed
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no later than 28 days after the entry of the judgment.” Fed. R.
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Civ. P. 59(e).1 Plaintiffs timely filed their motion on April 16,
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The 2009 Amendments to FRCP 59 extended the period for post-judgment
motions to be filed from 10 days to 28 days.
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2015.2
Defendant asserts the window for filing a motion pursuant to
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FRCP 59(e) is ten days under the holding of McCalla v. Royal
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MacCabees Life Ins. Co., 369 F.3d 1128 (9th Cir. 2004). McCalla was
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decided prior to the 2009 amendments to FRCP 59, which extended the
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time from 10 days to 28 days. In McCalla, the court found a motion
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for prejudgment interest should be considered a motion to alter or
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amend the judgment pursuant to FRCP 59(e). Id. The ten day time
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limit is mentioned only in the context of it being the time limit
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enumerated in the rule. Id. at 1130. Consequently, the court finds
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the 28 day time limit created by the 2009 amendments does not
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conflict with circuit precedent. Accordingly, the court has
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jurisdiction to consider plaintiff’s motion.
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B) Choice of Law
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Plaintiffs contend the choice of law provision of the contract
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requires the application of Nebraska law, and that using Nebraska
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law is also consistent with this court’s previous order concerning
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the parties’ motions for summary judgment. Defendant asserts it is
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unclear whether state or federal law should apply to this case, and
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therefore federal law should be applied.
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State law generally governs awards of prejudgment interest in
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diversity cases, unless the “substantive claim derives from federal
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law alone.” Oak Harbor Freight Lines, Inc. v. Sears Roebuck, & Co.,
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513 F.3d 949, 961 (9th Cir. 2008). The Ninth Circuit has found that
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when an action arises under diversity jurisdiction, the prejudgment
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interest is evaluated under state law, as it is substantive in
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Judgment was entered on March 20, 2015. Plaintiffs had until April 17,
2015, to file their motion.
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nature.
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1991); In re Exxon Valdez, 484 F.3d 1098, 1101 (9th Cir. 2007).
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Once a federal court determines the request is for prejudgment
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interest, it should look to the choice of law principles of the
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forum state when determining which state law to applies. Klaxon Co.
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v. Stentor Electric Mfg. Co., 313 U.S. 487, 496-97 (1941).
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See Lund v. Albrecht, 936 F.2d 459, 464-65 (9th
Cir.
In looking at state law, Nevada consistently upholds
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contractual provisions such as the Nebraska choice of law provision
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contained in the subject contract. In Nevada, courts “routinely
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honor contractual choice of law provisions.” Rio Properties, Inc.
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v. Stewart Annoyances, Ltd., 420 F.Supp.2d 1127, 1130-31 (D. Nev.
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2006) (citing Engel v. Ernst, 102 Nev. 390 (1986)). Furthermore,
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the defendant has not alleged that the contract or the choice-of-
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law clause is invalid.
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This court applied Nebraska law when considering the parties’
summary judgment motions:
Here, applying the Restatement’s conflict of law provision,
the court finds (1) there is no evidence that Nebraska
governing law was selected in anything other than good faith
between the parties; (2) Nebraska has a substantial relation
to the transaction because Union Pacific is headquartered in
Nebraska; and (3) applying Nebraska’s statute of limitations
comports with Nevada’s recognized public interest in
recognizing freedom to contract. Therefore, the court
concludes Nebraska’s statute of limitations applies to this
case.
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#71 at 11; 11-19. Moreover, defendant’s attorney conceded during
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the hearing on the summary judgment motion that Nebraska law should
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govern the statute of limitations issue. He stated that Nebraska
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was “the choice of law selected by Union Pacific in the contract
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that they drafted. Matter of fact, their contract specifically says
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that these types of lawsuits had to be brought in Nebraska, and
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would certainly suggest that they had a definite intent that all
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laws associated with Nebraska would be applied.” #81 at 28; 1-8.
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Therefore, the court concludes that Nebraska law governs the
issue of prejudgment interest.
