Opinion ID: 1058540
Heading Depth: 1
Heading Rank: 4

Heading: Accrual of Additional Interest on the Suspended Judgment of the First Trial

Text: UOSA contends that in interpreting the January 15, 2004 order, the circuit court erred in finding that the order required additional interest, which it characterizes as pre-judgment interest, to accrue on the compensatory damages awarded in the First Trial while execution of that order was suspended. UOSA contends that there was no provision in the January 15, 2004 order for additional pre-judgment interest on the compensatory damages awarded in the First Trial beyond the $1,832,652 calculated by the circuit court. UOSA asserts that this was a lump sum award made by the jury in the November 6, 2003 verdict and, thus, the court could not award additional pre-judgment interest for the period during which execution on the judgment was suspended. UOSA further contends that because the January 15, 2004 order was interlocutory and not subject to appeal, neither could post-judgment interest begin to accrue on the compensatory damages until the suspension of the judgment was lifted by the final order on June 27, 2005. In support of these contentions, UOSA relies on Code § 8.01-382, [7] which in relevant part provides: In any action at law or suit in equity, the verdict of the jury, or if no jury the judgment or decree of the court, may provide for interest on any principal sum awarded, or any part thereof, and fix the period at which the interest shall commence. The judgment or decree entered shall provide for such interest until such principal sum be paid. If a judgment or decree be rendered which does not provide for interest, the judgment or decree awarded or jury verdict shall bear interest at the judgment rate of interest as provided for in § 6.1-330.54 from its date of entry or from the date that the jury verdict was rendered. The Joint Venture responds that the interest which the circuit court imposed on the compensatory damages awarded in the First Trial for the period between November 6, 2003 and June 27, 2005 is properly characterized as post-judgment interest and that the court did not err in interpreting the judgment of the January 15, 2004 order as being subject to accrual of such interest even though execution of the judgment was suspended until entry of the final order. [8] This is so, the Joint Venture maintains, because Code § 8.01-382 imposes post-judgment interest from the date of entry [of the judgment] or from the date that the jury verdict was rendered and there is no requirement of finality of a judgment before post-judgment interest can accrue. The Joint Venture further contends that to deny it interest on the judgment entered on the jury's November 6, 2003 verdict during the period in which execution on that judgment was suspended would provide a windfall to UOSA and penalize the Joint Venture for seeking to enforce its right to additional compensatory damages in the Second Trial for the material breaches of the contract. The justification for the award of interest on damages  whether pre-judgment, post-judgment, or both  in a civil lawsuit, has been recognized since the earliest days of this Commonwealth: [N]atural justice [requires] that he who has the use of another's money should pay interest for it. Jones v. Williams, 6 Va. (2 Call) 102, 106 (1799); see also J.W. Creech, Inc. v. Norfolk Air Conditioning Corp., 237 Va. 320, 325, 377 S.E.2d 605, 608 (1989) (quoting Jones with approval). The terms pre-judgment interest and post-judgment interest are not defined in the Code or in our case law. Nonetheless, the principal distinction between pre-judgment and post-judgment interest is that the decision whether to award pre-judgment interest is discretionary with the trier of fact, while the application of post-judgment interest for all money judgments is mandatory. Code § 8.01-382; Dairyland Ins. Co. v. Douthat, 248 Va. 627, 631, 449 S.E.2d 799, 801 (1994). As we stated in Dairyland Ins., [u]nderlying this distinction is the principle that [p]rejudgment interest is normally designed to make the plaintiff whole and is part of the actual damages sought to be recovered. In contrast, postjudgment interest is not an element of damages, but is a statutory award for delay in the payment of money actually due. Id. at 631-632, 449 S.E.2d at 801 (internal citations and quotation marks omitted). Given that an award of pre-judgment interest is discretionary, but that application of post-judgment interest is mandatory, the necessity for establishing the point at which the former, when it has been awarded, ceases to accrue, and when the latter will begin to accrue is self-evident. As the present case amply demonstrates, clear guidelines as to the calculation of such interest will resolve disputes regarding the amount of the pre-judgment or post-judgment interest whenever there is a delay between the rendering of a jury verdict, the entry of an order confirming that verdict, the entry of an order ending the cause if later than the order confirming the verdict, the finality of the judgment following the exhaustion of appeals, and the date tender of payment in satisfaction of the judgment debt is made. We are of opinion that Code § 8.01-382 is clear and unambiguous as to when, and how, the application of post-judgment interest