XCVI, LLC v. LACAUSA, et al.

PLAINTIFF’S MOTION FOR PREJUDGMENT INTEREST

 

MOVING PARTY: Plaintiff XCVI, LLC

RESPONDING PARTY(S): None

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff XCVI, LLC filed this action against Defendants LACAUSA, LLC and Greg Lorber, alleging causes of action for (1) breach of contract – asset purchase agreement, (2) breach of contract – guaranty, (3) accounting, and (4) unfair business practices Under Cal. Bus. & Prof. Code § 17200, et seq. 

Plaintiff alleged that LACAUSA and XCVI entered into an asset purchase agreement (“APA”) on August 8, 2019. In connection with the APA, Defendant Lorber and XCVI entered into a guaranty (“Guaranty”) whereby Lorber guaranteed LACAUSA’s obligations under the APA, on August 8, 2019. Pursuant to the APA, LACAUSA was to pay XCVI a total of $727,982.97 as follows: (1) $250,000 for Trademarks, Domain Names, and Social Media Accounts at time of closing; (2) $88,148.05 for Samples and Related Assets; and (3) $389,834.92 for Inventory. Plaintiff alleged that Defendants had defaulted under the APA.  This suit followed. 

The matter proceeded to a jury trial starting December 11, 2023. On December 14, 2023, the jury returned a unanimous verdict in Plaintiff’s favor, awarding Plaintiff $376,144.37 for Defendants’ contractual breach.

Plaintiff now moves to recover its prejudgment interest on the verdict. No opposition was filed. [FN 1]

TENTATIVE RULING:

Plaintiff’s Motion for Prejudgment Interest is GRANTED in the requested amount of $150,045.56.

Plaintiff is ordered to give notice. 

DISCUSSION:

Motion for Prejudgment Interest

I. Legal Standard

Under Civil Code Section 3287(a), “[e]very person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in the person upon a particular day, is entitled also to recover interest thereon from that day.” “[O]ne purpose of section 3287[a], and of prejudgment interest in general, is to provide just compensation to the injured party for loss of use of the award during the prejudgment period—in other words, to make the plaintiff whole as of the date of the injury.” (Lakin v. Watkins Associated Industries (1993) 6 Cal.4th 644, 663.) Under section 3287(a), “the court has no discretion, but must award prejudgment interest upon request, from the first day there exists both a breach and a liquidated claim.” (North Oakland Medical Clinic v. Rogers (1998) 65 Cal.App.4th 824, 828.) Courts generally apply a liberal construction in determining whether a claim is certain, or liquidated. (Chesapeake Industries, Inc. v. Togova Enterprises, Inc. (1983) 149 Cal.App.3d 901, 907.) “The test for determining certainty under section 3287(a) is whether the defendant knew the amount of damages owed to the claimant or could have computed that amount from reasonably available information.” (Howard v. Am. Nat'l Fire Ins. Co. (2010) 187 Cal. App. 4th 498, 535.)

II. Analysis

Plaintiff moves for an order awarding its prejudgment interest in the amount of $150,045.56 based on the $376,144.37 jury verdict in its favor.

A. Timing of Motion

As a preliminary issue, the court addresses the timing of the motion. In North Oakland Med. Clinic v. Rogers (1998) 65 Cal. App. 4th 824, the Court of Appeal held that “prejudgment interest should be awarded in the judgment on the basis of a specific request therefor made before entry of judgment.” (Id. at 830 [emphasis in original].) “[A]t the latest,” the Court continued, “a request for prejudgment interest under section 3287 may be sought as part of a motion for new trial pursuant to Code of Civil Procedure section 657, on the grounds of ‘[e]xcessive or inadequate damages.’” (Id. at 830 [citing CCP § 657, subd. 5.].) Thus, under North Oakland, “requests for prejudgment interest under section 3287 by a successful plaintiff must be made by way of motion prior to entry of judgment, or the request must be made in the form of a motion for new trial no later than the time allowed for filing such a motion.” (Id. at 831 [citing Code Civ. Proc., § 659 [requiring a party move for a new trial “[w]ithin 15 days of the date of mailing notice of entry of judgment by the clerk of the court pursuant to Section 664.5, or service upon him or her by any party of written notice of entry of judgment, or within 180 days after the entry of judgment, whichever is earliest].) 

