Court Opinion

ID: 2970919
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:25:11.250349+00
Date Added: 2024-06-11T15:01:40.409486
License: Public Domain

RECOMMENDED FOR FULL-TEXT PUBLICATION
           Pursuant to Sixth Circuit Rule 206            2    Stamtec, Inc. v.                      Nos. 01-6541/6582
   ELECTRONIC CITATION: 2003 FED App. 0358P (6th Cir.)        Anson Stamping Co.
               File Name: 03a0358p.06
                                                                             _________________
UNITED STATES COURT OF APPEALS                                                    COUNSEL
             FOR THE SIXTH CIRCUIT                       ARGUED: Winston S. Evans, EVANS, JONES &
               _________________                         REYNOLDS, Nashville, Tennessee, for Appellant. Kenneth
                                                         L. Sales, SALES, TILLMAN & WALLBAUM, Louisville,
STAMTEC , INC.,                 X                        Kentucky, for Appellee. ON BRIEF: Winston S. Evans,
           Plaintiff-Appellant/ -                        EVANS, JONES & REYNOLDS, Nashville, Tennessee, for
               Cross-Appellee, -                         Appellant. Kenneth L. Sales, SALES, TILLMAN &
                                 -   Nos. 01-6541/6582   WALLBAUM, Louisville, Kentucky, Michael G. Mason,
                                 -                       NEAL & HARWELL, Nashville, Tennessee, for Appellee.
           v.                     >
                                 ,                                           _________________
                                 -
ANSON STAMPING COMPANY , -
                                                                                 OPINION
LLC,                             -                                           _________________
         Defendant-Appellee/ -
              Cross-Appellant. -                            KENNEDY, Circuit Judge. This case presents an appeal
                                 -                       and a cross-appeal from the district court’s order granting
                                N                        partial summary judgment in favor of Plaintiff-Appellant and
     Appeal from the United States District Court        Cross-Appellee Stamtec, Inc. Stamtec argues that the district
   for the Middle District of Tennessee at Nashville.    court erred when it failed to include various payments made
 No. 98-00308—William J. Haynes, Jr., District Judge.    to a third party as an element of Stamtec’s total damage award
                                                         and when it failed to award prejudgment interest on the
                Argued: July 31, 2003                    damages award. Stamtec also argues that the district court
                                                         abused its discretion when it failed to enter a default judgment
         Decided and Filed: October 7, 2003              against Anson Stamping Company (ASCO). Defendant-
                                                         Appellee and Cross-Appellant ASCO argues that the district
Before: KENNEDY, GILMAN, and GIBBONS, Circuit            court erred when it determined that the issue of Stamtec’s lost
                   Judges.                               profits did not present a genuine issue of material fact that
                                                         precluded summary judgment and awarded Stamtec damages
                                                         for estimated delivery costs. We REVERSE in part,
                                                         AFFIRM in part, and REMAND in part.

                           1
Nos. 01-6541/6582                      Stamtec, Inc. v.     3    4    Stamtec, Inc. v.                     Nos. 01-6541/6582
                                   Anson Stamping Co.                 Anson Stamping Co.

                              I.                                 substantially completed one press and had begun work on the
                                                                 second press.
   ASCO is engaged in the manufacture of stamped metal
products. Stamtec is engaged in the sale, service, and             On October 18, 1996, Chin Fong advised Stamtec that
engineering of large-scale mechanical presses for industrial     Stamtec would be charged interest and held responsible for
applications. Chin Fong Machine Industrial Co. (Chin Fong)       any losses if ASCO cancelled its order. Chin Fong further
is a manufacturer of large-scale presses. Stamtec is a wholly    demanded that Stamtec pay a non-refundable $100,000
owned subsidiary of Chin Fong.                                   deposit to Chin Fong, which was to be applied to the purchase
                                                                 price of the first ASCO press. On December 10, 1996,
  On April 8, 1996, Stamtec prepared a proposal for the sale     Stamtec paid Chin Fong $80,000 toward the deposit and paid
of a mechanical press to ASCO for $1,989,000. Stamtec’s          the $20,000 balance on January 3, 1997.
