Opinion ID: 1796233
Heading Depth: 1
Heading Rank: 8

Heading: Prejudgment Interest on Future Damages

Text: Alternatively, Sphere Drake contends that if the deduction of interest from the policy limits is not allowed, then prejudgment interest is not allowed on awards of future damages. In this case, inter alia, the trial court awarded past medical expenses of $183,633, future medical expenses of $1,045,690, past income loss of $104,533, future income loss of $894,312, and $800,000 for past and future pain and suffering, mental anguish and loss of enjoyment of life. Legal interest was awarded on the entire amount. The court of appeal affirmed the award of interest, finding that prejudgment interest is applicable to awards for future damages. The court concluded that LSA-R.S. 13:4203 makes no differentiation between elements of quantum related to past losses and those elements related to future losses. Edwards, 848 So.2d at 792-93. In Milstead v. Diamond M Offshore, Inc., 95-2446 (La.7/2/96), 676 So.2d 89, this Court addressed the appropriateness of awarding prejudgment interest on future damages in a Jones Act/maritime personal injury case based on federal law. This Court pointed out that federal maritime law gives courts the discretion to award prejudgment interest. However, federal courts have declined to grant prejudgment interest on awards for future losses, including future earnings and future pain and suffering. This Court, quoting Martin v. Walk, Haydel & Associates, Inc., 794 F.2d 209 (5th Cir.1986), stated, The rationale underlying this rule being that `recovery of interest' on losses not yet incurred effectively grants the recipient double recovery. Milstead, 676 So.2d at 97. [19] In Williams v. Rubicon, Inc., XXXX-XXXX (La.App. 1 Cir. 2/15/02), 808 So.2d 852, 864; writ granted, XXXX-XXXX (La.6/7/02), 818 So.2d 766, writ recalled as improvidently granted, XXXX-XXXX (La.12/4/02), 833 So.2d 942, an employee filed suit against his former employer for wrongful termination under the Family and Medical Leave Act. The trial court awarded the plaintiff back pay and front pay, along with legal interest from the date of judicial demand. The First Circuit reversed, stating: With regard to the prejudgment interest awarded on the front pay award, it is well settled that prejudgment interest may not be awarded with respect to future damages. Williams v. Reading & Bates Drilling Co., 750 F.2d 487, 491 (5th Cir.1985).[ [20] ] An award of prejudgment interest is compensatory in nature and serves to compensate a plaintiff for the loss of the use of the money that the plaintiff would have otherwise earned had he not been unjustly discharged. Booker v. Taylor Milk Company, Inc., 64 F.3d 860, 868 (3d Cir.1995).[ [21] ] Thus, prejudgment interest may be recovered only on damages accrued as of the date of the judgment. Williams, 808 So.2d at 864. [22] We note that Williams v. Rubicon, Inc., supra, as well as the cases relied upon by Sphere Drake, which held that prejudgment interest cannot be recovered on future damages, had underlying claims based upon federal law. This distinction is vital because federal courts have the discretion to award prejudgment interest on causes of action based upon certain federal claims. For this basic reason, the cases relied upon by the parties herein are clearly distinguishable from the instant case. Therefore, we must determine whether plaintiffs are allowed to collect prejudgment interest on all damages in general personal injury cases based upon state law. The Third Circuit has consistently held that, pursuant to LSA-R.S. 13:4203, interest on all claims is recoverable from the date of judicial demand. In Louisiana Farms v. LA. Dept. of Wildlife, 95-845 (La.App. 3 Cir. 10/9/96), 685 So.2d 1086, writs denied, 97-0486 (La.4/4/97), 692 So.2d 420, 97-0507 (La.4/4/97), 692 So.2d 422, owners of an alligator and catfish farm filed suit against the Department of Wildlife and Fisheries, alleging that they suffered economic losses as a result of the wrongful constructive seizure of the farm. The plaintiffs prevailed, and the trial court awarded damages for past and future lost profits, along with interest from the date of judicial demand. The Third Circuit found no error in the trial court's ruling, stating: La.R.S. 13:4203 specifically provides that the court shall award interest from the date of judicial demand. No differentiation is made between those elements of quantum which recompense for past losses and those which recompense for future losses. Louisiana Farms, 685 So.2d at 1111. See also Bruce v. Rogers Oil Tool Services, Inc., 556 So.2d 922 (La.App. 3 Cir.1990). Likewise, the Fifth Circuit, in Tastet v. Joyce, 531 So.2d 520 (La.App. 5 Cir.1988), in a personal injury claim pertaining to a motor vehicle accident, affirmed an award of interest on the entire amount of the judgment. The court stated: However, Legal interest shall attach from date of judicial demand, on all judgments, sounding in damages, `ex delicto', which may be rendered by any of the courts. La.R.S. 13:4203. No distinction is made between damages which compensate for past losses and those which compensate for future losses. Id. at 523. Similarly, in Schackai v. Tenneco Oil Co., 436 So.2d 729 (La.App. 4 Cir.1983), writ denied, 440 So.2d 759 (La.1983), the Fourth Circuit stated: In Louisiana law, there are statutory and codal provisions which apply to awarding interest on judgments. La.C.C.P. Art. 1921[ [23] ] and La.R.S. 13:4203 apply in this case....    [T]he Louisiana law is clear that in suits for damages ex delicto, the court shall award interest from the date of judicial demand. No differentiation is made between those elements of quantum which recompense for past losses and those which recompense for future losses. The trial judge correctly awarded interest from the date of judicial demand on all elements of the awards. Id. at 735. However, in Williams v. City of Monroe, 27,065, 27,066 (La.App. 2 Cir. 7/3/95), 658 So.2d 820, writs denied, 95-1998 (La.12/15/95), 664 So.2d 451, 95-2017 (La.12/15/95), 664 So.2d 452, a wrongful death/personal injury action, the trial court failed to award legal interest from the date of judicial demand. The Second Circuit, finding that the award of legal interest in tort cases is not discretionary pursuant to LSA-R.S. 13:4203, modified the judgment to include legal interest in accordance with the law. Williams, 658 So.2d at 836. Citing O'Bryan v. Folk Const. Co., 594 So.2d 900, 907 (La.App. 4 Cir.1991), judgment amended on reh'ing, a maritime case, the court concluded, [P]rejudgment interest cannot be awarded on future damages, whether economic or noneconomic. Id. A review of jurisprudence from other states reveals that some states allow the recovery of prejudgment interest on future damages, while others do not. The Supreme Court of North Dakota, in Gonzalez v. Tounjian, 665 N.W.2d 705 (N.D.2003), considered a state statute [24] regarding the award of prejudgment interest and concluded that interest on future damages should not be awarded in a tort case, stating: There is an inherent illogic to awarding prejudgment interest on future damages. By definition, future damages are expenses which the plaintiff has not yet incurred at the time of trial, and which will only arise at some future date. Interest is ordinarily viewed as compensation for the use of money for a period of time, due when the period has passed. (Citation omitted). Id. at 717. A South Dakota statute expressly prohibits recovery of prejudgment interest on future damages. SDCL 21-1-13.1 provides in relevant part: Any person who is entitled to recover damages, whether in the principal action or by counterclaim, cross claim, or third-party claim, is entitled to recover interest thereon from the day that the loss or damage occurred, except during such time as the debtor is prevented by law, or by act of the creditor, from paying the debt. Prejudgment interest is not recoverable on future damages, punitive damages or intangible damages such as pain and suffering, emotional distress, loss of consortium, injury to credit, reputation or financial standing, loss of enjoyment of life or loss of society and companionship.    (Emphasis added). Similarly, the Michigan statute on prejudgment interest distinguishes between interest on future damages and interest on past damages, clearly disallowing the recovery of interest on future damages. MCL 600.6013(1) states: Interest shall be allowed on a money judgment recovered in a civil action, as provided in this section. However, for complaints filed on or after October 1, 1986, interest shall not be allowed on future damages from the date of filing the complaint to the date of entry of the judgment. As used in this subsection, future damages means that term as defined in section 6301.[ [25] ] Thus, the plain text of the Michigan statute requires an award of prejudgment interest on a civil judgment, except for future damages. See Buzzitta v. Larizza Industries, Inc., 465 Mich. 975, 641 N.W.2d 593 (2002) (Corrigan, C.J. concurring in the denial of the application for leave to appeal). In John's Heating Service v. Lamb, 46 P.3d 1024 (Alaska, 2002), the Supreme Court of Alaska held that the trial court erred in awarding the plaintiffs prejudgment interest on the future damages portion of the jury's award, stating: A jury award for future damages is discounted to present value as of the date of the verdict to reflect the fact that the damages are made part of a recovery before they would otherwise accrue. In this way, the financial impact of the passage of time [is] incorporated into the jury's damage award, [and] any