However, at least one subsequent Court has taken a more lenient approach and limited North Oakland to its facts.  In Steiny & Co. v. California Elec. Supply Co. (2000) 79 Cal. App. 4th 285, 294, a party sought and was awarded prejudgment interest after the entry of a stipulated judgment.  On appeal, relying on N. Oakland, the appellant argued that the award of prejudgment interest was improper because the appellee failed to seek prejudgment interest prior to the entry of the stipulated judgment.  (Id.) The Court rejected that argument, finding the award of prejudgment interest was proper.  The Court reasoned that its case “b[ore] no resemblance to the extreme facts in North Oakland.” (Id.) Instead, the appellee “requested interest in its complaint, and [appellant] stipulated before judgment was entered that [appellee’s] request for interest would be adjudicated in a post-judgment hearing.” (Id. at 294.) 

Here, Plaintiff did not request prejudgment interest “by way of motion prior to entry of judgment,” or alternatively, by way of “motion for new trial no later than the time allowed for filing such a motion.” (N. Oakland Med. Clinic, supra, 65 Cal. App. 4th at 831.) Thus, under the rule formulated in North Oakland, the request would be untimely.  

Be that as it may, the facts in this case more closely resemble those present in Steiny than the “extreme facts” in North Oakland.  (Steiny & Co., supra, 79 Cal. App. 4th at 294.) Notably, Plaintiff included a request for prejudgment interest in the operative pleading. In addition, the Judgment in this matter states that an award of “pre-judgment and post-judgment interest shall be determined by the Court following further briefing by counsel for the parties,” and did not include a deadline for doing so. (See 12/27/23 Judgment.) Considering these facts, and without opposition by Defendants, the court finds Plaintiff’s motion is timely and will therefore proceed to address it on the merits. 

B. Prejudgment Interest is Ascertainable from the Complaint

Plaintiff argues its right to prejudgment interest is “ascertainable” from the Complaint and Asset Purchase Agreement as the amounts in dispute were certain. Namely, Plaintiff asserts Section 4.1 of the APA titled “Purchase Price” laid out LACAUSA’s financial obligations to XCVI. (Brutzkus Decl., Exh. 1.) Based on those agreed-upon, obligations, Plaintiff submits “there is no dispute as to the basis of the damages in the amount of $376,144.37.” (Mtn. 4: 18-21.) 

“The test for determining certainty under section 3287(a) is whether the defendant knew the amount of damages owed to the claimant or could have computed that amount from reasonably available information.” (Howard v. Am. Nat'l Fire Ins. Co. (2010) 187 Cal. App. 4th 498, 535.) 

Based on the facts and Defendant’s failure to oppose, the court concludes Defendant knew—or could have readily calculated—the damages owed to Plaintiff. Therefore, Plaintiff is entitled to its prejudgment interest.

C. Calculation of Prejudgment Interest 

Plaintiff is entitled to prejudgment interest at the statutory rate of 10 percent per annum from the date of the filing of the Complaint to the date of entry of judgment. (See §§ 3287(a), 3289(b).)

LACAUSA breached the APA on December 31, 2019 when it failed to pay the quarterly payment due on that same day. (Brutzkus Decl., ¶ 4.) Entry of judgment occurred on December 27, 2023.

The 10% per annum interest rate on a judgment of $376,144.37 is $37.614.44 per year, or $103.05 per day. There were three years and 361 days from the date of the breach to entry of judgment. Thus, prejudgment interest amounts to $150,045.56. ($37,614.44 per year x 3 years) + ($103.05 per day x 361 days).

Accordingly, Plaintiff’s Motion for Prejudgment Interest is GRANTED in the requested amount of $150,045.56.

Plaintiff is ordered to give notice.

IT IS SO ORDERED.

Dated:   April 11, 2024 ___________________________________

 FN 1 -   Plaintiff served the moving papers on Defendants by electronic service on February 20, 2024. (See 02/20/24 Proof of Service.)