No postjudgment interest on prejudgment interest? A rebuttal.

• Author: Herring, William W.
• Position: Florida

As a civil division county judge who has been trying over the past six years, with mixed results, to get plaintiffs' attorneys to draft their final judgments so as to provide for an award of postjudgment interest on prejudgment interest, the undersigned read with dismay the second part of attorney Jorge A. Lopez's otherwise excellent article, "Prejudgment and Postjudgment Interest--What's in a Name?," in the March 2002 issue of The Florida Bar Journal.

On page 23, the author discusses the holding of the Florida Supreme Court in Quality Engineered Installation, Inc. v. Higley South, Inc., 670 So. 2d 929, 931 (1996), a unanimous holding, that prejudgment interest, as with the other component parts of a judgment, becomes a part of and merges into a total, single sum awarded, such that it should not be treated differently than the other component parts, vis-a-vis the bearing of postjudgment interest under F.S. [section] 55.03(1). The following observations are made: 1) its rule always overcompensates prevailing parties by allowing compounded interest; 2) the compounding of interest goes beyond compensating the judgment creditor for the lost use of its money, of placing it in the same position it would have been had the loss/ damages not have occurred, placing it in a better situation, allowing for retribution not restitution; and 3) permitting compounded interest results in an unfair windfall to the creditor, the larger the judgment and the longer the passage of time until collected, the larger the windfall.

Only by the award of interest on interest is a judgment creditor made whole, with no punishment aspect involved. Why? Because had the judgment debtor paid off the entire judgment in all its component parts, as of the date of the judgment's entry, then the creditor would have been able to invest the prejudgment interest portion of the judgment, as well as the principal, court costs, and attorneys' fees. A contrary view ignores the very real fact that the creditor has lost the use of the prejudgment interest during the often lengthy interim between a judgment's entry and its payment. It further defies logic that the creditor somehow obtains a windfall because a large amount was originally owed and the debtor took a long time to pay off the judgment. Creditors universally, if acting in good faith without ulterior motive, desire to have their judgments paid off sooner rather than later. Why? Because during the time lapse between judgment entry and collection, the creditor has lost the use of the entire judgment amount, with the chances of recouping the ever-increasing amount owed diminishing with the passage of each day. Judgment creditors are not hard to find; yet the author would lay the blame at the creditor's door.

A review of the cases relied upon in the article for the proposition that the compound interest theory, as punishment, has been "uniformly rejected" discloses that they contain no underlying rationale or critical analysis in support of their bald pronouncement that interest may not be awarded on interest. In Gilliard v. Wright, 667 So. 2d 815, 816 (Fla. 2d DCA 1996), the court reversed an award of prejudgment interest on that portion of a civil theft judgment representing treble damages, holding that such interest could not be awarded on a statutory penalty, presumably because punitive legislation is strictly construed. Language followed that interest should be an instrument of restitution, not punishment. The decision did not stand for the proposition that compound interest could not be awarded. However, the other decisions cited in the article do fully support the author's position: Brown v. Estate of Stuckey, 710 So....