Utica Mutual Insurance Company v. Clearwater Insurance Company

Filing 130

SUMMARY ORDER - ORDERED that judgment in the amount of $5,947,094.74 plus prejudgment interest in the amount of $941,433.24 be entered in favor of Utica; and it is further ORDERED that Clearwater is obligated to pay all future billings that are consistent with past billings under Reinsurance Contract No. N 21163, within ninety (90) days of the date of each such billing, up to the total amount of $5,000,000 under that Reinsurance Contract (inclusive of amounts that Reinsurance Contract that comprise part of the principal balance of $5,947,094.74); and it is further ORDERED that Clearwater is obligated to pay all future billings that are consistent with past billings under Reinsurance Contract Nos. V-1522, HC-80-0098, and HC-81-0098, within ninety (90) days of the date of each such billing; and it is further ORDERED that the Clerk shall provide a copy of the Summary Order to the parties. Signed by Senior Judge Gary L. Sharpe on 7/14/2016. (jel, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
________________________________
UTICA MUTUAL INSURANCE
COMPANY,
Plaintiff,

6:13-cv-1178
(GLS/TWD)

v.
CLEARWATER INSURANCE
COMPANY,
Defendant.
________________________________
SUMMARY ORDER
Plaintiff Utica Mutual Insurance Company commenced this diversity
action against defendant Clearwater Insurance Company, alleging breach
of contract claims and seeking declaratory relief and damages. (See
generally Compl., Dkt. No. 1.) Clearwater counterclaimed for breach of
contract and sought damages to recoup payment already provided to
Utica. (Dkt. No. 17 ¶¶ 66-70.) On January 20, 2016, the court granted
Utica partial summary judgment, denied Clearwater’s cross motion for
summary judgment on its counterclaim, and dismissed that counterclaim.
(Dkt. No. 106.) Accordingly, the court awarded Utica approximately $5.7

million in principal damages.1
Following entry of partial judgment, (Dkt. No. 108), the parties filed
cross notices of appeal to the Second Circuit. (Dkt. Nos. 115, 117.) Still
pending, however, were issues over the calculation of damages and
prejudgment interest raised by the court sua sponte.2 (Dkt. No. 106 at 25;
Dkt. Nos. 112, 114, 119-22.) On June 16, 2016, the court conducted a
status conference to discuss outstanding damages issues. (Dkt. No. 126.)
At the conclusion of the conference, the parties agreed to discuss
settlement regarding prejudgment interest, (id. at 22-23), however, they
were unable to resolve their disputes, (Dkt. No. 124). As a result, the court
has been left to resolve the outstanding issues and does so as set forth
below.
Under N.Y. C.P.L.R. 5001(a), “[i]nterest shall be recoverable upon a
sum awarded because of a breach of performance of a contract.”3 The
1

The calculation of principal damages is ongoing because Clearwater continues not to
pay Utica’s billings. (Dkt. No. 113 ¶ 1; Dkt. No. 122 at 2 n.1.) At the request of the court, the
parties calculated the principal balance as of July 11, 2016 at $5,947,094.74. (Dkt. No. 129.)
2

Because premature appeals from a nonfinal order do not divest a district court of
jurisdiction, see Dudley ex rel. Estate of Patton v. Penn-Am. Ins. Co., 313 F.3d 662, 664 (2d
Cir. 2002); Cooper v. Salomon Bros. Inc., 1 F.3d 82, 84 (2d Cir. 1993); see also 28 U.S.C.
§ 1291, the court may evaluate the issues of damages.
3

In a case premised on diversity jurisdiction, state law governs the award of
prejudgment interest as a matter of substantive law. See Baker v. Dorfman, 239 F.3d 415,

