contends that all of the cost overruns were fictitious, and that her bonus should be calculated on the basis of the full net profits projected for each year, without regard to any of the cost overruns. Newnam introduced numerous documents at trial in an attempt to establish her theory, and although I am troubled by certain aspects of READS' operation and of George Stricker's method of conducting business, Newnam has failed to establish by a preponderance of the evidence that profits were diverted from READS to the other Stricker companies.
READS concedes that approximately $ 9,500 in cost overruns were for educational equipment and materials, most of which was apparently supplied by the Stricker affiliates A/V, Croft, and Walsh. But READS has also pointed to evidence in the record that the most substantial cost overruns were for truck repairs and maintenance, electrical hook-up, and salaries. I also note that there were substantial overruns in insurance costs. Newnam, on the other hand, has pointed to nothing in the record reflecting that a larger share of the cost overruns than that conceded by READS generated income for the Stricker companies. In light of the fact that the cost overruns on all three contracts over the three-year period in dispute ran well into six figures, I cannot say that the approximately $ 9,500 in cost overruns which might have redounded to the benefit of the Stricker companies constitutes an unreasonable amount reflecting a deliberate attempt to deprive Newnam of her bonus.
C. Calculation of Newnam's Bonus
In accordance with my finding that Newnam did not breach the employment contract, she is entitled to the contractual bonus for each of the three years in dispute.
READS concedes that Newnam is entitled to a bonus of $ 7,925 for fiscal year 1976-1977. I find that she is entitled to an additional $ 1,575 as her 10% share of the "disguised" institutional overhead of $ 15,752 on the first contract with the Philadelphia unit. See Finding 16. Newnam has already been paid $ 7,925 for 1976-1977, and therefore READS' total liability to Newnam for 1976-1977 is $ 1,575.
For the fiscal year 1977-1978, Newnam is entitled to a bonus of $ 7,907, representing 10% of READS' net profit of $ 79,077.
For the fiscal year 1978-1979, Newnam is entitled to a bonus of $ 9,496, representing 10% of READS' net profit of $ 94,960.
The bonuses for fiscal years 1977-1978, 1978-1979 represent liquidated amounts because READS knew its profits for those years, and there could be no serious dispute that Newnam was entitled to a 10% bonus on those profits under the terms of the employment contract. Under Pennsylvania law, where the defendant commits a breach of contract to pay a definite sum of money, legal interest is allowed on the debt from the time performance was due. Interlake, Inc. v. Erie Industrial Trucks, Inc., 427 F. Supp. 1012 (W.D.Pa.1977). Accordingly, Newnam is entitled to simple interest at the rate of 6% on the bonuses for 1977-1978 and 1978-1979.
Simple interest at 6% on $ 7,907 from July 1, 1978, the date the bonus was due, through July 31, 1981, is $ 1,462. Simple interest at 6% on $ 9,496 from July 1, 1979, through July 31, 1981, is $ 1,187.
III. CONCLUSIONS OF LAW
1. This court has jurisdiction over this matter under 28 U.S.C. § 1332.
2. This action is governed by Pennsylvania law.
3. The written agreement of August 30, 1976, constitutes the entire agreement between the parties.
4. Plaintiff did not breach the contract between the parties.
5. Plaintiff is entitled to a bonus of 10% of the actual net profit realized by defendant in fiscal years 1976-1977, 1977-1978, 1978-1979.
6. Plaintiff has established by a preponderance of the evidence that defendant improperly excluded from its stated net profit for 1976-1977, $ 15,752 in institutional overhead received from the Philadelphia contract.
7. Plaintiff has failed to establish by a preponderance of the evidence that defendant made use of its parent company and affiliated subsidiaries to inflate its costs and reduce the bonus to which plaintiff is entitled.
8. Defendant is liable to plaintiff for $ 18,978 in unpaid bonuses due plaintiff under the terms of the contract.
9. Plaintiff is entitled to legal interest on the unpaid bonuses, calculated from the date the bonuses were due.
10. Defendant is liable to plaintiff for $ 2,649 in interest on bonuses due but not paid.
11. Plaintiff is entitled to judgment against defendant in the total amount of $ 21,627.