Opinion
CASE NO. SA CV 01-97 DOC
May 2, 2002
ORDER DENYING COUNTERCLAIMANT'S MOTION TO ALTER OR AMEND JUDGMENT
Before the Court is Defendant and Counterclaimant Vickie Lynn Marshall's (Vickie) motion to alter or amend the judgment in this matter by increasing the damages by a factor of 2.5 or in the alternative to award prejudgment interest. After reviewing all the moving, opposing, and replying papers, and after oral argument on April 15, 2002, and for the reasons set forth below, the Court DENIES the motion.
As all the principals in the matter at hand share the same last name, the Court will refer to the parties by their given names, as is customary in cases involving family members.
I. BACKGROUND
On March 7, 2002, the Court issued a judgment in this matter. The procedural history and facts of the case are fully set forth in the Court's Findings of Fact and Conclusions of Law, reported at Marshall v. Marshall (In re Marshall), 275 B.R. 5 (C.D.Cal. 2002). The Court presumes familiarity with that order and uses the abbreviated terms found therein.
II. DISCUSSION
A. Increasing the Award by a Factor of 2.5
In its Findings of Fact and Conclusions of Law (FFCL), the Court held that the proper valuation of Koch stock was based on the "`price that a seller is willing to accept and a buyer is willing to pay on the open market in an arm's-length transaction.'" FFCL at 76 (quoting Black's Law Dictionary 1549 (7th ed. 1999). The Court established that the Book Value maintained by MPI and recorded in their transactions with Texas Commerce Bank represent the best estimation of that amount, and accordingly based the MPI value on that.
In arguing for the increase in damages, Vickie points to evidence that the sale of Koch stock was based on a factor of Book Value times 2.5. She refers to the 1980 sale of stock between J. Howard and J. Howard, III. In that sale, J. Howard paid J. Howard, III $208 per share for his 4% voting interest in Koch. That price was based on Book Value times 2.5. Pierce argues that Vickie did not raise that argument during the litigation and cannot raise it after judgment has been issued. Vickie, however, did raise the factual issue and significant testimony regarding the valuation of Koch was presented in the trial before the bankruptcy court and in this Court's de novo review.
The argument must ultimately be rejected because the Book Value multiplier used in 1980 is not probative of the current fair market value of the stock J. Howard owned at his death (or rather the stock that he would have owned at his death absent Pierce's tortious interference) for several reasons. First, J. Howard owned non-voting stock, whereas the stock purchased from J. Howard, III in 1980 was voting stock. A discount should therefore reasonably be applied to the fair market value of the non-voting stock relative to the voting stock purchased from J. Howard, III. Additionally, the stock that J. Howard, III owned in 1980 was the swing vote in a family battle for control of Koch Industries. Whether or not it was the "extortion" price that J. Howard claimed at the time, J. Howard, III was clearly in an advantageous bargaining position with his father, and likely obtained a premium. By 1992, when J. Howard began preparing a "New Community" for Vickie, the battle for control of Koch was long since over with J. Howard's faction having won. Thus, the premium involved in the 1980 sale should not be applied.
As detailed in the FFCL, J. Howard sold the stock back to Koch shortly after buying it from J. Howard, III. FFCL at 12.
Accordingly, the Court's original valuation will not be disturbed.
B. Prejudgment Interest
Vickie next argues that the Court should award prejudgment interest on the damages, accruing from the date she filed the present counterclaim against Pierce. Vickie asserts that prejudgment interest is mandatory.
Under Texas law, there are two bases for an award of prejudgment interest: "(1) general principles of equity and (2) an enabling statute." Johnson Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 528 (Tex. 1998). In Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549, 552-55 (Tex. 1985), the Texas Supreme Court held that prejudgment interest was mandatory in cases involving wrongful death, personal injury, or property damage. Id. That rule was subsequently codified and slightly altered by the Texas Legislature. Tex. Fin. Code § 304.102 (previously Tex. Rev. Civ. Stat. article 5069-1.05, section 6); see also Johnson Higgins of Texas, 962 S.W.2d at 528. Vickie's claims, however, are for economic loss, and are therefore governed by the permissive principles of equity. Spangler v. Jones, 861 S.W.2d 392 (Tex.App. 1993); see also Johnson Higgins of Texas, 962 S.W.2d at 529 ("We hold that section 6 means what it says: statutory prejudgment interest applies only to wrongful death, personal injury, and property damage cases" and holding that economic loss is not property damage."). Thus, applying the principles of equity, Vickie is not entitled to prejudgment interest. Although the Court has awarded damages based on the value of Koch Industries at J. Howard's death, the gift to Vickie would have gone to her only many years after his and Eleanor's death. While the nature of the case forces the Court to fix a date upon which damages are found and order that amount to be paid, it recognizes that the value of Koch in the future is speculative. Thus, balancing the interests between Pierce's tortious action and the appropriate value of Vickie's intended gift leaves the Court in the position of fixing the amount at the time of J. Howard's death, but not awarding prejudgment interest because of the speculative nature of the growth of Koch in the future.
At the time the Court made its findings of fact, Eleanor was still alive, and the Court assumes that she continues to be.
C. Multiplier or Interest as Additional Sanction
Vickie finally contends that a multiplier to the damages, or an award of prejudgment interest, should be given as a sanction for Pierce's discovery abuses. Vickie argues that Pierce's abuse of the process goes on to this day. In support of this argument, Vickie has lodged with the Court a press release issued by Pierce that apparently insinuates that this Court's decision, and the bankruptcy court's decision, were based on "influence[s] other than the facts and the law." Vickie argues that this shows contempt of court and can be used to increase the amount of damages.
Such increased damages are not a proper place for the award of sanctions. The damages awarded here are exclusively to compensate Vickie for her loss and punish Pierce for his conduct that gave rise to the claims. If Vickie seeks monetary sanctions for Pierce's conduct during the litigation, that is appropriately a matter for the bankruptcy to address in the first instance.
III. CONCLUSION
Accordingly, Vickie's motion to alter or amend the judgment is DENIED.
IT IS SO ORDERED.