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United States District Court, S.D. New York

October 3, 2005.

TIG INSURANCE COMPANY, successor by merger to International Insurance Company, Plaintiff,

The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge



  Newmont Mining Corporation ("Newmont") moves in limine to (1) preclude TIG Insurance Company ("TIG") from claiming that it is entitled to interest as damages for untimely payments ("Interest Motion")*fn1 and (2) limit or preclude the testimony of Dennis Neier,*fn2 TIG's proposed expert witness on interest ("Expert Motion").*fn3 For the following reasons, the Interest Motion is denied, and the Expert Motion is granted in part and denied in part.


  Newmont and TIG are parties to a Settlement Agreement which required Newmont to remit certain payments to TIG on a set timetable.*fn4 The Agreement settled prior litigation between Newmont and TIG's predecessor in interest, International Insurance Company ("International"), related to International's liability to Newmont for costs of clean-up of environmental contamination at Newmont's Idarado and Resurrection mining sites in Colorado. The Agreement required Newmont to "periodically" deliver to TIG copies of documents filed in other actions by Newmont against third party insurers.*fn5 In the event that Newmont reached settlements with third parties, Newmont was to remit twenty percent of the net recovery to TIG.*fn6 The Agreement also required Newmont to make any payments due to TIG by a fixed date every six months.*fn7 Newmont was to provide an affirmation certifying the amounts of any settlements and expenses.*fn8 The Agreement was silent on the question of interest on late payments.

  In this action, TIG claims that Newmont failed to make payments according to the timetable set by the Agreement, and that TIG suffered damages as a result.*fn9 TIG's alleged damages are twofold: first, interest on the principal amount of each late payment accruing from the time it was due until the time it was paid (the "Late Payment Damages"), and second, interest on the Late Payment Damages, calculated from the time the payment of principal was made until the date a judgment is rendered by this Court.

  In its Interest Motion, Newmont argues that (1) New York law*fn10 does not allow a party to recover interest for delays in payment where the principal was eventually paid, (2) TIG may not recover interest because it did not demand the principal until after this litigation commenced, and (3) certain of TIG's claims are time barred. In its Expert Motion, Newmont argues that Neier's testimony should be precluded because the Late Payment Damages are not recoverable and interest is a question of law.


  A. Legal Standard

  1. Summary Judgment

  The issues raised in the Interest Motion are not evidentiary questions, but rather legal issues which should have been raised in a motion for summary judgment.*fn11 This Court will therefore apply the standard for a motion for summary judgment to the Interest Motion. Summary judgment is appropriate if the evidence of record "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."*fn12 "An issue of fact is genuine `if the evidence is such that a jury could return a verdict for the nonmoving party.'"*fn13 "A fact is material for these purposes if it `might affect the outcome of the suit under the governing law.'"*fn14 The movant has the burden of demonstrating that no genuine issue of material fact exists.*fn15 In turn, to defeat a motion for summary judgment, the non-moving party must raise a genuine issue of material fact. To do so, it "must do more than simply show that there is some metaphysical doubt as to the material facts,"*fn16 and it must "come forward with `specific facts showing that there is a genuine issue for trial.'"*fn17 In determining whether a genuine issue of material fact exists, the court must construe the evidence in the light most favorable to the non-moving party and draw all inferences in that party's favor.*fn18

  2. Admission of Expert Testimony

  Rule 702 of the Federal Rules of Evidence states the following requirements for the admission of expert testimony into evidence:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto in the form of an opinion or otherwise, if (1) the testimony is based upon sufficient facts or data, (2) the testimony is the product of reliable principles and methods, and (3) the witness has applied the principles and methods reliably to the facts of the case.*fn19
Under Rule 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc.,*fn20 the trial judge must determine whether the proposed testimony "both rests on a reliable foundation and is relevant to the task at hand."*fn21

  Expert testimony may not usurp the role of the court in determining the applicable law.*fn22 While an expert "may opine on an issue of fact," an expert "may not give testimony stating ultimate legal conclusions based on those facts."*fn23 Expert testimony is inadmissible when it addresses "lay matters which [the trier of fact] is capable of understanding and deciding without the expert's help."*fn24

  B. Interest

  TIG has two legal bases for claiming interest: the common law and New York's prejudgment interest statute.*fn25

  1. Common Law

  Under New York common law, if one party to a contract breaches an obligation to make payment upon a fixed date, the other party is entitled to interest as damages for that breach.*fn26


[A]ll damages for delay in the payment of money owing upon contract are provided for in the allowance of interest, which is in the nature of damages for withholding money that is due. The law assumes that interest is the measure of all such damages.*fn27
New York common law does not allow recovery of consequential or incidental damages for a breach of a contractual obligation to make payment.*fn28 Where the contract does not provide a rate of interest, New York common law requires that the Court use the statutory rate of nine percent per annum.*fn29 If the principal was ultimately paid, the plaintiff must show that the defendant's delay was a material breach.*fn30 Additionally, in cases where the plaintiff accepted a late payment, knowing it was late, and without reserving its right to collect interest, New York courts have held that the plaintiff loses its claim to interest.*fn31

