Prejudgment interest

Prejudgment interest is awarded on liquidated damages. Liquidated damages are those damages that can be established with certainty from the time of injury onward.

History and Theory
Since at least before the turn of the century, Florida has adopted the position that prejudgment interest is merely another element of pecuniary damages. While doing so, the Court recognized and rejected an alternative but traditional rationale — that prejudgment interest was to be awarded as a penalty for defendant's "wrongful" act of disputing a claim found to be just and owing. This view is still the rule of some jurisdictions. See, e.g., Home Insurance Co. v. Olmstead, 355 So.2d 310 (Miss. 1978). The distinction between liquidated and unliquidated claims is closely linked to this "penalty theory" of prejudgment interest. To punish a defendant for failure to pay a sum which was not yet certain or which he disputed would be manifest injustice. But where the amount is certain and the defendant refuses to surrender it because of defenses determined to be meritless, the defendant may properly be punished for abuse of his privilege to litigate. Under the "loss theory," however, neither the merit of the defense nor the certainty of the amount of loss affects the award of prejudgment interest. Rather, the loss itself is a wrongful deprivation by the defendant of the plaintiff's property. Plaintiff is to be made whole from the date of the loss once a finder of fact has determined the amount of damages and defendant's liability therefor.

When prejudgment interest is considered retribution rather than restitution, the finder of fact, whether judge or jury, has to decide both entitlement to and amount of prejudgment interest. As jurisdictions have adopted the "loss theory" many, including Florida, have nonetheless retained this vestige of the earlier theory and left to the jury the duty of awarding such interest. Such a procedure is anomolous in a jurisdiction where prejudgment interest is held to be an element of damages as a matter of law. Once a verdict has liquidated the damages as of a date certain, computation of prejudgment interest is merely a mathematical computation. There is no "finding of fact" needed. Thus, it is a purely ministerial duty of the trial judge or clerk of the court to add the appropriate amount of interest to the principal amount of damages awarded in the verdict. We conclude that the finder of fact should not consider the time-value of money in its consideration of damages.

Furthermore, just as the loss theory forecloses discretion in the award of prejudgment interest, there is no discretion in the rate of that interest. The legislature has established a statutory interest rate which controls prejudgment interest. § 687.01, Fla. Stat. (1983).

''Argonaut Ins. Co. v. May Plumbing Co.'', [http://scholar.google.com/scholar_case?case=13436742046480153262 474 So. 2d 212] (Fla. 1985).

Offer of Judgment
Since prejudgment interest is considered an element of damages, prejudgment interest is included when calculating liability for attorneys' fees per Florida's Proposal for Settlement statute, s. 45.061, Fla. Stat. Persons v. Pelaez, 613 So.2d 509, 510 (Fla. 2d DCA 1993)