Opinion ID: 597429
Heading Depth: 3
Heading Rank: 2

Heading: Mar Oil's Other Contentions

Text: 65 Mar Oil's other challenges to the judgment include the contention that the district court should have awarded it punitive damages, attorneys' fees, and Rule 11 sanctions, and that the court should have awarded prejudgment interest for a longer period. We reject most of these challenges. 66 Under New York law, the imposition of punitive damages is left to the sound discretion of the finder of fact. See Racich v. Celotex Corp., 887 F.2d 393, 397 (2d Cir.1989); Loughry v. Lincoln First Bank, N.A., 67 N.Y.2d 369, 378, 502 N.Y.S.2d 965, 969, 494 N.E.2d 70, 74 (1986). Though this Court perhaps would not have disturbed an award of punitive damages had one been made, we also cannot say that the trial court abused its discretion in denying such damages. 67 Similarly, although the court has the power, upon appropriately specific findings, see, e.g., Dow Chemical Pacific Ltd. v. Rascator Maritime S.A., 782 F.2d 329, 344 (2d Cir.1986), to award the prevailing party attorneys' fees where the other party has conducted an action in bad faith, vexatiously, wantonly, or for oppressive reasons, F.D. Rich Co. v. United States ex rel. Industrial Lumber Co., 417 U.S. 116, 129, 94 S.Ct. 2157, 2165, 40 L.Ed.2d 703 (1974) (footnote omitted), such an award is not required. We will not second-guess the district court's refusal to exercise that power. 68 Nor do we believe the district court abused its discretion, see Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 2460, 110 L.Ed.2d 359 (1990), in refusing to grant sanctions under Fed.R.Civ.P. 11. Mar Oil contended principally that, prior to filing a pleading alleging that Morrissey had spent more than 5,000 hours on Mar Oil matters or that the parties had modified the Fee Agreement to provide for a contingent fee, Morrissey's attorneys should have investigated and deduced that Morrissey's version of the events was false in light of the documentary evidence. We disagree. Morrissey's billing records surely were inconclusive, since, as discussed above, they did not quantify the time spent. Further, Morrissey's contingent-fee contention did not depend on a modification of the Fee Agreement, for the parties arguably agreed therein to negotiate a new agreement--rather than to modify the existing agreement--prior to the commencement of Mar Oil litigation outside of Spain. Though the Fee Agreement provided that a modification must be in writing, it did not specify that a new agreement would have to be in writing. Hence, the absence of a document reflecting the alleged new agreement did not necessarily contradict Morrissey's version. Nor did the fact that the district court, as the trier of fact, rejected Morrissey's description of the events warrant an award of a Rule 11 sanction. An unfavorable credibility assessment is rarely a sufficient basis for such an award. See, e.g., Healey v. Chelsea Resources, Ltd., 947 F.2d at 625-26 (court may not properly award Rule 11 sanctions against attorney solely because client's trial testimony was not credible unless (a) it was incredible as a matter of law, and (b) the attorney signed a posttrial memorandum espousing his client's position). 69 Finally, Mar Oil contends that the district court's award of prejudgment interest, dating back to February 2, 1984, was insufficient. We agree. New York law, which controls this diversity action, provides that prejudgment interest 70 shall be recovered upon a sum awarded because of a breach of performance of a contract, or because of an act or omission depriving or otherwise interfering with title to, or possession or enjoyment of, property, except that in an action of an equitable nature, interest and the rate and date from which it shall be computed shall be in the court's discretion. 71 CPLR § 5001(a) (McKinney 1992). The purpose of the mandatory award of interest in property actions is to assure complete indemnification to plaintiffs whose property ha[s] been damaged by the wrongful act of another. 5 J. Weinstein, H. Korn & A. Miller, New York Civil Practice, 5001.05, at 50-18 to 50-19 (1991); see Lewis v. S.L. & E., Inc., 831 F.2d 37, 39 (2d Cir.1987); see also Spector v. Mermelstein, 485 F.2d 474, 481-82 & n. 8 (2d Cir.1973) (prejudgment interest mandatory even on property claim based on an equitable theory of breach of fiduciary duty) (dictum). In order to provide the successful claimant with complete indemnification, prejudgment interest must be awarded from the date of the adjudicated deprivation. 72 The main thrust of Mar Oil's complaint was that Morrissey had deprived Mar Oil of $925,675.38 that belonged to it. Though the trial court's findings did not state the precise date on which the deprivation had taken place, that date was not in dispute. Morrissey's answer to the original complaint in this action stated that Morrissey made the disputed payment to himself on July 11, 1983, and the February 2 Letter on which he has relied throughout the litigation likewise stated that the payment was made on that date. Thus, no finding as to the date on which Morrissey paid himself the $925,675.38 was required. The trial court's finding that the withdrawal was improper sufficed, in the circumstances, to establish that Mar Oil was deprived of its property on July 11, 1983. Accordingly, Mar Oil should have been awarded prejudgment interest on its recovery dating back to that date.