  2. Statutory Prejudgment Interest

  Additionally, a party may recover interest under New York's prejudgment interest statute, "upon a sum awarded because of a breach of performance of a contract."*fn32 Even if no sum is awarded, for example, because the defendant paid the principal amount prior to trial, a plaintiff may still claim prejudgment interest if it reserved its right to interest.*fn33 If "damages were incurred at various times, interest shall be computed upon each item from the date it was incurred or upon all of the damages from a single reasonable intermediate date."*fn34 The court, upon motion, specifies the date or dates from which interest is computed.*fn35 The calculation of prejudgment interest is a question of law, not a question of fact.*fn36 Prejudgment interest is calculated at the rate of nine percent per annum and is not compounded.*fn37 The total amount is "computed by the clerk of the court, to the date the verdict was rendered."*fn38 A party is entitled to prejudgment interest on any "sum awarded," including awards of interest as damages for breach of contract.*fn39 However, a party may not recover interest as damages for late payments, as well as prejudgment interest, accruing on the same principal amount over the same time period.*fn40

  C. Statute of Limitations for Breach of Contract

  New York has a six-year statute of limitations for an action to recover damages for breach of contract.*fn41 "[A] cause of action accrues and the statute of limitations begins to run in contract actions from the time of the breach . . . when the plaintiff possesses a legal right to demand payment."*fn42 A defendant is estopped from asserting the statute of limitations defense if the defendant actively concealed or misrepresented facts which prevented the plaintiff from filing a timely action.*fn43


  A. Interest Motion

  1. Late Payment Damages

  TIG may claim Late Payment Damages in the amount of nine percent per annum, on the principal amounts of any late payments by Newmont, calculated from the date each payment was due through the date it was paid.*fn44 Newmont argues that because Newmont ultimately paid the principal, there is no "sum awarded" here on which interest accrues pursuant to section 5001. However, New York common law provides a basis for the Late Payment Damages, independent of section 5001.*fn45

  Additionally, Newmont claims that TIG lost its claim to interest when it accepted the payment of principal. But the cases cited by Newmont only apply to situations in which a plaintiff was aware that it was receiving a late payment and failed to reserve its rights.*fn46 Here, TIG alleges it had no reason to know that any payment was late because Newmont did not disclose the dates of its settlements with third parties until discovery in this litigation.*fn47 TIG alleges that upon acceptance of payment, it expressly reserved "all of its rights in connection with the Agreement."*fn48 These fact issues preclude summary judgment.

  Newmont argues that TIG cannot now claim Late Payment Damages because TIG never made a demand for payment. But the cases cited by Newmont in support of this argument involve agreements in which payment was only due upon demand.*fn49 Here, the Agreement obligated Newmont to make payment only if Newmont had recovered net settlement proceeds by certain dates.*fn50 Newmont had direct access to information regarding its settlements and expenses; TIG did not. A demand by TIG was not a condition precedent to Newmont's payment obligation under the Agreement.

  In its reply memorandum, Newmont argues that because TIG did not object to Newmont's failure to make payments on schedule or provide required documents, it acquiesced to a waiver of the contractual provisions fixing dates for payment. TIG has asserted facts which dispute this argument.*fn51 Because "the question whether the parties' conduct expresses an intention to modify an existing agreement" is another disputed question of fact, this issue is inappropriate for summary judgment.*fn52

  2. Prejudgment Interest

  In the event that a judgment is rendered against Newmont, TIG is entitled to prejudgment interest on the "sum awarded."*fn53 The sum awarded may include the Late Payment Damages. This is not akin to compounding of interest, rather, it is essential to put TIG in the position it would have been in had Newmont performed according to the Agreement.*fn54 TIG may not collect both Late Payment Damages and prejudgment interest accruing on the same principal amounts over the same time period.*fn55

  3. Statute of Limitations

  TIG commenced this action on June 1, 2004. As a result, Newmont insists that TIG cannot bring any claims which accrued prior to June 1, 1998, such as TIG's claim for Late Payment Damages based on a payment due December 31, 1997. TIG, in turn, argues that the statute of limitations should be equitably tolled because Newmont concealed the fact that payment was due on December 31, 1997. The parties dispute whether TIG was aware that payment was due. TIG alleges that due to misrepresentations by Newmont, it was not aware that any payment was late until discovery in this litgation revealed the actual dates of Newmont's settlements with third parties.*fn56

  Because there are factual disputes, Newmont's motion for summary judgment with respect to interest is denied.

  B. Expert Motion With regard to TIG's claim for Late Payment Damages, the facts at issue are (1) when each payment was due, (2) when each payment was made, and (3) the amount of damages. Neier's testimony is only relevant for the purpose of determining the amount of Late Payment Damages.*fn57

  Neier may not testify regarding the correct rate and mode of computing interest. This is a legal argument, and Neier's opinion on these subjects is inadmissible. Neier's report computes interest using three alternative interest rates.*fn58 As previously discussed, TIG is limited to the statutory rate of interest. Therefore, only computations using the rate of nine percent per annum and not compounded are relevant.

  Neier is also precluded from testifying on any prejudgment interest on payments that were allegedly due but were never paid. Neier's report calculates both Late Payment Damages, which he refers to as "damage during the initial period" excluding "the Lloyd's of London Differential,"*fn59 and prejudgment interest, which he refers to as "interest during the subsequent period."*fn60 Prejudgment interest cannot be computed until a judgment is rendered and an end date for the computation is fixed.

  Finally, Neier's testimony describing the theory behind interest*fn61 is precluded because it is wholly irrelevant — as previously discussed, if TIG proves its claim, it is entitled to interest as a matter of law.

  In sum, Neier's testimony is limited to computing TIG's Late Payment Damages, which consist of interest at the rate of nine percent per annum from the time each payment was allegedly due until the time it was made.*fn62


  For the foregoing reasons, defendant's Interest Motion is denied, and defendant's Expert Motion is granted in part and denied in part. The Clerk of the Court is directed to close these motions. SO ORDERED.


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