Zurich American Insurance Company et al v. Intermodal Maintenance Services, Inc., No. 3:2013cv00512 - Document 82 (D. Nev. 2015)

Court Description: ORDER granting Plaintiffs' 78 Motion for Prejudgment Interest. Signed by Judge Howard D. McKibben on 9/3/2015. (Copies have been distributed pursuant to the NEF - KR)
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Zurich American Insurance Company et al v. Intermodal Maintenance Services, Inc. Doc. 82 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 DISTRICT OF NEVADA 10 11 12 13 14 15 16 17 ZURICH AMERICAN INSURANCE COMPANY, a foreign corporation, individually and as subrogee for its insureds UNION PACIFIC RAILROAD COMPANY AND UNION PACIFIC MOTOR FREIGHT COMPANY; DISCOVER PROPERTY & CASUALTY INSURANCE COMPANY, a foreign corporation, individually and as subrogee for its insureds UNION PACIFIC RAILROAD COMPANY and UNION PACIFIC MOTOR FREIGHT COMPANY, ) ) ) ) ) ) ) ) ) ) 3:13-cv-00512-HDM-VPC ORDER Plaintiffs, 18 19 vs. 20 INTERMODAL MAINTENANCE SERVICES, INC., a foreign corporation; DOES I-X, inclusive; and ROE INSURANCE COMPANIES XI-XX, inclusive; and MOE CORPORATIONS XXI-XXX, inclusive, 21 22 23 24 25 Defendants. _________________________________ Before the court is plaintiffs Zurich American Insurance 26 Company and Discover Property & Casualty Insurance Company’s 27 (“plaintiffs”) motion for prejudgment interest, filed April 16, 28 2015 (#78). Defendant Intermodal Maintenance Services (“defendant”) 1 Dockets.Justia.com 1 filed a response (#79) and plaintiffs replied. (#80). 2 Background 3 The present action involves claims of indemnity and 4 contribution in a subrogation matter stemming from an underlying 5 action for personal injuries sustained by Bert Brasher, a truck 6 driver for Devine Intermodal. Plaintiffs were the defending and 7 indemnifying insurance companies for Union Pacific Motor Freight 8 Company and Union Pacific Corporation. That action was resolved in 9 the Second Judicial District Court for the State of Nevada in and 10 for the County of Washoe, when plaintiffs paid a total settlement 11 of $2,000,000 to Bert and Linda Brasher. 12 On September 18, 2013, plaintiffs filed the instant complaint 13 asserting claims for relief for Breach of Contract, Express 14 Indemnity, Implied and Equitable Indemnity, and Contribution. The 15 parties submitted cross-motions for summary judgment and at a 16 hearing on February 26, 2015, the court granted summary judgment in 17 favor of plaintiffs on the express indemnity and breach of contract 18 claims. A written order was filed on March 20, 2015. Judgment was 19 rendered in the amount of $2,589,313, which represents the 20 $2,000,000 settlement payment to the Brashers and $589,313 in 21 attorneys’ fees and costs plaintiffs incurred in the underlying 22 case. Defendant filed a notice of appeal on April 10, 2015. 23 The Motion 24 Plaintiffs move for prejudgment interest. Defendant asserts: 25 1) the court has no jurisdiction to hear the motion; 2) plaintiffs’ 26 motion is untimely; 3) courts have discretion to choose whether 27 state or federal prejudgment interest rules apply in the event of a 28 conflict between state and federal laws; 4) plaintiffs never filed 2 1 and/or served an offer of settlement and therefore cannot recover 2 prejudgment interest under Neb. Rev. Stat. 45-103.2 Section 1; 5) 3 the $2,000,000 settlement paid to underlying plaintiff Bert Brasher 4 was not a liquidated claim; and 6) as the ramp contractor agreement 5 is silent as to prejudgment interest and the parties never 6 stipulated to prejudgment interest, none should be awarded. 7 Analysis 8 A) Jurisdiction 9 Preliminarily, the court must determine whether it has 10 11 jurisdiction to consider the motion brought by plaintiffs. “[A] postjudgment motion for discretionary prejudgment 12 interest constitutes a motion to alter or amend the judgment under 13 Rule 59(e).” Osterneck v. Whinney, 489 U.S. 169, 175 (1989). 14 Defendants contend that by filing their notice of appeal, they 15 divested this court of jurisdiction; however, “if a party files a 16 notice of appeal after the court announces or enters a judgment - 17 but before it disposes of a [motion under Rule 59(e)] - the notice 18 becomes effective . . . when the order disposing of the last such 19 remaining motion is entered.” FED. R. APP. P. 4(B)(i). Therefore, 20 defendant’s notice of appeal does not transfer jurisdiction to the 21 court of appeals until after this court adjudicates any timely 22 brought motion to alter or amend the judgment. 