Chapter 4 - § 4.6 • PREJUDGMENT INTEREST AS DAMAGES

• Jurisdiction: Colorado

§ 4.6 • PREJUDGMENT INTEREST AS DAMAGES

Prejudgment interest may be recoverable under some circumstances on both the cost of repairing home defects (depending on certain factors discussed below) and on damages for annoyance, inconvenience, and aggravation, including future losses.¹⁵⁸ Prejudgment interest may be awarded pursuant to statute, and, sometimes, pursuant to the common law as moratory interest.¹⁵⁹ Moratory interest is interest awarded as part of one's damages under an equitable unjust enrichment theory.¹⁶⁰ The amount of moratory interest awarded depends on the equities of each case and should fully recognize the gain or benefit the defendant realized as a result of his or her wrongful detention of money.¹⁶¹

Prejudgment interest comprises part of a party's damages.¹⁶² Thus, whether awarded pursuant to statute or the common law, prejudgment interest is part of the compensatory damages award.¹⁶³ Prejudgment interest will only be awarded pursuant to statute if requested, and is not allowed on punitive damage awards.¹⁶⁴ Prejudgment interest may properly be awarded by the court after a verdict even without a specific jury finding of when the underlying property damage first occurred.¹⁶⁵

In Goodyear Tire & Rubber Co. v. Holmes, the Colorado Supreme Court held that prejudgment interest on repair cost damages for property damage tort claims accrues from the date the damages are measured, typically the trial date.¹⁶⁶ Claimants have argued that this holding does not extend to breach of contract or implied warranty claims where the damages are measured as of the date of the breach. The Colorado Court of Appeals rejected this argument where the breach of implied warranty damages were measured as of the date of trial,¹⁶⁷ but the Colorado Supreme Court has yet to weigh in on the issue. However, when damages are measured by diminution in value, interest begins to accrue as of the date that the plaintiff suffered injury to his or her property.¹⁶⁸ And, if the damage award potentially implicates both diminution in value and cost of repair damages measures, and a jury returns only a general verdict that does not apportion damages between the two measures, there is no basis to distinguish between the two and the trial court may calculate interest from when the house was initially damaged.¹⁶⁹

Where a party makes temporary repairs or incurs forensic engineering expenses before or during litigation, prejudgment interest on the amount spent on the temporary repairs or engineering work should accrue from the repair or engineering work dates.¹⁷⁰ Because it is unknown before trial how the court will instruct the jury regarding any economic damages award or how it may exercise its discretion in calculating any prejudgment interest that may be due, it may be premature for the court to consider this issue before it enters judgment.¹⁷¹ For example, a trial court...