Travelers Property Casualty Company of America v. Jet Midwest Technik

IN THE UNITED STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF MISSOURI

ST. JOSEPH DIVISION

TRAVELERS PROPERTY CASUALTY )

COMPANY OF AMERICA, )

)

Plaintiff, )

)

vs. ) Case No. 16-06084-CV-SJ-ODS

)

JET MIDWEST TECHNIK, INC., )

)

Defendant. )

ORDER (1) GRANTING PLAINTIFF’S MOTION FOR AWARD OF STATUTORY

PREJUDGMENT AND POSTJUDGMENT INTEREST, AND (2) AWARDING

PLAINTIFF PREJUDGMENT AND POSTJUDGMENT INTEREST

On February 6, 2019, the jury returned a verdict in favor of Plaintiff in the amount

of $416,714.00. Doc. #140. On February 12, 2019, Plaintiff filed a motion for award of

statutory prejudgment and postjudgment interest. Doc. #141. For the reasons stated

below, Plaintiff’s motion is granted.

I. PREJUDGMENT INTEREST

Plaintiff argues it is entitled to prejudgment interest at nine percent per annum

from the premium due date, March 27, 2014. Docs. #141, 142. State law governs the

issue of prejudgment interest in diversity actions. See Reliance Ins. Co. v. Chitwood,

433 F.3d 660, 665-66 (8th Cir. 2006). “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…after they become due and

demand of payment is made….” Mo. Rev. Stat. § 408.020.1 Section 408.020 applies to

insurance policies. Schultz v. Queen Ins. Co., 399 S.W.2d 230, 236 (Mo. Ct. App.

1965). “Interest has traditionally been used to compensate for the use or loss of use of

money to which a person is entitled.” Travelers Prop. Cas. Ins. Co. of Am. v. Nat’l

1 The parties cite and rely on Missouri law. The Court will do the same.

Union Ins. Co. of Pittsburgh, 735 F.3d 993, 1004-05 (8th Cir. 2013) (quoting Catron v.

Columbia Mut. Ins. Co., 723 S.W.2d 5, 7 (Mo. banc 1987)). Missouri courts award

prejudgment interest if three elements are satisfied: (1) the expenses must be due and

payable; (2) the claim must be liquidated or the amount of the claim must be reasonably

ascertainable; and (3) the obligee must make a demand on the obligor for the amount

due. Barkley, Inc. v. Gabriel Bros., Inc., 829 F.3d 1030, 1039 (8th Cir. 2016) (quoting

Jablonski v. Barton Mut. Ins. Co., 291 S.W.3d 345, 350 (Mo. Ct. App. 2010)).

A. Due and Payable

Prejudgment interest can only be awarded on “moneys after they become due

and payable.” Mo. Rev. Stat. § 408.020. Defendant argues no moneys were “due”

under the terms of the insurance policy until resolution of the parties’ disputes regarding

interpretation and application of the residual market rules. Defendant claims it had the

right to dispute Plaintiff’s bill and had no obligation to pay disputed amounts.

“On a breach of a contract claim, interest ordinarily runs from the date of the

breach or the time when payment was due under the contract.” Travelers Commercial

Cas. Co. v. Vac-It-All Servs., Inc., 451 S.W.3d 301, 313 (Mo. Ct. App. 2014) (citation

omitted). Here, the jury found Defendant breached the insurance contract by failing to

pay the additional premium. The parties agree Plaintiff demanded the additional

premium following the final audit by way of Plaintiff’s March 7, 2014 invoice, which

demanded Defendant pay the additional premium by March 27, 2014. Doc. #141-1.

Therefore, the additional premium became due and payable on March 27, 2014.

B. Liquidated or Reasonably Ascertainable

For an award of prejudgment interest, there must be a liquidated claim or the

amount of the claim must be reasonably ascertainable. McKinney v. State Farm Mut.

Ins., 123 S.W.3d 242, 250 (Mo. Ct. App. 2003). “A liquidated claim is one which is fixed

and determined or readily ascertainable by computation or a recognized standard.” Id.

(quoting Schnucks Carrollton Corp. v. Bridgeton Health & Fitness, Inc., 884 S.W.2d 733,

740 (Mo. Ct. App. 1994)). The denial of prejudgment interest for unliquidated claims “is

based, generally, on the idea that where the person liable does not know the amount he

owes he should not be considered in default because of failure to pay.” Fohn v. Title

Ins. Corp. of St. Louis, 529 S.W.2d 1, 5 (Mo. banc 1975). Missouri courts have held

damages are not liquidated when the method used to calculate damages was genuinely

disputed. See Fohn, 529 S.W.2d at 4, 5; see also Ritter Landscaping, Inc. v. Meeks,

950 S.W.2d 495, 497 (Mo. Ct. App. 1997). Missouri courts have also found damages to

be unliquidated where the resolution of a claim or defense is necessary before damages

can be calculated. See Children Int’l v. Ammon Painting Co., 215 S.W.3d 194, 205 (Mo.