23 Plaintiffs had 28 days from the entry of judgment to file 24 their motion. “A motion to alter or amend a judgment must be filed 25 no later than 28 days after the entry of the judgment.” Fed. R. 26 Civ. P. 59(e).1 Plaintiffs timely filed their motion on April 16, 27 1 28 The 2009 Amendments to FRCP 59 extended the period for post-judgment motions to be filed from 10 days to 28 days. 3 1 2 2015.2 Defendant asserts the window for filing a motion pursuant to 3 FRCP 59(e) is ten days under the holding of McCalla v. Royal 4 MacCabees Life Ins. Co., 369 F.3d 1128 (9th Cir. 2004). McCalla was 5 decided prior to the 2009 amendments to FRCP 59, which extended the 6 time from 10 days to 28 days. In McCalla, the court found a motion 7 for prejudgment interest should be considered a motion to alter or 8 amend the judgment pursuant to FRCP 59(e). Id. The ten day time 9 limit is mentioned only in the context of it being the time limit 10 enumerated in the rule. Id. at 1130. Consequently, the court finds 11 the 28 day time limit created by the 2009 amendments does not 12 conflict with circuit precedent. Accordingly, the court has 13 jurisdiction to consider plaintiff’s motion. 14 B) Choice of Law 15 Plaintiffs contend the choice of law provision of the contract 16 requires the application of Nebraska law, and that using Nebraska 17 law is also consistent with this court’s previous order concerning 18 the parties’ motions for summary judgment. Defendant asserts it is 19 unclear whether state or federal law should apply to this case, and 20 therefore federal law should be applied. 21 State law generally governs awards of prejudgment interest in 22 diversity cases, unless the “substantive claim derives from federal 23 law alone.” Oak Harbor Freight Lines, Inc. v. Sears Roebuck, & Co., 24 513 F.3d 949, 961 (9th Cir. 2008). The Ninth Circuit has found that 25 when an action arises under diversity jurisdiction, the prejudgment 26 interest is evaluated under state law, as it is substantive in 27 2 28 Judgment was entered on March 20, 2015. Plaintiffs had until April 17, 2015, to file their motion. 4 1 nature. 2 1991); In re Exxon Valdez, 484 F.3d 1098, 1101 (9th Cir. 2007). 3 Once a federal court determines the request is for prejudgment 4 interest, it should look to the choice of law principles of the 5 forum state when determining which state law to applies. Klaxon Co. 6 v. Stentor Electric Mfg. Co., 313 U.S. 487, 496-97 (1941). 7 See Lund v. Albrecht, 936 F.2d 459, 464-65 (9th Cir. In looking at state law, Nevada consistently upholds 8 contractual provisions such as the Nebraska choice of law provision 9 contained in the subject contract. In Nevada, courts “routinely 10 honor contractual choice of law provisions.” Rio Properties, Inc. 11 v. Stewart Annoyances, Ltd., 420 F.Supp.2d 1127, 1130-31 (D. Nev. 12 2006) (citing Engel v. Ernst, 102 Nev. 390 (1986)). Furthermore, 13 the defendant has not alleged that the contract or the choice-of- 14 law clause is invalid. 15 16 17 18 19 20 21 This court applied Nebraska law when considering the parties’ summary judgment motions: Here, applying the Restatement’s conflict of law provision, the court finds (1) there is no evidence that Nebraska governing law was selected in anything other than good faith between the parties; (2) Nebraska has a substantial relation to the transaction because Union Pacific is headquartered in Nebraska; and (3) applying Nebraska’s statute of limitations comports with Nevada’s recognized public interest in recognizing freedom to contract. Therefore, the court concludes Nebraska’s statute of limitations applies to this case. 22 #71 at 11; 11-19. Moreover, defendant’s attorney conceded during 23 the hearing on the summary judgment motion that Nebraska law should 24 govern the statute of limitations issue. He stated that Nebraska 25 was “the choice of law selected by Union Pacific in the contract 26 that they drafted. Matter of fact, their contract specifically says 27 that these types of lawsuits had to be brought in Nebraska, and 28 5 1 would certainly suggest that they had a definite intent that all 2 laws associated with Nebraska would be applied.” #81 at 28; 1-8. 