Judge Randolph M. Hammock, Case 20STCV30279 2023-03-22 Tentative Ruling

Plaintiff DC Partners, Inc. dba Soligen 2006 (“Soligen”) alleged that Defendant Eaton Aerospace, LLC (“Eaton”) wass indebted to Soligen in the amount of $183,481.06 plus interest based on component parts Soligen supplied Eaton. The operative First Amended Complaint contained causes of action for (1) Goods Sold and Delivered, (2) Account Stated, and (3) Open Book Account.

This court is unaware of any legal authority which requires a court to rule on evidentiary objections on a motion, except as to a motion for summary motion/adjudication (CCP § 437c (q)) or a special motion to strike (CCP § 425.16 (b)(2)); see also, Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 947-949.)

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.)

Plaintiff now moves for prejudgment interest in the total amount of $143,470.12 following a jury verdict in its favor. Plaintiff arrived at this amount based on the pleading’s default date of April 15, 2020, with an interest rate from that date of 18% per annum, calculated to be $106,290.36. Plaintiff also seeks additional interest in the amount of $37,116.76 for that accrued prior to April 15, 2020.

In opposition, Defendant first contends that the motion is untimely. “That a party is entitled to prejudgment interest does not make an award automatic.” (Id.) “The trial judge, not the jury, determines a prejudgment interest award on unliquidated damages.” (Id.) “A general prayer in the complaint is adequate to support an award of prejudgment interest.” (Id.) But where interest is not included in the jury's verdict, a separate request must be made. (Id.)

In support of its argument that the motion is untimely, Plaintiff relies on North Oakland Med. Clinic v. Rogers (1998) 65 Cal. App. 4th 824, 829. The issue in North Oakland Medical Clinic was whether the plaintiffs had timely sought prejudgment interest where “no interest was included in the verdict and where neither court nor jury had determined whether the damages were liquidated or unliquidated.” (N. Oakland Med. Clinic v. Rogers (1998) 65 Cal. App. 4th 824, 829.) After the verdict in their favor, the plaintiffs “did not move for an award of interest before entry of judgment,” “did [not] they seek an award of prejudgment interest at any of the post judgment proceedings which followed,” and “never sought interest in their request for an award of costs.” (Id. at 831.) Instead, “at virtually the last minute,” they “inserted an interest award in the order awarding costs which they presented to the court.” This was “in clear violation of Rogers's due process right to notice and an opportunity for hearing.” (Id. at 831.)

Noting that “prejudgment interest is not a cost, but an element of damages,” the Court first rebuffed the contention that the rules and deadlines governing cost bills should apply to requests for prejudgment interest. (Id. at 830.) For that same reason, the Court stated that “the cost bill is not an appropriate vehicle for requesting interest under section 3287.” (Id.)

Instead, while recognizing that no statute or rule of court sets a time limit for requesting an award of prejudgment interest, the Court concluded 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, “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].) California Rules of Court Rule 3.1802 is consistent with this conclusion, as it states that “[t]he clerk must include in the judgment any interest awarded by the court.” (Emphasis added).

As raised by Plaintiff in Reply, however, at least one 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, the court entered judgment on the jury verdict on January 23, 2023. The Judgment does not request or award prejudgment interest. (See Judgment, generally.) Plaintiff filed the instant motion on February 23, 2023, which falls after the time permitted to move for a new trial. (See CCP § 659.) Accordingly, Plaintiff failed to 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.) First, Plaintiff included a request for prejudgment interest in the operative First Amended Complaint’s prayer. (See FAC, 08/13/2020.) Moreover, this court expressly stated at trial that the award of prejudgment interest, if any, would be determined as a post-trial motion. This court did not set a deadline for doing so. Finally, Plaintiff filed this motion for prejudgment interest approximately one month after entry of judgment. While Plaintiff could have moved quicker, it is a far cry from the “last minute” request for prejudgment interest that happened in North Oakland that raised due process concerns. Defendant is now hard-pressed to claim surprise or prejudice by this short delay.

