On Appeal from the United States District Court for the Western District of Pennsylvania.
Before: Adams and Garth, Circuit Judges and Cohen, District Judge*fn*
Shawville Coal Company, the defendant-appellant in this matter, operates mines in central Pennsylvania. Black Gold Coal Corporation is an Ohio-based coal broker. This action arose out of a dispute between Shawville and Black Gold concerning the calculation of the final price to be paid by Black Gold to Shawville under agreements to purchase coal in 1978-1979. Because we conclude that, according to Pennsylvania law, the district court judge erred in awarding prejudgment interest to Black Gold, we will reverse the judgment below and remand this case to the district court.
As part of an ongoing business relationship, Black Gold would purchase coal from Shawville at a price to be set prior to each shipment. Black Gold then sold the coal to another broker or to a utility company. Both parties agreed that
under the terms of the agreement between Black Gold and Shawville, Shawville was to furnish coal of a certain quality (12,300 BTU's) to Black Gold. The agreement provided that if the coal fell below 12,100 BTU's, Shawville would be liable for a penalty, and if the coal tested above 12,500 BTU's, Shawville would be entitled to a premium from Black Gold.
Appellant's Brief at 5. Ultimately, disputes arose concerning price adjustments for allegedly substandard coal delivered during three quarters of the relevant time period. Black Gold sought to recover alleged overpayments to Shawville for two quarters (June 1978-August 1978; December 1978-February 1979), while Shawville sought complete payment for one quarter (March 1978-May 1978), alleging Black Gold's unlawful withholding of final payment following its declaration that a price adjustment was in order.
By letter dated February 7, 1979, Black Gold assessed Shawville the penalty for allegedly substandard coal shipped in March-May 1978. The ensuing dispute between the parties concerned the various components of the formula to be used in calculating the appropriate price adjustment.
Finally, Black Gold filed this action against Shawville seeking damages for Shawville's alleged breach of contract in failing to tender money assessed as penalty pursuant to a formula allegedly contained in a premium/penalty clause in a contract for the sale of coal. Shawville answered, denying any penalty owed, and counterclaimed for monies owed to it for the purchase of coal pursuant to the agreement. Trial was had before a jury, and the jury returned a verdict in the amount of $47,034.34 in favor of Black Gold, and $9,617.66 on Shawville's counterclaim.
Black Gold then filed a timely motion seeking to amend the judgment to add prejudgment interest as a matter of law in the amount of $12,281.99. Shawville responded by arguing that Pennsylvania law does not permit an award of prejudgment interest where the amount of damages is unliquidated. Following additional briefing by both parties, the district court issued an Opinion and Order awarding Black Gold prejudgment interest in the amount of $8,418.75 (the figure submitted by Shawville as proper "if" Shawville was obliged to pay prejudgment interest).
Shawville brought this appeal alleging an error by the district court judge in applying Pennsylvania law to the facts of this case. Shawville argues that prejudgment interest cannot be awarded as a matter of right unless there were liquidated damages unjustly withheld, which Shawville claims there were not in this case. We conclude the district court judge misapplied Pennsylvania law, and that Black Gold did not carry its burden of proving that ...