On September 19, 2024, Justice Borrok of the New York County Commercial Division issued a decision in Telefonica S.A. v. Millicom Intl. Cellular S.A., 2024 NY Slip Op. 33315(U), holding that prejudgment interest was calculated on the damages caused on the date of breach even if there was a later mitigation of damages, explaining:
CPLR 5001 provides in relevant part:
(a) Actions in which recoverable. Interest shall be recovered upon a sum awarded because of a breach of performance of a contract, or because of an act or omission depriving or otherwise interfering with title to, or possession or enjoyment of, property, except that in an action of an equitable nature, interest and the rate and date from which it shall be computed shall be in the court’s discretion.
(b) Date from which computed. Interest shall be computed from the earliest ascertainable date the cause of action existed, except that interest upon damages incurred thereafter shall be computed from the date incurred. Where such damages were incurred at various times, interest shall be computed upon each item from the date it was incurred or upon all of the damages from a single reasonable intermediate date.
(c) Specifying date; computing interest. The date from which interest is to be computed shall be specified in the verdict, report or decision. If a jury is discharged without specifying the date, the court upon motion shall fix the date, except that where the date is certain and not in dispute, the date may be fixed by the clerk of the court upon affidavit. The amount of interest shall be computed by the clerk of the court, to the date the verdict was rendered or the report or decision was made, and included in the total sum awarded.
The breach occurred when Millicom improperly refused to close. This is the earliest ascertainable date the cause of action existed. At that point in time, Millicom owed Telefonica the $623 million contract price. This is the sum awarded because of a breach of performance of a contract.
Subsequently, some 15 months later, Telefonica mitigated its damages by entering into a replacement transaction for approximately $61 million less. The amount of the judgment is properly reduced by the amount of the mitigation. As discussed above, this is the benefit that Millicom properly receives. The argument that they are entitled to wipe out the interest from the date of the breach to the point of the cover transaction is both contrary to the statute’s express language and its purpose and would afford Millicom a windfall. Making Telefonica whole requires an award of prejudgment interest as to the sum awarded because of the breach from the earliest ascertainable date the cause of action existed- i.e., the date of the breach. To hold otherwise, twists logic beyond recognition.
(Internal quotations and citations omitted).
The court explained that “for the avoidance of doubt (and although not the subject of this motion), the Court notes that from the time that the cover transaction took place, the Court shall award prejudgment interest only on the net amount due – i.e., the $60,571,987 representing the delta between the price and the cover transaction.”