Hansen v. Rothaus

• Decision Date: 24 December 1986
• Docket Number: No. 52104-2
• Citation: Hansen v. Rothaus, 107 Wn.2d 468, 730 P.2d 662 (Wash. 1986)
• Court: Washington Supreme Court
• Parties: Harold HANSEN; Severin Hjelle; Sigried K., Inc.; Matthew Ebert; Vladmir Seman; Einar H. Pedersen; Ole Hendricks; Larry Hendricks; Sig Hendricks; and Robert E. Resoff, Appellants, and Karl Kaldestad; Kevin Kaldestad; Nils Brekka; Jeff P. Hendricks; Bill Osborn; William Grobschmidt; Leonard Sund; Sea Pacific, Inc., Jeff P. Hendricks, Inc.; Nations Enterprises, Inc.; and Biernes Enterprises, Inc., Plaintiffs, v. James ROTHAUS, Defendant, and Fred A. Tucker, Fred A. Tucker & Company, Inc.; and Inapro, Respondents.

Page 468

107 Wn.2d 468

730 P.2d 662

Harold HANSEN; Severin Hjelle; Sigried K., Inc.; Matthew Ebert; Vladmir Seman; Einar H. Pedersen; Ole Hendricks; Larry Hendricks; Sig Hendricks; and Robert E Resoff, Appellants and Karl Kaldestad; Kevin Kaldestad; Nils Brekka; Jeff P Hendricks; Bill Osborn; William Grobschmidt; Leonard Sund; Sea Pacific, Inc., Jeff P. Hendricks, Inc.; Nations Enterprises, Inc.; and Biernes Enterprises, Inc., Plaintiffs, v. James ROTHAUS, Defendant and Fred A. Tucker, Fred A. Tucker & Company, Inc.; and Inapro, Respondents.

No. 52104-2.

Supreme Court of Washington, En Banc.

Dec. 24, 1986.

Mikkelborg, Broz, Wells, Fryer & Yates, Douglas M. Fryer, Jeffrey L. Jernegan, Seattle, for appellants.

Lane, Powell, Moss & Miller, Andrew L. Seiple, Seattle, for respondent Fred A. Tucker & Co.

Merrick, Hofstedt & Lindsey, P.S., Allan H. Baris, Nancy K. McCoid, Seattle, for respondent Inapro.

Keith L. Kessler, amicus curiae, for appellants.

BRACHTENBACH, Justice.

The issue is whether appellant vessel owners are entitled to prejudgment interest on agreed damages. The vessel owners sued respondent insurance brokers for damages allegedly suffered as a result of the brokers' failure to provide them with insurance as agreed or as represented. The parties entered into an agreement settling all claims except the vessel owners' entitlement to prejudgment interest on the agreed damages. The trial court ruled that the vessel owners' claims were ordinary negligence claims for which prejudgment interest is not awardable. Upon direct review, we affirm in part on other grounds and reverse in part.

The defendants, Fred A. Tucker (Tucker), Fred A. Tucker & Company, Inc. (Tucker Co.), and James Rothaus were insurance brokers in Washington. Rothaus' insurer, the Insurance Company of North America and its subsidiary INAPRO (collectively INAPRO), agreed to pay some of the stipulated damages. INAPRO has been substituted for Rothaus as the real party in interest.

The seven claims involved here are identified by the names of the vessels. In the American Eagle and American Star claim, the vessel owners sought return of a premium paid to Rothaus for insurance with Lloyd's of London. Rothaus was never able to provide a policy or confirm coverage. Tucker and Tucker Co. stipulated to liability for damages in the amount of the premium paid.

In the Ocean Cape claim, the vessel owner authorized Tucker to place insurance. The policy issued by Tucker Co. did not meet specified criteria. Nonetheless, Tucker Co. collected the full premium on the policy from a financing company with which the owner had an insurance premium financing contract. The owner made two payments to the financing company, then canceled its order for insurance with Tucker Co. The owner made no further payments to the financing company. Tucker and Tucker Co. stipulated to liability for damages in the amount the owner paid to the financing company, and agreed to indemnify the owner for any liability to the financing company.

In the Steel Fin claim, the vessel owner paid Tucker for a policy insuring the vessel. The Steel Fin sank and was a total loss. No insurance company ever paid for the loss. Tucker and Tucker Co. stipulated to liability for the "insured agreed value" of the Steel Fin, less the amount the owner bid for salvage rights.

In the Vestfjord-hull claim, the vessel owner purchased hull and machinery insurance through Tucker Co. A rogue wave struck the Vestfjord, causing damage to the vessel. Repairs were made. An average adjuster adjusted the resulting insurance claim. (An average adjuster is an adjuster with special knowledge of marine matters, equipment and construction, who determines the fair amount of a loss of ship, cargo or freight, and apportions the loss among the owners or insurers. L. Buglass, Marine Insurance and General Average in the United States 115 (2d ed. 1981).) Four of the companies underwriting the policy obtained through Tucker Co. were insolvent or denied placement, thereby leaving an unpaid balance on the claim. Tucker and Tucker Co. stipulated to liability for the unpaid balance.

