Southard v. Fox

Decision Date21 April 1992
Docket NumberNo. 12117,12117
Citation1992 NMCA 45,833 P.2d 251,113 N.M. 774
PartiesCarol Lynn SOUTHARD, Plaintiff-Appellee, v. William T. FOX, Defendant-Appellant.
CourtCourt of Appeals of New Mexico


Defendant appeals the trial court's award of prejudgment interest in connection with a jury verdict stemming from a personal injury lawsuit. Defendant raises two issues on appeal: whether the trial court erred in (1) concluding that plaintiff's damages were subject to prejudgment interest and (2) determining that defendant was not entitled to a jury trial on the issue of prejudgment interest. We hold that the prejudgment interest statute, NMSA 1978, Section 56-8-4(B) (Repl.1986), applies to all damages and, consequently, that the trial court did not err in awarding prejudgment interest on plaintiff's damages. Additionally, because we hold that interest awarded pursuant to Section 56-8-4(B) is not awarded as an element of damages, defendant was not unconstitutionally denied a jury trial. We therefore affirm the trial court's award of prejudgment interest.


Plaintiff and defendant were involved in an automobile collision in April 1988, in which plaintiff was injured. On July 28, 1988, plaintiff filed a personal injury action against defendant for damages. Defendant answered on September 6, 1988, denying liability and demanding that the action be dismissed with prejudice. Discovery began in the fall of 1988 and continued until the fall of 1989. On September 26, 1989, defendant made his first settlement offer of $48,000. Plaintiff rejected the offer. On October 12, 1989, defendant offered $56,000, which was also rejected. On November 13, 1989, defendant admitted liability. Trial on the issue of damages began on November 20, 1989.

At trial, plaintiff presented evidence of medical expenses of more than $12,000, lost earnings of more than $5,500, and evidence of compensable injury for the nature and extent of her injuries, pain and suffering, future medical expenses, and impaired earnings capacity in the range of $284,000 to $355,000. At the close of evidence, defendant made a verbal settlement offer for $130,000.

The jury returned a verdict of $130,000 for plaintiff. Plaintiff then moved for an award of prejudgment interest. After a hearing, the trial court notified counsel that it would exercise its discretion under Section 56-8-4(B) and award plaintiff prejudgment interest at the rate of eight percent per year. In its formal findings and conclusions, the court found that defendant's offers of September 26, 1989, and October 12, 1989, were "timely but [were] not reasonable," and that defendant's offer at the close of evidence was "reasonable but was not timely." The trial court also found that plaintiff did not cause unreasonable delay in adjudicating her claims. Based on these findings, and the additional finding with respect to plaintiff's evidence on damages, the trial court concluded that an award of prejudgment interest was warranted and entered judgment. Defendant paid those portions of the judgment limited to the jury's verdict and the trial court's award of costs, but appealed the award of prejudgment interest.

1. Applicability of Prejudgment Statute to Tort Damages.

Defendant's major argument (in support of his claim that the trial court erred in concluding that plaintiff's damages were subject to prejudgment interest) is that damages for bodily injury, pain and suffering, and prospective damages are not subject to prejudgment interest because they are not reasonably ascertainable before trial. We disagree with defendant's argument because it ignores the plain language of the statute governing the award of prejudgment interest.

Section 56-8-4(B) states:

The court in its discretion may allow interest of up to ten percent from the date the complaint is served upon the defendant after considering among other things:

(1) if the plaintiff was the cause of unreasonable delay in the adjudication of the plaintiff's claims; and

(2) if the defendant had previously made a reasonable and timely offer of settlement to the plaintiff.

Where a statute is clear and unequivocal, it must be enforced as written. State v. Elliott, 89 N.M. 756, 557 P.2d 1105 (1977); State v. Michael R., 107 N.M. 794, 765 P.2d 767 (Ct.App.1988) (where meaning of statute is plain and words are free from ambiguity, statute must be enforced as written). "The general rules of statutory construction require that words of a statute should be given their ordinary, everyday meaning, and in the absence of a clear and express legislative intention to the contrary, the language of the statute is conclusive." State ex rel. Reynolds v. Aamodt, 111 N.M. 4, 5, 800 P.2d 1061, 1062 (1990).

