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Civil Procedure -- Computation of Interest Regarding Offer of Judgment

Metzler v. BCI Coca-Cola Bottling Co., 634 Ariz. Adv. Rep. 37 (App. Div. II, May 11, 2012) (J. Brammer)

WHERE PLAINTIFF BEATS HER OFFER OF JUDGMENT AT TRIAL, DEFENDANT WINS NEW TRIAL MOTION BUT COURT OF APPEALS REVERSES, INTEREST ON JUDGMENT RUNS FROM DATE OF OFFER OF JUDGMENT UNTIL THE MANDATE ISSUES FROM THE APPELLATE COURT REINSTATING THE JUDGMENT

http://www.leagle.com/xmlresult.aspx?xmldoc=In%20AZCO%2020120511010.xml&docbase=CsLwAr3-2007-Curr

A jury awarded plaintiff $1,855,398.86 against the defendant arising out of a slip and fall she sustained at the defendant's store. The defendant had rejected plaintiff's $150,000 offer of judgment two and a half years earlier. Thereafter the trial court granted defendant's motion for new trial and vacated judgment in plaintiff's favor. On appeal the Arizona Court of Appeals reversed and issued its mandate that the judgment be entered for plaintiff. Defendant argued that interest on the judgment should run from the date of the offer of judgment until the date the original judgment was rendered. Plaintiff argued it should run until the date of the mandate. The trial court agreed with the defendant but the Arizona Court of Appeals did not reversing and vacating that decision finding the interest ran until the date of the mandate.

The court noted that Rule 68 (g) of the Arizona Rules of Civil Procedure states that the failure to obtain “a more favorable judgment” shall result in the sanction, among other things, of interest on the unliquidated damages from the date of the offer. However, “judgment” is not defined in the rule and there is no clear “end point” for calculating the interest. Here, because the original judgment was vacated placing “the parties in the position they occupied before entry of judgment” this judgment should not be the end point of calculating interest. The original judgment was not suspended—it was vacated meaning it lacked all “force and effect” and therefore the judgment on mandate became the only judgment obtained for purposes of determining prejudgment interest.

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