2

statutory interest rate, which is not disputed by the parties, is nine percent
per annum. See N.Y. C.P.L.R. 5004. When presented with multiple
contract breaches at various times, the court has the discretion to award
interest under one of two calculations. See N.Y. C.P.L.R. 5001(b); see
also Mogil v. Building Essentials, Inc., 129 A.D.3d 1378, 1380 (3d Dep’t
2015); Pac. Westeel, Inc. v. D & R Installation, No. 01Civ.0293, 2003 WL
22359512, at *3 (S.D.N.Y. Oct. 17, 2003) (applying New York law). Under
the first calculation, “interest shall be computed upon each item from the
date it was incurred.” Id. Alternatively, under the second calculation, the
court may opt to award interest “upon all of the damages from a single
reasonable intermediate date.” N.Y. C.P.L.R. 5001(b); Pac. Westeel, Inc.,
2003 WL 22359512, at *3 ((“When precision isn’t practicable, [N.Y.
C.P.L.R. 5001(b)] allows the fact-trier to select a single reasonable
intermediate date from which the interest may be computed on all of the
items together”) (internal quotation marks and citations omitted)).
“‘[W]here damages are incurred at various times after the cause of action
accrues, [N.Y. C.P.L.R.] 5001 grants courts wide discretion in determining

425 (2d Cir. 2000). Here, as noted in the court’s earlier opinions, New York law governs.
(Dkt. No. 54 at 6 n.3; Dkt. No. 106 at 10 n.4.)

3

a reasonable date from which to award pre-judgment interest.’” Wechsler
v. Hunt Health Sys., Ltd., 330 F. Supp. 2d 383, 435 (S.D.N.Y. 2004)
(quoting Conway v. Icahn & Co., 16 F.3d 504, 512 (2d Cir. 1994)); see
Koylum, Inc. v. Peksen Realty Corp., 357 F. Supp. 2d 593, 596 (E.D.N.Y.
2005).
As recognized by the parties, this case presents a difficult
prejudgment interest calculation. There are nearly forty breaches, and the
parties dispute the length of the billing grace period, whether interest is
owed on Clearwater’s pre-litigation partial payments, and how to account
for Utica’s September 2015 credit. (See generally Dkt. Nos. 119-22.) After
considering the complexities presented under the first calculation, the court
opts to use the second calculation and select a single reasonable
intermediate date. Accordingly, prejudgment interest shall run from the
midpoint between ninety days after the oldest unpaid billing of November 2,
2012 and ninety days after the most recent unpaid billing of March 22,
20164 through July 14, 2016, the date of this order. Ninety days after the
dates of the billings are January 31, 2013 and June 20, 2016, respectively.

4

The parties agree that the most recent billing is dated March 22, 2016. (Dkt.

No. 129.)

4

The midpoint between these two dates is October 11, 2014. Interest, on
the principal amount of $5,947,094.74 from October 11, 2014 to July 14,
2016 at the nine percent rate, amounts to $941,433.24.
This calculation is consistent with other cases in which courts are
tasked to determine a single reasonable intermediate date, see Oy Saimaa
Lines Logistics Ltd. v. Mozaica-New York, Inc., 193 F.R.D. 87, 91
(E.D.N.Y. 2000) (collecting cases), without overly burdening the court to
engage in a complicated formula after providing the parties with the
opportunity settle this issue amongst themselves.
Accordingly, it is hereby
ORDERED that judgment in the amount of $5,947,094.74 plus
prejudgment interest in the amount of $941,433.24 be entered in favor of
Utica; and it is further
ORDERED that Clearwater is obligated to pay all future billings that
are consistent with past billings under Reinsurance Contract No. N 21163,
within ninety (90) days of the date of each such billing, up to the total
amount of $5,000,000 under that Reinsurance Contract (inclusive of
amounts that Reinsurance Contract that comprise part of the principal
balance of $5,947,094.74); and it is further
5

ORDERED that Clearwater is obligated to pay all future billings that
are consistent with past billings under Reinsurance Contract Nos. V-1522,
HC-80-0098, and HC-81-0098, within ninety (90) days of the date of each
such billing; and it is further
ORDERED that the Clerk shall provide a copy of the Summary Order
to the parties.
IT IS SO ORDERED.
July 14, 2016
Albany, New York

6