Opinion ID: 2598610
Heading Depth: 3
Heading Rank: 1

Heading: Liquidated or Capable of Mathematical Computation

Text: Idaho Code § 28-22-104 allows for prejudgment interest at a rate of twelve percent per year in cases of money due on an express contract. Prejudgment interest can be awarded as a matter of law from the date the sum became due in cases where the amount claimed, even though not liquidated, is capable of mathematical computation. Opportunity, L.L.C. v. Ossewarde, 136 Idaho 602, 609, 38 P.3d 1258, 1265 (2002). The district court found that an award of prejudgment interest to Dillon was proper `in order to fully compensate an injured party for the loss of the use of their money during the pendency of the action.' Chenery v. Agri-Lines Corp., 115 Idaho 281, 289, 766 P.2d 751, 759 (1988). The district court then determined the contract amount was readily ascertainable at the time of the breach; the contract provisions clearly set forth the manner for determining how the holdback should be addressed and released. At the time the breach occurred, both parties knew how the amounts would be computed. Furthermore, the claim is a liquidated claim, because the evidence furnished data which made it possible to compute the amount owed with exactness and without reliance on opinion or discretion. In addition, the fact the case was disputed does not change the Court's decision to award prejudgment interest. As the Idaho Courts have ruled: If a decision to award interest is based on whether the claim was disputed or litigated, ... prejudgment interest would never be awardeda party could delay payment without incurring interest expense by disputing and litigating any claim. (citations omitted).... A party could delay payment, waiting until trial to challenge the reasonableness of costs to avoid prejudgment interest, and prejudgment interest would only be allowed in rare circumstances. [citing Bouten Const. Co. v. H.F. Magnuson Co., 133 Idaho 756, 772, 992 P.2d 751, 766 (1999)]. The district court in denying Montgomery's motion for reconsideration further stated: In this case, the method for determining the dealership's inventory value was clearly established in the contract. Furthermore, the contract also established a method for addressing disagreements short of a suit. As the Court found, Mr. Montgomery breached his contract in several significant ways. He failed to use the appropriate method for establishing the used vehicle inventory. He failed to follow the contract's method for resolving the parties' differences. And he made every effort to thwart Mr. Dillon's efforts to resolve the problems. The Court would further find that he should not be able to avoid prejudgment interest by simply breaching the contract and then arguing the value was to be determined by the Court. In this case, the damages were easily ascertainable as of the date of the breach by simple mathematical calculation. The district court clearly recognized that the damages must be liquidated or capable of mathematical computation for prejudgment interest to be awarded. This Court in Rosecrans v. Intermountain Soap & Chem. Co., 100 Idaho 785, 788, 605 P.2d 963, 966 (1980), stated [i]n the instant case, the contractual liability was readily ascertainable. That statement seems to sum up this case as well. The parties' agreement clearly laid out the process for the parties to determine the value of the new vehicle inventory, used vehicle inventory, demonstrator vehicles, parts and accessories, gas, oil, grease and body shop inventories and other miscellaneous inventories. The agreement had a contingency plan for the situation that arose here, in case the parties would be unable to agree on the CDNW. The amendment further addressed if the parties could not agree on the CDNW that a properly qualified expert, such as Idaho Auto Auction, would be sought to assist in making the determination, with the costs of such expert borne equally between the parties. Dillon attempted to follow the contract and went so far as to seek assistance from Idaho Auto Auction at his expense to determine the CDNW and close the transaction. Montgomery's refusal to follow the contract caused Dillon to seek further relief from the district court. By weighing the evidence presented before it on the CDNW, the district court was able to determine the CDNW consistent with the applicable legal standards. The district court's decision is well within the discretion granted to it and was made through an exercise of reason. Montgomery argues that it was necessary to present a great amount of evidence and expert testimony to the district court in order for the trial court to make a determination of the CDNW and that, therefore, the damages may not have been readily capable of mathematical computation. See Bouten Constr. Co. v. H.F. Magnuson Co., 133 Idaho 756, 762, 992 P.2d 751, 757 (1999) (denying prejudgment interest because there was conflicting evidence on the price actually paid and the actual value of the products, thereby preventing the damages to be ascertainable by a mere mathematical process). However, the contract between Dillon and Montgomery set forth a procedure for easily determining the actual cash value of the automobiles. The parties were to follow the steps set forth in the contract and if the CDNW was less than $800,000 then the difference would be paid to Dillon, up to $200,000 and if greater than $800,000, the amount would be given to Montgomery; the $200,000 Closing Date Holdback was a liquidated sum. All the parties needed to do was add up the figures. We conclude that the amount upon which prejudgment interest was based was easily ascertainable by mathematical calculation. Montgomery chose not to follow the procedures set forth by the contract. We agree with the district court's observation that Montgomery can not be allowed to deviate from the contract in order to create what would appear to be an unliquidated sum and thereby defeat Dillon's entitlement to prejudgment interest. Had the parties' agreement been carried out, an independent accountant could have sifted through the figures, resolved the valuations and determine the CDNW. In that fashion, the damages recoverable by either party would have been predetermined. This Court holds that the damages would have been capable of mathematical computation but for Montgomery's breach. See Opportunity, L.L.C., 136 Idaho at 609, 38 P.3d at 1265. The district court's award of prejudgment interest is affirmed.