Todd Shipyards Corp. v. Turbine Service, Inc., Civ. A. No. 75-1825
| Decision Date | 27 July 1984 |
| Docket Number | 75-2719.,Civ. A. No. 75-1825 |
| Citation | 592 F. Supp. 380 |
| Parties | TODD SHIPYARDS CORPORATION, Plaintiff, v. TURBINE SERVICE, INC., Gonzales Manufacturing and Industrial Machine Works, Inc., and a Certain Turbine Rotor, Casing, Blades, Rings, Housing, and All Assorted Parts Thereto, all of which being from the SS KATRIN, Defendants. |
| Court | U.S. District Court — Eastern District of Louisiana |
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Donald F. Mooney, New York City, J. Francois Allain, New Orleans, La., for Auto Transp., S.A.
James B. Kemp, Jr., New Orleans, La., Richard A. Hagen, New York City, for Todd Shipyards Corp.
Michael G. Crow, New Orleans, La., for Turbine Service, Inc.
Fred E. Salley, New Orleans, La., for The Travelers Ins. Co.
Allen F. Campbell, New Orleans, La., for Gonzales Mfg. and Indus. Machine Works, Inc.
John I. Hulse, IV, New Orleans, La., for Sentry Ins. Co.
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 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 Accordingly, the court hereby orders its opinion on remand of September 22, 1983 WITHDRAWN and REPLACED by this opinion on remand, as rendered this date.
This court is instructed to resolve, upon remand, the following issues:
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.
Stating that the award of pre-judgment interest is the rule rather than the exception, the Court of Appeals directed this court to calculate and award pre-judgment 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.
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 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.2Todd 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.
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.
In general, an award of pre-judgment interest is calculated from the date the loss was sustained. In re M/V Vulcan, 553 F.2d at 490; Managua Navigation Co. v. Aktieselskabet Borgestad, 7 F.2d 990, 993 (5th Cir.1925). To the extent possible, I have followed this general rule with the exceptions given below.
The Court of Appeals upheld this court's finding regarding the total amount of time it would have taken to conduct repairs on the LP turbine to return the turbine to the condition it should have been in on May 25, 1975. The Court of Appeals, however, also found that the vessel was operational only 77.2% of the time, resulting in a loss of use time of 166 days, at the rate of $3,000 per day. 674 F.2d at 414.
Auto, therefore, is to be awarded loss-of-use damages for 77.2% of the 215 days after May 25, 1975. Of course, it is not possible to determine the precise dates upon which the ship in question would have been operable. In the judgment of the court, calculation of pre-judgment interest from a date mid-way through the 215-day period represents a fair compromise. September 10, 1975 is 108 days after May 25, 1975. Thus, pre-judgment interest shall begin to run on September 10, 1975 for the entire amount of loss of use damages of $498,000. The total in this category is $124,184.00 up to November 14, 1978.
Payment of the Siemens bill for the cost of replacement blades and repair expenses occurred on three different dates. Total recovery for that category of damages was set at $221,393.76. Pre-judgment interest is awarded for one-third of that amount ($73,797.92) from September 9, 1975; for another third from September 22, 1975; and for the last third from November 14, 1975. Thus, total pre-judgment interest in this category amounts to $53,872 up to November 14, 1978.
Pre-judgment interest for the agents' accounts from Hansen & Tidemann, detailed at 467 F.Supp. at 1310, runs from the following dates on the following amounts:
Date Amount
August 13, 1975 $ 7,277.28
September 22, 1975 9,270.51
November 18, 1975 2,232.44
April 26, 1976 102,142.88
The total in this category is $24,657 up to November 14, 1978.
Expenses for the expert surveyor Higgins amounted to $11,292.07. Higgins billed Auto for work on the vessel between June 1975 and February 1976. Pre-judgment interest on that amount begins to run on June 21, 1976. The total in this category is $2,066 up to November 14, 1978.
Interest on the master's account awards is calculated on the following amounts from the...
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