Opinion ID: 888050
Heading Depth: 1
Heading Rank: 8

Heading: Issue Four: Did the District Court err in awarding prejudgment interest at 18% per annum?

Text: ¶51 The District Court, without explanation or analysis, awarded AFM 18% prejudgment interest on the amount of damages it claimed. Palmer relies solely upon § 31-1-107, MCA, to support her claim that 18% interest exceeds the amount lawfully allowed and is usurious. However, Palmer's reliance on § 31-1-107, MCA, is misplaced. Title 31, Part 1 of the MCA specifically addresses interest rates associated with loans of money. The interest rate awarded by the District Court in the case before us is not for a loan of money but rather is premised upon a contractually-agreed upon finance charge owed on the balance of funds due and unpaid after thirty days. ¶52 One of the documents signed by both parties during contract development was a simple memorandum on AFM letterhead setting forth six easily understood terms. The sixth and last term stated in relevant part: Payment Conditions: 30 days net 1.5% on everything unpaid after 30 days plus any cost incurred to collect past due amount. We will deduct 10% off if paid within 10 working days after City of Three Forks final approval. Palmer made a hand-written revision to these payment conditions essentially seeking the 10% offered reduction in the event she paid at least 80% of the outstanding balance within ten days after the City's final approval. She did not challenge the 1.5% per month interest (i.e., 18% per annum), nor did she attempt to negotiate a lower interest rate. As noted above, both she and AFM signed this document. ¶53 AFM directs us to E.C.A. Environ. Management v. Toenyes, 208 Mont. 336, 679 P.2d 213 (1984). There, the District Court concluded that a fuel bill provision allowing 18% interest on unpaid balances more than thirty days old was usurious and awarded 6% interest. On appeal, we reversed, stating: The fuel transaction was not a subterfuge devised to conceal what was in fact a loan. . . . Here, there was neither the intent to loan a sum of money nor the intent to extract usurious interest. Terra-Spread took possession of the goods without paying and received a significant benefit. For this benefit, the seller is justified in imposing an additional charge. The contractor on receiving the goods, signed and received an invoice that contained an agreement providing for charging an annual interest rate of 18 percent on balances more than thirty days old. Without more, this agreement constitutes a simple commercial charge agreement to which usury laws are inapplicable. Empire Building Supply v. EKO Investments, Inc. (1979), 40 Or.App. 739, 596 P.2d 593. E.C.A., 208 Mont. at 342, 679 P.2d at 216. ¶54 While factually distinguishable from the case before us, the analysis in E.C.A. is applicable. Palmer sought the services she received from AFM with the understanding that she would pay for these services. She signed an agreement, even modifying part of the agreement to her benefit, yet agreeing to 18% per annum interest on the unpaid balance. Under E.C.A., this contractually-agreed upon rate is not usurious and the District Court did not err in awarding it. ¶55 Finally, as argued by AFM, under § 71-3-124(1), MCA, a successful lien claimant is entitled to recover attorney fees and costs incurred at trial and upon appeal. The statute provides: In an action to foreclose any of the liens provided for by part 3, 4, 5, 6, 8, or 10 of this chapter, the court shall allow as costs the money paid and attorney fees incurred for filing and recording the lien and reasonable attorney fees in the district and supreme courts. The costs and attorney fees must be allowed to each claimant whose lien is established, and the reasonable attorney fees must be allowed to the defendant against whose property a lien is claimed if the lien is not established. As recognized above, AFM's lien was filed under Title 71, Chapter 3, Part 5, and therefore § 71-3-124(1), MCA, is applicable. AFM is therefore entitled to its reasonable attorney fees incurred in both the district court and this Court. Accordingly, we remand for a determination of AFM's reasonable costs and attorney fees incurred on appeal, pursuant to the requisites of Plath v. Schonrock, 2003 MT 21, ¶ 36, 314 Mont. 101, ¶ 36, 64 P.3d 984, ¶ 36.