Opinion ID: 2544922
Heading Depth: 1
Heading Rank: 4

Heading: Receding from McGurn

Text: When considering whether to recede from precedent, this Court has explained: The doctrine of stare decisis counsels us to follow our precedents unless there has been `a significant change in circumstances after the adoption of the legal rule, or . . . an error in legal analysis.' Rotemi Realty, Inc. v. Act Realty Co., 911 So.2d 1181, 1188 (Fla.2005) (quoting Dorsey v. State, 868 So.2d 1192, 1199 (Fla.2003)). Fidelity to precedent provides stability to the law and to the society governed by that law. However, the doctrine does not command blind allegiance to precedent. Stare decisis yields when an established rule of law has proven unacceptable or unworkable in practice. State v. Green, 944 So.2d 208, 217 (Fla.2006) (citations and internal quotation marks omitted). We conclude that McGurn has proven to cause an injustice in practice because it rests on an impractical legal fiction. Under McGurn, an order that is non-final (because it includes a reservation to award prejudgment interest) will nonetheless be treated as final and deprive the trial court of jurisdiction to award prejudgment interest; thus, the plaintiff will be deemed to have waived the right to prejudgment interest. This impractical legal fiction has resulted in the inadvertent waiver of the valuable right to prejudgment interest, a result that procedural rules should operate to avoid. As stated by Judge Cope in his concurring opinion in this case: To the extent possible, procedural rules should operate so as to avoid the unintentional loss of substantive rights. . . . Florida has a long standing public policy in favor of adjudication of disputes on the merits wherever possible. See North Shore Hospital, Inc. v. Barber, 143 So.2d 849, 852-53 (Fla.1962). It would better serve that policy to modify the McGurn rule to eliminate the automatic waiver. Westgate, 16 So.3d at 860 (Cope, J., concurring). From a common sense point of view, no plaintiff would ever intentionally waive the right to prejudgment interest to which he or she is entitled. A review of the district court cases discussing the issue reveals that plaintiffs appear to have inadvertently waived the right to prejudgment interest on at least six occasions. [6] Although inadvertent waiver does not appear to be a pervasive problem, the district court cases following McGurn are indicative of the problem caused by the current rule: inadvertent waiver of prejudgment interest, which can be a substantial sum of moneyhere, approximately $2 millionand which is intended to make the plaintiff whole by accounting for the time-value of money. Accordingly, we recede from McGurn. In receding from McGurn, for the reasons explained below, we answer the rephrased certified question in the affirmative and hold that a trial court is allowed to reserve jurisdiction in a final judgment to award prejudgment interest in a manner similar to attorneys' fees and costs. In other words, an appeal from the final judgment will not divest the trial court of jurisdiction to award prejudgment interest, thereby avoiding inadvertent waiver. Because of the procedural quandary recognized in McGurn, we do not recede from McGurn 's holding that a final judgment that authorizes execution but reserves jurisdiction to award prejudgment interest will be considered final for purposes of appeal. [7] In holding that a trial court is allowed to reserve jurisdiction to award prejudgment interest, we find it significant that for all practical reasons, prejudgment interest is more akin to attorneys' fees and costs than other elements of damages. [8] Attorneys' fees, costs, and prejudgment interest are all matters for the judge to calculate and award, rather than the finder of fact. Also, prejudgment interest is calculated after a verdict liquidates the plaintiff's pecuniary losses; in other words, prejudgment interest cannot be determined until the conclusion of the case, when a verdict is rendered. Attorneys' fees and costs are also calculated at the completion of the case. Although prejudgment interest is not incidental to the final judgment like attorneys' fees and costs, the issue of prejudgment interest does not alter the substance of the underlying final judgment. We conclude that allowing the trial court to treat prejudgment interest like attorneys' fees and costs will further, rather than impede, the administration of justice. We have also considered the alternative options posed by the other questions certified to us by the Third District and conclude that these options each have potential drawbacks. The first option would be to allow reservation of jurisdiction based on agreement, or lack of objection, of the parties. However, under this option, there is the concern that disputes over whether the parties agree or do not object would lead to further litigation. Additionally, parties who do not know that they can agree to the trial court determining prejudgment interest at a later time may inadvertently waive their right to prejudgment interesta problem that we seek to remedy. As to this option, we conclude that it would be more prudent to treat all cases involving prejudgment interest alike rather than carving out an exception based on agreement or lack of objection by the parties. The second option would be to treat an appeal from a final judgment reserving jurisdiction to determine prejudgment interest as a premature appeal under Florida Rule of Appellate Procedure 9.110( l ). [9] However, under this option, there remains the potential for inadvertent waiver if the parties and the district court do not recognize that the appeal is premature. Further, the district courts are in disagreement as to whether an appeal from a judgment that authorizes execution upon a defendant's assets can be considered premature for purposes of appeal. [10] Finally, under this option, the potential for the procedural quandary recognized in McGurn remains: the final judgment appears to authorize execution upon the defendant's assets, yet the defendant cannot appeal the judgment. After noting the practical similarities of prejudgment interest to attorneys' fees and costs and concluding that the other options posed to us have drawbacks, we have concluded that allowing trial courts to reserve jurisdiction in the final judgment to award prejudgment interest is the most appropriate course of action in receding from McGurn to avoid the inadvertent waiver of prejudgment interest. Newport asserts, however, that by allowing a trial court to reserve jurisdiction in a final judgment to award prejudgment interest, we would be receding from Argonaut Insurance Co., 474 So.2d at 214-15, and thus from a hundred years of case law holding that prejudgment interest is an element of damages. We disagree. Although Argonaut recognized that prejudgment interest is an element of damages, it held that the issue of prejudgment interest is a discrete issue to be determined by the trial court, not the finder of fact. We find nothing in Argonaut that is inconsistent with receding from McGurn and instead holding that prejudgment interest, although technically an element of damages, may be awarded separately from the main final judgment because it is solely dependent on the amount of other damages awarded in the final judgment and is a calculation to be done by the trial court. Our decision to recede from McGurn should be interpreted not as a mandatory directive for trial courts to always reserve jurisdiction to award prejudgment interest when considering whether to enter a final judgment, but rather as a viable option available to the trial court. Trial courts may still enter interlocutory orders, as recognized by McGurn, setting forth the damages already determined. This would in effect liquidate those damages, if not already liquidated, and interest on those damages would start to accrue. 596 So.2d at 1044. An interlocutory order would fix the amount of damages already determined and allow a trial court to wait until prejudgment interest is calculated before entering a final judgment. In most cases, the calculation of prejudgment interest is a ministerial calculation. In such a scenario, we encourage the parties to include the amount in the final judgment, thereby saving judicial labor and avoiding the potential of a separate appeal of the prejudgment interest award. However, where the amount or manner of calculation of prejudgment interest is contested (as it was in this case) or entitlement is disputed, and the trial court requires additional evidence or a hearing on the matter, we see no reason that the trial court cannot either enter an interlocutory order on the damages already determined or enter a final judgment that reserves jurisdiction to award prejudgment interest. However, regardless of whether the calculation is contested, we hold that a trial court may award prejudgment interest in a separate order, which is separately appealable. Finally, we note that when a trial court enters a final judgment reserving jurisdiction to award prejudgment interest, the final judgment should be clear as to whether entitlement to prejudgment interest has been determined and whether all that remains is the calculation of the amount. This clarity is important because it will affect whether the issue of entitlement is reviewable on appeal from the final judgment.