3 4 Therefore, the court concludes that Nebraska law governs the issue of prejudgment interest. 5 C) Applicable Nebraska Law 6 Plaintiffs assert the prejudgment interest rate under Nebraska 7 law is 12 percent per annum. Defendant asserts Nebraska law does 8 not permit the recovery of prejudgment interest on claims that 9 involve unliquidated claims, and as the instant case involves such 10 an unliquidated claim, plaintiffs may not recover prejudgment 11 interest. 12 Under Nebraska law, a claim is liquidated when there is “no 13 reasonable controversy as to both the amount due and the 14 plaintiff’s right to recover.” Brook Valley, 285 Neb. at 172-73. 15 This inquiry is “two-pronged” and there must be no reasonable 16 controversy on either issue. Gerhold Concrete Co., Inc. v. St. Paul 17 Fire and Marine Ins. Co., 269 Neb. 692, 701 (2005); see also BSB 18 Const., Inc. v. Pinnacle Bank, 278 Neb. 1027, 1044 (2009). 19 The court concludes the claim in this case is liquidated. 20 During the motion for summary judgment hearing filed on June 6, 21 2015, the court found that defendant failed to “assert that there 22 are any material issue of fact in dispute on the amount of damages 23 that were recovered in the underlying claim . . . .” at 48-49. In 24 the response to plaintiff’s motion for prejudgment interest, 25 defendant presents no further evidence or argument in regard to the 26 specific amount due to plaintiffs, but instead focuses on the 27 issues currently on appeal in the Ninth Circuit concerning active 28 negligence and spoilation of evidence. #79 at 11. Defendant thereby 6 1 disputes whether it is required to pay the judgment, but does not 2 question the specific amount involved. 3 Additionally, it is undisputed that plaintiffs paid a 4 settlement of $2,000,000 to the Brashers in the underlying action 5 on March 13, 2013. As no reasonable controversy exists as to the 6 amount due to plaintiffs, and plaintiffs are entitled to 7 prejudgment interest at a rate of 12 percent per annum. 8 4) Pre-Judgment Interest Rate 9 Defendant contends that because the original contract does not 10 address the rate of prejudgment interest and the parties did not 11 stipulate to it, plaintiffs should not be allowed to collect 12 prejudgment interest. Plaintiffs assert there is no requirement 13 that the parties stipulate to an interest rate in the contract, and 14 that they are entitled to prejudgment interest from the date the 15 cause of action arose until the entry of judgment pursuant to 16 Nebraska law. 17 Prejudgment interest for a liquidated claim runs from the 18 “date the cause of action arose until the entry of judgment.” Neb. 19 Rev. Stat. § 45-103.02(2) (2014). 20 otherwise agreed, interest shall be allowed at the rate of twelve 21 percent per annum on money due on any instrument in writing...” 22 Neb. Rev. St. § 45-104 (2014). In Knox v. Cook, the court 23 determined that even though the lease in question did not specify a 24 prejudgment interest rate, Neb. Rev. § 45-104 applied and the 25 prejudgment interest rate would be twelve percent. Knox v. Cook, 26 233 Neb. 387, 395 (1989); see also Valley County School Dist. 88- 27 0005 v. Ericson State Bank, 18 Neb.App. 624, 628 (2010) (finding 28 that “because no interest rate had otherwise been agreed upon, the Nebraska law provides, “unless 7 1 2 statutory default rate of 12 percent per annum applied.”) Consequently, as the contract here does not contain an agreed- 3 upon prejudgment interest rate, the court may use the default 4 statutory rate. Under Neb. Rev. St. § 45-104, interest is due at a 5 rate of twelve percent per annum “on an instrument in writing,” 6 which in this case is the contract between the two parties. 7 Conclusion 8 9 Accordingly, and based on the foregoing, plaintiffs Zurich American Insurance Company and Discover Property & Casualty 10 Insurance Company’s motion for prejudgment interest (#78) is 11 GRANTED. Prejudgment interest shall be at the rate of twelve 12 percent per annum from the date the $2,000,000 was paid by 13 plaintiffs, until March 20, 2015, the date of judgment in this 14 action. 15 IT IS SO ORDERED. 16 DATED: This 3rd day of September, 2015. 17 18 ____________________________ UNITED STATES DISTRICT JUDGE 19 20 21 22 23 24 25 26 27 28 8