proposal included the following payment terms: (1) thirty
percent payment with the purchase order; (2) thirty percent        On or about January 9, 1997, Chin Fong issued its first
payment upon sign off at manufacturer; (3) thirty percent        invoice to Stamtec demanding full payment for the first press
payment upon delivery; and (4) ten percent payment upon the      ($1,600,000) and partial payment for the second press
completion of press installation. On April 25, 1996, ASCO        ($640,000 based on forty percent completion). Stamtec did
placed purchase orders for two presses. The ASCO purchase        not make any payment.
orders included the following revisions to Stamtec’s sales
proposal: (1) minor changes in the press specifications; (2) a      On November 30, 1997, Chin Fong invoiced Stamtec
reduction in the purchase price to $1,900,000; (3) a change in   $213,996 for interest charges on the cancelled orders and
the delivery location; and (4) a reduction in the down           $560,000 in storage fees. Stamtec paid the1997 storage fees
payment from $570,000 to $200,000 per press. ASCO did            on January 23, 1998 and the 1997 interest charge on March 2,
not make the required down payment at the time it placed its     1999. On December 31, 1998, Chin Fong invoiced Stamtec
order. Though Stamtec never waived the down payment              $213,996 in interest charges and $240,000 in storage fees that
requirement, it acted on ASCO’s purchase orders.                 accrued during 1998. Stamtec paid Chin Fong’s interest and
                                                                 storage fee invoices. Stamtec paid the 1998 storage fee on
  Stamtec entered into a contract with Chin Fong on April 26,    March 2, 1999 and the 1998 interest charge on May 20, 1999.
1996. Chin Fong immediately commenced production of the
presses, which were to be specially manufactured for ASCO.         In October 1998, Stamtec received an order for two presses
The Stamtec-Chin Fong contract provided that Chin Fong           from Precision Machine & Tool. Stamtec contracted with
would sell Stamtec the presses for $1,600,000 each, or a total   Chin Fong to manufacture the presses. Chin Fong was able
of $3,200,000. Stamtec did not make a down payment to            to use many, but not all, of the parts that had been fabricated
Chin Fong presumably because it had not received a down          for the ASCO presses. Chin Fong then forgave Stamtec’s
payment from ASCO.                                               obligation to pay the purchase price for the ASCO presses
                                                                 and, instead, required Stamtec to pay a $272,000 salvage loss
  On August 30, 1996, Chin Fong notified ASCO that it            charge. Chin Fong invoiced Stamtec a $272,000 salvage loss
would discontinue manufacturing the presses until and unless     charge on November 10, 1999, and Stamtec paid the charge
a down payment was made. At the time, Chin Fong had              on March 17, 2000.
Nos. 01-6541/6582                                Stamtec, Inc. v.             5    6    Stamtec, Inc. v.                     Nos. 01-6541/6582
                                             Anson Stamping Co.                         Anson Stamping Co.

   On December 18, 1998, the district court granted summary                                                      A.
judgment on the issue of liability in favor of Stamtec,
adopting the magistrate judge’s finding that the parties’                            ASCO argues that the district court’s determination that
conduct subsequent to April 25, 1996 evidenced their intent                        Stamtec was entitled to $264,880 in damages due to lost
to be bound by the reasonably certain terms of Stamtec’s sales                     profits resulting from ASCO’s breach was error because the
proposal and ASCO’s purchase orders. Neither party                                 district court did not make any findings as to whether Stamtec
objected to the magistrate judge’s finding of contract liability.                  actually experienced any lost profits. ASCO further argues
On August 23, 2001, the district court granted summary                             that the lost profits figure is hypothetical and, therefore,
judgment in favor of Stamtec on the issue of damages. The                          presents a genuine issue of material fact that precludes
parties timely appealed the district court’s order regarding                       summary judgment. The following facts are not in dispute:
Stamtec’s damages.1 The district court did not determine the                       ASCO contracted with Stamtec to deliver two presses F.O.B.
