though it may be beyond the scope of the recognized exceptions. Id. Finally, we determined that under the facts of this case, defendant's wanton disregard of a court order, and its conduct prior to and thereafter, constituted sufficiently egregious circumstances to warrant submission of plaintiffs' punitive damage claims to the jury.
PLAINTIFFS' MOTION FOR PREJUDGMENT INTEREST
Both contracts in this action provide that they shall be interpreted in accordance with the laws of Pennsylvania. See Plaintiffs' Exhibit 1, para. 13, and Plaintiffs' Exhibit 2, para. 13. These provisions arguably raise the threshold issue whether the law of Pennsylvania or New Jersey applies herein.
This action was tried to a jury in a New Jersey district court. A conflict of laws issue was not raised in the pleadings or response thereto, or during any of the pretrial discovery proceedings. Defendant's trial brief cited the contract provisions in question, but noted that Pennsylvania and New Jersey law were indistinguishable on all relevant issues. During the trial, all matters pertinent thereto were disposed of in accordance with the laws of New Jersey, including plaintiffs' in litem motion to amend their complaint that is now, inter alia, the subject of defendant's Rule 59 motion.
In diversity cases, the district court must apply the choice of law rules of the forum state. Klaxon v. Stentor Electric Manufacturing Co., 313 U.S. 487, 494, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941). On the issue of damages, New Jersey's choice of law rule is that "the state whose law governs the substantive legal questions also governs the prejudgment interest issue." Draper v. Airco, Inc., 580 F.2d 91, 98 (3d Cir. 1978), relying on Busik v. Levine, 63 N. J. 351, 307 A.2d 571 (1973). In their respective memoranda, in support of and in opposition to plaintiffs' motion, the parties concur that as applied to the facts of this case, there is no real distinction between the prejudgment interest laws at issue. Compare N.J.R. 4:42-11(b) with Pa. R. Civ. P. 238. Under these circumstances, we find no genuine dispute as to the applicable state law, and we shall proceed to resolve the matters now before us under the laws of New Jersey.
New Jersey law permits the recovery of prejudgment interest in tort actions as a matter of right. N.J.R. 4:42-11(b). In other actions, where the claim is for liquidated or unliquidated damages, prejudgment interest is awarded in accordance with equitable principles. See, e.g., Bak-A-Lum Corp. of America v. Alcoa Building Products, 69 N.J. 123, 131, 351 A.2d 349, 353 (1976) (liquidated and unliquidated damages); Rova Farms Resort v. Investors Insurance Co., 65 N.J. 474, 506, 323 A.2d 495, 512 (1974) (liquidated damages); Small v. Schuncke, 42 N.J. 407, 416, 201 A.2d 56, 60 (1964) (liquidated damages); Deerhurst Estates v. Meadow Homes, Inc., 64 N.J. Super. 134, 153, 165 A.2d 543, 554 (App. Div. 1960), certif. denied, 34 N.J. 66, 167 A.2d 55 (1961) (unliquidated damages); Jardine v. Donna Brook Corp., 42 N.J. Super. 332, 341, 126 A.2d 372, 377 (App. Div. 1956) (unliquidated damages); Kamens v. Fortugno, 108 N.J. Super. 544, 548-49, 262 A.2d 11, 15 (Ch. Div. 1970) (liquidated damages). But see McDonald v. Mianecki, 159 N.J. Super. 1, 25-26, 386 A.2d 1325, 1338-39 (App. Div. 1978), aff'd, 79 N.J. 275, 398 A.2d 1283 (1979).
In the case at bar, plaintiffs seek prejudgment interest on that portion of the verdict which awarded them compensatory damages for the lost profits they sustained as a result of defendant's wrongful termination of their respective contracts. The value of their claims, which was contested by the defendant at all times pertinent hereto, was left to the discretion of the jury based upon the evidence presented. Under these circumstances, we find the claims to be liquidated.
New Jersey courts generally award prejudgment interest on claims for unliquidated damages only when "consideration of justice and fair dealing so demand." Buono Sales, Inc. v. Chrysler Motors Corp., 449 F.2d 715, 723 (3d Cir. 1971); see also Coleco Industries, Inc. v. Berman, 423 F. Supp. 275, 323 (E.D. Pa. 1976) (applying New Jersey law), modified on other grounds, 567 F.2d 569 (1977); cert. denied, 439 U.S. 830, 58 L. Ed. 2d 124, 99 S. Ct. 106 (1978); Deerhurst Estates, supra, 64 N.J. Super. at 153, 165 A.2d at 554; Jardine Estates, Inc., supra, 42 N.J. Super. at 341, 126 A.2d at 377. However, the New Jersey Supreme Court has, on at least one occasion, applied equitable principles and awarded prejudgment interest on a claim for unliquidated damages. In Bak-A-Lum Corp. of America, supra, defendant manufacturer was found liable for failing to notify plaintiff of its intention to terminate their exclusive distributorship agreement, which by its terms permitted termination thereof without cause only on reasonable notice. 69 N.J. at 129, 351 A.2d at 351. The court held that defendant breached an implied covenant of dealing in good faith by persuading plaintiff to place a large order and expand its warehouse facilities predicated solely on continuation of the exclusive distributorship, with full knowledge that it secretly intended to terminate that agreement shortly thereafter. Id. at 130, 351 A.2d at 352. The court determined that under these circumstances, 20 months was a reasonable period of notice, and awarded plaintiff damages for lost profits and prejudgment interest from the date notice should have been given. Id. at 131, 351 A.2d at 352.
We find the facts in Bak-A-Lum Corp. of America to be substantially similar to the instant action. Therefore, the reasoning applied by the Supreme Court of New Jersey in that case is equally applicable here. The jury's determination that the defendant's conduct in this case merited two awards against it of punitive damages supports a finding that the equities herein clearly lie with the plaintiffs.
The Supreme Court of New Jersey has held that the purpose of an award of prejudgment interest is "compensatory, to indemnify the claimant for the loss of what the moneys due him would presumably have earned if payment had not been delayed." Busik, supra, 63 N.J. at 359, 307 A.2d at 575. Plaintiffs here were deprived of lost profits in the amounts of $86,768.00 and $28,396.00, respectively. They contend, and we agree, that had defendant not breached the contracts at issue, they would have earned and been in possession of those profits on or about November 30, 1980, the close of the 1980 season. For all the foregoing reasons, therefore, we find that plaintiffs Wright and A.C. Excavating are each entitled to interest, on their compensatory damage claims, at the rate of 12% from November 30, 1980 to May 23, 1983, the date of entry of judgment. See N.J.R. 4:42-11(b); Simons v. Saaz, 147 N.J. Super. 143, 370 A.2d 889 (App. Div. 1977).
DEFENDANT'S MOTION FOR A NEW TRIAL
Fed. R. Civ. P.59(a) provides that:
a new trial may be granted to all or any of the parties and on all or part of the issues (1) in an action in which there has been a trial by jury, for any of the reasons for which new trials have heretofore been granted in actions at law in the courts of the United States; . . . .