- 23 -
damages,12 and the remaining $817,884 is allocated to prejudgment
and postjudgment interest.
Finally, the $3 million paid by Columbia and Hudson to
settle their liability for coverage between $12 million and $22
million is allocated entirely to prejudgment interest and
punitive damages. At this level, all of the $11,500,000 in
actual damages has been exhausted, in addition to $500,000 of
prejudgment interest and all of the postjudgment interest.
Furthermore, the settlement amount of $3 million for $10 million
of liability ($22 million minus $12 million) reflects the
diminished likelihood of petitioner's recovering damages and
interest in an amount above $12 million if the case was appealed.
Extending respondent's alternative method of allocation, we
find that of the $3 million paid by Columbia and Hudson, $629,160
was paid in lieu of prejudgment interest, and $2,370,840 was paid
in lieu of punitive damages.13
12 This amount is calculated by multiplying the $2,400,000
paid by Harte-Hanks by $4,500,000 of remaining actual damages
divided by the sum of the $4,500,000 (actual damages), $500,000
(prejudgment interest), and $1,826,301 (postjudgment interest).
13 In the alternative allocation scheme, respondent assumed
that the prejudgment interest would be paid before the punitive
damages. The prejudgment interest totaled $2,597,201, of which
$500,000 was already settled out of the $2,400,000 payment by
Harte-Hanks. Columbia and Hudson would therefore pay the balance
of the prejudgment interest, $2,097,201, before they paid any
punitive damages.
The portion of Columbia's and Hudson's payment allocated to
interest is calculated by dividing the balance of the prejudgment
interest by Columbia's and Hudson's total liability, $10 million,
(continued...)
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