Opinion
C.A. No. 01C-04-012.
August 26, 2003.
Kenneth F. Fulginiti, Esquire Duffy Keenan.
Kathleen Jennings-Hostetter, Esquire Oberly, Jennings Rhodunda, P.A.
Jonathan L. Parshall, Esquire Murphy Spadaro Landon.
Dear Counsel:
This is the Court's decision on the Motion for New Trial filed by Defendant KCL Enterprises, a Delaware Corporation, d/b/a Clear Water Plumbing Air Conditioning, Inc., a Delaware Corporation ("KCL"), and the proposed Order Entering Judgment on the Verdict filed by Plaintiff Cumberland Insurance Group ("Cumberland"). For the reasons stated herein, KCL's Motion is denied, and judgment is entered on Cumberland's behalf for $504,687.65, plus post-judgment interest.
FACTS
This dispute arose after a fire destroyed the home of Bernadette and Luther Hearn (the "Hearns") on April 27, 1999. The Hearns were compensated for their property loss by Cumberland, their insurer. The following payments were received by the Hearns from Cumberland:
Date Payment
April 29, 1999 $10,000.00 February 24, 2000 7,925.00 February 24, 2000 21,800.00 February 24, 2000 207,236.87 August 25, 2000 125,868.00 October 2, 2000 2,726.50 ___________ $375,556.37 ===========
After the Hearns alleged that the fire was caused by KCL's negligent maintenance of a pool heater, Cumberland sought to recoup its expenditures through subrogation. Subsequently, on June 18, 2003, a jury found KCL responsible for the fire and liable for Cumberland's expenditures on the Hearns' behalf. Cumberland and KCL had stipulated that Cumberland's recoverable damages were $375,556.37. Cumberland's proposed Order Entering Judgment on the Verdict seeks from KCL $505,559.65 in damages, plus $74.59 per day in post-judgment interest accruing from June 18, 2003, until satisfaction. KCL alleges that the jury received the wrong instruction of law and has filed a motion for a new trial.
The Hearns originally filed suit against KCL, but on January 23, 2003, the Court substituted Cumberland as the plaintiff.
This figure includes: Recoverable Damages, $375,556.37; Taxable Costs, $4,557.15; and Pre-Judgment Interest, $125,446.13.
DISCUSSION
A. Motion for New Trial
KCL's Motion for a New Trial asserts that the jury was prejudiced by the Court's use of an erroneous instruction of law. The contested instruction relied on the 1988 and 1992 versions of the National Fuel Gas Code (the "Old Code") published jointly by the American Gas Association and the National Fire Prevention Association (the "Governing Bodies"). The Old Code provides:
4.2.1 Before Turning Gas On. Before gas is introduced into a system of new gas piping, or back into an existing system after being shutoff, the entire system shall be inspected to determine that there are no open fittings or ends and that all manual valves at outlets on equipment are closed and all unused valves at outlets are closed and plugged or capped.
4.2.2 Test for Leakage. Immediately after turning on the gas, the piping system shall be tested to ascertain that no gas is escaping.
If leakage is indicated, the gas supply shall be shut off until the necessary repairs are made.
4.2.3 Placing Equipment in Operation. Gas utilization equipment shall be permitted to be placed in operation after the piping system has been tested and determined to be free of leakage and purged in accordance with 4.3.2.
At trial, neither party questioned the applicability of the Old Code. KCL now argues that the Old Code was superseded by revisions made by the Governing Bodies in 1999 (the "New Code") and that the New Code applies to this case. The New Code states:
4.2.2. Before Turning Gas On. Before gas is introduced into a system of new gas piping, the entire system shall be inspected to determine that there are no open fittings or ends and that all manual valves at outlets on equipment are closed and all unused valves at outlets are closed and plugged or capped.
4.2.3. Test for Leakage. Immediately after the gas is turned on into a new system or into a system that has been initially restored after an interruption of service, the piping system shall be tested for leakage. If leakage is indicated, the gas supply shall be shut off until the necessary repairs have been made.
4.2.4 Placing Equipment in Operation. Gas utilization equipment shall not be placed in operation until after the piping system has been tested in accordance with 4.2.3 and purged in accordance with 4.3.2.
