Mill not entitled to prejudgment interest on breach of contract claim

November 10, 2014

The Indiana Court of Appeals upheld a $36 million award to an East Chicago mill after a braking system failure led to the spillage of molten iron within the shop. But the judges reversed the grant of more than $3 million in prejudgment interest.

A ladle full of molten iron unexpectedly descended from its hoisted position and tipped, which spilled and ignited a fire that damaged the steel shop at the mill operated by ArcelorMittal Indiana Harbor LLC. ArcelorMittal investigated the matter and determined that a failed braking system caused the incident. ArcelorMittal did not keep all of the parts removed from the crane system during the investigation.

The company sued WESCO Distribution Inc., which supplied the parts, after determining that the parts had fractured and led to the failure. Five years later and after extensive pre-trial proceedings, a jury awarded ArcelorMittal $36,134,477 in damages. Lake Superior Special Judge John R. Pera also awarded more than $3 million in prejudgment interest on the amount ArcelorMittal expended to repair its facility.

WESCO appealed, raising several arguments, including that ArcelorMittal’s expert testimony should not have been admitted and the mill destroyed certain evidence that was critical to its defense.

In WESCO Distribution, Inc. v. ArcelorMittal Indiana Harbour LLC and ESPU, Inc., 45A03-1307-PL-274, the COA affirmed the trial court in all respects, except regarding the grant of prejudgment interest. WESCO did not show that the trial court committed any reversible errors or it abused its discretion in the handling of the discovery issue. The expert testimony was admissible to prove causation because it was helpful in explaining to the jury how the incidence could have happened, and the engineering methodology behind the opinions was reliable, Judge Margret Robb wrote.

The judges also found that ArcelorMittal should not have been sanctioned for failing to preserve or document critical components of the crane’s braking system. Although the evidence was intentionally altered or discarded in the sense that the mill employee acted purposefully in rebuilding the controller and throwing away the parts after the braking failure, the mill did not intentionally destroy evidence that it knew was evidence at the time it was destroyed. In addition, because it was destroyed before either party had a chance to inspect it, the prejudice the parties experienced is approximately equal, Robb wrote.

ArcelorMittal was not entitled to prejudgment interest on any of the verdict, the COA held. Prejudgment interest is proper when the trier of fact doesn’t have to exercise judgment in order to assess the amount of damages. In this case, the jury exercised discretion in arriving at the damages amount that was substantially different than what ArcelorMittal claimed.  



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