Opinion ID: 2639484
Heading Depth: 4
Heading Rank: 3

Heading: Horton is entitled to an enhancement of prejudgment interest only.

Text: Horton claims that he is entitled to enhancement of prejudgment and postjudgment interest because MSS failed to achieve a verdict more favorable to it than Horton's offer of judgment made under the former Alaska Rule 68. MSS counters that prejudgment interest enhancement is not available because it conflicts with federal law and that statutory provisions for prejudgment interest do not provide for postjudgment interest. This issue presents a question of law to which we apply our independent judgment. [96]
Before trial, Horton made an offer of judgment for $950,000 plus costs, prejudgment interest, and attorney's fees. The jury ultimately awarded Horton $175,000 in past damages and $1,155,000 in future damages as well as ten percent interest on his past losses. Horton claimed entitlement to an enhancement based on the former Alaska Civil Rule 68 that provided that if the judgment rendered was not more favorable to the offeree than the offer, the prejudgment interest accrued would be increased by five percent as specified in the former AS 09.30.065. [97] The trial court initially added the enhancement, increasing prejudgment interest to fifteen percent per year and postjudgment interest to 12.545%. The trial court later revised that decision and determined that Horton would receive ten percent prejudgment and 7.545% postjudgment interest; the trial court removed the five percent enhancement from both interest rates. It is the removal of the enhancement that Horton now appeals. Because Horton made an offer for judgment for $950,000 and was ultimately awarded more than $1,300,000, he should qualify for the enhancement. However, whether the enhancement applies depends upon whether the trial court characterizes Horton's damages award as a Jones Act or unseaworthiness award. We have established that Horton is not entitled to prejudgment interest on his Jones Act claim. Consequently, he cannot receive an enhancement of prejudgment interest if his award is characterized as a Jones Act award. [98] However, if the trial court characterizes Horton's damages award as an unseaworthiness award, he is entitled to an enhancement of prejudgment interest. [99]
Horton also argues that postjudgment interest should have accrued at 10.5% under the former AS 09.30.070(a) and that he is entitled to an enhancement of that interest as well. MSS maintains that the statute and Rule 68 do not apply to postjudgment interest at all and thus neither does the enhancement. The trial court awarded postjudgment interest at the rate of 7.545%. At the time this action was filed, the former version of AS 09.30.070(a), the statute providing for interest on judgments, provided that [t]he rate of interest on judgments and decrees for the payment of money is 10.5 percent a year. It appears that the parties presented the new version of AS 09.30.070(a) to the trial court, and accordingly the trial court may have calculated the interest at three percentage points above the 12th Federal Reserve District discount rate in effect as required by the new version of AS 09.30.070(a). Perhaps this explains why the trial court specified a rate of 7.545%. However, the statute in effect at the time this case was filed provides that interest is to be set at 10.5%. Further, the new statute provides that it applies to all causes of action accruing on or after August 7, 1997, thus clearly implying that it was not meant to apply to causes of action accruing before that date. [100] The trial court's use of the wrong statute to calculate postjudgment interest constitutes plain error, and we reverse and remand to correct the judgment and set the interest rate at 10.5 percent. Horton, however, is not entitled to an enhancement of postjudgment interest. Horton argues that the enhancement applies to postjudgment interest because the former version of AS 09.30.065 only generally refers to judgment and the interest rate and is not explicitly limited to prejudgment interest. However, as MSS points out, AS 09.30.065 also refers to the interest awarded under AS 09.30.070 and accrued up to the date judgment is entered.  (Emphasis added.) We have interpreted this provision as referring only to prejudgment interest. [101] In addition, the purpose of the enhancement was to encourage settlement and discourage protracted litigation on less meritorious claims; accordingly, the penalty of the enhancement should only apply to the period before judgment. Therefore, Horton is entitled to an enhancement of prejudgment interest only; the enhancement provision does not apply to postjudgment interest. [102]