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CENTRAL HUDSON GAS & ELEC. CORP. v. THE M/V LUNAMA

September 9, 1992

CENTRAL HUDSON GAS AND ELECTRIC CORPORATION, Plaintiff, against THE M/V LUNAMAR II, her engines, etc. in rem and SEIRIKI ONE (PANAMA), S.A. in personam, Defendants.


The opinion of the court was delivered by: VINCENT L. BRODERICK

 VINCENT L. BRODERICK, U.S.D.J.

 Plaintiff's property was destroyed by wrongful act of defendants, and defendants are liable to the plaintiff for the full cost of replacement necessitated by the harm caused. See Standard Oil Co. v. Southern Pacific Co., 268 U.S. 146, 155, 69 L. Ed. 890, 45 S. Ct. 465 (1925); Pillsbury Co. v. Midland Enterprises, 715 F. Supp. 738, 763 (E.D. La. 1989), aff'd 904 F.2d 317 (5th Cir. 1990).

 After deleting all internal overhead and costs for burying and trenching new pipe, the total damage incurred by plaintiff as a result of the rupture of the underwater pipe and cable and disruption in service to customers caused by the LUNAMAR II as described in the memorandum order of April 7, 1992 is $ 3,371,937.60 exclusive of interest and litigation costs.

 Prejudgment interest is appropriate in admiralty cases and is not governed by a statutory rate. See Independent Bulk Transp. v. MARIANNA ABACO, 676 F.2d 23 (2d Cir. 1982); Canova v. Travelers Ins. Co., 406 F.2d 410 (5th Cir. 1969).

 Prejudgment interest on the compensatory amount set forth above, at the reasonable rate for the period of 9%, amounts to $ 1,259,917.81 as of July 30, 1992 prior to any reductions.

 A handwritten document concededly written by one of plaintiff's supervisory staff, Exhibit BBBBBBBB describing selection of an option for repair work after the damage to plaintiff's underwater line as follows:

 "This approach uses Option 3 as a minimum, and Option 4 as a maximum. . . . Written this way, we feel we maximize the likelihood of collecting for the total job."

 Plaintiff does not argue that this document was written by a minor official, was not acted upon, or fails to reflect plaintiff's decisionmaking process. Instead, plaintiff's memorandum of law on the subject appears to concede that this exhibit means what it appears to mean, and focuses on defending plaintiff's right to choose its own repair option.

 The clear indication from this exhibit and plaintiff's defense of it is that executives of the plaintiff sought, to some degree, to use the litigation process in ways contrary to the well-known duty to mitigate damages one seeks to collect, even though this duty does not restrict what one actually does. This cannot properly be ignored by the court when discretionary relief is sought.

 This document does not, however, suggest destruction or distortion of evidence, see Welsh v. United States, 844 F.2d 1239, 1244-47 (6th Cir. 1988). Treatment of a document as making such suggestion when it does not would be as inappropriate as ignoring spoliation if established. See Stephens v. South Atlantic Canners, 848 F.2d 484, 487 (4th Cir. 1988).

 While evidence of intent can sometimes serve as evidence of probable effect, depending on the totality of the circumstances, see Broadcast Music, Inc. v. CBS, 441 U.S. 1, 19, 60 L. Ed. 2d 1, 99 S. Ct. 1551 (1979); cf. United States v. United States Gypsum Co., 438 U.S. 422, 436, 57 L. Ed. 2d 854, 98 S. Ct. 2864 n 13 (1978), here the objective of plaintiff was to replace a good line with an equally good line under subsequent engineering requirements and there is no credible indication that the actual repair undertaken was an excessive response rather than a mere replacement of the damaged line attempting to conform to construction standards as of the time of the repair.

 Litigation-related behavior undertaken for improper objectives can be subject to attack even if the underlying claim has merit, as illustrated in another (antitrust) context by Grip-Pak, Inc. v. Illinois Tool Works, 694 F.2d 466 (7th Cir. 1982), cert. ...


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