Opinion ID: 1890133
Heading Depth: 1
Heading Rank: 3

Heading: Prejudgment Interest under Section 408.040.2

Text: Mr. Hayes also contends that the trial court erred by refusing to award him prejudgment interest pursuant to section 408.040.2. [5] He argues that he fully complied with the statutory requirements and, therefore, he is entitled to prejudgment interest as a matter of law. He asserts that the language of section 408.040.2 allows a person to make an unambiguous demand that may or may not include the production of other information and documents by the defendant. The crux of Mr. Hayes's claim of error involves statutory interpretation. Interpretation of a statute is a matter of law, which this Court reviews de novo. Smith v. Shaw, 159 S.W.3d 830, 833 (Mo. banc 2005). The statute at issue, section 408.040.2, authorizes a court to grant prejudgment interest if a party meets the requirements in the statute. This Court construed the provisions of the prejudgment interest statute in Brown v. Donham, and its analysis is helpful in resolving the issue raised in this case. 900 S.W.2d 630 (Mo. banc 1995). Section 408.040.2 states: In tort actions, if a claimant has made demand for payment of a claim or an offer of settlement of a claim, to the party, parties or their representatives and the amount of the judgment or order exceeds the demand for payment or offer of settlement, prejudgment interest, at the rate specified in subsection 1 of this section, shall be calculated from a date sixty days after the demand or offer was made, or from the date the demand or offer was rejected without counter offer, whichever is earlier. Any such demand or offer shall be made in writing and sent by certified mail and shall be left open for sixty days unless rejected earlier. Nothing contained herein shall limit the right of a claimant, in actions other than tort actions, to recover prejudgment interest as otherwise provided by law or contract. This statute allows a plaintiff to recover prejudgment interest if the plaintiff makes a demand for payment or offer of settlement to the opposing party and any subsequent judgment in the case exceeds the amount specified in the demand or offer of settlement. Emery v. Wal-Mart Stores, Inc., 976 S.W.2d 439, 448 (Mo. banc 1998). For a party to receive prejudgment interest, the settlement demand must be proper. Werremeyer v. K.C. Auto Salvage Co., 134 S.W.3d 633, 636 (Mo. banc 2004). A proper demand must be definite in terms. Brown, 900 S.W.2d at 633. Analogous to an offer in a contract, a demand must be so definite in its terms or require such definite terms in the acceptance that the promises and performances to be rendered by each party are reasonably certain. Id. (internal citations omitted). Additionally, the amount of settlement demanded must be readily ascertainable in dollars and cents. Id. When the requirements of section 408.040.2 are met, a trial court has no discretion and must grant prejudgment interest. McCormack v. Capital Electric Const. Co., 159 S.W.3d 387, 402 (Mo.App.2004). The relevant parts of Mr. Hayes's demand letter state: I have been authorized by my client, Ronald Hayes, to settle his claim against your clients by the delivery of copies of the titles to all vehicles owned or driven by, or available for the use of Patrick, Gaylia, or Trisha Price on September 25, 2004, certified copies of all indemnity agreements in any form from any source whatsoever, all applicable liability insurance coverages, including declaration pages, primary, excess, or otherwise, issued on those vehicles, or to or for the benefit of, or on behalf of Patrick, Gaylia, or Trisha Price or any other named insured, which insure or stand to indemnify any of them for any of their potential liability arising in any fashion from the collision in this matter and to compensate the damages claimed by Ronald Hayes, a sworn statement of Patrick, Gaylia, and Trisha Price taken in person by me at my cost, and recorded and transcribed by a court reporter, in addition to the payment of $325,000.00, and reimbursement of all court costs, payable in cash or its equivalent, and all of which must be delivered to my office within 10 days of acceptance, in exchange for a R.S.Mo § 537.060 release. . . . Acceptance of this offer may be made only in writing expressly agreeing to the terms in this letter and release, and requires the actual delivery of the above items and statements, and the full payment of the above demanded amount. [6] Ms. Price did not accept this offer of settlement. After the verdict, Mr. Hayes filed a motion requesting prejudgment interest. Ms. Price opposed the motion on the ground that Mr. Hayes's offer of settlement demanded the participation of her parents, Patrick and Gaylia Price, who were not parties to the action, in order to reach a settlement. She argued that the demand for performance by these nonparties rendered any resulting contract unenforceable. The trial court overruled