Opinion ID: 697299
Heading Depth: 2
Heading Rank: 2

Heading: Interest Damages

Text: 62 Borg-Warner also challenges the jury's award of $250,000 in so-called interest damages. Borg-Warner claims that damages for interest payments cannot be recovered in a fraud case. The defendant also argues that Miller's did not prove a causal connection between Borg-Warner's misrepresentations and Miller's interest expenses because neither Miller's nor Borg-Warner anticipated that Miller's would be required to borrow money to pay the vendors from whom Miller's purchased the accessories that would comprise the kits. 63 To justify the jury's award of interest damages, it must appear that loans taken out and the resulting interest were a natural and proximate result of Borg-Warner's fraudulent conduct. Sanders, 300 S.W.2d at 241. 64 In the context of securities fraud, courts have required that a plaintiff prove loss causation in order to recoup interest damages. Specifically, a plaintiff must prove that the defendant's misrepresentations played a direct part in the debt that the plaintiff incurred. Silverberg v. Paine, Webber, Jackson & Curtis, Inc., 710 F.2d 678, 688 (11th Cir.1983); Polycast Technology Corp. v. Uniroyal, Inc., 792 F.Supp. 244, 277 (S.D.N.Y.1992). 65 Borg-Warner knew that distributors such as Miller's would have to assemble kits to sell with the Acucarb comprising of parts purchased from other manufacturers. But for Borg-Warner's misrepresentations, Miller's would have had no reason to assemble kits. And because of Borg-Warner's false representations as to the quality and reliability of the Acucarbs, it could foresee that Miller's' market would vanish and that Miller's would be unable to sell its inventory of kits and would have to borrow money to pay the manufacturers from whom the component parts were purchased. It was especially foreseeable because Miller's is a relatively small corporation which could not pay large debts while simultaneously suffering the loss of a customer base. 66 Borg-Warner also challenges the amount of interest damages the jury awarded. Borg-Warner claims that Miller's is not entitled to the interest on $163,955 which Miller's acquired through the sale of 441 of the tanks. Borg-Warner also claims that the amount Miller's sought was inflated because it was based on a constant principal of $295,000 when Miller's has been making monthly payments since 1981. 67 We reject these arguments as without merit. The jury awarded Miller's only $225,000 in interest damages. The jury may well have taken into account the fact that Miller's sold some of the tanks and may have simply inaccurately calculated the damages while awarding Miller's substantially less than it sought. We, therefore, decline to reverse the district court's order denying the defendant's motion for judgment as a matter of law or a new trial.