Court Opinion

ID: 9560203
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:45:15.860884+00
Date Added: 2024-06-11T09:12:21.946629
License: Public Domain

FELDMAN, Vice Chief Justice,
dissenting.
I concur in parts I through III of the court’s opinion and agree that La Paz County was entitled to $2,023,685 for its share of county assets. I dissent from part IV of the court’s opinion because law, logic, and basic principles of fairness establish La Paz’s right to prejudgment interest on the total award from January 1, 1983, “the time of its organization____” A.R.S. § 11-148.
I.
The majority awards La Paz prejudgment interest on $433,427.55 because this amount was supposedly “liquidated,” that is, known and relatively certain, before today’s decision. At 168, 735 P.2d at 778. By implication, the majority concludes that the rest of the judgment was unliquidated because it was uncertain and was based on appraisal and opinion before today. Id.
The majority’s distinction is untenable.1 The $433,427.55 was not “liquidated” before today. It is merely an amount that Yuma once proposed as the amount due La Paz based on an appraisal which was later discarded and replaced by another appraisal. See Master’s Report, Part IV. The entire amount owed La Paz, including the portion which the majority finds “liquidated,” was equally unknown and unknowable until today. It could only be determined by applying the judicial valuation process to the facts in the record. The Master, in fact, did not distinguish between the two amounts and recommended prejudgment interest on the entire award from the date of his report. Master’s Report, Part IV, at 20-21.
Despite the lack of any principled difference between the “liquidated” and “unliquidated” portions of La Paz’s award, the court relies on the so-called distinction between liquidated and unliquidated damages to determine whether prejudgment interest is warranted. That distinction has been the subject of persuasive and wide-ranging criticism.2 Even if we ignore the critics, *170however, and preserve the distinction in all its pristine purity, long-established principles of law make it inapplicable to this case.
II.
This is not a case in which La Paz sought to recover damages because Yuma had breached a contract or committed a tort. In those types of cases, it might make sense to deny prejudgment interest on the grounds that the defendant could not know what sum to tender and thus could not halt the running of interest. This is the so-called “protection” theory. Comment, Prejudgment Interest: Survey and Suggestion, 77 NW.U.L.REV. 192, 197 (1982) (citing cases). In this case, however, Yuma actually had possession of La Paz’s property and is now returning that property by paying its worth in money. Thus, the judgment in this case does not represent damages in contract or tort; it represents restitution of property or its value.
Prejudgment interest is particularly appropriate in restitution cases because interest is the value of money or property over time and is properly payable when the owner has been deprived of the use of his property or money. D. DOBBS, HANDBOOK ON THE LAW OF REMEDIES § 3.5, at 169-70,173 (1973). Consequently, even if the dichotomy between liquidated and unliquidated damages is recognized, it is logically irrelevant in this type of case. As Professor Dobbs has explained:
If the plaintiff has actually lost the use of his money, or the use of any other form of property, and if compensation is the goal of damages, he should be entitled to interest or some other measure of his loss whether the exact sum due him as principal is ascertainable or not. It is no more unfair to the defendant to hold him for interest on a sum he could not ascertain in advance than it is to hold him for the unascertainable sum itself, if interest does indeed measure the plaintiff’s loss of use of the money or property.
D. DOBBS, supra § 3.5, at 173 (emphasis added); accord T. SEDGWICK, A TREATISE ON THE MEASURE OF DAMAGES § 300 (A. Sedgwick & J. Beale, eds. 9th rev. ed. 1920).
The present case clearly illustrates the irrelevancy of the liquidated-unliquidated distinction in restitution cases. Under A.R.S. § 11-148, La Paz was entitled to its proportionate share of assets as of the time of its organization, January 1, 1983. As is now established by judgment, on that date Yuma had in its possession assets—including cash and personal and real property valued at over two million dollars—which belonged to La Paz. For more than four years Yuma has used those assets, obtaining value from the use of La Paz’s property, perhaps even collecting interest on La Paz’s cash. The court now compels Yuma to pay La Paz only the same amount of money that was due on January 1, 1983. This award is not complete restitution because La Paz has been deprived of and Yuma has benefited from the use of La Paz’s share of county assets during the period of litigation. Interest is the means of measuring Yuma’s gain and La Paz’s loss. D. DOBBS, supra § 3.5, at 168-69. Theoretically, the money and property used by Yuma during the period of litigation has produced the exact amount which should now be due as prejudgment interest. Id.
*171Contrary to the basic premise of the court’s opinion, prejudgment interest is not awarded simply because the amount due is certain nor withheld because it is uncertain. When, as here, the plaintiff's claim is measured by the value of the use of its property or its right to restitution for the taking of its property, interest is awarded because the plaintiff was entitled to compensation before the day judgment was formally entered and has lost the value of that compensation from the time of loss until the time of judgment. In simple terms, Yuma took two million dollars of La Paz’s property and is now paying it back. Suppose, instead of holding and using that property, Yuma had sold it for cash and invested the two million dollars in a certificate of deposit. The majority holds, in effect, that Yuma must now give back the money but may retain the interest it made on La Paz’s money. This result is incorrect. La Paz is entitled to both its money and the value of the use of its money and property from January 1, 1983.
By failing to award interest, the majority makes it more profitable for one in possession of another’s assets to hold and use those assets instead of delivering them to their rightful owner. This makes it more profitable to convert than to account.

