STERILITE CORPORATION vs. CONTINENTAL CASUALTY COMPANY.

WARNER, J. In Sterilite Corp. v. Continental Cas. Co., 17 Mass. App. Ct. 316 (1983), we affirmed, with a modification not here relevant, a judgment of the Superior Court declaring that the defendant was in breach of its duty to the plaintiff under an insurance policy to defend an action brought against the plaintiff, and that the defendant was liable to the plaintiff in the amount of $108,370.76 for counsel fees and related expenses incurred in the defense of that action. This appeal by the defendant comes to us from the subsequent entry of a judgment which ordered the payment of interest on the damages

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awarded from January 5, 1976. [Note 1] We are asked to construe the provisions of G. L. c. 231, Section 6C.

Following the defendant's refusal on January 5, 1976, to defend the third-party action against the plaintiff, the plaintiff incurred legal expenses over a period of about six years and paid a substantial portion of them in response to over twenty billings for varying amounts. [Note 2] The damages awarded comprised these expenses. The defendant argues on appeal that the computation of interest on that award from January 5, 1976, results in a windfall to the plaintiff, as damages were unliquidated at that time and the bulk of legal expenses was not incurred until after the commencement of this action on October 20, 1980. [Note 3] In its reply brief, the defendant urges us to hold that interest should be computed as of the dates of the various billings for legal expenses or as of the date of the commencement of this action. [Note 4]

Much of the defendant's argument is in misplaced reliance on the rule in Massachusetts before the enactment of G. L. c. 231, Section 6C, in 1968, by St. 1968, c. 763. [Note 5] The former general rule governing the right to prejudgment interest distinguished between contract actions involving liquidated damages and

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those involving unliquidated damages. Interest was allowed in actions for liquidated damages [Note 6] as of the date of the breach, see, e.g., New York Bank Note Co. v. Kidder Press Mfg. Co., 192 Mass. 391, 405-406 (1906), or the date of demand, see, e.g., Thomas v. Wells, 140 Mass. 517, 521 (1886); Gay v. Rooke, 151 Mass. 115, 117 (1890), and, in those for unliquidated damages, as of the date of the writ. See Cochrane v. Forbes, 267 Mass. 417, 420 (1929), and cases cited. [Note 7]

General Laws c. 231, Section 6C, as appearing in St. 1982, c. 183, Section 3, provides:

"In all actions based on contractual obligations, upon a verdict, finding or order for judgment for pecuniary damages, interest shall be added by the clerk of the court to the amount of damages, at the contract rate, if established, or at the rate of twelve per cent per annum from the date of the breach or demand. If the date of the breach or demand is not established, interest shall be added by the clerk of the court, at such contractual rate, or at the rate of twelve per cent per annum from the date of the commencement of the action." (Emphasis supplied.)

In examining the impact of Section 6C we apply familiar principles of statutory construction. "`[W]here the language of a statute

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is plain there is no room for speculation as to its meaning or its implication. The Legislature must be presumed to have meant what the words plainly say, and it also must be presumed that the Legislature knew pre-existing law and the decisions of [the Supreme Judicial] [C]ourt.' Condon v. Haitsma, 325 Mass. 371, 373 (1950). Moreover, `[i]t is the function of the court to construe a statute as written and an event or contingency for which no provision is made does not justify judicial legislation.' Prudential Ins. Co. of America v. Boston, 369 Mass. 542, 547 (1976)." First Natl. Bank v. Judge Baker Guidance Center, 13 Mass. App. Ct. 144, 151 (1982). Brown v. Taunton, 16 Mass. App. Ct. 614, 617-618 (1983). See G. L. c. 4, Section 6; Holbrook v. Randolph, 374 Mass. 437, 440-441 (1978). "[T]echnical words and phrases and such others as may have acquired a peculiar and appropriate meaning in law shall be construed and understood according to such meaning." G. L. c. 4, Section 6, Third. See Chapin v. Lowell, 194 Mass. 486, 488 (1907). "[T]he statutory language is the principal source of insight into legislative purpose." Bronstein v. Prudential Ins. Co. of America, 390 Mass. 701, 704 (1984). [Note 8]

We think Section 6C "means just what it says on its face . . . ." Sprague v. O'Connell, 18 Mass. App. Ct. 230, 235 (1984). In unequivocal language it directs that the clerk of court shall, see Hashimi v. Kalil, 388 Mass. 607, 609 (1983), add interest to contract damages as of the date of the breach of the contract when that date has been established. In these circumstances the statute permits no compromise; it commands a ministerial act. It seems clear to us that in this respect the Legislature intended to abrogate the common law rule which distinguished between liquidated and unliquidated damages. [Note 9] Cf. Charles D. Bonanno Linen Serv., Inc. v. McCarthy, 550 F. Supp. 231,

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246 (D. Mass. 1982), aff'd in part, rev'd in part on other grounds, 708 F.2d 1 (1st Cir. 1983). Our prior cases applying Section 6C have approved, without discussion, the construction which we adopt here. See Cesco Mfg. Corp. v. Norcross, Inc., 7 Mass. App. Ct. 837, 845 (1979); Steranko v. Inforex, Inc., 8 Mass. App. Ct. 523, 534-535 (1979); Ward v. American Mut. Liab. Ins. Co., 15 Mass. App. Ct. 98, 101-102 (1983) (Breach of contract occurred when employment terminated prematurely. Damages awarded consisted of the amount of commissions due to employees to the date employment could properly have been terminated. Interest was calculated from the date of the breach). [Note 10]

While, absent some constitutional infirmity which is not asserted in this case, interest awarded in contract cases is "a matter of legislative grace," cf. Verrochi v. Commonwealth, 394 Mass. 633, 636 (1985), we think there is a discernible and plausible reason -- beyond the elimination of the distinction between cases involving liquidated and unliquidated damages -- for establishing fixed dates from which interest is to be calculated. The Legislature may well have determined that the merit of other approaches was outweighed by the administrative

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value of "a fixed rule for mathematically calculable interest . . . avoid[ing] the costs and delays incident to disputes over details such as might be presented here if interest were awarded separately on many elements of damages from many different dates of accrual." Charles D. Bonanno Linen Serv., Inc. v. McCarthy, 550 F. Supp. at 246-247, aff'd on this issue, 708 F.2d at 12. The Legislature was, of course, free to make that accommodation. [Note 11]

The phrase "breach of contract" has an established meaning in law which we are bound to accept. See G. L. c. 4, Section 6, Third. A breach of contract is "a failure to perform for which legal excuse is lacking." Realty Developing Co. v. Wakefield Ready-Mixed Concrete Co., 327 Mass. 535, 537 (1951). See 11 Williston, Contracts Section 1290 (3d ed. 1968); 4 Corbin, Contracts Section 943 (1951). The first Superior Court judgment, affirmed by this court, 17 Mass. App. Ct. 316, established that the defendant's breach occurred on January 5, 1976, when it disclaimed coverage under its insurance policy with the plaintiff and refused to defend the third-party action. We reject the defendant's argument that its breach was not on January 5, 1976, but on the various dates on which the plaintiff was billed for legal expenses by counsel retained to defend the third-party action. Contrast United Cal. Bank v. Eastern Mountain Sports, Inc., 546 F. Supp. 945, 975-977 (D. Mass. 1982), aff'd 705 F.2d 439 (1983) (multiple breaches of sales contract).

Judgment affirmed.