KCL believes that the code version recited in the instruction determined the dispute's outcome. Cumberland's expert witness, who relied on the Old Code, testified that a technician must test for leaks when restarting a gas system, a step KCL's employee failed to perform. KCL contends the New Code does not require this safeguard.
A litigant is entitled to a new trial on liability and damages when it is "desirable as a matter of fairness." DiGioia v. Schetrompf, 251 A.2d 569 (Del.Super. 1969). As Cumberland notes, the fire occurred April 27, 1999, but the New Code was not adopted until July 22, 1999, three months after the fire. Therefore, the New Code was not applicable at the time of the fire. The jury did not receive an erroneous instruction of law and KCL's claim is without merit. Therefore, KCL's Motion for a New Trial is denied.
Cumberland also contends that the Fire Marshal of the State of Delaware has not adopted the New Code, there is no substantive difference between the New Code and the Old Code, and KCL waived the improper jury instruction issue when it failed to assert the claim at trial. Due to the denial of the Motion on other grounds, these arguments will not be addressed.
B. Prejudgment Interest
Cumberland contends that prejudgment interest should be calculated separately for each payment made by the insurer to the insured. Accordingly, Cumberland seeks the following:
Date Payment Rate Interest Sought
The Federal Reserve Discount Rate.
April 29, 1999 $10,000.00 4.50% $3,928.60 February 24, 2000 $236,861.87 5.25% $81,287.44 August 25, 2000 $125,868.00 6.00% $39,409.27 October 2, 2000 $2,726.50 6.00% $820.82
Thus, the total prejudgment interest sought by Cumberland is $125,446.13.
Cumberland originally sought $532,831.42 in damages, including $147,895.75 in prejudgment interest accruing from the date of the fire.
KCL submits that the prejudgment interest began to accrue on October 2, 2000, when Cumberland made its final payment to the Hearns. Thus, according to KCL, only $112,727.28 in prejudgment interest would be due to Cumberland To refute Cumberland's method of computation, KCL citesDeardorff Assoc. v. Harford Mut. Ins. Co., Del. Super., C.A. No. 96-C-10-260, Toliver, J. (Apr. 27, 2000) (a partial subrogation action) and its finding that prejudgment interest accrued after the insureds had received full compensation. Deardorff examined whether an insurer was entitled to prejudgment interest, not the methodology used to determine the award. Unlike Cumberland and KCL's dispute, neither party disputed the amount of prejudgment interest sought by the insurer. KCL also refers to Hercules Inc. v. Aetna Cas. Sur. Co., Del. Super., C.A. 92C-10-105, 90C-FE-195, Silverman, J. (Sept. 30, 1998), and its conclusion that "pre-judgment interest begins with the filing of the complaint." This accrual date was chosen after the jury failed to determine when Hercules met the contractual requirements for receiving insurance coverage. Thus, Hercules, a coverage dispute, is distinguishable from Cumberland's tort claim.
Generally, the prevailing plaintiff is entitled to prejudgment interest. Moskowitz v. Mayor and Council of Wilmington, 391 A.2d 209, 210 (Del. 1978) (citation omitted). Prejudgment interest compensates the plaintiff "for the fact that the defendant has been able to utilize the money represented by plaintiff's damages from the date of the wrong to the date of judgment." Stephenson v. Capano Dev. Co., Del. Super., No. 81-C-JA-83, Stiftel, P.J. (July 10, 1985), at 3. In tort cases involving injury to person or property, "interest shall be added to any final judgment entered for damages awarded, calculated at the rate established in subsection (a) of this section, commencing from the date of injury." 6 Del. C. § 2301(d); see also Rollins Envt'l Serv. Inc. v. WSMW Indus. Inc., 426 A.2d 1363, 1368 (Del.Super. 1980) (prevailing plaintiff entitled to prejudgment interest from "the time [it] was entitled to its damages").
According to 6 Del. C. § 2301(a), "the legal rate of interest shall be 5% over the Federal Reserve discount rate including any surcharge as of the time from which interest is due."