date of ASCO’s breach and the parties dispute the date that                        Louisville for $3.8 million ($1.9 million per press). Stamtec
the breach occurred.                                                               placed a purchase order with Chin Fong for the manufacture
                                                                                   of the two presses according to Stamtec’s specifications for
                                      II.                                          $3.2 million ($1.6 million per press). The fee paid to Chin
                                                                                   Fong did not include any delivery costs; Stamtec bore
   The district court’s disposition of a summary judgment                          responsibility for shipping the presses from Taiwan to
motion is reviewed de novo. Hunter v. Caliber Sys., Inc., 220                      Louisville. The $600,000 difference between Stamtec’s
F.3d 702, 709 (6th Cir. 2000). Summary judgment is                                 contract with Chin Fong and its contract with ASCO included
appropriate where there is no genuine issue as to any material                     $264,880 in expected profit and $335,120 in expected
fact and the moving party is entitled to judgment as a matter                      delivery, installation and warranty costs. In light in of these
of law. Fed. R. Civ. P. 56(c). Material facts are those facts                      uncontested facts, the amount of Stamtec’s lost profits does
defined by the substantive law and that are necessary to apply                     not pose a genuine issue of material fact that precludes
it. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986).                           summary judgment and the district court was not required to
While a court must draw all inferences in a light most                             make any specific findings with respect to Stamtec’s actual
favorable to the non-moving party, it may grant summary                            losses. Consequently, we affirm the district court’s award of
judgment if the record, taken as a whole, could not lead a                         $264,880 in lost profits.
rational trier of fact to find for that party. Matusushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).                                                      B.
                                                                                     ASCO argues that the district court erred when it
                                                                                   determined that Stamtec’s $335,120 estimated delivery costs
                                                                                   qualified as overhead and could be awarded as damages under
     1                                                                             Tennessee Code § 47-2-708(2). Stamtec concedes that the
       ASC O’s notice of appeal, filed December 7, 2001, included an
appeal of the district court’s Decemb er 18, 1998 o rder, as we ll as the          estimated delivery costs are not overhead expenses and that
magistrate judge’s report and recommendation, on the issue of contract             the expenses should not have been awarded as damages under
liability. ASCO did not file any written o bjec tion to the magistrate’s           § 47-2-708(2). The district court held that Stamtec was
finding of contra ct liability and, therefore, is barred from raising that issue
on ap peal. Thomas v. Arn, 474 U.S. 140 (1985).
                                                                                   entitled to the estimated delivery costs as overhead under the
Nos. 01-6541/6582                             Stamtec, Inc. v.           7    8    Stamtec, Inc. v.                      Nos. 01-6541/6582
                                          Anson Stamping Co.                       Anson Stamping Co.

rule established in Mid-South Materials Co. v. Ellis, 1988 WL                 costs because the manufacturer, not the seller, was
23914 (Tenn. Ct. App. Mar. 16, 1988).2 The Ellis court                        responsible for the cost of delivering the goods to the buyer.
interpreted the meaning of profit under Tennessee Code
Annotated § 47-2-708(2) when the non-breaching party is a                        The district court erred by not deducting for Stamtec’s
seller acting as a jobber. Section 47-2-708(2) states:                        saved delivery costs from the measure of Stamtec’s lost
                                                                              profits. Ellis makes clear that where there is no delivery cost,
  If the measure of damages provided in subsection (1) is                     a jobber’s measure of damages under § 47-2-708(2) is gross
  inadequate to put the seller in as good a position as                       profits, without any reduction for saved overhead. But where
  performance would have done then the measure of                             a jobber’s contract price includes saved delivery costs, the
  damages is the profit (including reasonable overhead)                       measure of damages under § 47-2-708(2) is gross profits (no
  which the seller would have made from full performance                      reduction for overhead) less the saved delivery cost. Thus,
  by the buyer, together with incidental damages provided                     under Ellis, the measure of Stamtec’s damages under § 47-2-
  in this chapter (§ 47-2-710), due allowance for costs                       708(2) is the contract price ($3.9 million) less Stamtec’s cost
  reasonably incurred and due credit for payments or                          of acquiring the presses ($3.2 million) less the saved delivery
  proceeds of resale.                                                         costs ($335,120), or $264,880. Consequently, we reverse the
                                                                              district court’s award of delivery costs as an element of
TENN. CODE ANN . § 47-2-708 (2003).                                           Stamtec’s measure of lost profits.
