Opinion ID: 1658949
Heading Depth: 1
Heading Rank: 5

Heading: whether the trial court erred in denying ingalls prejudgment interest and attorneys fees.

Text: In its Cross-Appeal, Ingalls challenges the trial court's post-trial refusal to award prejudgment interest as extra-contractual damages and refusal to award attorneys fees pursuant to the Litigation Accountability Act of 1988 (Miss. Code Ann. § 11-55-1, et seq, (Supp. 1995)). Ingalls lists several reasons supporting the award of prejudgment interest including: (1) Terex had the alternative of having the forklifts manufactured elsewhere and supplying the forklifts to Ingalls thereby avoiding the testing and integration costs; (2) Terex caused the action to be stayed in Ohio Bankruptcy Court for almost a year, before it was dismissed with that court citing lack of subject matter jurisdiction and the judge indicating that he thought Terex was attempting to avoid its obligation under the contract; and (3) The jury, on February 21, 1992, returned a verdict for $227,454, the exact amount first demanded on April 13, 1989. In City of Mound Bayou v. Roy Collins Constr. Co., 499 So.2d 1354, 1361 (Miss. 1986), this Court upheld an award of prejudgment interest where the city and its consulting firm had not paid the contractors even thought the contractors had submitted all the paperwork required and had completed all the work. Mound Bayou, 499 So.2d at 1361. The prejudgment interest award dated from the date that the consulting firm accepted the project to the day the trial commenced in chancery court. Id. But the Court did note in Mound Bayou that further such actions involving contractors and payments due them would be governed by Miss.Code Ann § 31-5-25 (Supp. 1985) which was a prospectively applied provision addressing interest on past due contract payments. Ingalls, while recognizing that the primary focus of the law in this area concerns bad faith insurance claims, contends that as extra-contractual damages for breach of the contract, pre-judgment interest is allowable under Mississippi law in the discretion of the trial judge where the amount due is liquidated when the claim is originally made or where the denial of the claim is frivolous or in bad faith. Sunburst Bank v. Keith, 648 So.2d 1147, 1152 (Miss. 1995); Simpson v. State Farm Fire and Cas. Co., 564 So.2d 1374, 1380 (Miss. 1990); Aetna Cas. & Sur. Co. v. Doleac Elec. Co., 471 So.2d 325, 331 (Miss. 1990). To determine if the case sub judice qualifies for prejudgment interest, we must ask (1) were the damages liquidated? and (2) was the claim frivolous or in bad faith? Different damage theories were presented to the jury and the jury's acceptance of Ingalls' damage argument does not mean that the damages were therefore liquidated. See Warwick v. Matheney, 603 So.2d 330, 342 (Miss. 1992) (holding that trial court's refusal to award prejudgment interest should be upheld where there were several contested issues regarding measure damages). As to the frivolousness or bad faith of Terex's refusal to pay, there was no finding of bad faith by the trial judge. Terex presented substantial credible evidence to support its defenses and that evidence, along with supporting jury instructions, was submitted to the jury. The jury's rejection of Terex's position does not amount to a finding of bad faith. This Court recently addressed factors involved in awarding prejudgment interest. See Hans Constr. Co. v. Drummond, 653 So.2d 253 (Miss. 1995); Sunburst Bank v. Keith, 648 So.2d 1147 (Miss. 1995). Hans addressed the prejudgment interest question under a two-part format which involved determining whether there was a liquidated amount due or whether a frivolous or a bad faith denial of a claim existed. Hans, 653 So.2d at 264. The parties' testimony raised questions as to the amount that was owed. Due to this uncertainty as to the amount of damages, the award for prejudgment interest could not be based upon a liquidated amount. No adequate evidence existed of a frivolous or bad faith denial of the claim upon which to base an award of prejudgment interest. Therefore, since the scenario in Hans failed both prongs of the test, this Court held that the judge had abused her discretion in awarding prejudgment interest and reversed as to that issue. Id. at 264. Prejudgment interest is not imposed as a penalty for wrong doing; it is allowed as compensation for the detention of money overdue. Sunburst Bank v. Keith, 648 So.2d 1147, 1153 (Miss. 1995); Rubel v. Rubel, 221 Miss. 848, 75 So.2d 59, 69 (1954). This Court has allowed prejudgment interest at the legal rate in insurance cases where, in the absence of statutory authority, punitive damages were justified. Valley Forge Ins./CNA v. Strickland, 620 So.2d 535, 542 (1993). The present case is not analogous in that punitive damages are not in issue. We have held that the prevailing party in a breach of contract suit is entitled to have added legal interest on the sum recovered, computed from the date of breach of