Opinion ID: 2622544
Heading Depth: 1
Heading Rank: 6

Heading: Prejudgment Interest Must Be Recalculated.

Text: The Jacobs argue in their cross-appeal that they were entitled to additional pre-judgment interest. The judgment included prejudgment interest from January 12, 1997, when the Beauxs received written notification of the Jacobs' claims. [29] The Beauxs contend that under AS 09.30.070(b) [30] the superior court correctly treated prejudgment interest as accruing from the date they received written notice of the Jacobs' claims. The Jacobs argue that AS 09.30.070(b) applies only to claims for personal injury, death, or damage to property. [31] Because, the Jacobs argue, their claims were for purely economic loss, prejudgment interest should have accrued from March 23, 1994, when the parties executed the earnest money agreement and the Jacobs' cause of action accrued. When prejudgment interest begins to accrue is a question of law which we review applying our independent judgment. [32] We review interpretations of statutes de novo, adopting the rule of law that is most persuasive in light of precedent, reason, and policy. [33] In several recent cases we have suggested, but not held, that AS 09.30.070(b) applies only to actions for personal injury, death, or damage to property. [34] In Henash v. Ipalook , we observed that AS 09.30.070(b) might only apply to actions for `personal injury, death, or damage to property.' [35] But because the issue was inadequately briefed, we directed the superior court in that case to determine on remand whether AS 09.30.070(b) applied to the plaintiff's claim under the Alaska Wage and Hour Act. [36] Similarly, in Johnson v. Olympic Liquidating Trust , we questioned whether AS 09.30.070(b) applied to the plaintiff's contract claim, noting that the statute might apply only to cases involving `personal injury, death, or damage to property.' [37] But because the parties had assumed that the statute applied, and because we did not need to decide the issue to resolve the case, we declined to reach the issue. [38] And in McConkey v. Hart , we stated that AS 09.30.070(b) modifies the general rule of awarding prejudgment interest from the accrual date of a cause of action by providing that the starting date for prejudgment interest on certain tort judgments shall be the date on which the defendant receives written notice that a claim may be brought, or the date on which process is served, whichever is earlier. [39] We now explicitly hold that AS 09.30.070(b) applies only to actions for personal injury, death, or damage to property, and does not apply to claims for purely economic loss. This approach is consistent with our recent decision in Cole v. Bartels. [40] In that case, purchasers of a home sued the defendant for failing to disclose wall decay, in violation of the Disclosures in Residential Real Property Transfers Act. [41] A jury found for the plaintiffs, and the judgment included prejudgment interest from the date the plaintiffs' claim accrued. [42] On appeal, we affirmed the prejudgment interest award. [43] In affirming, we rejected the defendant's argument that an award of prejudgment interest on unexpended repair costs  the purchasers had not yet repaired the undisclosed defect at the time of trial  constituted an improper double recovery. [44] The Cole parties did not cite AS 09.30.070(b), and we did not discuss whether the statute applied to the purchasers' claim. Nevertheless, affirming the superior court's prejudgment interest award, which awarded prejudgment interest from the date when the purchasers' claim accrued, was consistent with reading AS 09.30.070(b) to be inapplicable to a nondisclosure claim for purely economic loss. [45] A plaintiff's claim is for purely economic loss if the plaintiff has suffered only damage based on insufficient product value. [46] For example, where a plaintiff seeks to recover loss of bargain damages  i.e., the difference in value of what is received and its value as represented  the claim is for purely economic loss. [47] The Jacobs sought awards both for economic loss  i.e., loss of bargain damages caused by the negligent disclosures  and for property damage caused by the Beauxs' negligence  i.e., damages for the cost of replacing the basement carpet, which was damaged by water infiltration. On remand, the superior court should apply AS 09.30.070(b) only to the Jacobs' claims for damage to property.
For these reasons, we AFFIRM with respect to the issues of liability, comparative fault, and mitigation of damages, but REVERSE the damage award and REMAND for further proceedings consistent with this opinion, including recalculation of the prejudgment interest award. And although we AFFIRM the methodology by which the superior court calculated attorney's fees, changes in the awards for damages and prejudgment interest will require that the attorney's fees be recalculated.