limit their liability for the damages suffered by various parties as a result of the collision between the S.S. Edgar M. Queeny and the S.T. Corinthos on the Delaware River, at Marcus Hook, Pennsylvania during the early morning hours of January 31, 1975.
Trial of the damage issues took place on April 21, 1980. At that trial, BP/Sohio and the Queeny interests submitted to the Court a document entitled "Offer of Proof of Claim in Lieu of Trial". That document contained a stipulation authorizing the Court to enter judgment at the conclusion of the damages trial in BP/Sohio's favor against the Queeny interests.
Those parties concluded that the total of BP/Sohio's provable damages is $ 16,188,531.00. The stipulation and offer of proof did not address the issues of prejudgment interest, the interest rate as to either prejudgment or post-judgment interest, or the award of costs.
As between the Corinthos interests and the Queeny interests, no stipulation has been entered into regarding the amount of damages to be awarded. Thus, as to the damage claims of the Corinthos interests, the Queeny interests have identified four issues to be resolved. Briefly stated, these issues are: (1) What value is to be placed on the Corinthos; (2) Is Corinthos entitled to recover sums paid pursuant to Greek Law on various personal injury claims; (3) Is Corinthos entitled to prejudgment interest as to the damages awarded as compensation for the value of the Corinthos; and (4) Is Corinthos entitled to prejudgment interest as to the personal injury claims paid pursuant to Greek Law?
Turning first to the question of whether BP/Sohio is entitled to prejudgment interest, the Queeny interests contend that because BP/Sohio grossly overstated its original claim by demanding $ 25,986,936.00, the parties could not bring a quick resolution to the case by entering into meaningful settlement negotiations. The Queeny interests argue that BP/Sohio's negotiation actions amounted to a bad faith representation of their damages, and therefore, prejudgment interest is not recoverable.
Neither the Queeny nor the BP/Sohio, nor the Corinthos interests acted with haste in this matter. There was a constant barrage of requests by both sides for continuances and delays.
In BP/Sohio's case, as in the Corinthos' case, it was uncertain who would bear legal responsibility for the damages suffered. In a situation where liability is contested, the give and take which normally occurs during settlement negotiations often produces demand and offer figures which are at opposite ends of the spectrum. Unless a settlement occurs, the Court cannot expect the damaged party to undervalue the extent of its damages nor the responsible party to overvalue its offer. Both parties are expected to negotiate in good faith.
Regarding the award of prejudgment interest in admiralty cases, no statutory provision exists. It is therefore left to the sound discretion of the Court to determine whether prejudgment interest should be awarded. Dow Chemical Co. v. M/V Gulf Seas, 593 F.2d 613 (5th Cir. 1979); Mid-America Transportation Company, Inc. v. Rose Barge Line, Inc., 477 F.2d 914 (8th Cir. 1973); Gardner v. The Calvert, 253 F.2d 395, cert. denied, 356 U.S. 960, 78 S. Ct. 997, 2 L. Ed. 2d 1067 (1958); Maryland Shipbuilding & Drydock Co. v. Patapsco Scrap Corp., 169 F. Supp. 605 (D.Md.1959). Generally, in an admiralty case, prejudgment interest should be granted unless there are exceptional or peculiar circumstances. Socony Mobil Oil Co. v. Texas Coastal and International, 559 F.2d 1008 (5th Cir. 1977); Mid-America Transportation Company, Inc. v. Rose Barge Line, Inc., supra; Sea-Land Service, Inc. v. Eagle Terminal Tankers, 443 F. Supp. 532 (W.D.Wash.1977).
There are three basic factors which can result in the disallowance of prejudgment interest. The first factor is unreasonable or unexplained delay in the prosecution of the case which results in prejudice to the opposing side. O'Donnell Trans. Co., Inc. v. City of New York, 215 F.2d 92, 95 (2nd Cir. 1954); The Russell No. 3, 82 F.2d 260, 263 (2nd Cir. 1936). The second factor is a bad faith estimate of damages. Patterson Terminals, Inc. v. S.S. Johannes Frans, 209 F. Supp. 705, 711 (E.D.Pa.1962); Maryland Shipbuilding & Drydock Company v. Patapsco Scrap Corporation, supra; Detroit & Cleveland Navigation Company v. The Steamer Elbert H. Gary, 161 F. Supp. 570, 578 (E.D.Mich., S.D.1958). The third factor is where there are no actual damages incurred.
