Opinion ID: 678497
Heading Depth: 3
Heading Rank: 2

Heading: Calculation Issues

Text: 73
74 Amoco also argues that because BNY did not demand immediate possession of the platinum until the date it filed its complaint, the district court erred in calculating damages based on the price of platinum on February 15, 1990, instead of March 1990 when, Amoco argues, BNY first clearly demanded the platinum. 75 The New York Court of Appeals has written that the loss is to be measured as of the time of the conversion. Procter & Gamble, 16 N.Y.2d at 352, 266 N.Y.S.2d at 791, 213 N.E.2d at 877. The date of conversion is the date at which demand was made and refused. The district court found that demand for the platinum was first made on February 15, 1990. Letter from Barbara A. Hyland, BNY, to E.A. Sloss, Amoco of 2/15/90, reprinted as Appendix Exhibit D. That letter stated: 76 As discussed this morning, we request that you transfer the following material which you are currently holding for the account or order of Drexel Burnham Lambert Trading Corporation to the account of The Bank of New York.... 77 The letter then proceeds to identify the specific holding certificates under which BNY claimed the platinum. Attached to the letter were copies of the front and back of each of the holding certificates. Amoco argues that it was confused by this letter because its final paragraph stated: 78 Please send the holding certificates which are now to the order of The Bank of New York directly to my attention under telefax advice. 79 Although this paragraph is puzzling--because BNY had the holding certificates and Amoco did not--the district court determined that the letter constituted a demand for the platinum. We find that taken as a whole the letter of February 15, 1990 constituted a demand for delivery of the platinum. Hence, the district court properly calculated damages with reference to the value of the platinum on February 15, 1990. 80
81 Amoco argues that the district court should not have awarded BNY prejudgment interest from the date of the filing of their complaint in addition to the award of $550,000 in damages. Amoco argues that under the partial settlement agreement, BNY may not recover damages, including prejudgment interest, in excess of $550,000. The Settlement Agreement provided: 82 The attorneys for the parties shall enter into a stipulation and order, in the form annexed as Exhibit A, ... (ii) limiting any recovery of damages by BNY from Amoco in the Action, or in any other action based on any of the allegations set forth in the Complaint in the Action, to an amount not to exceed five hundred fifty thousand dollars ($550,000); and (iii) deleting all claims in the Action for punitive damages. 83 Settlement Agreement, reprinted at S Appendix. The district court determined that the agreement precluded any award of interest on BNY's damages that accrued prior to the date of the agreement. Thus, the district court determined that BNY was not entitled to interest on the sum of $11,624,067.00 (the value of the platinum on February 15, 1990) from February 15, 1990, through April 4, 1990 (the date of the settlement agreement). The district court then determined that BNY could recover prejudgment interest on $550,000.00 from April 4, 1990. 84 Amoco relies on Petosa v. City of New York, 63 A.D.2d 1016, 1017, 406 N.Y.S.2d 354, 355-56 (2d Dept.1978), for the proposition that a stipulated limit on damages precludes the plaintiff from recovering prejudgment interest when damages plus interest would exceed the stipulated limit. That case, however, only held that the plaintiff was precluded from recovering prejudgment interest on damages from the date of the injury until the date of the stipulation. Petosa did not hold that the plaintiffs could not recover prejudgment interest from the date of the stipulation. 