Ct. App. 2006).

But Missouri courts have granted prejudgment interest, despite a dispute over

the measure of damages, where the alternative measures offered by the defendant

were not supported by evidence at trial. McNeil v. City of Kan. City, 459 S.W.3d 509,

517 (Mo. Ct. App. 2015) (affirming the decision to grant prejudgment interest when the

amount of damages was disputed but the parties agreed on the proper method for

calculating damages); Comens v. SSM St. Charles Clinic Med. Grp., Inc., 335 S.W.3d

76, 81-82 (Mo. Ct. App. 2011) (affirming the decision to grant prejudgment interest

because the defendant’s suggested alternative measures to calculate damages were

not supported by evidence); Watters v. Travel Guard Int’l, 136 S.W.3d 100, 104-05, 111

(Mo. Ct. App. 2004) (finding prejudgment interest was properly granted where the

parties disputed liability but the amount of damages was “readily determinable and

ascertainable by simple computation”).

Defendant argues the claim was unliquidated because it disputed Plaintiff’s claim

and method of calculating the premium. According to Defendant, resolution of multiple

issues regarding Missouri law as well as interpretation and application of the residual

market rules was necessary before liability or damages could be ascertained.

Defendant claims that through the time of trial, it did not know the amount it owed, if

anything. Plaintiff opposes this argument, claiming its March 7, 2014 invoice provided

the exact amount Defendant owed.

“The mere fact that a party denies liability or defends a claim against [it], or even

the existence of a bona fide dispute as to the amount of the indebtedness, does not

preclude recovery of interest.” Comens, 335 S.W.3d at 82 (citations omitted). “To hold

otherwise would allow the opposing party to accrue pecuniary benefit unfairly by the

simple expedient of producing conflicting estimates of value.” Id. (citations omitted).

Further, “[a]n exact calculation of damages need not be presented in order for the claim

to be considered liquidated.” Macheca Transp. Co. v. Philadelphia Indem. Ins. Co., 737

F.3d 1188, 1197 (8th Cir. 2013) (quoting Comens, 335 S.W.3d at 82). “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.” Id. (quoting Comens, 335 S.W.3d at

82).

Here, Defendant did not provide evidence supporting a different calculation of the

loss. At trial, both parties agreed the proper measure of damages was the number of

payroll dollars multiplied by the applicable rate, which is determined by the

corresponding classification code. From March 2014 through the jury’s verdict in

February 2019, Plaintiff consistently maintained how much additional premium

Defendant owed, and the evidence presented at trial supported Plaintiff’s calculation.

Under the circumstances, the amount of premium Defendant owed was readily

ascertainable by recognized standards, and therefore, Plaintiff has satisfied the second

element for an award of prejudgment interest. See Jablonski, 291 S.W.3d at 350-51.

C. Demand for Payment

Defendant argues Plaintiff’s March 7, 2014 invoice was not a demand for

payment because Defendant advised Plaintiff of its right to dispute the invoice, and

therefore, it was not obligated to pay the disputed amount. Defendant further contends

the jury determined Plaintiff’s March 7, 2014 invoice at trial was incorrect and did not

reflect the final premium. Finally, Defendant maintains Plaintiff’s March 7, 2014 invoice

left doubt as to when and how much payment was due. Plaintiff argues the amount of

premium Defendant owed was consistent. And Defendant’s additional $65,000

payment after it received the March 7, 2014 invoice evidences the March 7, 2014

invoice was a demand for payment.

“The demand for payment need not be in any certain form, but it must be definite

as to amount and time.” Ogg v. Mediacom, LLC, 382 S.W.3d 108, 119 (Mo. Ct. App.

2012) (quoting Rois v. H.C. Sharp Co., 203 S.W.3d 761, 767 (Mo. Ct. App. 2009)).

Here, the March 7, 2014 invoice informed Defendant the “amount is due and payable

upon receipt of this invoice.” Doc. #141-1. Further, the invoice stated: “Payment must

be received by March 27, 2014.” Id. Therefore, the March 7, 2014 invoice was definite

as to amount and time Defendant’s payment was due.

