United States District Court, E.D. Kentucky, Southern Division, Pikeville
OPINION AND ORDER
K. CALDWELL, CHIEF JUDGE UNITED STATES DISTRICT COURT.
matter is before the Court on Appalachian Regional
Healthcare, Inc.'s motion to alter the judgment in this
action to add prejudgment interest (DE 349) and its motion
for attorney's fees (DE 350).
Regional Healthcare, Inc. provides medical services in
Eastern Kentucky, including at its hospital located in
Whitesburg, Kentucky. U.S. Nursing Corporation is a staffing
agency that provided nurses to Appalachian Regional on a
temporary basis when Appalachian Regional was short-staffed.
The staffing agreement between the parties required U.S.
Nursing to indemnify Appalachian Regional from "any and
all liability or damage that arises from . . . the negligent
or intentional act or omission" of U.S. Nursing or its
employees. (DE 52-1, Staffing Agreement, § D(15)).
patient at the Whitesburg facility, Ralph Profitt, and his
wife asserted a claim in Kentucky state court against
Appalachian Regional and U.S. Nursing, alleging that he was
injured while he was a patient. Appalachian Regional incurred
legal fees and costs of $823, 522.71 in defending the claim
and ultimately paid the Profitts $2 million to settle it.
U.S. Nursing refused to indemnify Appalachian Regional for
those amounts, which caused Appalachian Regional to bring a
claim against U.S. Nursing in this Court for breach of the
indemnification provision of the staffing agreement.
trial, a jury found that a U.S. Nursing employee - Nurse
Constance Foote - was negligent in performing certain acts in
treating Profitt, meaning that U.S. Nursing's
indemnification obligations were triggered. In a second phase
of the trial, the jury determined that Nurse Foote's
negligent acts caused Appalachian Regional to spend sums to
settle and defend the Profitts' claims against it. The
jury further determined that the $2 million that Appalachian
Regional paid to settle the Profitts' claims was
reasonable and that the $823, 522.71 Appalachian Regional
paid in attorney's fees and costs to defend the
Profitts' claims against it was reasonable. The Court
then entered a judgment (DE 338) ordering that Appalachian
Regional was entitled to recover from U.S. Nursing
Corporation a total of $2, 823, 522.71.
the first motion now under consideration, Appalachian
Regional asks the Court to alter the judgment to include an
award of pre-judgment interest. In a diversity case, state
law governs awards of prejudgment interest. Jack Henry
& Associates, Inc. v. BSC, Inc., 487 Fed.Appx. 246,
260 (6th Cir. 2012) (internal quotation marks omitted)
(quoting Estate of Riddle v. S. Farm Bureau Life Ins.
Co., 421 F.3d 400, 409 (6th Cir.2005)).
“longstanding rule” in Kentucky “is that
prejudgment interest is awarded as a matter of right on a
liquidated demand, and is a matter within the discretion of
the trial court or jury on unliquidated demands.”
3D Enterprises Contracting Corp. v. Louisville and
Jefferson County Metropolitan Sewer Dist., 174 S.W.3d
440, 450 (Ky. 2005) (citing Nucor Corp. v. General
Electric Co., 812 S.W.2d 136, 141 (Ky. 1991)).
“Precisely when the amount involved qualifies as
‘liquidated' is not always clear, but in general
‘liquidated' means ‘made certain or fixed by
agreement of parties or by operation of law. Common examples
are a bill or note past due, an amount due on an open
account, or an unpaid fixed contract price.'”
Nucor Corp., 812 S.W.2d at 141 (quotations and
determining whether a claim is liquidated or unliquidated,
“one must look at the nature of the underlying
claim, not the final award.” 3D
Enterprises, 174 S.W.3d at 450.
claims are ‘of such a nature that the amount is capable
of ascertainment by mere computation, can be established with
reasonable certainty, can be ascertained in accordance with
fixed rules of evidence and known standards of value, or can
be determined by reference to well-established market
values.'” Id. (quoting 22 Am.Jur.2d
Damages § 469 (2004)).
contrast, an unliquidated damages claim is one that has
“not been determined or calculated” and
“not yet reduced to a certainty in respect to
amount.” Ford Contracting, Inc. v. Kentucky Transp.
Cabinet, 429 S.W.3d 397, 414 (Ky. Ct. App. 2014)
(quoting Nucor Corp., 812 S.W.2d at 141).
was entered in Appalachian Regional's favor on its claim
that U.S. Nursing breached the staffing agreement by failing
to indemnify it for the costs it incurred in defending and
settling the Profitt litigation. The amount that Appalachian
Regional paid to settle the Profitts' claim and the
attorney's fees it incurred in that action were fixed and
ascertainable on April 1, 2016, the date of the settlement.
Judge Amul Thapar (who originally presided over this case),
however, ruled that Appalachian Regional must prove its
defense and settlement costs were reasonable (DE 77, Opinion
at 7.) In other words, Appalachian Regional's claim was
for the reasonable amounts it expended to defend and
settle the Profitts' claims.
support of its motion for prejudgment interest, Appalachian
Regional cites several cases in other jurisdictions holding
that a claim may be deemed liquidated even where the jury
must determine the reasonableness of the damages. Numerous
cases also hold the opposite.
example, Appalachian Regional cites the Tenth Circuit's
decision in Neustrom v. Union Pac. F. Co., 156 F.3d
1057 (10th Cir. 1998) in which the court rejected
under Kansas law an argument that a claim was not liquidated
until the court determined the reasonableness of the
settlement. More recently, however, the Tenth Circuit held
that, under Oklahoma law, attorney fees are “subject to
a reasonableness determination by the fact finder” and,
thus, “are not liquidated as required under Oklahoma
law for an award of prejudgment interest.” Yousuf
v. Cohlmia, 741 F.3d 31, 48 (10th Cir. 2014). See
also Flood Control Dist. of Maricopa Cty. v. Paloma Inv. Ltd.
P'ship, 279 P.3d 1191, 1211 (Ariz.Ct.App. 2012)
(stating “attorneys' fees spent defending the
underlying litigation are not liquidated and subject to
prejudgment interest because they are subject to a
reasonableness determination by the trial court.”);
Pierce Couch Hendrickson Baysinger & Green v.
Freede, 936 P.2d 906, 914 (Okla. 1987) (“[T]he
expenses in the present case were subject to the fact-finders
determination of reasonableness. Thus, they were not
liquidated and not subject to prejudgment interest.”);
Tri-M Erectors, Inc. v. Donald M. Drake Co., 618
P.2d 1341, 1346 (Wash.Ct.App. 1980) (“A claim is
unliquidated if the principal must be arrived at by a
determination of reasonableness.”).
cases from other jurisdictions are instructive, ultimately
this Court must predict whether Kentucky courts would find
Appalachian Regional's claims to be liquidated. Hines
v. Joy Mfg. Co., 850 F.2d 1146, 1150 (6th Cir. 1988).
Because U.S. Nursing disputed the reasonableness of the
amounts Appalachian Regional paid to settle and defend the
Profitts' claim, Kentucky courts would likely find
Appalachian Regional's claims not liquidated. “When
the amount of a claim can be ascertained readily by reference
to a formula in the contract and none of the facts is in
dispute or when the amount of the claim itself is not
disputed, the claim is liquidated.” Bituminous Cas.
Corp. v. Lynn, 503 F.2d 636, 646 (6th Cir. 1974)
(applying Kentucky law). ...