award of prejudgment interest on this amount would therefore constitute a double recovery. Id. at 1041, quoting Sebring v. Colver, 649 P.2d 932, 936 (Alaska 1982). Florida is another state which disallows the recovery of prejudgment interest on future damages. In Alvarado v. Rice, 614 So.2d 498 (Fla.1993), the Florida Supreme Court found that a successful plaintiff is entitled to prejudgment interest only when it is determined that the plaintiff has suffered an actual out-of-pocket loss a some date prior to the entry of judgment. Id. at 499. Contrarily, Texas, as well as some other states, allows the recovery of prejudgment interest on future damages. In Reyes-Mata v. IBP, Inc., 299 F.3d 504 (5th Cir. 2002), the federal court of appeal was called upon to interpret a Texas statute to determine whether a plaintiff was entitled to collect prejudgment interest on all damages in a personal injury matter based upon common-law negligence and statutory negligence. The Texas Finance Code, § 304.102 provides, A judgment in a wrongful death, personal injury, or property damage case earns prejudgment interest. In a Per Curiam opinion, the federal court stated: The Texas Supreme Court has held that this provision entitles a plaintiff to prejudgment interest on its entire judgment, including future damages, because the statute makes no distinction between damages awarded in judgment for past damages and damages awarded for future damages. C & H Nationwide, Inc. v. Thompson, 903 S.W.2d 315, 324 (Tex. 1994) (referring to § 304.102's precursor statute Tex.Rev.Civ. Stat. Ann. Art. 5069-1.05, § 6).    Therefore, under a plain reading of the statute, plaintiffs are allowed to collect prejudgment interest on all damages when the case is a personal injury case.[] Reyes-Mata, 299 F.3d at 507. See also International Turbine Services, Inc. v. VASP Brazilian Airlines, 278 F.3d 494 (5th Cir.2002) (Texas common law allows prejudgment interest on the total amount of the judgment, including future damages). The issue has also been considered by the Supreme Judicial Court of Massachusetts. In Commonwealth v. Johnson Insulation, 425 Mass. 650, 682 N.E.2d 1323 (1997), the trial court entered a judgment against the defendant, ordering it to pay damages, plus interest calculated from the date the action was commenced. The statute at issue mandated the clerk of court to add interest to the amount of damages [i]n any action in which a verdict is rendered or a finding made or an order for judgment made for pecuniary damages for personal injuries to the plaintiff or for consequential damages, or for damage to property. G.L. c. 231 § 6B. The defendants argued that prejudgment interest should only be charged on that portion of damages representing costs already incurred before the date of the judgment, and not on the cost that had yet to be undertaken. The Massachusetts Supreme Court disagreed, concluding that the award of interest was properly calculated on the full amount of damages. The court stated: The cost of asbestos abatement, whether already incurred by the Commonwealth or merely projected, is not itself the damage or injury suffered by the Commonwealth, but is rather a measurement of the appropriate compensation for that damage. The injury to the Commonwealth's property occurred when asbestos-containing products were installed in its buildings. Any damages to which the Commonwealth was entitled, whatever that amount might be and whenever it might be awarded, was due from the moment of injury. The Commonwealth's projected abatement costs are not future damages, but are rather an estimation of damage that has already occurred, for which compensation is already due. The cost of repairs is the outlay necessary to restore property to its preinjury condition; in undertaking a repair, the injured party substitutes one measure of damages, a cash outlay, for another measure, the diminution in the property's value occasioned by the injury. Whether measured by repair cost or diminution in value, the damage has already been suffered, and future events merely place a cash value on the extent of the loss.... Similarly, in the case of personal injury, prejudgment interest is to be awarded for the loss of earning capacity, even though it is future income that is affected by that loss. Id. at 1333-34 (Internal citations omitted). In Uniroyal Goodrich Tire Co. v. Mercer, 111 Nev. 318, 890 P.2d 785 (1995), the Nevada Supreme Court, in a products liability action, held that the trial court properly awarded interest on future damages, pursuant to the provisions of the state statute. The court stated: The statutory language makes no distinction between past and future damages in the judgment.... [T]he applicable [statute] authorizes the judge to include interest on the entire judgment awarded by the jury. Id. at 789. The court