It is not relevant the jury awarded less than the amount Plaintiff sought. “That the

ultimate award was less than the amount requested does not preclude an award of

prejudgment interest on the ascertained damages.” Vac-It-All Services, 451 S.W.3d at

313 (citing Watters, 136 S.W.3d at 111). Therefore, Plaintiff’s March 7, 2014 invoice is

a demand for payment under Missouri law.

D. Equitable Principles of Fairness and Justice

Defendant argues if the Court finds prejudgment interest should be awarded, the

amount should be substantially curtailed pursuant to equitable principles of fairness and

justice. “As a general rule, an award of prejudgment interest in a case where § 408.020

is applicable is not a matter of court discretion; it is compelled.” Emmenegger v. Bull

Moose Tube Co., 324 F.3d 616, 624 (8th Cir. 2003) (citation and internal quotations

omitted). “Equitable principles of fairness and justice may not be considered when

awarding prejudgment interest on a liquidated demand.” Id. (quoting Huffstutter v. Mich.

Mut. Ins. Co., 778 S.W.2d 391, 395 (Mo. Ct. App. 1989)).

Defendant argues prejudgment interest should not begin to run until July 31,

2018, when the Eighth Circuit reversed this Court’s dismissal of Plaintiff’s lawsuit for

lack of subject matter jurisdiction. According to Defendant, prior to that time, “there

plainly was a dispute and uncertainty as to the method used to calculate damages;

specifically, whether the Review Board’s ruling was binding on Travelers.” Doc. #143,

at 7. In the alternative, Defendant argues prejudgment interest should not begin to run

until July 7, 2016, when Plaintiff filed its Complaint.

Section 408.020 does not allow for equitable adjustments but mandates

prejudgment interest at the fixed rate of nine percent from the time payment is due.

Under the statute, prejudgment interest in actions for breach of contract accrues “from

the date of the breach or the time when payment was due under the contract, not from

the time when suit for breach of that contract was filed.” Emmenegger, 324 F.3d at 624-

25 (citations omitted). To do as Defendant suggests – ordering no prejudgment interest

for more than two or four years after premium payment was due –-would frustrate the

key purpose of prejudgment interest under Missouri law: “to compensate for the failure

to pay a liquidated amount when due.” Prof’l Ins. Managers, Inc. v. RCA Mut. Ins. Co.,

884 S.W.2d 332, 338 (Mo. Ct. App. 1994). Defendant has had the benefit of monies

belonging to Plaintiff since 2014, and Plaintiff is entitled to compensation for its loss of

use of those funds.

Plaintiff made a fixed demand for payment, money was due, and the amount was

liquidated or reasonably ascertainable. Accordingly, Plaintiff’s motion for prejudgment

interest is granted. Plaintiff is entitled to prejudgment interest at a rate of nine percent,

running from March 27, 2014, and ending on the date the final judgment is entered in

this matter.

II. POSTJUDGMENT INTEREST

Plaintiff requests the Court’s final judgment specifically provide for postjudgment interest

in accordance with 28 U.S.C. § 1961(a). Defendant did not respond to Plaintiff’s

request for postjudgment interest. See Doc. #143. Federal law governs the issue of

postjudgment interest. Travelers Prop. Cas., 735 F.3d at 1007. “Interest shall be

allowed on any money judgment in a civil case recovered in a district court.” 28 U.S.C.

§ 1961(a). The statute calculates postjudgment interest “from the date of the entry of

the judgment, at a rate equal to the weekly average 1-year constant maturity Treasury

yield, as published by the Board of Governors of the Federal Reserve System, for the

calendar week preceding . . . the date of the judgment.” Id. Accordingly, Plaintiff’s

motion for postjudgment interest is granted. Plaintiff is entitled to postjudgment interest

at the legal rate set by 28 U.S.C § 1961 to accrue from the date the final judgment is

entered by this Court.

III. CONCLUSION

For the foregoing reasons, Plaintiff’s motion for prejudgment and postjudgment

interest is granted. The Clerk of Court is directed to enter a final judgment awarding

Plaintiff $416,714.00 from Defendant, with prejudgment interest at a rate of nine percent

per annum from March 27, 2014, to accrue until the date of entry of the final judgment,

and postjudgment interest at the legal rate pursuant to 28 U.S.C. § 1961 to accrue from

the date of the final judgment.

IT IS SO ORDERED.

/s/ Ortrie D. Smith

DATE: June 7, 2019 ORTRIE D. SMITH, SENIOR JUDGE

UNITED STATES DISTRICT COURT