Court Opinion

ID: 3021354
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:24:36.465213+00
Date Added: 2024-06-11T11:47:27.978558
License: Public Domain

Opinions of the United
2006 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

6-1-2006

Nutrition Mgmt Ser v. Harborside
Precedential or Non-Precedential: Non-Precedential

Docket No. 05-3085

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Recommended Citation
"Nutrition Mgmt Ser v. Harborside" (2006). 2006 Decisions. Paper 979.
http://digitalcommons.law.villanova.edu/thirdcircuit_2006/979

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                                                                     NOT PRECEDENTIAL

                           UNITED STATES COURT OF APPEALS
                                FOR THE THIRD CIRCUIT
                                      __________

                                         No. 05-3085
                                         __________

                 NUTRITION MANAGEMENT SERVICES COMPANY,
                                          Appellant,

                                               vs.

                HARBORSIDE HEALTHCARE CORPORATION AND
               HARBORSIDE HEALTHCARE LIMITED PARTNERSHIP

                                         __________

                      On Appeal from the United States District Court
                         for the Eastern District of Pennsylvania
                                    (No. 01-cv-00902)
                       District Judge: Honorable R. Barclay Surrick
                                        __________

                       Submitted Under Third Circuit L.A.R. 34.1(a)
                                     May 16, 2006

                                          _________

      Before: MCKEE and GARTH, Circuit Judges, and LIFLAND, District Judge*

                                (Opinion Filed: June 1, 2006)
                                        __________

                                          OPINION
                                         __________

Lifland, District Judge:

       *
          The Honorable John C. Lifland, Senior District Judge for the District of New Jersey,
sitting by designation.
          This is an appeal from an Order entered May 17, 2005, denying the post-trial

motion of Appellant Nutrition Management Services Company (“Nutrition

Management”), pursuant to Federal Rule of Civil Procedure 59(e), to alter or amend a

judgment to add prejudgment interest in a case resulting in a jury finding of breach of

contract and intentional interference with contractual relations. We will affirm.1

          Writing, as we do, only for the benefit of the parties, we recite only those facts

essential to decide this appeal. Nutrition Management managed the dietary services at

nursing homes operated by Appellees Harborside Healthcare Corporation and Harborside

Healthcare Limited Partnership (collectively “Harborside”). During the course of their

dealings, a dispute arose over billing terms which led ultimately to the filing of this

action.

          Nutrition Management claimed losses, inter alia, in the amount of $2,120,913 for

unpaid invoices, to which it added $1,637,935 in interest calculated at a rate of 1.5% per

month.2 According to Nutrition Management, Harborside had agreed to pay interest on

unpaid invoices at the rate of 1.5% per month (“contract rate”). However, if the jury

determined that Harborside had not agreed to pay contract rate interest, Nutrition

Management claimed that Harborside nonetheless owed an additional $545,978 in interest

          1
        The District Court had subject matter jurisdiction over this action pursuant to 28 U.S.C.
§ 1332. We have appellate jurisdiction pursuant to 28 U.S.C. § 1291.
          2
        Nutrition Management also sought miscellaneous expenses, such as damages for excess
food costs and damages stemming from a covenant of no competition.

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on the unpaid invoices calculated at the rate of 6% per annum (“legal rate”).3 Nutrition

Management supported its claims for interest throughout the trial with testimonial and

documentary evidence. Exhibits showing damages with both interest estimates were

submitted to the jury for use during its deliberations.

       The parties agreed upon a verdict slip that provided for damages as a lump sum in

the event that the jury found in Nutrition Management’s favor. Although Nutrition

Management jointly prepared the verdict slip with Harborside, counsel for Nutrition

Management, with seeming prescience, anticipated that a problem would arise with the

lump-sum format should damages be awarded. Because of the way the verdict slip was

structured, the District Court would be unable to determine, after the fact, whether the

jury had included interest on unpaid invoices – an element of the damages susceptible to

prejudgment interest. Unless the award of damages matched exactly that claimed by

Nutrition Management, the District Court would be left to guess whether the jury awarded

contract rate interest or legal rate interest or made only a partial award of interest at one

rate or another; thus, a post-trial motion to alter the judgment to add prejudgment interest

would suffer the potential of yielding an impermissible double helping of prejudgment

interest.