There is no question but that BP/Sohio suffered damage. In determining whether to award prejudgment interest we shall therefore examine and review the first two factors referred to above.
An examination of the records reveals that a finger cannot be pointed at any one party, accusing it alone of unreasonable delay. There have been many delays occasioned by the acts of all parties at one time or another. In any case, the initiative is always with the plaintiff. It should want to proceed to trial in haste to recover its damages. Any delays should work to its disadvantage. A plaintiff does not have the right to drag its cause because it expects to get prejudgment interest.
The factor concerning a bad faith estimate of damages is our next concern. The original claim of BP/Sohio was $ 25,986,936.00. At the trial of the damage issues on April 21, 1980, BP/Sohio and Queeny filed a stipulation with the Court authorizing the entry of judgment in BP/Sohio's favor in the sum of $ 16,188,531.00, representing the provable damages.
Reviewing all of the circumstances of this case, with the wide variance between the estimate of damage and the provable damage, which provable damage was not resolved until more than five years after the accident, and the delays in bringing this case to trial, the Court is of the opinion that there should be no allowance of prejudgment interest.
VALUE OF THE CORINTHOS
The measure of damages, when there is a total loss of a vessel, is its market value at the time of the loss. The Supreme Court discussed the measure of damages in the case of a total loss of a vessel in Standard Oil Company of New Jersey v. Southern Pacific Company, 268 U.S. 146, 45 S. Ct. 465, 69 L. Ed. 890 (1925). The Court stated:
"It is fundamental in the law of damages that the injured party is entitled to compensation for loss sustained. Where property is destroyed by wrongful act, the owner is entitled to its money equivalent, and thereby to be put in as good position pecuniarily as if his property had not been destroyed. In case of total loss of a vessel, the measure of damages is its market value, if it has a market value, at the time of destruction. The Baltimore, 8 Wall. 377, 385, 75 U.S. 377, 19 L. Ed. 463. Where there is no market value such as is established by contemporaneous sales of like property in the way of ordinary business, as in the case of merchandise bought and sold in the market, other evidence is resorted to. The value of the vessel lost properly may be taken to be the sum which, considering all the circumstances, probably could have been obtained for her on the date of the collision; that is, the sum that in all probability would result from fair negotiations between an owner willing to sell and a purchaser desiring to buy. Brooks-Scanlon Corporation v. United States, 265 U.S. 106, 123, 44 S. Ct. 471, 474, 68 L. Ed. 934. And by numerous decisions of this Court it is firmly established that the cost of reproduction as of the date of valuation constitutes evidence properly to be considered in the ascertainment of value. Southwestern Bell Telephone Co. v. Public Service Commission, 262 U.S. 276, 287, 43 S. Ct. 544, 546, 67 L. Ed. 981, and cases cited; Bluefield Co. v. Public Service Commission, 262 U.S. 679, 689, 43 S. Ct. 675, 677, 67 L. Ed. 1176; Georgia Ry. & Power Co. v. Railroad Commission, 262 U.S. 625, 629, 43 S. Ct. 680, 67 L. Ed. 1144; Brooks-Scanlon Corporation v. United States, supra, 265 U.S. at 125, 44 S. Ct. at 475; Ohio Utilities Company v. Public Utilities Commission, 267 U.S. 359, 45 S. Ct. 259, 69 L. Ed. 656. The same rule is applied in England. In re Mersey Docks and Admiralty Commissioners (1920), 3 K.B. 223; Toronto City Corporation v. Toronto Railway Corporation, (1925) A.C. 177, 191. It is to be borne in mind that value is the thing to be found and that neither cost of reproduction new, nor that less depreciation, is the measure or sole guide. The ascertainment of value is not controlled by artificial rules. It is not a matter of formulas, but there must be a reasonable judgment having its basis in a proper consideration of all relevant facts. Minnesota Rate Cases, 230 U.S. 352, 434, 33 S. Ct. 729, 754, 57 L. Ed. 1511.