the contract to the date of the decree. Stockett v. Exxon Corp., 312 So.2d 709, 712 (Miss. 1975) (citing Rubel v. Rubel, 221 Miss. 848, 75 So.2d 59 (1954)). In the case at bar, the jury found that Terex breached the contract. We affirm the judgment entered against Terex, recognizing a breach of contract by Terex, but modify the damage award accordingly. Yet, the decision to award prejudgment interest rests within the discretion of the trial judge. Warwick v. Matheney, 603 So.2d 330, 342 (Miss. 1992). As mentioned above, there was no explicit finding of bad faith by the trial judge. The Ohio bankruptcy judge was the one who wrote in his Order that, in his opinion, this cause of action in bankruptcy occurred because Terex refused to complete the contract and that Terex was willing to enjoy the fruits of the contract but wanted the Court to relieve it of the responsibilities of the contract. The trial judge did not adopt this statement by the Ohio judge. However, the fact remains that Terex filed the Ohio action in an attempt to delay or thwart the Mississippi action. Based on this, we find it proper to award prejudgment interest from the date of the breach of the contract to the date of the lower court decree. With respect to Ingalls' claim that Terex should pay Ingalls' attorneys fees, Terex responds that there is no authority in Mississippi for an award of attorneys fees in a breach of contract case absent express contractual language providing for attorneys fees or a finding of outrageous conduct that would support an award of punitive damages. Greenlee v. Mitchell, 607 So.2d 97, 108 (Miss. 1992); Central Bank of Mississippi v. Butler, 517 So.2d 507, 512 (Miss. 1987). In the present case, the contract did not provide for the recovery of attorneys fees. To award this under the Litigation Accountability Act would be within the discretion of the trial judge. There is absolutely nothing in the record to indicate that the trial judge abused his discretion in deciding not to award attorneys fees. The dissent cites to Universal Life Insurance Co. v. Veasley, 610 So.2d 290 (Miss. 1992). The portion of Veasley that the Terex dissent quotes from is as follows. Some justices on this court have suggested that extra-contractual damages ought be awarded in cases involving a failure to pay on an insurance contract without an arguable reason even where the circumstances are not such that the punitive damages are proper. Veasley at 295; quoting Pioneer Life Insurance Company of Illinois v. Moss, 513 So.2d 927, 932 (Miss. 1987) (Sullivan, J., concurring). This is a fact specific suggestion of award of attorney's fees. In Veasley, this Court goes on to say anxiety and emotional distress would ordinarily follow the denial of a valid claim, especially in the area of life insurance where the loss of a loved one is exacerbated by the attendant financial effects of that loss. Additional inconvenience and expense, attorneys fees and the like should be expected in an effort to have the oversight corrected. It is no more than just that the injured party be compensated for these injuries. Veasly, 610 So.2d at 295. In Terex, we have a vastly different situation. No one died here. This is a case where Terex mounted an articulate, cogent defense as to whether or not they were liable for the cost of the full replacement value of the forklifts. These defenses involved the inequality of the cover Ingalls obtained, the presence of a condition precedent, and the fact that the Terex forklifts, constructed exactly as Ingalls ordered, had to be modified to fit in Ingalls' ships and modified in such a way that Terex felt it was exposed to a potential products liability claim. The dissent claims that contract liability is not disputed. This is not so. At trial, several of Terex's aforementioned defenses, if the jury had adopted them, would have resulted in no liability on Terex's part. This is a breach of contract action, not a denial of a valid life insurance claim as in Veasly. Terex had already paid Ingalls $16,478.64 in attorney's fees related to the Ohio bankruptcy action in order to reinstate the action in Jackson County Circuit Court. The dissent mentioned frivolous delay tactics and it is the majority's position that Terex paid for that delay when Terex reimbursed Ingalls $16,478.64 for its attorney's fees in the Ohio Bankruptcy Court action. Otherwise, a suit in Jackson County Circuit Court, where Terex was able to raise the defenses mentioned above and point out that there were available replacements but none anywhere in the world that would meet Ingalls' new 117 inch height limitation, is a viable method of resorting to the courts and juries to settle a dispute. That action cannot be considered frivolous delay tactics. Terex did delay the start of the Jackson County case and, in turn, paid for it. But a trial on the merits is not harassment as the dissent suggests in order for Ingalls to be eligible for the compensation that Miss. Code Ann. § 11-55-5 (Supp. 1995) has to offer.