The opinion of the court was delivered by: LORD, III
In tort actions as a general rule prejudgment interest is not awarded on unliquidated claims, but, even when damages to be recovered are unliquidated, interest may be awarded when in the trial court's discretion fair compensation requires it. E. g., Rea v. Ford Motor Co., 560 F.2d 554, 558 (3d Cir.), cert. denied, 434 U.S. 923, 98 S. Ct. 401, 54 L. Ed. 2d 281 (1977); Sun Shipbuilding & Drydock Co. v. United States Lines, Inc., 439 F. Supp. 671 (E.D.Pa.1977), aff'd, 582 F.2d 1276 (3d Cir. 1978), cert. denied, 439 U.S. 1073, 99 S. Ct. 846, 59 L. Ed. 2d 40 (1979).
In securities actions, the award of prejudgment interest does not generally turn on the characterization of the damages as liquidated or unliquidated,
but rather is a matter of discretion for the trial court and is determined by a standard of fairness. Blau v. Lehman, 368 U.S. 403, 414, 82 S. Ct. 451, 457, 7 L. Ed. 2d 403 (1962); Gould v. American-Hawaiian S.S. Co., 535 F.2d 761, 784-85 (3d Cir. 1976); Wolf v. Frank, 477 F.2d 467, 479 (5th Cir.), cert. denied, 414 U.S. 975, 94 S. Ct. 287, 38 L. Ed. 2d 218 (1973).
In an earlier decision I determined that the appropriate measure of damages in this § 10(b) case was the out-of-pocket measurement, i. e., "the difference between the price (the plaintiffs) paid for their investment and what it was actually worth at the time of purchase." Sharp v. Coopers & Lybrand, 83 F.R.D. 343, 347 (E.D.Pa.1979). In the case of a defrauded buyer, as here, the First Circuit in a frequently cited opinion has held that "(Damages) are to be reckoned solely by "the difference between the real value of the property at the date of its sale to the plaintiffs and the price paid for it, with interest from that date . . .' " Janigan v. Taylor, 344 F.2d 781, 786 (1st Cir.), cert. denied, 382 U.S. 879, 86 S. Ct. 163, 15 L. Ed. 2d 120 (1965) quoting Sigafus v. Porter, 179 U.S. 116, 125, 21 S. Ct. 34, 37, 45 L. Ed. 113 (1900) (emphasis added); Estate Counseling Service, Inc. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 303 F.2d 527, 533 (10th Cir. 1962). In Sigafus, the Supreme Court discussed earlier cases that applied this damage standard to claims of fraudulent misrepresentation whereby plaintiffs were induced to buy shares. Without so denominating the issue as one of liquidated or unliquidated damages, the analysis underlying these cases is the functional equivalent of a determination that the damages to be recovered are liquidated. As applied to this case, the reasoning would be that plaintiffs advanced a sum certain ($ 8,125 for a one-eighth limited partnership interest) and received something worth less than they had been told to expect. The plaintiffs were thus deprived of the use of that sum (by definition an ascertainable amount), and proper compensation should include interest from the date of purchase.
In later securities cases, courts have used two different dates for the assessment of damages, some holding that it is the date of purchase; others, the date of discovery of the fraud or when the plaintiff reasonably should have discovered the fraud, i. e., the date the cause of action accrued. See Harris v. American Investment Co., 523 F.2d 220, 225-27 (8th Cir. 1975), cert. denied, 423 U.S. 1054, 96 S. Ct. 784, 46 L. Ed. 2d 643 (1976) and the cases cited therein. Here, the date of purchase is the proper measure, since the interest in the well was not a traded security whose value fluctuated with the vicissitudes of the market. Rather, the actual value of the security in 1971 is measured by the anticipated return in gas and oil on a representative well in the 1971 WMC Ohio Program over the life of the well. I thus conclude that prejudgment interest from the date of purchase would be appropriate compensation in this case. The remaining question is whether as a matter of fairness interest should be awarded. Thomas v. Duralite Co., 524 F.2d 577, 589 (3d Cir. 1975) ("Interest is not to be recovered merely as compensation for money withheld but, rather, in response to considerations of fairness.")
In Norte & Co. v. Huffines, 416 F.2d 1189 (2d Cir. 1969), cert. denied sub nom., Muscat v. Norte & Co., 397 U.S. 989, 90 S. Ct. 1121, 25 L. Ed. 2d 396 (1970), the Second Circuit outlined the factors to be considered in addition to fundamental considerations of fairness in determining whether prejudgment interest should be awarded:
1) degree of personal wrongdoing;
2) whether such interest would be truly compensatory;
3) the availability of alternative investment opportunities to the plaintiff;
4) the length and reason for the time gap between the violation and award of judgment.
See also, Fox v. Kane-Miller Corp., 398 F. Supp. 609 (D.Md.1975), aff'd in part and remanded on other grounds, 542 F.2d 915 (4th Cir. 1976).
First, in the 1978 Sharp trial, the jury found that the defendant's employee had perpetrated a fraud with intent or recklessness and that the defendant was responsible for its employee's actions. In the post trial opinion I found that the defendant was or should have been aware that the opinion letter would be disseminated to potential purchasers. Sharp, 457 F. Supp. at 887. Indeed in the second trial the jury found that the plaintiffs would not have purchased their investments had it not been for the fraud perpetrated in the defendant's opinion letter.
Second, an award of interest here would be compensatory because each plaintiff was "deprived" of a principal sum ($ 8,125 for a one-eighth interest) at a clearly defined date (December 1971, the date ...