85 Under the law of New York, a settlement agreement in writing between parties represented by counsel is binding and, essentially, a contract. N.Y.Civ.Prac.L. & R. Sec. 2104 (McKinney 1976 & Supp.1994); Novak & Co., Inc. v. New York Convention Ctr. Dev. Corp., 202 A.D.2d 205, 206, 608 N.Y.S.2d 219, 219 (1st Dept.1994); Davis v. Sapa, 107 A.D.2d 1005, 1006, 484 N.Y.S.2d 568, 570 (3d Dept.1985). As such, it is subject to the rules governing the construction of contracts. Joseph M. McLaughlin, Practice Commentaries, N.Y.Civ.Prac.L. & R. C2104:1 p. 560; see also Teitelbaum Holdings, Ltd. v. Gold, 48 N.Y.2d 51, 56, 421 N.Y.S.2d 556, 559, 396 N.E.2d 1029, 1032 (1979) (interpreting settlement agreement pursuant to rules governing the construction of contracts). Generally, the agreement will be construed in accordance with the intent of the parties. Davis, 107 A.D.2d at 1006, 484 N.Y.S.2d at 570. Unambiguous words and phrases will be construed according to their plain meaning. State v. Warren Bros. Co., Inc., 190 A.D.2d 728, 730, 593 N.Y.S.2d 308, 310 (2d Dept.1993). Where, however, the meaning of a word or phrase is ambiguous, the courts of New York will examine the record as a whole in an effort to interpret the agreement so as to effectuate the intent of the parties. Kraker v. Roll, 100 A.D.2d 424, 436, 474 N.Y.S.2d 527, 535-36 (2d Dept.1984); see also Novak, 202 A.D.2d at 205-06, 608 N.Y.S.2d at 219. Further, in construing contracts, the court should reach for fair and reasonable results. Kineon v. Bluegrass Elkhorn Coal Corp., 121 A.D.2d 980, 982, 505 N.Y.S.2d 624, 625 (1st Dept.1986). Where one interpretation is broader than another, courts should not apply the broader interpretation absent a clear manifestation of intent. See Estate of O'Brien v. Town of Mamaroneck, 20 N.Y.2d 587, 594, 285 N.Y.S.2d 843, 848, 232 N.E.2d 844, 847 (1967); Kraker, 100 A.D.2d at 438, 474 N.Y.S.2d at 536. Rather, where contracts are negotiated by counsel for sophisticated commercial parties, courts should interpret ambiguous language to realize the reasonable expectations of the ordinary businessperson. See Lama Holding Co. v. Shearman & Sterling, 758 F.Supp. 159, 163 (S.D.N.Y.1991); Merrill Lynch Commodities Inc. v. Richal Shipping Corp., 581 F.Supp. 933, 939 n. 14 (S.D.N.Y.1984); Outlet Embroidery Co. v. Derwent Mills, Ltd., 254 N.Y. 179, 183, 172 N.E. 462, 463 (1930). 86 Ordinarily, if prejudgment interest were included within the meaning of the term damages, then one would expect reasonable business people to agree to a cap on damages that is higher than the cap to which they would agree if prejudgment interest were excluded from the meaning of the term damages. The trouble is that reasonable business people could not know with precision how the inclusion of prejudgment interest should affect the level of the cap on damages. After all, neither party could know with precision when final judgment would be rendered. Therefore, as of the date of the stipulation, neither party could know with precision how much prejudgment interest to include within the cap on damages. Absent a clear intent to include prejudgment interest within the meaning of damages, we think that reasonable businesspeople faced with uncertainty over how much prejudgment interest there would be would exclude prejudgment interest from the meaning of damages. Further, the date of final judgment is, to some extent, a function of the parties' conduct during litigation. In the absence of a clear intent to include prejudgment interest from the date of the stipulation in the amount of stipulated damages, courts should not interpret the settlement agreement so as to create incentives for the defendant to delay while enjoying the free use of the plaintiff's money. See also Lowy and Donnath, Inc. v. City of New York, 98 A.D.2d 42, 469 N.Y.S.2d 760 (1st Dept.1983), aff'd, 62 N.Y.2d 746, 476 N.Y.S.2d 830, 465 N.E.2d 369 (1984) (courts should avoid constructions that place one party at the mercy of the other). We conclude that under the reasonable expectations of the ordinary businessperson, use of the word damages was not intended to include prejudgment interest. We therefore affirm the district court's award of prejudgment interest to BNY.