The Ellis court concluded that the section intended “to                         Stamtec next argues that the district court erred when it
compensate the seller for losses incurred and gains prevented                 refused to include the $100,000 deposit and $272,000 salvage
in excess of savings made possible by the breach.” Id. at *3.                 loss charge paid to Chin Fong as “costs reasonably incurred”
“In the case of a middleman or a jobber where there is no cost                under § 47-2-708(2) or, in the alternative, as an element of
of delivery that measure usually equals what we call gross                    incidental damages under § 47-2-710. The district court
profits: the jobber’s mark-up, or, in the case of a middleman,                determined that the deposit was a transaction-specific
the contract price less the middleman’s costs of acquiring the                payment and, as such, did not qualify as a recoverable
goods.” Id. Further, the court held that overhead savings are                 overhead expense. The district court determined that the
not deducted under § 47-2-708(2). Id. The Ellis court                         salvage loss charge fell within the definition of consequential
awarded the seller “the difference between the contract price                 damages, which are not recoverable by a seller. ASCO
and the cost to the seller of acquiring the goods ‘F.O.B.                     contends that the district court properly excluded these costs
jobsite.’” Id. Thus, in Ellis, the measure of the seller’s lost               as consequential damages. ASCO does not contend that it
profits was not adjusted to reflect the seller’s saved delivery               was commercially unreasonable for Stamtec to pay the
                                                                              charges.
                                                                                Though a deposit paid by a jobber to a manufacturer may
    2
                                                                              be recovered as a cost reasonably incurred, Stamtec’s
      The district court applied the damages measure provided in § 47-2-      payment of the $100,000 deposit was commercially
708(2) because it found that Stamtec acted as a jobber in this transaction,   unreasonable. Under the “due allowance for costs reasonably
citing Ellis. The parties do not dispute that Stam tec meets the Ellis test
for a jobber.
                                                                              incurred” provision of § 47-2-708(2), those costs reasonably
Nos. 01-6541/6582                       Stamtec, Inc. v.       9    10       Stamtec, Inc. v.                        Nos. 01-6541/6582
                                    Anson Stamping Co.                       Anson Stamping Co.

incurred by a seller or jobber prior to the buyer’s breach, such    court properly excluded these costs as consequential damages.
as a jobber’s payment of a non-refundable deposit to a              ASCO does not contend that the charges were commercially
manufacturer, are recoverable. Giantonio’s Pastry Shop v.           unreasonable.
Champagne & Co., Inc., 1986 WL 3704, at *3 (Ohio Ct. App.
Mar. 25, 1986) (holding that a jobber is entitled to recover          The $272,000 salvage loss charge is not recoverable under
non-refundable deposit paid to manufacturer as cost                 § 47-2-708(2) as a cost reasonably incurred because the
reasonably incurred prior to buyer’s breach under R.C.              charge occurred after ASCO’s breach.3 Nor may the charge
1302.82(B), the Ohio version of Tennessee Code § 47-2-              be recoverable as an element of incidental damages.
708(2)). Stamtec’s conduct, however, was not commercially           Tennessee Code Annotated § 47-2-710 states:
reasonable. Stamtec’s payment consumed a large proportion
(almost forty percent) of the profit it expected to earn on its       Incidental damages to an aggrieved seller include any
contract with ASCO. Stamtec’s payment of the deposit was              commercially reasonable charges, expenses, or
commercially unreasonable for several reasons. First, when            commissions incurred in stopping delivery, in the
Stamtec paid the deposit for the first ASCO press in                  transportation, care and custody of goods after the
December 1996 and January 1997, the press was substantially           buyer’s breach, in connection with the return or resale of
complete. At that time, ASCO had not only breached the                the goods or otherwise resulting from the breach.
contract downpayment term but had arguably breached the
contract term that required ASCO to inspect the completed           TENN. CODE ANN . 47-2-710 (2003).