Defendant does not argue that the statute is ambiguous; therefore, we will apply the statute as written. On its face, Section 56-8-4(B) applies to all actions and is not limited to certain or specific actions, such as those based on contract or in which damages are ascertainable before trial. Additionally, the statute plainly gives the trial court discretion to award prejudgment interest after considering two specific factors: whether plaintiff was the cause of unreasonable delay and whether defendant had made a reasonable and timely offer of settlement. Sec. 56-8-4(B); State ex rel. Hooten Constr. Co. v. Borsberry Constr. Co., 108 N.M. 192, 196, 769 P.2d 726, 730 (1989). That the legislature did not intend to limit the application of Section 56-8-4(B) to only contract cases or cases involving ascertainable damages is supported by the fact that, before Section 56-8-4(B) was adopted, our law permitted the award of prejudgment interest in those types of cases. See United Nuclear Corp. v. Allendale Mut. Ins. Co., 103 N.M. 480, 709 P.2d 649 (1985). The legislature is presumed to be aware of existing law. Bettini v. City of Las Cruces, 82 N.M. 633, 485 P.2d 967 (1971). "Courts assume that the legislature will not enact useless statutes or amendments." Consolidated Freightways, Inc. v. Subsequent Injury Fund, 110 N.M. 201, 205, 793 P.2d 1354, 1358 (Ct.App.1990). If we were to accept defendant's interpretation of Section 56-8-4(B), in effect, we would render it superfluous. We decline to do so.

We note that New Mexico has never followed as narrow a rule for the award of prejudgment interest as defendant suggests. Defendant relies on State Trust & Savings Bank v. Hermosa Land & Cattle Co., 30 N.M. 566, 595, 240 P. 469, 480 (1925), for the proposition that "[a]n early New Mexico Supreme Court opinion noted that damages for personal injury were 'undoubtedly unliquidated' and generally not subject to an award of prejudgment interest." We believe defendant's reliance on State Trust is misplaced because, in that case, our supreme court actually questioned this proposition and concluded that "the old distinction between liquidated and unliquidated damages seems to be discredited by the weight of modern decisions and texts." Id. at 597, 240 P. at 481. Even at the time State Trust was decided, our supreme court favored a flexible rule for the awarding of prejudgment interest. Bernhard v. Rochester German Insurance Co. 79 Conn. 388, 65 A. 134, 138 (1906), which the State Trust & Savings Bank court quoted approvingly, stated:

Courts are more and more coming to recognize that a rule forbidding an allowance for interest upon unliquidated damages is one well calculated to defeat that purpose in many cases, and that no right reason exists for drawing an arbitrary distinction between liquidated and unliquidated damages.... The determination of whether or [not] interest is to be recognized as a proper element of damage is one to be made in view of the demands of justice rather than through the application of any arbitrary rule.

Id. (emphasis added). Although the question was not directly addressed, this court nevertheless noted in Strickland v. Roosevelt County Rural Electric Cooperative, 99 N.M. 335, 343, 657 P.2d 1184, 1192 (Ct.App.1982), cert. denied, 463 U.S. 1209, 103 S.Ct. 3540, 77 L.Ed.2d 1390 (1983), that State Trust "suggests that as a matter of fairness the same rule should apply in tort cases if the date of the tort is ascertainable." The question is now squarely before us, and we decline to adopt the arbitrary rule limiting the application of Section 56-8-4(B) only to liquidated or ascertainable damages, as proposed by defendant. However, we recognize that in determining the "reasonableness" of settlement offers under Section 56-8-4(B), the trial court will necessarily be making a determination of whether defendant was fairly able to "ascertain" the damages.

Defendant claims the "clear majority" of jurisdictions does not allow prejudgment interest in personal injury suits, relying on Greater Westchester Homeowners Association v. City of Los Angeles, 26 Cal.3d 86, 160 Cal.Rptr. 733, 603 P.2d 1329 (1979), cert. denied, 449 U.S. 820, 101 S.Ct. 77, 66 L.Ed.2d 22 (1980); George v. Double D Foods, Inc., 155 Cal.App.3d 36, 201 Cal.Rptr. 870 (1984); and Restatement (Second) of Torts Section 913(2) (1979). We are not persuaded by this argument for several reasons.

First, we believe Section 56-8-4 and case law allow prejudgment interest to be awarded in tort claims. See State Trust & Sav. Bank v. Hermosa Land & Cattle Co.; Strickland v. Roosevelt County Rural Elec. Coop.; see also North v. Public Serv. Co. of New Mexico, 101 N.M. 222, 231, 680 P.2d 603, 612 (Ct.App.1983) (recognized that Section 56-8-4 would give the trial court the discretion to award prejudgment interest on trespass claims). Second, the California statute on which the above-noted cases relied is...

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