Baker

MEMORANDUM **

This case arises out of a dispute over the terms of a lease for a rehabilitation center in California. The parties are familiar with the facts of the case, and except as. set forth herein, we need not repeat them now. Defendants-Appellants Garden Grove Medical Investors, Forrest L. Preston, Fred L. Lester, Jr., and Charles E. Jabaley (collectively “the Garden Grove investors”) appeal an adverse judgment in the amount of $979,060.40 in unpaid rent and $3,680,882.30 in annually compounded prejudgment interest. The district court, following a bench trial, found in favor of Plaintiff-Appellee James D. Baker III (“Baker”).

The Garden Grove investors appeal three aspects of the district court’s award of damages. First, they contend that the district court erroneously interpreted a rent increase provision of the parties’ lease. Second, the investors argue that the district court erred in awarding prejudgment interest. Last, they assert that the district court should not have compounded the prejudgment interest award on an annual basis. We affirm in part and reverse in part.

I. Rent Increase Provision

In determining that the Garden Grove investors owed damages for unpaid…