Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_03-cv-00519/USCOURTS-cand-5_03-cv-00519-1/pdf.json

Nature of Suit Code: 370
Nature of Suit: Other Fraud
Cause of Action: 28:1332 Diversity-Fraud

---

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

*E-Filed:5/26/06

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

SUNCOR STAINLESS, Inc.

Plaintiff,

 v.

STRUCTURAL HARDWARE AND SUPPLY,

Inc.; and BRUCE SULLIVAN, 

Defendants. /

Case No. 03-00519 HRL

SUPPLEMENTAL FINDINGS OF FACT

AND CONCLUSIONS OF LAW

I. INTRODUCTION

On March 22, 2006, the Ninth Circuit issued a Memorandum Opinion vacating this

court’s judgment and remanding for a new calculation of plaintiff’s damages (Suncor Stainless,

Inc. v. Structural Hardware and Supply, Inc., Bruce Sullivan, No 04-15781). 

As a consequence, the court obtained briefs from the parties describing their respective

views on how damages should be calculated. The court has considered the arguments of the

parties and studied the trial record carefully with respect to the evidence supporting a new

calculation. As instructed, the court has been guided by Geddes & Smith, Inc. v. Saint Paul

Case 5:03-cv-00519-HRL Document 74 Filed 05/26/06 Page 1 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

 For the facts of the case and the analysis leading to this court’s finding of liability

against defendants for intentional interference with contract, refer to the Findings of Fact and

Conclusions of Law filed on March 22, 2004.

2

Although Exhibit 21 shows 236.5 hours for Roman Striebel, he testified at trial that

his actual hours spent in opposing the protests was 200.5. See 1RT 47-48.

2

Mercury Indemnity Company, 407 P.2d 868 (Cal. 1965) and Convoy Company v. Sperry Rand

Corporation, 672 F.2d 781 (9th Cir. 1982). This, now, is the court’s decision.1

II. DISCUSSION

The court agrees, as plaintiff urges, that damages should be based on the “...wages paid

to its employees and related business overhead allocable to the time spent opposing Structural’s

protests.” (Plaintiff’s Brief Re: Calculation of its Damages, p. 4, L. 23-24). The undisputed

evidence showed that four of plaintiff’s employees worked on opposing the protests: Roman

Striebel, Patrick Striebel, Steven Alexanderson, and Edwina Damstra. Plaintiff kept detailed

records of the number of hours each worked on the protests, respectively: 200.52

, 28.5, 129.5,

and 60.5.

The wages and direct benefits paid to each of these four employees were described in

fair detail by Roman Striebel (1RT 63-69). However, his testimony about corporate general

overhead (“sales and general administrative expenses”) allocable to these four was not as

specific or unambiguous as the court would wish (2RT 8,113). Nevertheless, the court

concludes that increasing their wages and direct benefits by a factor of 50% will fairly take into

account their share of general overhead.

The only place where the court departs company from plaintiff’s proposed damage

formula is with respect to the number it proposes for the “wages” of Roman and Patrick

Striebel. The annual salary of each was $80,000. But, not only were they employees of Suncor,

they were the owners of Suncor. Each owned 50% of the corporation. Each received, in

addition to his salary, a distribution of “profit” from the corporation in 2002 of $260,000. 

Therefore, argues plaintiff, their wages were $340,000 each, and that is the number that should

be used in the damage formula.

Case 5:03-cv-00519-HRL Document 74 Filed 05/26/06 Page 2 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

Plaintiff confuses what it paid out to its owners that year with what it was obligated to

pay them as employees of the corporation. The profit distributions to the owners of the

corporate plaintiff are not, in the court’s mind, properly categorized as wages. In fact, unlike

the “essential expenses” of the corporation allowed as damages in Geddes & Smith, these are

not corporate expenses at all. The corporation could have retained the profit, invested it in

capital improvements, or done all manner of other things with it. Instead, its owners chose to

have the corporation pay it out - in effect - as a dividend to themselves. 

The expenses of the corporation attributable to Roman Striebel were: $80,000 salary,

$10,000 health benefits, $8,000 automobile allowance, and a $2,500 contribution to a 401k

plan, for a total of $100, 500. Increasing that amount by 50% to account for overhead gives

$150,750. Dividing that number by Roman’s 2400 working hours per year results in an hourly

rate of $62.81. Multiplying $62.81 by 200.5 hours produces $12, 593.40.

Patrick Striebel’s salary and direct benefits were the same as Roman’s. However, since

his annual working hours were only about 2200, his calculated hourly rate is $68.52. 

Multiplying that hourly rate by his 28.5 hours spent on the defense of the protests yields

$1,952.82.

Steven Alexanderson’s total salary and direct benefits in 2002 were $85,000. Increased

by 50%, that number becomes $127,500. He worked 2000 hours a year, meaning his hourly

rate was $63.75. Since he spent 129.5 hours on the protests, that time cost the plaintiff

corporation $8,255.63.

Edwina Damstra was paid $21 an hour. She also received direct benefits worth $2000 a

year. The court estimates she worked 1800 hours a year, meaning her benefits represented an

additional $1.11 per hour. Adding 50% to her total hourly rate ($21 plus $1.11) yields $33.17. 

She spent 60.5 hours on the protests, resulting in lost time to the plaintiff costing $2006.79

($33.17 x 60.5).

In summary, Suncor’s damages as represented by the wages and benefits paid to its

employees for the time they worked on the defense against the defendants’ protests, plus

allocable overhead, are $12,593.40 + $1,952.82 + $8,255.63 + $2006.79 = $24,808.64. 

Case 5:03-cv-00519-HRL Document 74 Filed 05/26/06 Page 3 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

Since this is a diversity case, the question of prejudgment interest is governed by

California law. See Mutuelles Unies v. Kroll & Linstrom, 957 F.2d 707, 714 (9th Cir. 1992).

Under California Civil Code § 3288 the court has discretion to make such an award. See Bullis

v. Security Pacific National Bank, 582 P.2d 109 (Cal. 1978). In this case, the court concludes

that the costs to plaintiff measured by the time spent by its employees in defending against the

protests were both ascertainable and reasonably to be anticipated by defendants. In order to

fairly compensate plaintiff for its loss, the court awards prejudgment interest (at 7%) from the

date the complaint was filed to present, as follows: 3.29 years x .07 x $24,808.64 = $5,705.99.

III. CONCLUSION

Plaintiff shall recover from defendants $30,514.63.

 

Dated: 5/26/06 /s/ Howard R. Lloyd HOWARD R. LLOYD

UNITED STATES MAGISTRATE JUDGE

Case 5:03-cv-00519-HRL Document 74 Filed 05/26/06 Page 4 of 5
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

THIS SHALL CERTIFY THAT A COPY OF THIS ORDER WILL BE SENT TO:

Counsel for Plaintiff

Arthur B. Cook acook@hfbllp.com

Stephen J. Tomasulo stomasulo@hfbllp.com 

Defendant pro per

Bruce Sullivan 

2506 Kenoga Drive

San Jose, CA 95121

Counsel for Defendant Structural Hardware and Supply

James M. Sullivan 

225 N. Santa Cruz Ave 

Los Gatos, CA 95030 

* Counsel are responsible for providing copies of this order to co-counsel.

Dated: 5/26/06

 /s/ JMM 

 Chambers of Magistrate Judge Lloyd

Case 5:03-cv-00519-HRL Document 74 Filed 05/26/06 Page 5 of 5