Let’s say you have a good case for compensation for your injuries from someone else’s animal; you’re entitled to money, possibly six figures: does the canine owner also owe you prejudgment interest on the money, going back to the date of the bite?
After all, cases in litigation can take years to percolate through the courts before a case settles or goes to trial. In the interim, who gets to enjoy returns on the money before it changes hands? If the responsible party pays no prejudgment interest on the eventual recovery, wouldn’t that give every Defendant an incentive to drag out cases as long as possible, to enjoy returns on the money for as long as possible?
Getting Paid “Pre-Judgment” Interest
In negligence or tort cases (which include canine bite cases), a plaintiff can seek an award for prejudgment interest pursuant to Pennsylvania Rule of Civil Procedure 238, under certain circumstances.
The Amount of Interest Owed
First, the interest rate is the Wall Street Journal prime rate plus 1% annually. This is per Rule 238(a)(3).
The Right to Prejudgment Interest
Now, let’s talk about how interest gets calculated.
Rule 238 gives the Defendant a reasonable amount of time (one year) after receiving service of suit, to work to resolve the matter through settlement or verdict. Otherwise, the Defendant must pay pre-judgment interest on the eventual award. To understand the exact amount of days for which the Defendant owes pre-judgment interest on the money, note the following:
- The starting day (the first day interest is owed) starts one year after service of process, which is either the date that the sheriff hands the suit to the Defendant, or when Defendant signs for a certified mailing if the defendant is out-of-state.
- It ends on the date of the verdict or award. Rule 238(a)(2).
Key Limitations
1. Encouraging Settlement
The law encourages — and rewards — a Defendant for making a reasonable offer, early on. So let’s say, within one year of being sued, the Defendant makes an offer to settle. Let’s also say the offer is equal to or greater than the award or verdict. Here, no money is owed for prejudgment interest.
So, for example, let’s say a Plaintiff sues the Defendant-pet owner for injuries the pat caused to the Plaintiff. The pet owner takes responsibility. In fact, when served with suit, the pet owner offers to settle the case for $25,000. You reject the offer, thinking the case is worth $50,000. So the case percolates through the courts for four long years. Ultimately, a jury awards the Plaintiff $25,000, exclusive of interest. Here, a court will preclude the Plaintiff from recovering an award for four years of pre-judgment interest.
Ouch, for the Plaintiff. The court effectively gave the Defendant a four year, interest free loan, because the Plaintiff had refused to accept the “reasonable” offer (reasonable, according to the jury.
2. Plaintiff-Caused Delays
Let’s say in the above example, the pet owner makes no offer at all, when served with suit. The Defendant seeks a jury trial, ASAP. So the court schedules trial to take early – within one year of when you served the Defendant with suit. Only, you’re not ready! Your lawyer moves to push back the date of trial another year, because your doctors can’t say (yet) how long your nerve damage will exist. More time is needed. The court will give you more time, but not pre-judgment interest for this delay, since you sought the delay.
3. Defendant Offering All the Money He Has
Let’s say the pet owner you sue is broke: he owns nothing except a $3,000 used Hyundai parked in front of the apartment unit he rents. He offers you $3,000 to settle a case against him worth $30,000, potentially. Now what? In Krymsmalski by Krymsalski v. Tarasovich, 622 A. 2d 298 (Pa: Superior Court 1993), PA’s Superior Court held:
… [A] defendant who offers all that he has available for payment will not be held for delay damages after the date of the offer. If damages are imposed because defendant is expected to offer more than he has, Rule 238’s purpose is frustrated because we ask defendant to do the impossible.
Thus, if a Defendant served with suit offers all the money he has, this is a defense to a claim for pre-judgment interest.
Conclusions
The calculate of pre-judgment interest can motivate the parties to settle a canine related claim. Call, text, or email us for more!
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