United States Court of Appeals,
Eleventh Circuit.
No. 94-4809.
BECKER HOLDING CORPORATION,
Plaintiff/Counter-defendant-Appellant/Cross-Appellee,
v.
R. William BECKER, Becker Trading Company,
Defendants/Counter-claimants-Appellee/Cross-Appellant.
March 27, 1996.
Appeals from the United States District Court for the Southern
District of Florida. (No. 92-14057-CIV-JCP), James C. Paine, Judge.
Before HATCHETT and BARKETT, Circuit Judges, and OAKES*, Senior
Circuit Judge.
BARKETT, Circuit Judge:
Becker Holding Corp. ("Becker Holding") appeals a final
judgment entered in favor of William Becker and Becker Trading Co.
("William Becker") on Becker Holding's claims of breach of contract
and breach of fiduciary duty. Becker Holding also appeals the
judgment awarding William Becker $24,515,485.59 on his counterclaim
for accelerated payment on a promissory note. William Becker
cross-appeals the trial court's denial of prejudgment interest on
the interest component of a delinquent installment payment on the
note.
William Becker owned half the common stock of Becker Holding,
a privately-held corporation founded and chaired by Richard Becker,
William Becker's father, and engaged in various aspects of the
citrus industry. After a disagreement, William Becker was fired
*
Honorable James L. Oakes, Senior U.S. Circuit Judge for the
Second Circuit, sitting by designation.
from his position as vice-president and chief executive officer of
Becker Holding. The parties then negotiated the purchase of
William Becker's shares in Becker Holding for $30 million, which
included approximately $23,953,934.00 in principal and
$6,046,066.00 in interest at a 10 percent interest rate. The
agreement provided that Becker Holding would pay William Becker $5
million on April 1, 1991, and execute a promissory note for the
outstanding principal and interest to be paid back in five equal
annual installments of $5 million each beginning on April 1, 1992.
The promissory note further provided (1) that if William Becker
breached the non-competition clause to which the parties also had
agreed, Becker Holding could suspend payments on the note and (2)
that if Becker Holding was in default of payment for more than
thirty days, William Becker could accelerate payment on the note,
making the entire principal due. The non-compete clause of the
agreement provided:
6. COMPETITION: The Seller, R. William Becker, will be
free to engage in any and all aspects of the citrus industry,
including the growing, picking, and packing of citrus fruit,
except that, for a period of three (3) years from closing,
Seller shall not directly or indirectly engage in the
processing or sale of citrus concentrate or fresh juices;....
(emphasis added).
Shortly after signing the agreement, William Becker, through
his new company Becker Trading, sought to purchase a cold-storage
facility for citrus. After determining that Becker Holding did not
object to the purchase, William Becker purchased the facility and
began to offer storage services to citrus growers and packers. In
the course of storing citrus concentrate, the bulk concentrate was
mixed and blended, an ordinary service provided by citrus storage
operators.
Becker Holding took the position that this mixing and blending
was tantamount to "processing" citrus concentrate in violation of
the non-competition agreement. Becker Holding refused to pay the
$5 million installment that was due on April 1, 1992, and sued
William Becker for breach of contract. The complaint also alleged
that William Becker breached his fiduciary duty to Becker Holding
by making personal side deals to buy and sell fruit at a time when
he was an officer of Becker Holding. Based on Becker Holding's
failure to pay on the note, William Becker counterclaimed for
accelerated payment of the promissory note.
Following a bench trial, the district court determined that
based on the language of the non-competition agreement, the intent
and understanding of the parties, and industry practice and custom,
the blending and mixing done at William Becker's cold-storage
facility was not "processing" as prohibited by the agreement.
Alternatively, the court determined that even if William Becker did
process concentrate, Becker Holding waived application of the
non-competition agreement when it failed to object to William
Becker's proposal to operate a citrus storage facility because
blending is ordinarily done at such a facility. The court also
found that William Becker did not buy, sell, or otherwise process
citrus concentrate or juices. Regarding the breach of fiduciary
duty claim, the court found that Richard Becker always had allowed
his children to make their own citrus deals on the side, and
because of this consent, William Becker's participation in the
disputed side deals did not breach his fiduciary duties. Finally,
the court found that Becker Holding had defaulted on the April 1,
1992 installment payment, making the full amount of the promissory
note due and payable. The court entered final judgment against
Becker Holding in the amount of $24,515,485.59, which included
prejudgment interest only on the outstanding principal and not on
the interest portion of the $5 million installment that was due and
owing on April 1, 1992.
For the reasons expressed in the district court's decision,
we affirm the judgment against Becker Holding on its claims, as
well as the court's determination that William Becker was entitled
to a judgment for the full amount of the promissory note. However,
Florida law compels the reversal of the district court's decision
that William Becker was not entitled to prejudgment interest on the
interest portion of the $5 million installment that was due on
April 1, 1992.
