Mr. Astrin was the Interpool employee authorized to deal with the return of equipment to Interpool's depot. His original fax requesting the return of the containers was fully within his authority, and it created the reasonable impression in the minds of Bernuth employees such as Mr. Ali that he did have the authority to change the location of the off-hire. Moreover, Bernuth reasonably relied on Mr. Astrin's representations that the off-hire date be acknowledged as the date of a survey to be conducted at Bernuth's yard.
7. However, this interchange of correspondence dealt only with the 59 containers at issue in the early part of 1992. As to these containers, Bernuth is excused from paying rental charges. However, as for the balance of the containers, Bernuth is liable for the rental charges which it has failed to pay until the date of August 19, 1994, shortly before commencement of the lawsuit.
8. Bernuth's failure to pay rent for these containers means that they have been constructively lost within the meaning of the Agreement. Plaintiff's Exhibit 1, art. 2. Thus, Bernuth is also liable for the replacement values of these containers.
9. As for the 59 containers, the extensive testimony and the reports of surveyors have indicated that they are damaged beyond repair, and the court has already determined that this was the responsibility of Bernuth. Finding of Fact # 43. As a result, these containers are also deemed constructively lost and Bernuth is liable for their replacement value pursuant to the terms of the 1990 Lease. Plaintiff's Exhibit 3, sec. 14.
10. Interpool requests a prejudgment interest rate of 18% on the grounds that this is the rate contemplated in the agreement. Plaintiff's Exhibit 1, art. 2. It is true that in admiralty cases, absent extraordinary circumstances, a plaintiff is entitled to have prejudgment interest included in its recovery. Mentor Ins. Co. (U.K.) Ltd. v. Brannkasse, 996 F.2d 506, 520 (2d Cir. 1993). However, "the rate of prejudgment interest is within the broad discretion of the district court." Id. Accord Central Hudson Gas & Elec. v. Empresa Naviera, 56 F.3d 359, 372 (2d Cir 1995); Magee v. U.S. Lines, 976 F.2d 821, 823 (2d Cir. 1992); Mitsui & Co. v. American Export Lines, 636 F.2d 807, 823 (2d Cir. 1981). Moreover, prejudgment interest awards "must not result in over-compensation of the plaintiff." Wickham Contracting v. Local Union No. 3, IBEW, 955 F.2d 831, 834 (2d Cir. 1992). The plaintiff is entitled only to "the income which the monetary damages would have earned, and that should be measured by interest on short-term, risk-free obligations." Ingersoll Mill. Mach. Co. v. M/V Bodena, 829 F.2d 293, 311 (2d Cir. 1987) (quoting Independent Bulk Transp., Inc. v. The Vessel "MORANIA ABACO", 676 F.2d 23, 26 (2d Cir. 1982)).
11. The court holds that an 18% per annum interest rate would clearly overcompensate Interpool and is not in any way reflective on the income which the damages would have generated. Using its broad discretion, the court determines that 6% is a much more reasonable interest rate that is parallel to the amount of interest that would be earned on short-term, risk-free investments.
12. Interpool similarly requests attorneys fees on the grounds that the Agreement stipulates that Interpool has the right to collect attorneys fees from Bernuth should Bernuth fail to pay the rental charges it owes, thereby requiring Interpool to go to court to obtain these charges. Plaintiff's Exhibit 1, art. 12. However, the rule in admiralty is clear: "the award of fees and expenses is discretionary with the district judge upon a showing of bad faith." Ingersoll, 829 F.2d at 309. See also American Nat. Fire Ins. Co. v. Kenealy, 72 F.3d 264, 270-71 (2d. Cir. 1995) (referring the rule in admiralty law that attorneys fees are not permitted absent a showing of bad faith).
13. Because the court has not found that Bernuth has acted in bad faith, the court will not grant Interpool attorney's fees.
Based on the foregoing, the court awards plaintiff $ 905,173.43 in damages and interest. The following table indicates the means by which the court arrived at this figure.
Replacement Values of Containers Subtotal
80 forty foot containers ($ 2160 each) $ 172,800.00
264 twenty foot containers ($ 1280 each) $ 337,920.00
Rental Charges until August 19, 1994 $ 272,302.00
(excluding 59 containers)
Interest 8/19/94-3/15/97 $ 122,151.43
(6% per annum over 2.60 years)
TOTAL $ 905,173.43
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