Selective Insurance Company of America v. Heritage Construction Companies, LLC

Background

The case arose from a failed construction project. After Selective Insurance Company of America brought claims against the Heritage Parties concerning an indemnification agreement, Selective and the Heritage Parties reached a confidential settlement. The Heritage Parties then brought third-party claims against Minnesota Medical University, LLC (MMU), and Philip Keithahn.

MMU stipulated to liability for breach of contract, leaving the amount of damages for the jury. The jury awarded Heritage Construction $6,019,563.98 on that claim against MMU alone. It also found MMU and Keithahn liable for negligent misrepresentation and fraud by omission, awarding $4,878,750.30 under each theory. The jury found them not liable for fraudulent misrepresentation. It also awarded $4,694,788.92 on a common-law indemnification claim against MMU and Keithahn.

The Heritage Parties moved to amend the judgment to add pre- and post-judgment interest. MMU and Keithahn argued that the Heritage Parties should not receive duplicative damages and that pre-judgment interest should be reduced by half because of delays. The court noted that MMU and Keithahn had separately moved for judgment as a matter of law or a new trial, but that motion would be addressed in a later order.

Duplicative damages

The court held that the damages awards were duplicative because they compensated a single harm arising from the same alleged wrongdoing. The Heritage Parties had acknowledged that the fraud damages used the same measures as the breach-of-contract damages, except for lost profits, and had agreed that all indemnification damages were included in the fraud claims.

The court therefore amended the judgment to a total damages amount of $6,019,563.98. MMU and Keithahn were made jointly and severally liable for up to $4,878,750.30, while MMU alone was liable for the remaining $1,140,813.68. Although the jury had awarded indemnification damages to the Heritage Parties, the court awarded the amended judgment only to Heritage Construction because the tort claims supporting indemnification were brought only by Heritage Construction and the damages were duplicative.

Pre-judgment interest

The court awarded pre-judgment interest from February 20, 2020, through December 19, 2023. It applied a 10% rate to the amount recoverable under the fraud theories, producing $1,869,964.84, and a 1% rate to the remaining contractual damages, producing $43,725.98. The total pre-judgment interest was $1,913,690.82.

The court rejected MMU and Keithahn’s argument that the COVID-19 pandemic and scheduling conflicts were exceptional circumstances requiring a reduction. The court found that the described delays did not qualify as the type of exceptional circumstances that would justify reducing interest.

Post-judgment interest and disposition

The court ordered post-judgment interest at 5.01%. That interest applies to the $6,019,563.98 jury award beginning December 19, 2023, the date of judgment. It applies to the jury award plus pre-judgment interest beginning April 30, 2024, the date of this order.

Judge John R. Tunheim ordered that the motion to alter, amend, or correct the judgment was GRANTED in part and DENIED in part. The judgment was amended to reflect total damages of $6,019,563.98, pre-judgment interest of $1,913,690.82, and the specified post-judgment interest.