press and make an additional payment against the purchase
price. Given ASCO’s failure to meet any of its obligations            Although the record is not totally clear on this matter, it
under the contract, it was commercially unreasonable for            appears Chin Fong presumably imposed the salvage-loss
Stamtec to advance nearly forty percent of its expected profits     charge on Stamtec because Stamtec breached its contract with
from the ASCO contract. Stamtec’s conduct did nothing to            Chin Fong. All parties agree that ASCO was not a party to
preserve its position relative to the measure of its lost profits   the Stamtec-Chin Fong contract, and the Stamtec-Chin Fong
owed as damages; rather it inflated ASCO’s potential                contract did not expressly incorporate the Stamtec-ASCO
damages liability by almost forty percent. Accordingly, we          contract. ASCO’s breach of its contract with Stamtec was
affirm the district court’s refusal to include the $100,000         therefore neither necessary nor sufficient for Stamtec to
deposit as an element of Stamtec’s damages because the cost         breach its contract with Chin Fong. As a practical matter, of
was not reasonably incurred.                                        course, Stamtec breached its contract with Chin Fong because
                                                                    ASCO would not fulfill its payment obligations to Stamtec.
   Next, Stamtec argues that the $272,000 salvage loss charge       But that means that the salvage-loss charge imposed by Chin
assessed by Chin Fong in March 2000 is recoverable as a             Fong on Stamtec was a consequence of ASCO’s breach,
“cost reasonably incurred” under § 47-2-708(2) or, in the           rather than a direct result of ASCO’s breach. Regardless of
alternative, an element of incidental damages under § 47-2-
710. The district court refused to award Stamtec recovery on
the ground that the salvage loss payment constituted                     3
                                                                         Though the parties dispute the exact date of ASCO ’s breach, the
consequential damages, which are not available to an                salvage loss charge was levied at a point in time when the parties do not
aggrieved seller. ASCO, again, contends that the district           dispute that ASCO was in breach.
Nos. 01-6541/6582                             Stamtec, Inc. v.          11     12   Stamtec, Inc. v.                     Nos. 01-6541/6582
                                          Anson Stamping Co.                        Anson Stamping Co.

the date of ASCO’s breach, therefore, the salvage-loss charge                                                C.
is an element of consequential, not incidental, damages.
Firwood Mfg. Co. v. Gen. Tire, Inc., 96 F.3d 163, 169-71 (6th                     Stamtec argues that it is entitled to recover prejudgment
Cir. 1996) (distinguishing between incidental and                              interest as an element of its damages arising from ASCO’s
consequential damages under the Uniform Commercial Code,                       breach. First, Stamtec argues the $427,992 interest charge
as adopted by Michigan.) Thus, we affirm the district court’s                  payments made to Chin Fong are recoverable as an element
refusal to permit Stamtec to recover the salvage cost as an                    of incidental damages under § 47-2-710. Second, Stamtec
element of incidental damages.                                                 argues that it is entitled to recover interest based on the one
                                                                               percent penalty term Stamtec claims was included in its
  Finally, Stamtec argues that the district court erred when it                contract with ASCO. In the alternative, Stamtec argues that
refused to include the $800,000 storage charge paid to Chin                    it is entitled to interest based on its lost use of money under
Fong as an element of its incidental damages under § 47-2-                     § 47-2-710. The district court refused to permit Stamtec to
710. Stamtec paid Chin Fong a total of $800,000 in storage                     recover either the Chin Fong interest charges or interest based
charges; a $560,000 storage charge was assessed for the                        on its loss use of money under § 47-2-710 because the court
period from November 1, 1996 through December 31, 1997                         concluded that such interest costs are consequential damages
and a $240,000 storage charge was assessed for the period                      that are not available to an aggrieved seller, citing Firwood
from January 1, 1998 through December 31, 1998. Though                         Mfg. Co., 96 F.3d at 169. The district court also refused to
the district court found that storage charges may be                           permit Stamtec to recover interest under the one percent
recoverable as incidental damages, the court denied recovery                   penalty term because that term was not a part of the parties’
because it found that Stamtec had failed to prove the storage                  contract.
cost losses with reasonable certainty. While we find that the
district court erred in treating the total amount of storage                     As an initial matter, the district court’s finding that the
charges as incidental damages,4 we agree with the district                     penalty term was not a part of the Stamtec-ASCO contract is
court that Stamtec cannot recover any of its storage costs                     supported by the record. Stamtec’s vice president testified
because it failed to prove the commercial reasonableness of                    “he was not sure the page of the contract dealing with that
the amount.5 Nashland Assocs. v. Shumate, 730 S.W.2d 332,                      subject was included in ASCO’s copy of the contract nor was
334 (Tenn. Ct. App. 1987) (holding that Tennessee law does                     the item billed to defendant before the action was filed.
not permit the recovery of speculative or uncertain damages).
