Wednesday, December 7, 2011

What about pre-judgment interest as part of the judgment in a contract case?

ENTITLEMENT TO PRE-JUDGMENT INTEREST: When does such interst begin to accrue?
For a breach-of-contract claim, prejudgment interest begins to accrue on the earlier of (1) 180 days after the date a defendant receives written notice of a claim, or (2) the date suit is filed. Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 532 (Tex. 1998). A claim "is a demand for compensation or assertion of a right to be paid." Toshiba Mach. Co., Am. v. SPM Flow Control, Inc., 180 S.W.3d 761, 785 (Tex. App.—Fort Worth 2005, pet. granted, judgm’t vacated w.r.m.). A claim need not demand an exact amount or list every element of damage. Id.

How do settlement proceeds from another Defendant affect pre-judgment interest?

When settlement credits are at issue, the declining-principal formula should be used, under which settlements are credited when paid to reduce prejudgment interest. Brainard v. Trinity Universal Ins. Co., 216 S.W.3d 809, 816 (Tex. 2006); see also Battaglia v. Alexander, 177 S.W.3d 893, 904–12 (Tex. 2005).

Standard of review on appeal

"The abuse of discretion standard applies to the trial court’s factual findings as they relate to prejudgment interest; but the de novo standard applies to the trial court’s application of the law to the facts." Figueroa v. Davis, 318 S.W.3d 53, 66 (Tex. App.—Houston [1st Dist.] 2010, no pet.).

SOURCE: HOUSTON COURT OF APPEALS - 01-10-00672-CV - 12/1/11

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