prejudgment interest
The interest that a creditor, usually a plaintiff in the case, is entitled to collect, derived from the amount of a judgment, which compensates the creditor for an injury which occurred before the judgment. The rate applied to calculate prejudgment interest varies by state, and some states may apply a fixed amount, while others may tie the rate to an established index. ABA, Calculation of Prejudgment Interest on Past Losses in Business Litigation . For example, the California Constitution applies a general the rate of interest at 7% per annum, and in Palomar Grading & Paving, Inc. v. Wells Fargo Bank, N.A. , the California Court of Appeals found that this 7% applies to prejudgment interest, at least on a mechanic’s lien. An example of a court awarding prejudgment interest is in In re Oil Spill by the Amoco Cadiz Off the Coast of France , where the Seventh Circuit awarded French plaintiffs $65 million in damages and $148 million in prejudgment interest in a suit arising out of the grounding of an oil tanker which resulted in a massive oil spill along the coast of Brittany. Another example is Short v. U.S. , where the Federal Circuit awarded the Yurok Indians prejudgment interest on their damages to recover revenue generated from timber harvesting from which they were wrongly excluded.
[Last reviewed in August of 2020 by the Wex Definitions Team ]
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