. Arizona cases do little to clarify the distinction. Compare Fleming v. Pima County, 141 Ariz. 149, 685 P.2d 1301 (1984) (claim is liquidated where its amount may be computed from evidence in the record) with Northern Arizona Gas Service, Inc. v. Petrolane Transport, Inc., 145 Ariz. 467, 702 P.2d 696 (App.1984) (uncertainty over profit margins is inconsistent with the concept of liquidated damages) and Homes & Son Construction Co., Inc. v. Bolo Corp., 22 Ariz.App. 303, 526 P.2d 1258 (1974) (claim on cost plus construction contract held to be liquidated even though there was considerable dispute as to the amount of cost). The distinction has not fared any better in other jurisdictions. See, e.g., Stevens-Scott Grain Co. v. Atchison, T. & S.F. Ry., 96 Kan. 1, 2, 149 P. 744, 744 (1915) ("the distinction is a mere verbal one”); The Manhattan, 85 F.2d 427, 429 (3d Cir.1936) (distinction is "little more than a difference in words”). For example, "courts have often shown an entire willingness to award interest on the value of property” even though that value “necessarily depends" upon the “opinion of those who claim to know the market." D. DOBBS, HANDBOOK ON THE LAW OF REMEDIES § 3.5, at 165-66 (1973). Other courts have awarded prejudgment interest when the plaintiffs claim was certain but subject to an uncertain counterclaim. E.g., Fluor Corp. v. United States ex rel. Mosher Steel Co., 405 F.2d 823 (9th Cir.), cert. denied, 394 U.S. 1014, 89 S.Ct. 1632, 23 L.Ed.2d 40 (1969). Needless to say, the difference between two amounts, one of which is uncertain, is itself uncertain.

. Courts and commentators have severely criticized the Iiquidated-unliquidated distinction for decades. Funkhouser v. Preston Co., 290 U.S. 163, 168, 54 S.Ct. 134, 136, 78 L.Ed. 243 (1933) (“a distinction ... simply as between cases of liquidated and unliquidated damages, is not a sound one"); Moore-McCormack Lines, Inc. v. Richardson, 295 F.2d 583, 594 (2d Cir.1961) ("the hoary distinction"), cert. denied, 368 U.S. 989, 82 S.Ct. 606, 7 L.Ed.2d 526, cert. denied, 370 U.S. 937, 82 S.Ct. 1577, 8 L.Ed.2d 806 (1962); *170State v. Phillips, 470 P.2d 266, 273 (Alaska 1970) ("the liquidated-unliquidated common law distinction lacks a persuasive rationale"); T. SEDGWICK, A TREATISE ON THE MEASURE OF DAMAGES §§ 299, 300, at 569-71, § 315, at 624-26 (A. Sedgwick & J. Beale, eds. 9th rev. ed. 1920); D. DOBBS, supra § 3.5, at 164-74. In addition to the problem explained in text, the more persuasive criticisms include the treatment of plaintiffs suffering identical losses in different ways based solely on whether their claims are liquidated, see Comment, Prejudgment Interest: Survey and Suggestion, 77 NW.U. L.REV. 192, 199 (1982), and the failure to recognize the truism that interest represents the value of money over time, T. SEDGWICK, supra § 300, at 571 (“once admit that interest is the natural fruit of money, it would seem that whenever a verdict liquidates a claim and fixes it as of a prior date, interest should follow from that date”). For a complete summary of the criticism, see Comment, supra, 77 NW.U.L.REV. at 192; Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549, 552-54 (Texas 1985) (summarizing and approving modern trend recognizing prejudgment interest).