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C) Applicable Nebraska Law
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Plaintiffs assert the prejudgment interest rate under Nebraska
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law is 12 percent per annum. Defendant asserts Nebraska law does
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not permit the recovery of prejudgment interest on claims that
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involve unliquidated claims, and as the instant case involves such
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an unliquidated claim, plaintiffs may not recover prejudgment
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interest.
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Under Nebraska law, a claim is liquidated when there is “no
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reasonable controversy as to both the amount due and the
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plaintiff’s right to recover.” Brook Valley, 285 Neb. at 172-73.
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This inquiry is “two-pronged” and there must be no reasonable
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controversy on either issue. Gerhold Concrete Co., Inc. v. St. Paul
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Fire and Marine Ins. Co., 269 Neb. 692, 701 (2005); see also BSB
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Const., Inc. v. Pinnacle Bank, 278 Neb. 1027, 1044 (2009).
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The court concludes the claim in this case is liquidated.
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During the motion for summary judgment hearing filed on June 6,
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2015, the court found that defendant failed to “assert that there
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are any material issue of fact in dispute on the amount of damages
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that were recovered in the underlying claim . . . .” at 48-49. In
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the response to plaintiff’s motion for prejudgment interest,
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defendant presents no further evidence or argument in regard to the
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specific amount due to plaintiffs, but instead focuses on the
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issues currently on appeal in the Ninth Circuit concerning active
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negligence and spoilation of evidence. #79 at 11. Defendant thereby
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disputes whether it is required to pay the judgment, but does not
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question the specific amount involved.
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Additionally, it is undisputed that plaintiffs paid a
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settlement of $2,000,000 to the Brashers in the underlying action
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on March 13, 2013. As no reasonable controversy exists as to the
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amount due to plaintiffs, and plaintiffs are entitled to
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prejudgment interest at a rate of 12 percent per annum.
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4) Pre-Judgment Interest Rate
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Defendant contends that because the original contract does not
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address the rate of prejudgment interest and the parties did not
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stipulate to it, plaintiffs should not be allowed to collect
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prejudgment interest. Plaintiffs assert there is no requirement
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that the parties stipulate to an interest rate in the contract, and
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that they are entitled to prejudgment interest from the date the
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cause of action arose until the entry of judgment pursuant to
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Nebraska law.
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Prejudgment interest for a liquidated claim runs from the
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“date the cause of action arose until the entry of judgment.” Neb.
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Rev. Stat. § 45-103.02(2) (2014).
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otherwise agreed, interest shall be allowed at the rate of twelve
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percent per annum on money due on any instrument in writing...”
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Neb. Rev. St. § 45-104 (2014). In Knox v. Cook, the court
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determined that even though the lease in question did not specify a
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prejudgment interest rate, Neb. Rev. § 45-104 applied and the
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prejudgment interest rate would be twelve percent. Knox v. Cook,
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233 Neb. 387, 395 (1989); see also Valley County School Dist. 88-
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0005 v. Ericson State Bank, 18 Neb.App. 624, 628 (2010) (finding
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that “because no interest rate had otherwise been agreed upon, the
Nebraska law provides, “unless
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statutory default rate of 12 percent per annum applied.”)
Consequently, as the contract here does not contain an agreed-
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upon prejudgment interest rate, the court may use the default
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statutory rate. Under Neb. Rev. St. § 45-104, interest is due at a
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rate of twelve percent per annum “on an instrument in writing,”
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which in this case is the contract between the two parties.
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Conclusion
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Accordingly, and based on the foregoing, plaintiffs Zurich
American Insurance Company and Discover Property & Casualty
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Insurance Company’s motion for prejudgment interest (#78) is
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GRANTED. Prejudgment interest shall be at the rate of twelve
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percent per annum from the date the $2,000,000 was paid by
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plaintiffs, until March 20, 2015, the date of judgment in this
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action.
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IT IS SO ORDERED.
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DATED: This 3rd day of September, 2015.
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____________________________
UNITED STATES DISTRICT JUDGE
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