went on to recognize that the statute authorizing the inclusion of prejudgment interest is not compensatory in nature. Rather, it provides a financial incentive for early settlement of litigation. The type of damages ultimately awarded are immaterial to the basic purpose of the statute. Id. at 790. Similarly, in Scholz v. Metropolitan Pathologists, P.C., 851 P.2d 901 (Colo. 1993), the Colorado Supreme Court held that the trial court erred in awarding prejudgment interest only for past damages, and refusing to award prejudgment interest for future damages pursuant to Colorado's prejudgment interest statute. [26] The court stated: Our unwillingness to distinguish between different forms of compensatory damages, i.e., past and future damages, is entirely consistent with language of the prejudgment interest statute, which itself draws no such distinction. It simply speaks of damages assessed, understood by this court to mean compensatory damages, and instructs the court to add interest to such damages. Consequently, nothing in [the statute] supports the trial court's differentiation between past and future damages for purposes of calculating and awarding prejudgment interest  it simply mandates the award of prejudgment interest for all compensatory damages assessed.    We are mindful of the issues surrounding the award of prejudgment interest to future damages and the varying conclusions reached by those who have considered the issue. We find, however, that based on the language of the prejudgment interest statute, it is not for this court to reach its own conclusion regarding those issues but rather, to enforce the statute as written. If our conclusion here does not comport with the General Assembly's intention in passing the prejudgment interest statute it is the legislature, not the court, that must rewrite it. Id. at 908-909 (Internal footnote omitted). Also, in Lester v. Sayles, 850 S.W.2d 858 (Mo.1993), the Missouri Supreme Court affirmed an award of prejudgment interest on the entire judgment, including future damages. The Court found that the relevant statute provided for prejudgment interest on all money due upon any judgment or order, and thus, clearly contemplate[d] the result reached by the trial court. [27] Id. at 874. Likewise, the Supreme Court of Iowa has concluded that prejudgment interest applies to awards for future damages. In Mossman v. Amana Society, 494 N.W.2d 676 (Iowa 1993), the court found that future damages are not excepted from the plain language of the statute pertaining to prejudgment interest. [28] In Ruff v. Weintraub, 105 N.J. 233, 519 A.2d 1384 (1987), the New Jersey Supreme Court recognized that the award of prejudgment interest for amounts that will not be incurred by a plaintiff until after judgment is questionable, but held that the trial court may award prejudgment interest on damages for both past and future losses unless circumstances of case are exceptional. [29] The court stated: The only qualification to the Rule on prejudgment interest is that in exceptional cases the court may suspend the running of such prejudgment interest. R. 4:42-11(b). This language has been interpreted to mean that prejudgment interest can be withheld only where it is demonstrated that the policy, spirit and intent of the rule are patently inapposite to the circumstances at hand. (Citation omitted). Such is not the case here. The applicability of a compensation rationale for prejudgment interest may be questionable in the case of future losses, since it can be argued that those damages accrue after the judgment. However, the public interest in encouraging settlements is an adequate independent basis for the application of the prejudgment interest rule in this case. Thus, this is not an exceptional case, as that term has been interpreted. Id. at 1390-91. The Louisiana Legislature has elected not to expressly bar the recovery of prejudgment interest as it relates to future damages. LSA-R.S. 13:4203 provides: Legal interest shall attach from date of judicial demand, on all judgments, sounding in damages, ex delicto, which may be rendered by any of the courts. When a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the legislature. LSA-C.C. art. 9. The language of LSA-R.S. 13:4203 is clear and unambiguous: no distinction is made between judgments sounding in past damages and those sounding in future damages. The plain language of the statute makes it evident that it applies to all judgments, sounding in damages.... No exception is made for future damages. Thus, without action from the legislature, we decline to distinguish between past and future damages in the award of legal interest. For these reasons, we reject Sphere Drake's argument, and we affirm the lower courts' determinations that prejudgment interest is recoverable on awards for future damages.