First National is readily applicable because of the Third Circuit's emphasis on the adequacy of damages and assignment of the risk of the success or failure of the venture to the long-term lender, and not the inherent uniqueness of land.
In the present case, the Court finds that any award of damages would be insufficient as a matter of law because of the special contractual arrangement between the Insurance Companies and Girard. As in First National, Girard only agreed to serve as an "Interim Lender" under a long-term $ 30 million loan package extended by the Insurance Companies to NRUC. The contract documents show that both parties "contemplated" that the Conditional Sale Agreements and boxcar security interests would be reassigned to the Insurance Companies. It is also important that the Insurance Companies have special rights under the Participation Agreement, such as Stock Purchase Warrants, which Girard does not. Any other remedy under this special arrangement would be inadequate as a matter of law because the act of reassignment was what was bargained for by both parties. By obtaining specific performance, Girard obtains both the money which is owed, and the benefits accompanying the assignment of the Conditional Sale Agreements and security interests "without any recourse hereunder." Further Assignment and Agreement, Section 1. Thus, Girard will no longer be required to monitor the movement of the boxcars, which to this date are still owned and operated by NRUC. Because of the very nature of the long-term investment by the Insurance Companies and the limited role played by Girard as the "Interim Lender," it would not be unreasonable to place the risk of success or failure of the long-term investment on the Insurance Companies who originally agreed to the $ 30 million loan arrangement. To this date, NRUC is still a viable business entity engaged in the management and operation of railroad boxcars. Additionally, the Insurance Companies already hold security interests in the other 450 boxcars. For all of these reasons, damages would not serve as a "just and reasonable substitution" for the reassignment of the Conditional Sale Agreement and repayment of Girard.
Moreover, an award of damages would be impracticable because it would be "impossible to arrive at a legal measure of damages at all, or at least with any sufficient degree of certainty." The value of the boxcars has continually declined from the $ 40,000.00 purchase price in the Fall of 1979. Furthermore, Girard only holds the Conditional Sale Agreement which only provide for the actual possession of the security interests upon the declaration of a default. As stated earlier, neither the Insurance Companies nor Girard have declared a default because of its expected impact on NRUC. Therefore, the market for the Conditional Sale Agreements is uncertain and could only be based on pure speculation. Any calculation of damages would require a complex inquiry into an assessment of the depreciated value of the boxcars, the changes in market price, the individual conditions of the boxcars, the adjustments for costs and expenses incurred during the management of the boxcars, as well as an accounting for the gross and net earnings of each boxcar. In light of the fact that the jury rejected the principal defenses offered by the Insurance Companies, and the complex and speculative nature of the calculation of any damages to be awarded, specific performance is the only adequate remedy to be provided in this case because of the certainty and precision which would result from the actual reassignment of the Conditional Sale Agreements in exchange for the monies owed to Girard. This was what was bargained for and actually practiced prior to the breach of the Agreement.
D. Defendants' Remaining Contentions
Defendants assert as ground for a new trial that they were deprived of their right to a jury trial on the issue of damages. Defendants are not entitled to a jury trial if the Court deems that the equitable remedy of specific performance is appropriate because damages are an inadequate remedy at law. See Beacon Theatres v. Westover, 359 U.S. 500, 510 (1959). Secondly, the Insurance Companies contend they were materially prejudiced because the Court did not allow further testimony to be presented with respect to damages. As stated earlier, the Court listened to both counsels' offers of proof and argument with respect to damages. The Court also had the benefit of hearing the testimony of the witnesses at trial and examining the contractual documents and other exhibits offered into evidence. Any further testimony to be offered by the Insurance Companies on the issue of specific performance would have only been unduly burdensome to the Court. The Court finds that there is a sufficient basis for specific performance present on the record, as set forth in the preceding section.
VI. Prejudgment Interest
Girard seeks an award of prejudgment interest to be calculated at 110% above Girard's Prime Rate, or at prevailing interest rates, from March 1, 1980, to the date of judgment, July 15, 1981. Under Pennsylvania law, in cases of breach of contract, interest is allowable at the legal rate from the date of payment is wrongfully withheld, there the damages are liquidated and certain, and the interest is readily ascertainable through computation. Penneys v. Pennsylvania Railroad Company, 408 Pa. 276, 183 A.2d 544, 546-47 (1962); Palmgreen v. Palmer's Garage, 383 Pa. 105, 117 A.2d 721, 722 (1955); Restatement of Contracts § 337 (1932). In Pennsylvania, the legal rate of interest is 6%. 41 Pa. Const. Stat. Ann. § 202 (Purdon Supp. 1981-1982). See generally Peterson v. Crown Financial Corp., 498 F. Supp. 1177 (E.D. Pa. 1980).
In this case, an award of prejudgment interest would be equitable because the Insurance Companies have used the money which was withheld from the date of breach and reinvested it at the current prevailing interest rates. Therefore, an award of prejudgment interest is necessary to prevent the unjust enrichment of the Insurance Companies as a result of the breach, as well as the fact that Girard has been deprived of the use of this money as an investment vehicle during the same period. Therefore, Girard will be awarded prejudgment interest at the legal rate of 6% per annum on the $ 6,494,200.00 owed to Girard from the date of March 1, 1980, to July 15, 1981, minus $ 26,882.63 which Girard received from NRUC on December 11, 1980, as a payment under the Conditional Sale Agreements.
An appropriate order will be entered.
Amounts To Girard
Interim Advanced Reassignment By JH
Closings By Girard Closing and CG
Aug. 17, 1979 $ 2,454,000
Aug. 28, 1979 $ 2,454,000 Sept. 12, 1979 $ 4,908,000
Sept. 17, 1979 $ 1,636,000
Sept. 28, 1979 $ 1,636,000
Oct. 22, 1979 $ 1,636,000 Nov. 2, 1979 $ 4,908,000
Oct. 16, 1979 $ 1,619,400
Oct. 16, 1979 $ 1,619,400
Nov. 5, 1979 $ 1,636,000 Nov. 16, 1979 $ 4,874,800
Nov. 8, 1979 $ 1,619,400
Nov. 15, 1979 $ 1,619,400
Nov. 27, 1979 $ 1,636,000 Dec. 3, 1979
Nov. 27, 1979 $ 1,619,400
Dec. 6, 1979
Dec. 13, 1979 Dec. 27, 1979
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