Florida law has long held that a successful plaintiff must be
able to recover the total amount of the pecuniary loss that has
been suffered. Thus, a successful plaintiff is entitled not only
to the amount lost, but also to interest on the amount lost in
order to compensate the plaintiff for having been deprived of the
use of the principal loss amount. Argonaut Ins. Co. v. May
Plumbing Co., 474 So.2d 212, 214-15 (Fla.1985). The interest
awarded to compensate for this deprivation is referred to
differently depending on the period of time that the plaintiff is
deprived of the principal loss amount: 1) "prejudgment interest"
is awarded to compensate a plaintiff for having been deprived of
the value of principal losses from the time of loss to the time of
judgment; 2) "postjudgment interest" is awarded to compensate a
plaintiff for having been deprived of the value of principal losses
from the time of judgment to the time that the plaintiff is
actually paid. Thus, prejudgment and postjudgment interest serve
exactly the same purpose, albeit for different time periods: they
make the plaintiff whole for having been deprived of the use of the
principal loss amount. This general system for making the
plaintiff whole by ordering prejudgment and postjudgment interest
applies in a wide variety of cases involving liquidated damages, 1
including insurance subrogation claims, see, e.g., Utica Mutual
Ins. Co. v. Pennsylvania Nat'l Mutual Casualty Ins. Co., 639 So.2d
41 (Fla. 5th D.C.A.1994); Aetna Casualty & Surety v. Protective
Nat'l Ins. Co., 631 So.2d 305 (Fla. 3d D.C.A.1993); breach of
contract claims, see, e.g., Central Constructors, Inc. v. Spectrum
Contracting Co., 621 So.2d 526 (Fla. 4th D.C.A.1993); City of
Tampa v. Janke Construction, Inc., 626 So.2d 239 (Fla. 2d
D.C.A.1993); stock accountings, see, e.g., LaFaye v. Presser, 554
So.2d 610 (Fla. 1st D.C.A.1989); property disputes, see, e.g.,
West v. Sunbelt Enterprises, 530 So.2d 433 (Fla. 1st D.C.A.1988);
and mortgage foreclosures, see, e.g., Ghanbari v. Perrault, 651
So.2d 1257 (Fla. 1st D.C.A.1995); Reilly v. Barrera, 620 So.2d
1116 (Fla. 5th D.C.A.1993).
In a number of cases, plaintiffs have unsuccessfully sought
postjudgment interest on a prejudgment interest award. See S & E
Contractors v. City of Tampa, 629 So.2d 883 (Fla. 2d D.C.A.1993);
1
Under Florida law, a successful plaintiff is not entitled
to prejudgment interest on personal injury awards because damages
are not liquidated. Argonaut, 474 So.2d at 215 n. 1.
Aetna Casualty & Surety, 631 So.2d at 310; Central Constructors,
621 So.2d at 527; United Services Automobile Ass'n v. Smith, 527
So.2d 281, 283-84 (Fla. 1st D.C.A.1988); West, 530 So.2d at 436.
Because prejudgment interest serves only to compensate the
plaintiff for the deprivation of the use of the principal loss
amount for a set period of time—from the date of loss to
judgment—such compensation is fixed at the time of judgment.
Therefore, ordering postjudgment interest on prejudgment interest
would overcompensate for the deprivation. Similarly, once judgment
is entered the clock is reset and postjudgment interest is awarded
only to compensate a plaintiff for the deprivation of the use of
the principal loss amount after judgment.
Becker Holding argues that this court should not order
prejudgment interest on the interest portion of the $5 million
installment payment that was due on April 1, 1992. Becker Holding
relies on S & E Contractors, Aetna Casualty & Surety, Central
Constructors, West, Janke Construction, and United Services
Automobile Ass'n to argue that ordering prejudgment interest on the
interest portion of the delinquent installment would impermissibly
compound the interest. However, the cases to which Becker Holding
cites are inapposite because none of them involved fully matured
and due interest as part of principal losses. Consequently, the
courts in those cases were not concerned about compounding the kind
of interest that is involved in this case. Instead, those courts
refused to order postjudgment interest on prejudgment interest
because such compounding of prejudgment interest would
overcompensate the plaintiffs for having been deprived of the use
of principal losses. The issue in this case, however, is not
whether to award postjudgment interest on a prejudgment interest
award, but rather, whether to award prejudgment interest on the
interest component of a fully matured installment payment. Thus,
Ghanbari, 651 So.2d at 1257, and Reilly, 620 So.2d at 1118, the
only cases that involve fully matured and due interest payments,
are on point. In both Ghanbari and Reilly a mortgagee sought to
recover prejudgment interest on the entire amount of a delinquent
mortgage payment, including the interest component. Relying on
Argonaut, the courts held that because both the interest and
principal components of the mortgage payment were overdue,
prejudgment interest automatically attached to the entire overdue
installment. Ghanbari, 651 So.2d at 1257; Reilly, 620 So.2d at
1118.
Becker Holding contractually agreed to pay William Becker $5
million on April 1, 1992. The $5 million payment consisted of a
principal component and an interest component, each computed
pursuant to the stock transaction agreement. On April 1, 1992,
when Becker Holding refused to pay the agreed upon $5 million
payment, the entire $5 million became due and owing. Thus, in
order to restore William Becker to where he would have been had
Becker Holding not defaulted, William Becker is entitled to the $5
million principal loss amount plus compensation for having been
deprived of the $5 million from the date he was contractually
entitled to it but did not receive it. See Argonaut, 474 So.2d
214-15. That is, William Becker is entitled to prejudgment
interest on the entire overdue installment payment from April 1,
1992, the date of loss, to March 7, 1994, the date of judgment.
Therefore, William Becker is entitled to prejudgment interest
at 10 percent per year, the contractually agreed upon rate, on the
$5 million overdue installment. He also is entitled to prejudgment
interest at 10 percent on the promissory note's accelerated
outstanding principal of $15,849,327.40. Total prejudgment
interest at 10 percent calculated from April 1, 1992, to March 7,
1994, is equal to $4,032,772.48. Thus, the total final judgment is
$24,882,099.84, which consists of principal damages of
$20,849,327.40 and total prejudgment interest of $4,032,772.48.
Accordingly, we affirm the district court's judgment against
Becker Holding on its claims, but reverse the court's final damage
award to William Becker and remand for an adjustment to damages in
accordance with this opinion.
AFFIRMED in part; REVERSED in part; REMANDED.