                                                                                 Nor did the district court err when it concluded that Stamtec
                                                                               could not recover either the interest charges paid to Chin
                                                                               Fong or interest based on its lost use of money because these
    4                                                                          costs are consequential damages, which are not available to
     As discussed above, costs incurred prior to a breach may be
recoverab le as costs reasonably incurred under § 47-2 -708 (2), while costs   an aggrieved seller. Like the district court, we find the
incurred following a breach may be recoverable as incidental damages           reasoning in Firwood persuasive. The Firwood court
under § 47-2-710.                                                              considered whether an aggrieved seller could collect the cost
    5                                                                          of its lost use of money (interest) as an element of its
      The only evidence with respect to the reasonableness of the amount       incidental damages. The Firwood court began by noting that
of the storage charge was testimony given by Don Chi, who served at the
time as both an officer of Stamtec and an officer of Chin Fong.
                                                                               the Uniform Commercial Code entitles sellers to collect
Nos. 01-6541/6582                       Stamtec, Inc. v.     13    14   Stamtec, Inc. v.                       Nos. 01-6541/6582
                                    Anson Stamping Co.                  Anson Stamping Co.

incidental, but not consequential damages. Id. at 169.             interest paid on a commercial loan. Each involves a financial
Focusing on the issue of how Michigan had defined incidental       transaction that falls outside the immediate scope of the
damages, the court found that Michigan courts had not              buyer-seller transaction at issue: the first involves a bank
permitted an aggrieved seller to collect interest payments on      transaction necessary to maintain an entity’s financial
a loan secured to maintain a business after a buyer’s breach       viability and the second involves a transaction with an
on the ground that such interest payments fell within the          unspecified party that would produce uncertain results. Thus,
definition of consequential damages. Id. at 170. Because the       we conclude that the Tennessee Uniform Commercial Code,
Michigan courts had not addressed the specific issue of            which adopted the relevant Uniform Commercial Code
incidental damages arising from the lost use of money, the         provisions without modification, does not permit a seller’s
Firwood court considered the competing positions taken by          claim for damages based on either lost use of money or
the Seventh and Second Circuits. In doing so, the Firwood          interest paid to a third party (which is analogous to interest
court looked to the general structure of the Uniform               paid on a commercial loan) because these costs represent
Commercial Code for guidance. The Firwood court “agree[d]          consequential damages. Given that a seller is not entitled to
with the Seventh Circuit’s view that sellers are not entitled to   consequential damages, and the Commercial Code portion of
[lost use of money] as an element of the damage award”             the Tennessee law precludes the award of consequential
because “a foregone profit from exploiting a valuable              damages except as specifically provided by statute, TENN .
opportunity that the breach of contract denied to the victim of    CODE ANN . § 47-1-106(1), Stamtec cannot recover the
the breach fits more comfortably under the heading of              interest-charge payments made to Chin Fong nor the cost of
consequential damages than of incidental damages.” Id. at          its lost use of money as an element of incidental damages
171 (quoting Afram Export Corp. v. Metallurgiki Halyps,            under § 47-2-710.