In the Vestfjord -Doty claim, the owner purchased marine liability insurance (protection and indemnity insurance (P & I)) from Rothaus. A Vestfjord crew member sustained injuries on two separate occasions. When the resulting claim for maintenance, cure and unearned wages was not paid, the crew member filed suit against the vessel owner and the Vestfjord. That suit was settled with the owner paying maintenance, medical expenses (cure), and a $50,000 settlement. INAPRO agreed that the settlement was reasonable. The vessel owner incurred costs of defending the suit brought by the crew member. Tucker and Tucker Co. stipulated to liability for the maintenance, medical expenses, and settlement the owner paid, and for his costs of defense.

In the Sea Comber claim, the vessel owner purchased a hull insurance policy from Tucker. The Sea Comber sustained damages when it struck a log. The marine surveyor hired by Tucker approved repairs. The policy underwriter is in liquidation, and the owner has not been paid for the cost of the repairs. The owner used his own funds plus money he borrowed to pay for repairs. One repair bill remains unpaid. The owner has incurred interest charges on the borrowed money and on the unpaid bill. Tucker and Tucker Co. stipulated to liability for damages in the amount of the repairs.

In the Sea Star claim, several persons are the vessel owners. One owner ordered a P & I policy through Rothaus. The underwriters were never identified. When a crew member was injured, respondents appointed an adjuster. After the underwriters did not respond to the claim, the Sea Star owners paid the crew member $22,500 for maintenance, medical bills, and unearned wages. Tucker and Tucker Co. stipulated to liability for this amount.

In each of the seven claims Tucker and Tucker Co. stipulated to liability for prejudgment interest on the agreed damages to the date of the settlement agreement, if prejudgment interest is awardable. In the Sea Comber claim, Tucker and Tucker Co. also stipulated to liability for the interest charged to the vessel owner on the loan and the unpaid repair bill, if such interest is awardable. In each case, the vessel owners seek additional prejudgmentinterest for the period of time between the date of the settlement agreement and the date judgment was entered.

Respondents argue that prejudgment interest is not awardable on damages in ordinary negligence actions, relying upon Boeing Co. v. State, 89 Wash.2d 443, 572 P.2d 8 (1978). Appellants urge us to decide whether prejudgment interest is awardable on these claims based upon whether the claims are liquidated or unliquidated. Appellants alternatively contend that their claims are contractual claims and therefore Boeing is inapplicable. Finally, the parties urge opposing views as to whether certain of the claims are liquidated or unliquidated.

The nature of the claim, not its characterization as sounding in contract or negligence, decides the issue. We reiterate the court's established analysis, and hold that whether prejudgment interest is awardable depends on whether the claim is a liquidated or readily determinable claim, as opposed to an unliquidated claim. See, e.g., Prier v. Refrigeration Eng'g Co., 74 Wash.2d 25, 442 P.2d 621 (1968); Mall Tool Co. v. Far West Equip. Co., 45 Wash.2d 158, 273 P.2d 652 (1954); Parks v. Elmore, 59 Wash. 584, 110 P. 381 (1910). The rule is stated:

[I]nterest prior to judgment is allowable (1) when an amount claimed is "liquidated" or (2) when the amount of an "unliquidated" claim is for an amount due upon a specific contract for the payment of money and the amount due is determinable by computation with reference to a fixed standard contained in the contract, without reliance on opinion or discretion.

Prier, 74 Wash.2d at 32, 442 P.2d 621.

A "liquidated" claim is a claim "where the evidence furnishes data which, if believed, makes it possible to compute the amount with exactness, without reliance on opinion or discretion." Prier, at 32, 442 P.2d 621 (citing C. McCormick, Damages § 54 (Hornbook Series) (1935)). A dispute over the claim, in whole or in part, does not change the character of a liquidated claim to unliquidated. Prier, at 33, 442 P.2d 621 (citing C. McCormick, Damages § 54 (Hornbook Series) (1935)).

An unliquidated claim, by contrast, is one

"where the exact amount of the sum to be allowed cannot be definitely fixed from the facts proved, disputed or undisputed, but must in the last analysis depend upon the opinion or discretion of the judge or jury as to whether a larger or a smaller amount should be allowed."

(Italics omitted.) Prier, at 33, 442 P.2d 621 (quoting C. McCormick, Damages (Hornbook Series) § 54 (1935)).

Prejudgment interest awards are based on the principle that a defendant "who retains money which he ought to pay to another should be charged interest upon it." Prier, at 34, 442 P.2d 621. The plaintiff should be compensated for the "use value" of the money representing his damages for the period of time from his loss to the date of judgment. Mall Tool Co. v. Far West Equip. Co., supra 45 Wash.2d at 177, 273 P.2d 652; see also Grays Harbor Cy. v. Bay City Lumber Co., 47 Wash.2d 879, 891, 289 P.2d 975 (1955). A defendant should not, however, be required to pay prejudgment interest in cases where he is unable to ascertain the amount he owes to the plaintiff. Prier, 74 Wash.2d at 34, 442 P.2d 621. Accord, Ferber v. Wisen, 195 Wash. 603, 610, 82 P.2d 139 (1938); Pearson Constr. Corp. v. Intertherm, Inc., 18 Wash.App. 17, 20, 566 P.2d 575 (1977).

This court has consistently applied the liquidated-unliquidated analysis to both contract and tort claims. See, e.g., Wright v. Tacoma, 87 Wash. 334, 151 P. 837 (1915) (amount alleged due on contract for public improvements; claim held unliquidated,...