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Nautilus, Inc. v. Icon Health & Fitness, Inc.

United States District Court, W.D. Texas, San Antonio Division

May 7, 2018

Nautilus, Inc. Plaintiff,
v.
Icon Health & Fitness, Inc. Defendant.

          MEMORANDUM OPINION: GRANTING IN PART AND DENYING IN PART THE PLAINTIFFS MOTION TO ALTER OR AMEND JUDGMENT

          HON. ROYCE LAMBERTH, UNITED STATES DISTRICT JUDGE

         Background

         On January 19, 2018, the Court granted Nautilus's motion for summary judgment [ECF #41] and awarded damages to Nautilus in the amount of $1, 782, 508-$1, 507, 408 in royalties and $275, 100 in late-payment interest for the time period between November 30, 2015, and January 20, 2017. (ECF #9 at 26-27). But the Court's opinion and order granting the summary judgment motion did not address pre-judgment interest, post-judgment interest, or late-payment interest for the time since January 20, 2017. Nautilus now moves to amend the Court's judgment to address those matters. Specifically, Nautilus asks the Court to amend its judgment "to include (1) additional late payment interest pursuant to the parties' Agreement in the amount of $349, 712.36; (2) judgment that Nautilus is entitled to additional and ongoing late payment interest pursuant to the parties' Agreement until payment is made by ICON in full; (3) pre-judgment interest in the amount of $763, 472.56; and (4) post-judgment interest in the amount of 1.79% to accrue until the judgment is paid in full by ICON." (ECF #96 at 6-7).

         For the reasons given below, the Court will grant in part and deny in part Nautilus's motion.

         Legal Standard

         Rule 59 of the Federal Rules of Civil Procedure allows a motion to alter or amend judgment within 28 days after the entry of judgment. (Fed. R. Civ. P. 59(e)). Under Rule 59(e), amending a judgment is appropriate in three circumstances: (1) when there has been an intervening change in the controlling law, (2) when the movant presents newly discovered evidence that was previously unavailable, or (3) when there has been a clear error of law or fact. (Demahy v. Schwartz Pharma, Inc., 702 F.3d 177, 182 (5th Cir. 2012)). A motion under Rule 59 cannot be used to raise new arguments or claims that could or should have been made before the judgment issued. (MarseillesHomeowners Condo. Ass'n v. Fid. Nat. Ins. Co., 542 F.3d 1053, 1058 (5th Cir. 2008)). And while Rule 59 motions are generally disfavored, they are the appropriate vehicle to update damages numbers and to amend judgments to include pre-and post-judgment interest. (Kg. Heck v. Triche, 775 F.3d 265, 276-77 (5th Cir. 2014) (noting that post-judgment motions to add interest must be brought pursuant to Rule 59(e)); Tellez v. GEO Group, Inc., No. 15-cv-00465, 2018 WL 1146398, at *6 (W.D. Tex. Mar. 1, 2018) (granting pre- and post-judgment interest and costs in the context of a Rule 59(e) motion)).

         Analysis

         I. The Court Will Amend Its Prior Judgment to Grant Pre-judgment Interest / Late-Payment Interest to Nautilus.

         In its motion for summary judgment, Nautilus requested "additional late payment interest owed pursuant to the parties' agreement accrued subsequent to the filing of its prior expert report on damages, in addition to pre-judgment interest." (ECF #41-1 at 1-2). The Court, in its prior judgment, did not address these requests. That was an oversight on the Court's part and is grounds enough to re-open the Court's analysis and, if necessary, amend the judgment.

         The Court will first analyze whether Nautilus is entitled to additional late-payment interest, pre-judgment interest, or both. If Nautilus is entitled to any of those, the Court will amend the judgment to reflect that.

         a. Nautilus Cannot Recover Both Late-Payment Interest and Pre-Judgment Interest.

         Nautilus requests both "additional late payment interest pursuant to the parties' [contract]" and "pre-judgment interest." (ECF #96 at 6-7). Nautilus may receive additional late-payment interest under the contract. But Nautilus may not receive pre-judgment interest above and beyond the late-payment interest.

         "[A] prevailing plaintiff in a contract case tried under Texas law is entitled to an award of prejudgment interest in all but exceptional circumstances." (Am. Int'l Trading Corp. v. Petroleos Mexicanos, 835 F.2d 536, 541 (5th Cir. 1987)). And under Texas law, when a contract provides for late-payment interest, that interest is the pre-judgment interest for the case. (See Perry Roofing Co. v. Olcott, 722 S.W.2d 538, 544 (Tex. 1986) ("[A] trial court may award prejudgment interest in a contract action where the contract itself does not fix the amount of damages."); People's United Equip. Fin. Corp. v. Morris, No H-16-365, 2018 WL 287860, at *3 (S.D. Tex. Jan. 4, 2018) (using the parties' contractual interest rate as the rate for pre-judgment interest)). It would constitute an impermissible double recovery for a party to receive both contractual late-payment interest and statutory pre-judgment interest. The reason for that is clear when one considers the injury that pre-judgment interest is intended to remedy-the "judgment creditor's lost opportunity to invest the money awarded as damages." (Miga v. Jensen, 96 S.W.3d 207, 213 (Tex. 2002)). Late-payment interest serves the same purpose, being an agreed-upon estimation of the value of the contract creditor's money due. (Perry Roofing , 722 S.W.2d at 544 (equating prejudgment interest with contractually specified damages)). Thus, a prevailing party in a contract action is entitled to specified contractual late-payment damages in lieu of pre-judgment interest (to the extent permitted by law).

         In this case, the implication of this doctrine is that Nautilus cannot receive all of the relief for which it asks. Nautilus cannot receive both "additional late payment interest pursuant to the parties' [contract]" and "pre-judgment interest" because the contractual late-payment interest supplants the role of pre-judgment interest. Therefore, the Court will deny Nautilus's motion to the extent that Nautilus seeks multiple recoveries for the lost time value of the royalties owed to it. ...


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