Mr. Hayes's motion. The parties agreed that Mr. Hayes's offer of settlement included a demand for a monetary amount that is readily ascertainable, the sum of $325,000. In addition to his demand for $325,000, Mr. Hayes included four non-monetary demands. He demanded copies of titles to cars owned or driven by Ms. Price and her parents, certified copies of all indemnity agreements in any form from any source, all applicable liability insurance policies, and sworn statements of Ms. Price and each of her parents taken in person by Mr. Hayes's attorney. His offer of settlement also expressly conditioned acceptance on actual delivery of all of the above items and statements. Ms. Price could not settle unless she provided all of these items in addition to the $325,000 payment. There is no language in section 408.040.2 that permits or prohibits nonmonetary demands in addition to a demand for a monetary amount that is readily ascertainable. Therefore, it is necessary to examine the statute's language to determine if a proper offer of settlement can include additional non-monetary demands. In interpreting statutes, this Court ascertains the intent of the legislature from the plain and ordinary language used and, if possible, gives effect to that intent. Smith, 159 S.W.3d at 834. In determining legislative intent, statutory words and phrases are taken in their ordinary and usual sense. Id. This Court may also review the earlier versions of the law, or examine the whole act . . ., or consider the problem that the statute was enacted to remedy to discern legislative intent. State ex rel. Unnerstall v. Berkemeyer, 298 S.W.3d 513, 519 (Mo. banc 2009) (internal citations omitted). The language of section 408.040.2 states that if a claimant in a tort action has made a demand for payment of a claim or an offer of settlement of a claim . . . and the amount of the judgment or order exceeds the demand for payment or offer to settle, prejudgment interest . . . shall be calculated. This language speaks to the necessity for a demand amount that is a readily ascertainable monetary amount. While the phrase offer of settlement is broader than the phrase demand of payment and arguably could include non-monetary demands, the context of both phrases makes it clear that the legislature intended that the offer be capable of ascertainment in a certain dollars and cents amount. Brown, 900 S.W.2d at 633. It is necessary that the offer be ascertainable in a certain dollar and cents amount because the offer must be in a form that can be compared with the actual judgment amount. It is the comparison of the two amounts that triggers the right to prejudgment interest. [7] Id. By their nature, non-monetary demands cannot be compared with the actual judgment amount to determine if prejudgment interest should be awarded. Additionally, to allow a party to make non-monetary demands beyond the monetary demand for settlement in a section 408.040.2 offer would be contrary to the public policies served by the statute. Section 408.040.2 serves two public policies. Brown, 900 S.W.2d at 633. First, it compensates claimant for the true cost of money damages they have incurred due to the delay of litigation. Second, where liability and damages are fairly certain, it promotes settlement and deters unfair benefit from the delay of litigation. Id. The statute encourages a defendant to buy peace in the form of a monetary settlement. A non-monetary demand in an offer of settlement has no relationship to compensating a claimant for the true cost of money damages the claimant incurred due to the delay of litigation. Nor does a demand unrelated to ascertaining the amount of the demand in dollars and cents promote settlement and deter unfair benefit from the delay of litigation. While there possibly may be some offer of settlement with non-monetary conditions that do not impede settlement or frustrate the purpose of section 408.040.2, that is not this case. Here, by including demands for indemnity agreements, titles, and sworn statements in his offer of settlement, Mr. Hayes obstructed Ms. Price's ability to unequivocally accept because to accept the offer, Ms. Price needed the cooperation of third parties. Mr. Hayes's offer of settlement would not allow Ms. Price to accept the offer, settling his claim, unless Ms. Price could obtain her parents' cooperation to comply with his demands. Mr. Hayes's offer of settlement made it impossible for Ms. Price, alone, to accept. The effect of his offer of settlement impeded settlement and frustrated section 408.040.2's purpose of encouraging settlement. [8] Because Mr. Hayes's offer of settlement included a demand for document production and statements of third persons, the offer of settlement was not capable of ascertainment in a certain dollar and cents amount and impeded settlement and did not meet the requirements of section 408.040.2. Therefore, the trial court did not err in denying the request for prejudgment interest.