PRE-JUDGMENT INTEREST

Did you know that the law provides for an award of pre-judgment interest in a personal injury lawsuit?  California’s Civil Code, Section 3288 provides that “[i]n an action for the breach of an obligation not arising from contract, and in every case of oppression, fraud, or malice, interest may be given, in the discretion of the jury.”

The rationale for such an award arises from the principle that the injured plaintiff was deprived of the use of those funds that would have otherwise been available to the plaintiff, but for the negligence of the defendant.

The Judicial Council of California’s jury instruction on the issue, CACI No. 3935, provides for “an award of the amount of interest the law provides to a plaintiff to compensate for the loss of the ability to use the funds. If prejudgment interest is awarded, it is computed from the date on which each loss was incurred until the date on which you sign your verdict.”

There are limitations on a plaintiff’s ability to obtain an award for prejudgment interest.

“It is settled that prejudgment interest cannot be awarded on damages for the intangible, noneconomic aspects of mental and emotional injury because they are inherently nonpecuniary, unliquidated, and not readily subject to precise calculation.

Greater Westchester Homeowners Assn v. L.A. (1979) 26 Cal.3d 86, 102–103.

Interest may only be awarded on those aspects of a judgment that pertain to what are referred to as “economic damages” like lost earnings or loss of value to a vehicle, rather than for “non-economic damages” like pain and suffering.  Additionally, it is ultimately up to the judge to decide whether the case is one where this type of award is appropriate, and the interest rate is fixed as a matter of law.