The plaintiffs-appellants, BCP Smyrna, Inc. and Brandywine Smyrna, Inc. (together "Brandywine Smyrna"), own an automobile dealership in Smyrna, Delaware. BCP Smyrna, Inc. owns the real estate and structure and Brandywine Smyrna, Inc. operates the business. Joseph Renzi is the sole owner of both companies. In 2007, Mr. Renzi was having a second facility built across Route 13 from the existing dealership. During that construction, he decided to add a new roof to the original dealership. The defendant-appellee, Millennium Builders, LLC ("Millennium"), was hired to perform this roofing work.
On September 22, 2007, a significant rain storm moved through Smyrna. Unfortunately, the roofing work was incomplete and the new roof not yet sealed. The rain caused significant damage to the dealership: the rainwater dropped ceiling tiles, shorted out ceiling lights, buckled walls, generated sparking and short-circuiting in the electric box, and created water damage throughout the building. The dealership was evacuated and closed. The offices and showroom remained closed for approximately seven months to allow for repairs and additional updating.
Brandywine Smyrna hired Millennium for most of the repair work. Millennium was paid a total of $238,453 for this work. Brandywine Smyrna incurred additional expenses and losses associated with the water damage.
Brandywine Smyrna sued Millennium in contract and tort, alleging that Millennium failed to take necessary precautions to protect the premises from water damage. Millennium disputed the scope and the amount of the damages claimed by the plaintiffs due to the September 22, 2007 incident. The main source of contention was the fact that Brandywine Smyrna decided not to rebuild the water-damaged showroom to the same specifications as its original construction, but instead modernized that structure so that it would match the appearance of a new showroom which had just been constructed across the street.
The only issue before us on appeal is the trial judge's decision not to grant prejudgment interest on the amounts that were awarded by the jury. We have concluded that Brandywine Smyrna is entitled to prejudgment interest. Accordingly, this matter must be remanded to the Superior Court to determine the amount of prejudgment interest owed to Brandywine Smyrna by Millennium.
Superior Court's Decision
Brandywine Smyrna filed a timely motion for prejudgment interest. The motion provided a computation of the prejudgment interest sought. On the amounts awarded for property damage ($372,362), loss of car sales ($134,691) and loss of parts and service ($32,956) (a total of $540,009), applying the statutory interest formula in title 6, section 2301(a) of the Delaware Code from the date of loss to the verdict, the prejudgment interest requested was $156,643.10. Brandywine Smyrna also asked for $4,315.41 of prejudgment interest on the additional interest expenses that were awarded by the jury. Thus, the total amount of prejudgment interest sought was $160,958.51.
The Superior Court denied Brandywine Smyrna prejudgment interest for two reasons. First, the trial judge concluded that Brandywine Smyrna was not entitled to prejudgment interest under title 6, section 2301(d) "because they requested a greater amount in their settlement demand than what the jury awarded." Second, the trial judge reasoned that the jury had already compensated Brandywine Smyrna for prejudgment interest by awarding them $72,650 in additional interest expenses, so that a post-trial award of prejudgment interest would amount to a double recovery.
Tort Recovery—No Interest Due
The first issue is whether Brandywine Smyrna may recover prejudgment interest under title 6, section 2301(d) of the Delaware Code. We review the trial court's rulings on issues of statutory construction de novo.
As the statute unambiguously states, section 2301(d) applies only to tort claims, and it requires an award of prejudgment interest in the event that plaintiff's settlement offer is less than the amount of damages awarded at trial. In State Farm Mut. Ins. Co. v. Enrique, this Court, interpreting section 2301(d), stated that "[i]n Delaware, prejudgment interest only becomes an obligation of a litigating party . . . when that party rejects a demand before trial for an
In this case, Brandywine Smyrna, in a letter dated March 25, 2010, demanded the sum of $1,000,000.00. That demand letter stated, in part:
The final judgment rendered in this case awarded Brandywine Smyrna damages in the total amount of $612,659.00. Brandywine Smyrna's settlement offer of $1,000,000 exceeded the $612,659 damage award awarded by the jury. Therefore, under section 2301(d), Brandywine Smyrna is not entitled to the recovery of prejudgment interest, insofar as their claim lies in tort.
Contract Theory—Interest Due
That ruling is not dispositive, however, because the jury awarded Brandywine Smyrna $612,659 in damages on both its tort and its contract claims, without referencing what portion of the damage award was attributable to each of its respective theories of recovery. The plaintiffs' demand letter contained an express qualification that it was not waiving its request for prejudgment interest in the complaint, which alleged theories of both tort and contract. As earlier stated, section 2301(d) relates only to tort claims.
In Moskowitz v. Mayor and Council of Wilmington, we concluded that "[i]nterest is awarded in Delaware as a matter of right and not of judicial discretion."
Interest as Damages
Although Brandywine Smyrna is entitled to recover prejudgment interest on its contract claim, the Superior Court denied Brandywine Smyrna prejudgment interest on an independent alternative ground: that the jury's award of $72,650 in "additional interest expenses" constituted an award of prejudgment interest. We conclude that that additional interest amount did not constitute an award of prejudgment interest. Rather, that amount represented an element of the damages incurred by Brandywine Smyrna to account for the interest it was required to pay on the money borrowed as a result of Millennium's conduct.
Brandywine Smyrna's damages expert testified as to the additional interest expenses that Brandywine Smyrna claimed were incurred due to the water damage: first, $32,062 in floor plan interest because of the loss of a favorable borrowing rate due to the deterioration of its financial status; and second, $61,597 in interest on
The record reflects that none of the expert testimony at trial addressed the issue of prejudgment interest. Nor was the jury advised that the amount claimed for additional interest expenses would include prejudgment interest. The jury was instructed, as follows:
This instruction directed the jury to award Brandywine Smyrna the out-of-pocket interest expenses it incurred as a consequence of Millennium's conduct. On the jury verdict sheet, next to the words "additional interest expenses," the jury awarded Brandywine Smyrna $72,650 of the $93,659 that had been requested.
Prejudgment interest is conceptually separate and distinct from the additional interest expenses Brandywine Smyrna actually incurred and was awarded in this case. Prejudgment interest serves two purposes: first, it compensates the plaintiff for the loss of the use of his or her money; and, second, it forces the defendant to relinquish any benefit that it has received by retaining the plaintiff's money in the interim.
Prejudgment Interest Due
In Moskowitz, this Court determined that, in addition to the principle that prejudgment interest in Delaware cases is awarded as a matter of right, the general rule is that "interest accumulates from the date payment was due the plaintiff, because full compensation requires an allowance for the detention of the compensation awarded and interest is used as a basis for measuring that allowance."
Millennium's defense is essentially that because the expert testimony varied as to the exact extent of the consequential damages, the amount was not calculable prior to trial. That argument was explicitly rejected in Janas v. Biedrzycki.
We approve and affirm that rationale from Janas. In Metro. Mut. Fire Ins. Co. v. Carmen Holding Co., this Court held that prejudgment interest must be awarded as a matter of right on an insurance contract claim, even though the amount of the loss under the insurance contract was in dispute prior to the verdict.
In Moskowitz, this Court noted the strong public policy that favors providing full compensation to prevailing plaintiffs who do not contribute to the defendant's delay in paying.
The judgment of the Superior Court, on the issue of prejudgment interest, is reversed. This matter is remanded to the Superior Court for a determination of the amount of prejudgment interest that is due to Brandywine Smyrna. Jurisdiction is not retained.