Movora LLC v. Gendreau

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dispute whether it settled the issues of (1) prejudgment interest, (2) contingent closing note offsets, or (3) the indemnity cap's future application.³This order resolves all three.

Prejudgment Interest

2. The core dispute as to prejudgment interest centers on whether Plaintiffs' out-of-pocket loan expenses and the right to prejudgment interest under Delaware law are mutually exclusive forms of compensation. Plaintiffs argue that prejudgment interest is mandatory in indemnification cases and is not negated by an award for actual loan interest.⁴Plaintiffs further assert the Opinion supports this interpretation by awarding compensation for actual interest but not explicitly or implicitly precluding separate prejudgment interest.⁵Having already received actual loan interest, Plaintiffs now seek full compensation through prejudgment interest.⁶

3. Defendants contend that granting both forms of interest (actual and prejudgment) on the loan principal would result in impermissible double recovery, creating a windfall for Plaintiffs.⁷Defendants assert Plaintiffs are not entitled to prejudgment interest on the $70 million DePuy settlement, as Plaintiffs have already been awarded damages representing their out-of-pocket interest expenses used to

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finance that payment.⁸Defendants maintain that "[b]ecause Plaintiffs used the loan to pay DePuy, they incurred no opportunity cost nor suffered a loss in the time value of money."⁹

4. The Supreme Court of Delaware has instructed trial courts that a successful plaintiff is entitled to prejudgment interest on money damages as a matter of right, computed from the date liability accrues.¹⁰This is not a matter of discretion.¹¹"Prejudgment interest serves two purposes: (1) compensating the plaintiff for the lost use of its money; and (2) divesting the defendant of any benefit it received by retaining the plaintiff's money during the case's pendency."¹²"Both the compensatory and disgorgement purposes of prejudgment interest arise from the premise that the damages award was 'plaintiff's money'—money that the plaintiff

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would have had in her possession absent wrongdoing."¹³Although prejudgment interest has been denied or limited under certain circumstances, this often involved delays caused by the plaintiff or other equitable considerations.¹⁴

5. Defendants rely on the recent post-trial decision in LG Electronics. Inc.

v. Invention Inv. Fund I, L.P., where the court held that plaintiff was not entitled to prejudgment interest because it "was not deprived of any money" and therefore an award of prejudgment interest "would constitute an inequitable windfall."¹⁵The LG Electronics decision was heavily redacted, and the court's reasoning is difficult to decipher.¹⁶

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6. The non-redacted portions of the LG Electronics decision indicate the court held that prejudgment interest would constitute an impermissible windfall for the prevailing party who had not been deprived of any funds due to contractual arrangements.¹⁷Unlike the prevailing party in LG Electronics, Plaintiffs here have paid a substantial amount. Still, Defendants assert "there would have been no difference in Plaintiffs' account balance if [Defendants] or the loan paid for the $70 million settlement."¹⁸This argument is unconvincing.

7. As Plaintiffs point out, Defendants' position ignores the uncontroverted trial record as to Plaintiffs' lost use of capital and overlooks the deprivation of that use altogether.¹⁹The record demonstrates that Defendants' breach of the MIPA, by failing to indemnify Plaintiffs, deprived Plaintiffs of capital they would have used to invest in and grow their business.²⁰While Plaintiffs received interest on the loan principal, that award is unrelated to prejudgment interest, which is "conceptually

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separate and distinct" from other types of damages, including interest expenses incurred due to borrowing.²¹

8. For these reasons, Plaintiffs are entitled to prejudgment interest based on the principal amount of $35,832,218.92.²²

Contingent Closing Note

9. Defendants seek confirmation that their rights to amounts due under the Contingent Closing Note (including accrued interest) remain intact and unaffected by the Opinion.²³Defendants argue the balance remaining in the note should offset any final obligation to Plaintiffs.²⁴Conversely, Plaintiffs assert the issue is not yet ripe, disputing Defendants' attempt to raise it at this stage.²⁵Plaintiffs contend that any disputes over the note's application should be handled under the note's contractual mechanisms if they arise.²⁶Plaintiffs also commit to abide by the note and its resolution procedures.²⁷Plaintiffs neither cite nor rely on the Opinion with

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respect to the Contingent Closing Note, suggesting the Opinion does not presently impact the note.²⁸

10. The Court finds that the issue regarding the Contingent Closing Note is not yet ripe. If a dispute arises in the future, that dispute will be handled at the appropriate time and pursuant to the note's terms.²⁹

Indemnity Cap

11. The parties agree on the 9.5% interest rate (the Federal Reserve discount rate of 4.5% on the date of judgment, plus 5% under 6 Del. C. § 2301(a)).³⁰Defendants argue the indemnity cap (set at 55% of the purchase price, or ~$55 million) remains untouched by the Opinion.³¹Defendants seek confirmation that their indemnity obligation cannot exceed the cap and maintain that nothing in the Opinion alters this limit.³²Plaintiffs contend the indemnity cap is not at issue because the current judgment has not reached the cap.³³Plaintiffs argue the applicability of the cap, especially concerning post-judgment interest, is hypothetical and should not be decided now.³⁴The Court agrees. Because the Opinion neither

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addresses nor limits the applicability of the indemnity cap, the Court need not explicitly declare an indemnity cap for post-judgment interest.

Conclusion

12. For the reasons stated, the Court finds Plaintiffs are entitled to prejudgment interest as discussed herein. The issues concerning the contingent closing note and indemnity cap, as raised by Defendants, are unripe for adjudication at this time. The Court will issue an order contemporaneously with this decision, adopting Plaintiffs' proposed form of order.³⁵

IT IS SO ORDERED.