By: Alex Beck, Esq., Stearns, Roberts & Guttentag, LLC
Prejudgment interest is a type of damage which is suffered due to the loss of use of money which should have been paid at a particular time. Under Florida law, the prevailing party, in contract cases and certain tort cases, is entitled to prejudgment interest on the amount of damages awarded. The purpose of prejudgment interest is to make the prevailing party whole from the date of the loss. Once a verdict has liquidated the damages as of a date certain, prejudgment interest becomes a matter of right. A claim becomes liquidated when a verdict sets the amount of damages. If no interest rate is provided in the parties’ agreement, the statutory prejudgment interest rate in effect at the time the interest accrues will apply [1].
One prerequisite to the award of prejudgment interest is the determination of the “date of loss”. Recently, the case of Albanese Popkin Hughes Cove, Inc. v. Scharlin, 2014 WL 3291422 (Fla. 3 rd DCA 2014) addressed the issue of the court’s ability to award prejudgment interest where there was no finding of the date of loss in a jury’s verdict. In Albanese, the property owners (“Owners”) sued their contractor (“Contractor”) alleging that the Contractor improperly constructed their home, forcing the Owners to vacate their home for over three years until the defective work was repaired. A jury returned a verdict awarding the Owners $589,789.46 of the $2.5 million sought for repairs, and $224,825.00 of the $1.6 million sought for the loss of use of the home. The trial court then entered an order awarding prejudgment interest in favor the Owners, and the Contractor appealed.
On appeal, the Contractor argued that the award of prejudgment interest was improper because the jury verdict did not identify a “date of loss” for the actual construction defect damages, nor did the verdict identify which of the $2.5 million in sought damages were included in the award. The verdict also did not specify the dates for which the owners were entitled to be reimbursed for the loss of use of their home. The argument was premised on the fact that the court would have no way to know from what date it should start calculating the interest owed. The Owners argued that the “date of loss” for the repair costs started from the day they began paying for the repairs, and the “date of loss” for their loss of use started the day they moved out of the house.
The appellate court held that based on the facts of the case and the lack of specificity in the jury’s verdict, it could not determine when the damages awarded by the jury occurred. The Court explained that according to the Owners, the damages and associated repairs began to occur within a few weeks of moving into the house, and it could not be determined which of the $2.5 million in repair costs were awarded by the jury. As such, the court held that the only possible date that liquidated the Owner’s claim for prejudgment interest purposes was the date the jury rendered its verdict. Thus, the appellate court directed the trial court to enter an award of prejudgment interest from the date of the jury verdict until the date of entry of the final judgment.
This case demonstrates the importance of establishing the date of loss in connection with the award of prejudgment interest as damages. Absent a finding of a specific date of loss in a jury trial, an award of prejudgment interest may be calculated from the date of the jury verdict until the date of the final judgment.
About the Authors: Alexander S. Beck is an associate with Stearns, Roberts & Guttentag, LLC. Mr. Beck in construction law including construction lien claims, payment and performance bond claims, bid protests, construction contract preparation, and construction and design defect claims He can be reached for consultation at [email protected].