begins. In simplest terms, that statute provides that post-judgment interest shall begin to accrue on the date that a fixed amount of a judgment debt is rendered by the factfinder charged with making that determination. Thus, if a jury determines through its verdict that money damages are owed to a plaintiff, without regard to whether the jury has also awarded pre-judgment interest, post-judgment interest will accrue from the date of the verdict until the judgment is paid. [9] Similarly, if a trial court sitting without a jury renders a judgment for money damages, the rendition of that award in an order or decree shall fix the date upon which post-judgment interest begins to accrue as to that award, even if the order or decree rendering the award does not conclude the cause or otherwise stays an immediate execution on the judgment. As a corollary to this rule, it follows that if the verdict, order or decree calls for an award of pre-judgment interest, accrual of that interest will be for the period fixed by the trier of fact until the date of the verdict, order or decree. In effect, where a trier of fact exercises the discretion to award pre-judgment interest, the result is to extend the period for which interest accrues on the damages awarded from the date of the verdict, order or decree back to the date fixed by the trier of fact for the commencement of pre-judgment interest. In this context, the designation of interest on an award of damages as pre-judgment or post-judgment is merely a reference to the date, before, upon or after the date of the verdict, order or decree awarding the damages, on which the interest accrued. Thus, where a verdict, order or decree provides for an award of pre-judgment interest, the effect is simply to impose interest on the award of damages from a date certain prior to the award, rather than as of the date of the award as would otherwise be the case under Code § 8.01-382. In the present case, the jury's verdict in the First Trial established that interest was to accrue on the compensatory damages awarded therein from the dates specified for each claim until those damages were paid. The circuit court's calculation of the interest due as of the date of the verdict did not fix the amount of interest due. Rather, it merely recited the amount of interest due as a result of the jury's discretionary act in awarding interest to the Joint Venture for the time preceding the entry of the verdict. Thereafter, interest would accrue on the award of compensatory damages as a matter of law, and it was not necessary for the court to recite this in its order. Accordingly, we hold that the circuit court did not err in determining that post-judgment interest accrued on the compensatory damages awarded in the First Trial from the November 6, 2003 jury verdict, rather than from the June 27, 2005 final order, until paid. We now turn to the question whether the circuit court erred in setting the rate for the post-judgment interest on the compensatory damages awarded in the First Trial at 9% per year. The Joint Venture contends that as to the compensatory damages awarded in the First Trial, the circuit court should have applied the Prompt Payment Act 1% per month rate of interest under Code § 2.2-4352, the rate of interest awarded by the jury. UOSA responds that the 1% monthly rate of interest cannot be applied as post-judgment interest on the compensatory damages for the various breaches of the December 1996 contract. UOSA maintains that this is so because the contract contained no provision for interest, the 1% monthly rate was established by the Prompt Payment Act, and the jury's verdict applied that rate only for pre-judgment interest. Accordingly, UOSA contends that the circuit court should have looked to the third sentence of Code § 8.01-382 and applied the judgment rate of interest as provided for in § 6.1-330.54 in effect on the date of the final order. UOSA's contention is in error for two reasons. First, the Joint Venture's right to seek interest of up to 1% per month under the Prompt Payment Act, while not recited as a term in the December 1996 contract, was a term to be implied in the contract under Code § 2.2-4352, and the jury was so instructed. Thus, contrary to UOSA's contention, the 1% per month rate of interest awarded by the jury in the November 6, 2003 verdict was a contract rate of interest. Second, the jury found that the compensatory damages were subject to the Prompt Payment Act rate of interest, and, as we have just demonstrated, under the provisions of the first and second sentences of Code § 8.01-382 that rate of interest found by the jury was to apply until such principal sum be paid, not merely as pre-judgment interest. Accordingly, we hold that the circuit court erred in not applying the 1% per month rate of interest awarded by the jury on the compensatory damages in the First Trial as the rate of post-judgment interest on those damages from the date of the jury's verdict until those damages are paid. [10] For these reasons, we will reverse the circuit court's award of $1,162,805 in post-judgment interest on the compensatory damages of the First Trial, and we will remand the case to the circuit court for a recalculation of the interest actually due on those damages from November 6, 2003 to May 8, 2006 at the rate of 1% per month.