Plaintiff contends it is entitled to prejudgment interest under CCP section 3287, subdivision (a). In opposition, Defendant asserts that Civil Code section 3287(a) is inapplicable because Plaintiff’s damages “were unliquidated until the jury verdict.” (Opp. 1: 7-8.) Rather, if the court applies any prejudgment interest, Defendant contends it should be done under section 3287(b) and at a rate of 10% per annum. Where the interest rate is not set by contract, “the obligation shall bear interest at a rate of 10 percent per annum after a breach.” (§ 3289(b).)

Section 3287, subdivision (a), addresses the award of interest on liquidated claims. One who is “entitled to recover damages certain, or capable of being made certain by calculation ... is entitled also to recover interest thereon” from the time the right to recover arises. (Id.) Section 3287, subdivision (b), on the other hand, addresses the award of interest on unliquidated contract claims: “Every person who is entitled under any judgment to receive damages based upon a cause of action in contract where the claim was unliquidated, may also recover interest thereon from a date prior to the entry of judgment as the court may, in its discretion, fix, but in no event earlier than the date the action was filed.” “Under section 3287, subdivision (b) the court has discretion to decide whether prejudgment interest should be awarded on an unliquidated contractual claim.” (N. Oakland Med. Clinic v. Rogers (1998) 65 Cal. App. 4th 824, 829. “It is up to the judge to determine the date from which interest runs, but in no event may the court fix a date earlier than the filing of the action.” (Id.)

The test for determining “certainty” is whether defendant actually knows the amount owed or could have computed the amount from reasonably available information. (Children's Hosp. & Med. Ctr. v. Bonta (2002) 97 Cal. App. 4th 740, 774.) Where the amount of damages cannot be resolved except by verdict or judgment, prejudgment interest is not appropriate. (Wisper Corp. v. California Commerce Bank (1996) 49 Cal. App. 4th 948, 960; Chesapeake Indus., Inc. v. Togova Enterprises, Inc. (1983) 149 Cal. App. 3d 901, 909 [“an accounting action is prima facie evidence a claim is uncertain”].)

Here, there was a fundamental factual dispute as to which invoices were actually at issue, which of those invoices were paid in full, and which invoices, out of certain unpaid invoices at issue, justified payment. (Golodnitska Dec., ¶ 4.) Indeed, the damages sought by Plaintiff have fluctuated. In the First Amended Complaint, Soligen sought $183,481.06. Soligen served Eaton with a CCP § 998 offer to compromise in the amount of $600,000. (Golodnitska Decl. ¶ 44.) Soligen’s expert report claimed that Soligen was owed $825,545 in damages. (Id.) At trial, Soligen asked the jury to award it $241,000 in principle balance due. (Id.) Later that day, the jury awarded Soligen $212,981. (Id.) Therefore, Plaintiff’s claims were clearly unliquidated. In short, the amounts being claimed by Plaintiff in this case cannot reasonably be said to have been “certain,” as defined in the previous paragraph herein.

First, Plaintiff’s action was based on common count, not for breach of contract. It is unclear how the “Quality Manual Standard” applies to the dispute, if at all. Be that as it may, Plaintiff also completely fails to address Defendant’s argument that Defendant’s Terms and Conditions explicitly rejected Plaintiff’s proposed late fee or interest provisions. In fact, beyond a conclusory statement in its memorandum, Plaintiff cites no authority to support its contention that the 18% rate listed in the Quality Manual Standard should be applied here.

Second, and moreover, this Court did not necessarily agree or concur with the jury’s verdict in this case. If this Court had been the trier of fact, it would have likely entered a verdict in favor of the Plaintiff for substantially less than was awarded, based not only upon the statute of limitation issues, but also based upon the fact that the last invoices issued by the Plaintiff were clearly unreasonable and untimely, even under a “common count” or “open book account” theory. [FN 1]