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BA Jacobs Flight Services, LLC v. Rutair Ltd.

United States District Court, N.D. Illinois, Eastern Division

May 12, 2017

BA JACOBS FLIGHT SERVICES, LLC, an Illinois Limited Liability Company, Plaintiff,
v.
RUTAIR LIMITED, a/k/a RUTAIR LLC, a Jamaica Corporation, and GEORGE LEVY, an individual, Defendants.

          MEMORANDUM OPINION AND ORDER

          Jeffrey T. Gilbert Magistrate Judge.

         The Court assumes familiarity with, and incorporates by reference, the underlying facts and conclusions set forth in its previous Memorandum Opinions and Orders in this case. See [ECF Nos. 74, 88, 116]. This dispute arises out of a lease agreement (the "Lease") entered into between Plaintiff BA Jacobs Flight Services LLC ("BA Jacobs") and Defendant RutAir Limited ("RutAir") in December 2010. BA Jacobs leased a new 2010 Cessna Caravan 208B airplane (the "Aircraft") to RutAir. Defendant George Levy ("Levy") signed a guaranty ("the Guaranty") pursuant to which he personally guaranteed RutAir's Lease payments up to $300, 000 in the event of a breach of the Lease, and agreed to pay attorneys' fees and costs incurred by BA Jacobs in enforcing its rights under the Guaranty. The Court already has held that RutAir breached the Lease and that Levy is liable on his Guaranty, and it awarded damages against both RutAir and Levy consequent to the breach after a bench trial. [ECF Nos. 74, 116].

         The Court concluded that BA Jacobs is entitled to damages of $400, 245, plus prejudgment interest and attorneys' fees and costs. See generally BA Jacobs Flight Services, LLC v. RutAir Limited a/k/a RutAir LLC, 2017 WL 277913 (N.D. Ill. Jan. 20, 2017) [ECF No. 116]. The Court ordered the parties to confer in good faith and attempt to reach agreement on the amount of prejudgment interest and attorneys' fees and costs to be awarded. They were unable to resolve those issues. The Court, therefore, set a briefing schedule on the issues of prejudgment interest and BA Jacobs's request for attorneys' fees. The parties have filed their briefs, and this matter is now before the Court on Plaintiffs Motion for Prejudgment Interest and Attorneys' Fees and Expenses [ECF No. 119].

         ANALYSIS

         I. Prejudgment Interest

         As an initial matter, RutAir is fundamentally mistaken in its presumption that the question of whether to award prejudgment interest is an open question yet to be resolved. It is not. An award of prejudgment interest is left to the sound discretion of the district court. See United States v, Bd. of Educ. of Consol. High Sch. Dist. 230, Palos Hills, III, 983 F.2d 790, 799 (7th Cir. 1993). In its most recent Memorandum Opinion and Order issued January 20, 2017, the Court concluded that "BA Jacobs is entitled to prejudgment interest and that such an award is appropriate given the facts and circumstances of this case." BA Jacobs Flight Services, LLC, 2017 WL 277913, at *5. At this point, that is the law of the case, and the Court sees no reason to revisit its earlier conclusion.

         In addition, RutAir's argument that the Court should deny BA Jacobs's request for prejudgment interest was not made earlier and is waived. In fact, in earlier briefing, RutAir specifically cited the Illinois Interest Act and acknowledged that BA Jacobs "is entitled to a 5% interest on the amount owed from the date the Lease was breached." RutAir's Prehearing Memorandum, [ECF No. 95, at 6]. RutAir now cannot argue differently. Therefore, there is no question that BA Jacobs is entitled to prejudgment interest at the rate of 5% pursuant to the Illinois Interest Act, 815 ILCS 205/2, The only question regarding prejudgment interest to be resolved is from what date the interest should be calculated.

         It is not disputed that RutAir owed BA Jacobs unpaid monthly rent and other fees pursuant to the Lease prior to BA Jacobs repossessing the Aircraft at the beginning of April in 2011. BA Jacobs also continued to incur substantial money damages after BA Jacobs repossessed the Aircraft in April 2011, and late fees continued to accrue for the past due monthly rent payments until the Aircraft was sold in February 2012. In the Court's view, the amount due and owing to BA Jacobs pursuant to the Lease, therefore, became a fixed amount as of the date the Aircraft was sold in February 2012. The Court will use February 1, 2012, as the start date for the accrual of prejudgment interest as to the Lease.

         As to the Lease, BA Jacobs asserts that based on a damages award of $400, 245, at a rate of 5% per annum, the interest is $20, 012.25 per year. For the five-year period of February 1, 2012 through February 1, 2017, the total interest is $100, 061.25. BA Jacobs submits that interest runs at a rate of $54.82 per day for each day running from February 2, 2017, until the date judgment is entered, which is $5482. Although RutAir argued that prejudgment should not be awarded at all (an argument the Court rejected above), it does not dispute the prejudgment interest calculations submitted by BA Jacobs.

         The Court also is not persuaded by any of Levy's arguments that prejudgment interest should not be awarded on the Guaranty. For the first time, Levy argues that the Guaranty is a separate contract and does not expressly provide for the recovery of prejudgment interest, and prejudgment interest, therefore, should not be awarded on the Guaranty. The Court disagrees. As previously cited above, the award of prejudgment interest is left to the sound discretion of the district court. See Bd. of Educ. of Consol High Sch. Dist. 230, Pahs Hills, III., 983 F.2d at 799. The Court finds that an award of prejudgment interest is appropriate in this case against RutAir for breach of the Lease and against Levy on the Guaranty. As the Court noted previously, "BA Jacobs has waited a long time to recover its losses. There is a time value of money, and the Court finds that BA Jacobs is entitled to prejudgment interest and that such an award is appropriate given the facts and circumstances of this case." BA Jacobs Flight Services, LLC, 2017 WL 277913, at *5. That statement, made with respect specifically to RutAir's default under the Lease, is equally applicable to Levy and his Guaranty of the amount due under the Lease.

         Levy had numerous opportunities to challenge BA Jacobs's argument regarding an award of prejudgment interest. He raised no such challenge. The amount recoverable by BA Jacobs pursuant to the Guaranty is easily calculated given that the specific amount of $300, 000 was agreed to by the parties as set forth in the Guaranty, and the Illinois Interest Act, 815 ILCS 205/2, specifically provides for the recovery of prejudgment at a rate of 5% per annum. As explained above, the recent briefing schedule set for the parties on prejudgment interest was not an invitation to RutAir or Levy to argue that an award of prejudgment interest should be denied or limited. The Court already concluded that an award of prejudgment interest is appropriate in this case. Again, the only matter at issue is how to calculate the prejudgment interest.

         As to the Guaranty, the Court concluded that Levy is liable for S300, 000 pursuant to the Guaranty. At 5% per annum, BA Jacobs submits that interest accrues at the rate of $15, 000 per year for a total of $75, 000, from February 1, 2012 through February 1, 2017, and that prejudgment interest then continues to accrue at a rate of $41.09 per day from February 2, 2017, until judgment is entered, which amounts to $4109. Levy also does not dispute these calculations.

         In summary, based on the calculations submitted by BA Jacobs, and not challenged by either RutAir or Levy, the Court awards a total of $105, 543.25 in prejudgment interest against ...


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