DENVER (Legal Newsline) – Two-time losers in Colorado courts will be at the mercy of current interest rates when calculating how much interest they must pay because they appealed.
A June 21 decision by a 4-2 majority of the Colorado Supreme Court seemingly will apply in very few cases but was watched by the American Tort Reform Association, the Colorado Civil Justice League and both Colorado’s defense lawyers and plaintiffs lawyers. All were parties on amicus briefs filed in a lawsuit Forrest Walker brought against Ford Motor Company.
The question posed to the court was whether a defendant who loses a personal injury case, appeals, wins a new trial and loses again would pay a 9% interest rate on the judgment or a market-based rate, which is currently below 9%.
An appeal triggers the market-based rate, the court ruled. The 9% rate will remain for defendants for the period between the final judgment and payment of it.
“Applying the fixed statutory rate (9%) during the judgment debtor’s appeal of the judgment would provide judgment debtors an incentive to appeal whenever the market rate is higher than the fixed rate,” Justice Carlos Samour wrote for the majority.
“In that situation, judgment debtors could capitalize on the difference in the two interest rates because of the potential to continue to earn the higher market rate on the judgment while appealing. By Doing nothing more than filing a notice of appeal, and without regard for the merits of the appeal, judgment debtors could enjoy the higher market return on the value of the judgment while paying the lower fixed rate to the judgment creditor if the judgment is eventually affirmed.
“Talk about an incentive to file an appeal, including a frivolous one.”
What ended up happening in Walker’s design defect lawsuit is Ford will pay nearly $1.8 million less in interest after years of litigation following a $2.9 million verdict came down in 2013.
Ford appealed and won a new trial by the Court of Appeals. Walker appealed to the state Supreme Court, which also ordered a new trial.
That didn’t happen until 2019. A second jury awarded about the same amount, and Walker wanted interest at the 9% statutory rate for the six years between the first appeal and the final judgment.
Ford said that 9% rate only applied from the time between Walker’s initial personal injury claim and the appeal of the first judgment. The trial court said it applied to the whole shebang and assessed $3.6 million in interest.
Ford appealed the interest ruling. It lost at the Court of Appeals but found success at the state Supreme Court, which found the statutes regarding interest rates ambiguous. Justice Samour called the three passages pertaining to interest rates “a jurisprudential Bermuda Triangle.”
Justice Monica Marquez authored a dissenting opinion, finding no confusion in the law.
“By rewriting the statute to address the specific scenario presented here (i.e., where a personal injury judgment debtor obtains reversal of the original judgment but ultimately loses on retrial and incurs another judgment), the majority usurps the role of the General Assembly,” she wrote.
“Should the legislature wish to amend section 13-21-101, it is free to do so.”