       The District Court acknowledged that this uncertainty would create a significant

       3
         Under Pennsylvania law, interest is available as a matter of right on money owed under
a contract. Fernandez v. Levin, 548 A.2d 1191, 1193 (Pa. 1988). Parties are free to
contractually determine the availability and/or rate of interest if one of the parties breaches its
duties; otherwise, the statutory rate of prejudgment interest applies. The statutory rate is 6% per
annum. 41 Pa. Cons. Stat. Ann. § 202.

                                                 3
problem in making a determination as to what interest, if any, should be recovered. To

correct this uncertainty, the District Court suggested a revised verdict slip, one that

separately identified each claim so that the jurors could more accurately partition

damages. However, the court’s verdict slip still did not sever within each claim those

elements of the damages susceptible to prejudgment interest from those elements not

susceptible. Counsel for Nutrition Management suggested a change to the verdict slip

that would inquire from the jury precisely whether they found that invoices were unpaid

and whether they awarded contract rate interest or not. Harborside objected to this

inquiry based on its suggestiveness. Ultimately, the parties agreed that, upon motion, the

District Court would review the jury’s damages award and from that review, make a

determination about whether or not the award contained interest. Nutrition Management

believed that if the court determined that the jury did not award contract rate interest, the

court would then award the statutory interest at the legal rate to which it was entitled.

       The jury returned a verdict in favor of Nutrition Management, finding that

Harborside breached its contract with Nutrition Management and interfered with

contractual relations, but did not commit fraud. The jury awarded Nutrition Management

a total of $2,500,000 in damages. As noted, the verdict slip reflected this amount as a

lump sum, and did not identify what portion, if any, of this award the jury allocated to

interest (either contractual or statutory) on unpaid invoices, or to interference with

contractual relations.

       Nutrition Management reasoned that the jury necessarily found that there was a

                                              4
contract which entitled Nutrition Management to payment on its invoices ($2,120,913),

but that the award did not include contract rate interest ($1,637,935). Nutrition

Management surmised that the jury did not accept its claim that it was owed any interest

at the contract rate and therefore did not award interest at the legal rate even though both

interest estimates were presented to the jury. Nutrition Management moved to alter or

amend the judgment pursuant to Fed. R. Civ. P. 59(e) to add prejudgment interest at the

legal rate.

       Engaging in its review, the District Court examined what had occurred at trial and

found that Nutrition Management clearly presented its claim for contract rate interest to

the jury. Moreover, the jury had been instructed by the court to award interest if they

determined that the parties had a contract and the contract in fact provided for the

payment of interest. Without evidence to the contrary, the District Court presumed that

the jury followed the court’s instructions with regard to the calculation of damages. The

District Court concluded that the award of damages contained the amount of interest the

jurors deemed appropriate, and therefore denied Nutrition Management’s motion.

       We review an order denying a motion to alter or amend a judgment pursuant to

Fed. R. Civ. P. 59(e) for abuse of discretion as to those matters committed to the

discretion of the district court. Adams v. Gould, Inc., 739 F.2d 858, 864 (3d Cir. 1984).

       Here, it cannot be said that the District Court abused its discretion when it

presumed, after engaging in a thorough review of the trial record, that the jury adhered to

instructions and awarded the interest it deemed appropriate. See Poleto v. Conrail Corp.,

                                              5
826 F.2d 1270, 1277 (3d Cir. 1987) (“It has been suggested that when a jury has been

asked to render only a general verdict, it might be presumed to have included

prejudgment interest in its calculation of damages.”). Nutrition Management provided the

jury with damage figures that included interest estimates at both the contract rate and the

legal rate. Moreover, Nutrition Management emphasized the inclusion of prejudgment

interest throughout the trial and the court expressly charged the jury to include

prejudgment interest in their assessment of damages if applicable. Fairness dictates that

Nutrition Management, not Harborside, should bear the consequences of the confusion

and uncertainty it created by presenting arguments for both contractual and statutory

prejudgment interest. See Raybestos Prods. Co. v. Younger, 54 F.3d 1234, 1246 (7th Cir.

1995). A presumption that the jury’s award included augmentation for interest under

these circumstances is clearly not an abuse of discretion. See id. at 1247.

                                           ***

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