Can You Get Prejudgment Interest Without Filing a Lawsuit?

Prejudgment interest can be recovered in a personal injury claim in Colorado under Section 13-21-101(1): “In all actions brought to recover damages for personal injuries… it is lawful for the plaintiff in the complaint to claim interest on the damages alleged from the date said suit is filed; and . . . [w]hen such interest is so claimed, it is the duty of the court in entering judgment for the plaintiff in such action to add to the amount of damages assessed by the verdict of the jury, or found by the court, interest on such amount…”

Seems clear, or is it? In Munoz v. American Family Insurance Company, No. 16CA0416 (Co. Ct. App. February 23, 2017), Plaintiff made a UM claim against his own insurance carrier after a car accident. During settlement negotiations but without filing a lawsuit, Plaintiff sought prejudgment interest on the claim, but Defendant refused to include any amount for prejudgment interest in the calculation. Plaintiff eventually accepted the settlement offer, and released all further claims against Defendant. However, Plaintiff then filed suit against Defendant, arguing that he was entitled to prejudgment interest pursuant to Section 13-21-101(1).

Defendant contended that the statute is clear: prejudgment interest only can be awarded as a component of damages assessed by a jury or court, not in a settlement. The trial court agreed with the Defendant, and the appeals court reviewed the question of law de novo. The appeals court noted that Section 13-21-101(1) sets forth specific conditions for prejudgment interest:

1. An action must be brought
2. Plaintiff must claim damages
3. There must be a finding of damages by a jury or court, and
4. Judgment is entered

Although Plaintiff contended that another Colorado case, USAA v. Parker, 200 P.3d 350 (Colo. 2009), dictated the opposite result, the court disagreed. The Parker case was about calculating prejudgment interest, not whether it can be awarded without fulfilling the requirements of Section 13-21-101(1). Therefore, under the plain reading of the text of Section 13-21-101(1), Plaintiff was not entitled to prejudgment interest in the settlement agreement reached with Defendant.

The Metier Law Firm is committed to assisting people with personal injury claims throughout Colorado, Wyoming and Nebraska, and we frequently serve as co-counsel to law firms nationwide. Tom Metier recently secured the largest personal injury verdict in Colorado.