Subrogation reimburses "the person who met the obligation of another or paid the money or compensation owed by another." Baio v. Commercial Union Ins. Co., 410 A.2d 502, 506 (Del. 1979). Subrogation is an equitable remedy. Id.; see also 83 C.J.S. Subrogation §§ 3, 92 (2000). Prejudgment interest "computed from time of payment [has been found to be] a fair and reasonable distribution of the proceeds of recovery." 16 Lee R. Russ Thomas F. Segalla, Couch on Insurance, § 223:101, at 223-115 (3rd ed. 2000); see also Metropolitan Mut. Fire Ins. Co. v. Carmen Holding Co., 220 A.2d 778, 782 (Del. 1966) (interest accrues when payments should have been made); 83 C.J.S. Subrogation § 99 (2000). A fair and equitable award of prejudgment interest will recognize that Cumberland paid the Hearns on four dates thereby losing the ability to use the funds in an incremental manner. As such, Cumberland's method of calculation is approved and the insurer is granted $125,446.13 in prejudgment interest in this subrogation claim.
C. Expert Witness Fees
Cumberland seeks to recoup the costs associated with its expert witnesses, G.C. Frederick ("Frederick") and T.D. Schneiders ("Schneiders"). The expert witness fees sought by Cumberland are:
Witness Time Rate Travel Expenses Amount Sought
Frederick 11 hours $195 $117.85 $2,248.85 Schneiders 11 hours $165 $102.10 $1,903.10
KCL acknowledges that Cumberland is entitled to recover expert witness fees, but it objects to the amount claimed by Cumberland According to KCL, Cumberland cannot apply an expert's hourly rate for testimony to his or her travel and waiting times. KCL acknowledges that Cumberland may recover $987.50 for Schneider's services (for two hours of testimony and five hours of travel charged at a lower hourly rate) and $1,172.50 for Fredericks's services (for two hours of testimony and five hours of travel charged at a lower hourly rate).
Generally, the prevailing party in a civil lawsuit "shall recover, against the adverse party, costs of suit." 10 Del. C. § 5101; see also Super. Ct. Civ. R. 54(d). The award of costs is a matter of judicial discretion. Donovan v. Delaware Water Air Res. Comm'n, 358 A.2d 717 (Del. 1976). Expert witness testimony is a compensable expense. Nygaard v. Lucchesi, 654 A.2d 410 (Del.Super. 1994). Reimbursement for expert witnesses is limited "to time necessarily spent in attendance upon the court for the purpose of testifying." State ex rel. Price v. 0.0673 Acres of Land, 224 A.2d 598, 602 (Del. 1966). This includes an expert witness's fees for testifying, waiting to testify, and traveling to and from the courthouse. Russo v. Medlab Clinical Testing, Inc., Del. Super., Civ. A. No. 99C-12-019, Bradley, J. (Nov. 14, 2001). Remuneration is calculated at the expert's hourly rate for the time spent testifying and traveling to court. Russo, at 4 (citing Little v. Morgan, Del. Super., C.a. No. 86C-AP-1, Toliver, J. (April 10, 1991) at 2)). However, the same hourly rate does not apply to both activities. Bell v. Harmony Mill Ltd. Partnership, Del. Super., Civ. A. No. 93C-05-191, Carpenter, J. (Jan. 19, 1996), at 5. While traveling to and from court, an expert witness "retains a certain amount of freedom to do other compensable tasks and his efforts are not solely confined to working on [the] case." Sliwinski v. Duncan, Del. Super., C.A. 89C-MR-93, Toliver, J. (Mar. 27, 1992), at 3. Thus, this Court finds that one-half of the expert's hourly rate is a reasonable award for the time the expert spent traveling to and from the courthouse. See Bell at 5; Sliwinski at 2-3. As Schneider and Fredericks traveled from Philadelphia to testify, Cumberland will be compensated for five hours of travel time for each expert witness at one-half of the hourly rate. The remaining six hours claimed for each expert will be compensated at the full hourly rate. Therefore, Cumberland is awarded $3060.00 for its expert witness fees and $219.95 for the expert witnesses' travel expenses.
CONCLUSION
For the aforementioned reasons, Defendant KCL's Motion for a New Trial is denied. Plaintiff Cumberland's revised Order Entering Judgment on the Verdict is granted, except for the issue of expert witness fees. Cumberland is awarded $375,556.37 in damages, $125,446.13 in prejudgment interest, $3,685.15 in costs, and the applicable post-judgment interest from June 18, 2003.
In addition to the expert witness fees, the costs include $405.20 for uncontested filing fees and the cost of the Giles transcript.