Todd Shipyards Corp. v. Turbine Service, Inc.

592 F. Supp. 380, 1984 U.S. Dist. LEXIS 24765
CourtDistrict Court, E.D. Louisiana
DecidedJuly 27, 1984
DocketCiv. A. 75-1825, 75-2719
StatusPublished
Cited by15 cases

This text of 592 F. Supp. 380 (Todd Shipyards Corp. v. Turbine Service, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Todd Shipyards Corp. v. Turbine Service, Inc., 592 F. Supp. 380, 1984 U.S. Dist. LEXIS 24765 (E.D. La. 1984).

Opinion

OPINION ON REMAND

CASSIBRY, Senior District Judge:

The holding of this court was affirmed in part, modified in part, reversed in part, and remanded for further proceedings not inconsistent with the opinion in Todd Shipyards Corporation v. Turbine Service, Inc., 674 F.2d 401 (5th Cir.1982). On September 22, 1983, this court rendered its opinion on remand and ordered counsel for Auto to prepare a judgment consistent with *384 the court’s opinion. 1 The decision of the court and the proposed judgment subsequently presented to the court by Auto precipitated a rush of correspondence from the parties to the court. These communications from the parties called the court’s attention to certain oversights or omissions in its opinion on remand, for which the court is grateful. In addition to performing this service, the parties chose to devote the greater part of their correspondence to a belated effort to press their positions upon the court again, an attempt singularly inappropriate at this stage of this protracted litigation. Nevertheless, in an effort to send this matter to its deserved, and long-overdue, rest, the court sifted through all of these contentions with renewed care. This review now having been completed, the court has determined to modify, in the interest of clarity and finality, the opinion on remand it rendered on September 22, 1983. Accordingly, the court hereby orders its opinion on remand of September 22, 1983 WITHDRAWN and REPLACED by this opinion on remand, as rendered this date.

I. THE ISSUES ON REMAND

This court is instructed to resolve, upon remand, the following issues:

(1) The effect of the holding by the Court of Appeals that the red-letter clause in the Todd Shipyards Corporation (“Todd”) contract limited Todd’s liability for negligence or breach of contract to $300,000; ■
(2) the effect of the reduction of loss of use damage by the Court of Appeals to the amount of $498,000;
(3) the amount of pre-judgment interest that this court must award;
(4) the amount the damage awards against Travelers Insurance Company (“Travelers”) and Sentry Insurance Company (“Sentry”) must be reduced due to the holding by the Court of Appeals that Travelers and Sentry are not liable for any costs incurred in repairing and replacing the work product of their insureds, including the cost of inspecting, crating, shipping, and reinstalling the LP turbine, 674 F.2d at 423; and
(5) the final determination of damages with respect to all parties considering all of the above adjustments to the original opinion and award.

Items 1, 2, and 5 concern adjustments and recalculations to be made in the damage awards in accordance with the opinion of the Court of Appeals, but require no new findings of fact or conclusions of law. The recalculated awards are set forth in the Allocation of Damage Awards table which appears at the conclusion of this section.

A. PRE-JUDGMENT INTEREST

Stating that the award of prejudgment interest is the rule rather than the exception, the Court of Appeals directed this court to calculate and award prejudgment interest. 674 F.2d at 415-16. The purpose behind an award of pre-judgment interest, in admiralty cases as elsewhere, is to compensate a claimant for the loss of use of funds to which he is rightfully entitled. 674 F.2d at 415, quoting Noritake Co. v. M/V Hellenic Champion, 627 F.2d 724, 728 (5th Cir.1980). Before it can calculate the award of pre-judgment interest, however, this court must first answer three questions. These are: (1) what rate of interest to use; (2) whether to calculate interest on a simple or a compound basis; and (3) the date from which pre-judgment interest should run.

1. The Rate of Interest

Since pre-judgment interest is awarded as compensation for the use of funds wrongfully withheld, admiralty courts have discretion in setting the rate of pre-judgment interest. Platoro Ltd., Inc. v. Unidentified Remains, etc., 695 F.2d *385 893, 906-07 (5th Cir.1983); In re M/V Vulcan, 553 F.2d 489, 491 (5th Cir.1977). Admiralty courts may be guided by state law in setting the rate of pre-judgment interest, but they are not bound by it. Platoro, 695 F.2d at 907; Signal Oil & Gas Co. v. Barge W-701, 654 F.2d 1164, 1177 (5th Cir. Unit A, 1981). In calculating the awards of pre-judgment interest, I have made use of the current state statutory rates, as set forth in Article 2924 of the Louisiana Civil Code. 2 Todd has been pending during each of the three periods delineated by the legislature, and I find the most reasonable construction and application of Article 2924 to be the following: the rate of interest shall be seven percent from the date the loss was sustained through September 11, 1980; ten percent from September 12, 1980 through September 11, 1981; and twelve percent from September 12, 1981.

Auto has urged the court to use the prime rate, as evinced by certain commonly accepted interest rate schedules, as the appropriate touchstone in its calculations. The problem with Auto’s position is quite simple: it has introduced no proof that it borrowed any money and incurred higher costs. See Signal Oil, 654 F.2d at 1177. In the absence of such proof, I am unpersuaded that nothing short of the prime rate will grant Auto (and other parties) “full and fair” compensation and have determined to employ the rates of interest fixed by Article 2924.

2. The Method of Calculation of PreJudgment Interest

The rates of interest having been selected, the next question is whether interest should be calculated on a simple or compound basis. In view of the inordinate duration of this litigation and the uncommonly high rates of return available to investors over the principal part of this same time period, I have determined that full and fair compensation is more nearly achieved by a calculation of interest on a compound basis. See King Fisher Marine Service, Inc. v. NP Sunbonnet, 724 F.2d 1181, 1187 (5th Cir.1984). Accordingly, interest on the principal sums due and owing has been compounded daily, at the statutory rate then in effect, up to the date of September 1, 1983. I deem simple interest at the statutory rate of 12% sufficiently compensatory to be employed thereafter. The Allocation of Damage Awards table sets forth the amount of interest to be added to each figure of recovery for each day after September 1, 1983 until the date of entry of judgment.

3. The Dates from which Pre-Judgment Interest Runs

In general, an award of pre-judgment interest is calculated from the date the loss was sustained. In re M/V Vulcan,

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592 F. Supp. 380, 1984 U.S. Dist. LEXIS 24765, Counsel Stack Legal Research, https://law.counselstack.com/opinion/todd-shipyards-corp-v-turbine-service-inc-laed-1984.