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Missouri Court of Appeals Weighs in on the Stringent Requirements of the Pre-Judgment Interest Statute, and Whether Partial Payment of a Judgment Waives the Right of Appeal

January 27, 2015 | Peter Hoffman

For a defendant’s attorney in a personal injury case, it is not pleasant to contemplate issues of post-judgment interest and pre-judgment interest on a judgment entered against his client, when the amount of the judgment is Fourteen Million Dollars. In the recent case of Hawley v Tseona, before the Missouri Court of Appeals Western District, a defense counsel confronting these issues made some decisions that saved his client some money.

Hawley arose out of a two car accident on Interstate 70 in which the defendant had been engaged in racing with another driver at over 90 miles an hour, when he struck a vehicle driven by Greg Hawley, resulting in severe injuries to Hawley which led to his death a few hours later. Approximately one year after the accident, an attorney for several of the family members sent a settlement demand letter to the attorney for the defendant making settlement demands totaling $2 million. The settlement demands were not accepted.

By agreement, the case was tried to the court without a jury on July 30, 2012 at least in part because liability was admitted by the defendant. On December 18, 2012, the circuit court rendered its judgment of $14 million plus aggravating circumstances damages in the amount of $100,000. The Court also awarded prejudgment interest in the amount of $946,465.20 and also awarded post judgment interest which, in light of the amount of the judgment, amounted to an additional $718,000 per year in post judgment interest.

After the judgment by the trial court, but before he requested any post-judgment relief, defense counsel made a partial payment to the plaintiffs’ counsel, the amount of which payment as well as the circumstances surrounding it were not specified in the opinion. On appeal, defense counsel challenged the award of prejudgment interest because he contended plaintiffs did not comply with the prejudgment interest statute. Defendant also contended that the amount of the judgment by the trial court was excessive.

Plaintiff’s counsel contended on appeal that the partial payment by defendant’s counsel amounted to a waiver of the challenge of the prejudgment interest award. While it is possible to estop oneself from appealing a judgment by performing acts inconsistent with the appeal, defense counsel’s payment did not constitute such action according to the Court. Instead, such payment by the defendant was deemed to be applied only to pay off part of the judgment of actual damages, rather than paying any of the prejudgment interest.  The Court of Appeals specifically ruled that payments to avoid post-judgment interest are considered involuntary and do not render an appeal moot. (Opinion at page 5).

Turning to the merits of the prejudgment interest challenge, it was admitted by both sides that the settlement demand letter did not include a list of the names and addresses of medical providers that had treated the decedent for his injuries and did not include written authorizations to allow defense counsel to obtain copies of those records. As such, Defendant contended that these failures violated the express terms of R.S. Mo. § 408.040. Plaintiffs contended that even though they did not strictly comply with the statute, the facts of the claim were such that it was obvious that a judgment for the plaintiffs could exceed the settlement demands. The Court of Appeals relied upon two earlier Missouri Supreme Court decisions for the propositions that 1) there must be strict compliance with the requirements of the prejudgment interest statute; and 2) that compliance was required even in the absence of a showing of prejudice to the defendant by failure to comply with the statutory requirements.

As a result, the Court of Appeals reversed that portion of the judgment awarding prejudgment interest to the tune of $946,465.20.

Practice Pointer: Although not a part of the decision, counsel faced with the dilemma encountered by the attorney for the defendant should make explicit to the plaintiff and to the court that any payment to cut off or reduce post-judgment interest is for that purpose and that purpose alone.

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The BSCR Missouri Law Blog examines significant developments, trends and changes in Missouri law on a broad range of topics of interest to Missouri practitioners and attorneys and businesses with disputes subject to Missouri law. Learn more about the editor, David Eisenberg.

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