Opinion ID: 1368807
Heading Depth: 2
Heading Rank: 5

Heading: analysis on remand.

Text: On remand, the superior court should note that a debtor may be charged interest for the withholding of the amount due when that amount is ascertainable. [7] As put by the Restatement (Second) of Contracts § 354 (1981): Interest as Damages. (1) If the breach consists of a failure to pay a definite sum in money or to render a performance with fixed or ascertainable monetary value, interest is recoverable from the time for performance on the amount due less all deductions to which the party in breach is entitled. (2) In any other case, such interest may be allowed as justice requires on the amount that would have been just compensation had it been paid when performance was due. Interest is a standardized form of compensation to the injured party for the loss of the use of what should have been paid. Restatement (Second) of Contracts § 354, comment a. It is payable without compounding at the rate, commonly called the `legal rate,' fixed by statute for this purpose. Id. Interest is not payable as damages for non-performance until performance is due. Id., comment b. [8] The position of the Restatement and those courts which have held that interest may be charged on a sum certain due comports with our view in regard to awarding prejudgment interest and the purpose behind such awards. As stated in Bevins v. Peoples Bank & Trust Co., 671 P.2d 875, 881 (Alaska 1983): The purpose of awarding prejudgment interest is not to penalize the losing party, but rather to compensate the successful claimant for losing the use of the money between the date he or she was entitled to it and the date of judgment. A corollary purpose is to prevent the judgment debtor from being unjustly enriched by the use of that money. Farnsworth v. Steiner, 638 P.2d 181, 184 (Alaska 1981); Anchorage Asphalt Paving Co. v. Lewis, 629 P.2d 65, 69 (Alaska 1981). Prejudgment interest should not be awarded, however, when it is unjust to do so. Anchorage Asphalt, 629 P.2d at 70. Accordingly, the superior court should employ the following analysis on remand. If the court finds that there was an agreement not to pay interest on the debt, then Merdes is not liable for any interest. If it finds that there was no agreement not to pay interest, then it must determine whether there was an agreement to pay 12% simple interest. If it further determines that there was no agreement to pay 12% simple interest, then it should impose the statutory rate of interest from the date it determines the debt was due.