S.A., 772 F.2d 1358 (7th Cir. 1985)). The Firwood court
“decline[d] to follow the Second Circuit’s embrace of an             Prejudgment interest may, however, be awarded under
expansive definition of incidental damages because “[that]         Tennessee Code Annotated § 47-14-123, which provides, in
Court appeared to conflate the definition of consequential         relevant part,
damages with that of incidental damages” when it determined
that recovery depended on whether the interest payments were         Prejudgment interest, i.e., interest as an element of, or in
foreseeable, an element of the test for consequential damages.       the nature of, damages, as permitted by the statutory and
Id. at 170 n.2. Thus, it was the considered opinion of the           common laws of the state as of April 1, 1979, may be
Firwood court that the general structure of the Uniform              awarded by courts or juries in accordance with the
Commercial Code precluded the award of interest, whether             principles of equity at any rate not in excess of a
claimed as charges arising from a bank loan or the buyer’s           maximum effective rate of ten percent (10%) per
lost use of money, as incidental damages because such costs          annum. . . . In addition, contracts may expressly provide
fell outside the immediate buyer-seller transaction.                 for the imposition of the same or a different rate of
                                                                     interest to be paid after breach or default within the limits
  We believe that the Firwood court was correct in its               set by § 47-14-123.
analysis of recoverability of interest costs as an element of
incidental damages. We do not see a meaningful distinction         TENN. CODE ANN . 47-14-123 (2003). Section 47-14-123
between costs incurred due to the lost use of money and            permits an aggrieved seller’s damage award to include an
Nos. 01-6541/6582                       Stamtec, Inc. v.     15    16    Stamtec, Inc. v.                      Nos. 01-6541/6582
                                    Anson Stamping Co.                   Anson Stamping Co.

amount for prejudgment interest as a matter of equity, rather      district court summarily denied. In light of the Tennessee
than as a form of incidental damages.                              Supreme Court’s presumption in favor of granting
                                                                   prejudgment interest under the statute, we remand the
  Stamtec argues that it is entitled to prejudgment interest       question so that the district court can provide a reasoned
under § 47-14-123 because fairness requires a plaintiff to be      decision on this issue.
fully compensated by a defendant for losses incurred,
including the lost of use of money. The Tennessee Supreme                                         D.
Court has held that, under § 47-12-123, “the court must
decide whether the award of prejudgment interest is fair,            Stamtec argues that the district court erred when it did not
given the particular circumstances of the case.” Myint v.          grant its motion for entry of a default judgment. Stamtec
Allstate Ins. Co., 970 S.W.2d 920, 927 (Tenn. 1998). In            urged the district court to enter a default judgment against
reaching an equitable decision, “a court must keep in mind         ASCO on the ground that an ASCO represenative’s
that the purpose of awarding the interest is to fully              deposition testimony in this case conflicted with the
compensate a plaintiff for the loss of the use of funds to         testimony given by that same person in another lawsuit. We
which he or she was legally entitled, not to penalize a            agree with the district court that its finding of liability on the
defendant for wrongdoing.” Id. Though courts traditionally         part of ASCO moots the conflicting testimony issue.
have awarded interest in cases where the amount of the
obligation is certain and the existence of the obligation is not                                  III.
disputed on reasonable grounds, “[t]he uncertainty of either
the existence or the amount of an obligation does not mandate        In sum, we reverse the district court’s decision to include
denial of prejudgment interest.” Id. at 928. The Tennessee         Stamtec’s estimated delivery costs in its damages award. We
Court of Appeals found that Myint “shifted the balance to          affirm the district court’s decision to award Stamtec $264,880
favor awarding prejudgment interest whenever doing so will         in lost profits and to exclude Stamtec’s payment of the Chin
more fully compensate plaintiffs for the loss of use of their      Fong storage, salvage loss, and interest charges from the
funds,” and concluded that “[f]airness will, in almost all         damages award, as well as its decision to deny damages based
cases, require that a successful plaintiff be fully compensated    on the interest term allegedly included in the contract. We
by the defendant for all losses caused by the defendant,           also affirm the district court’s decision to deny Stamtec’s
including the loss of use of money the plaintiff should have       motion for default judgment. Finally, we remand Stamtec’s
received.” Scholz v. S.B. Int’l, Inc., 40 S.W.3d 78, 83 (Tenn.     claim for prejudgment interest under § 47-14-123 for
Ct. App. 2000).                                                    additional proceedings.

  The district court stated that its conclusion that interest
charges were not recoverable as incidental damages under
§ 47-2-710 did not bar an award of prejudgment interest
under Tennessee law. The district court, however, did not
grant Stamtec’s request for prejudgment interest under § 47-
14-123. Stamtec filed a motion to alter or amend again
seeking prejudgment interest under the statute, which the