Opinion
Civil Action No: 03-489, Section: "R" (3).
January 19, 2005
ORDER AND REASONS
The plaintiff moves the Court to calculate its prejudgment interest according to the Louisiana rate and for court costs. The defendant contends that the federal interest rate is appropriate. For the following reasons, the Court will apply the federal interest rate, and the Court orders the defendant to bear the court costs.
I. BACKGROUND
ENSCO sued Bird-Johnson Company for breach of the warranty of workmanlike service. ENSCO alleged that repair work that Bird-Johnson performed on the M/V ENSCO TITAN during the spring and summer of 2000 caused the TITAN to suffer a catastrophic failure. Bird-Johnson counterclaimed against ENSCO for $11,047.28 for unpaid repair work it performed after the TITAN's failure. After conducting a three-day bench trial, the Court found that Bird-Johnson breached the warranty of workmanlike service and that its breach caused 50% of ENSCO's damages. Additionally, the Court rejected Bird-Johnson's counterclaim.
II. DISCUSSION
A. Pre-judgment Interest
ENSCO moves the Court to calculate its prejudgment according to the Louisiana legal rate or, in the alternative, according to the cost of borrowing. Bird-Johnson contends that the lower federal interest rate is appropriate. The Court has broad discretion to award prejudgment interest in admiralty cases. See Randolph v. Laeisz, 896 F.2d 964, 969 (5th Cir. 1990). Courts should award interest unless there are peculiar circumstances that would make the imposition of interest inequitable to the losing party. Noritake Co. v. M/V HELLENIC CHAMPION, 627 F.2d 724, 728 (5th Cir. 1980).
The purpose of prejudgment interest is to compensate, not to penalize. See Transorient Navigators Co., S.A. v. M/S SOUTHWIND, 788 F.2d 288, 294 (5th Cir. 1986). The federal interest rate is tied to the rate of investment return. Pillsbury Co. v. Midland Enter., Inc., 715 F.Supp. 738, 771 (E.D. La. 1989). The Louisiana legal rate is based on the generally higher rates of borrowing. Id. Factors that guide the Court in determining whether to apply the federal or state rate include whether the plaintiff had to borrow money as a result of the litigation and the residence of the parties. See M/V NICOLE TRAHAN v. A/S Dampskibsselskabet Svendborg, 10 F.3d 1190, 1197 (5th Cir. 1994) (affirming the district court's selection of the federal interest rate and noting, inter alia, that neither party was domiciled, incorporated, or had its principle place of business in Louisiana); Pillsbury, 715 F.Supp. at 771 (noting that none of the parties was from Louisiana and that the cause of action arose outside of Louisiana). Specifically, it is appropriate to award interest at the higher rate when the plaintiff offers evidence that it had to borrow money or was prevented from repaying other loans as a result of the litigation. See U.S. v. Central Gulf Lines, Inc., 974 F.2d 621, 630-31 (5th Cir. 1992) (noting that the Fifth Circuit "has generally rejected plaintiffs' arguments that they should have been awarded prejudgment interest at a higher rate" when the plaintiffs provide no evidence that they had to borrow money and incurred higher interest costs).
The Court finds that there are no circumstances here that would make the award of pre-judgment interest inequitable to Bird-Johnson. Therefore, the Court will award ENSCO pre-judgment interest. The Court, however, will not calculate the rate of interest on the basis of the Louisiana legal rate or the rate of borrowing, as ENSCO requests, but rather according to the federal interest rate. This is because ENSCO has introduced no evidence that it had to borrow money or was prevented from repaying loans as a result of this action. The Court notes that ENSCO argues in its memorandum that it was "either borrowing or investing money with higher returns than, for example, the average personal injury plaintiff." (Pl.'s Mem. at 2.) This statement, however, was not offered as proof that ENSCO had to borrow money as a result of the litigation. Instead, it was offered to inform the Court that the commercial rate of borrowing would be more appropriate for ENSCO than the rates applied to ordinary personal injury plaintiffs. Additionally, although ENSCO's "head" office is in Louisiana, neither of the parties is incorporated or has its principal place of business in Louisiana. Accordingly, the Court in its discretion finds that the federal interest rate most accurately compensates ENSCO for its loss.
B. Court Costs
Rule 54(d) provides that "costs other than attorneys' fees shall be allowed as of course to the prevailing party unless the court otherwise directs." The Court must view the case as a whole to determine who is a prevailing party for the purposes of Rule 54. Studiengesellschaft Kohle v. Eastman Kodak Co., 713 F.2d 128, 131 (5th Cir. 1983). "A party need not prevail on all issues to justify an award of costs." Id. Ultimately, the determination of the "prevailing party" is a practical matter left to the Court's discretion. Minerais U.S. Inc. v. M/V MOSLAVINA, 849 F.Supp. 467, 479 (E.D. La. 1994), rev'd on other grounds, 46 F.3d 501 (5th Cir. 1995).
ENSCO was the prevailing party in this case. This is because ENSCO prevailed on the issue of liability, it defeated all of Bird-Johnson's legal defenses, and it defeated Bird-Johnson's counterclaim. The Court notes that it found that ENSCO proved only that Bird-Johnson caused 50% of its loss. On balance, however, the Court finds that ENSCO was the prevailing party. See Eastman Kodak, 713 F.2d at 131 (affirming district court's finding that the defendant was, on balance, the prevailing party even though it did not prevail on all of the issues).
III. CONCLUSION
For the foregoing reasons, the Court orders ENSCO to submit a proposed judgment consistent with this Order.