Precedent from the Supreme Court of Florida in Argonaut Insurance Company v. May Plumbing Company, 474 So.2d 212 (Fla. 1985), set forth the legal standard for recovery prejudgment interest where there is recovery of financial loss at trial. Argonaut held that “when a verdict liquidates damages on a plaintiff’s out-of-pocket, pecuniary losses, plaintiff is entitled, as a matter of law, to prejudgment interest at the statutory rate from the date of that loss.” Under Florida law, this is generally the legal standard in business litigation concerning breach of contract and business torts, as distinct from, for example, personal injury cases. In its later Musa Holdings decision, 46 So.3d 42 (2020), the Supreme Court explained that, “[t]hus, it has long been the law in Florida that in contract actions, and in certain tort cases, once the amount of damages is determined, prejudgment interest is allowed from the date of loss or the accrual of damages.” Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.
In Argonaut, the Supreme Court discussed the rationale for its decision, explaining in pertinent part: “since at least before the turn of the century, Florida has adopted the position that prejudgment interest is merely another element of pecuniary damages. While doing so, the Court recognized and rejected an alternative but traditional rationale–that prejudgment interest was to be awarded as a penalty for defendant’s ‘wrongful’ act of disputing a claim found to be just and owing. This view is still the rule in some jurisdictions.” Argonaut ultimately rejected this “penalty” approach to liquidated damages, and instead used the “loss theory” for recovery of prejudgment interest. “When prejudgment interest is considered retribution rather than restitution, the finder of fact, whether judge or jury, has to decide both entitlement to and amount of prejudgment interest. As jurisdictions have adopted the ‘loss theory’ many, including Florida, have nonetheless retained this vestige of the earlier theory and left to the jury the duty of awarding such interest. Such a procedure is anomolous in a jurisdiction where prejudgment interest is held to be an element of damages as a matter of law. Once a verdict has liquidated the damages as of a date certain, computation of prejudgment interest is merely a mathematical computation. There is no ‘finding of fact’ needed. Thus it is a purely ministerial duty of the trial judge or clerk of the court to add the appropriate amount of interest to the principal amount of damages awarded in the verdict. We conclude that the finder of fact should not consider the time-value of money in its consideration of damages.”
Under Florida law, there is no discretion in either the award of prejudgment interest or the interest rate. Argonaut explained in pertinent part that, “just as the loss theory forecloses discretion in the award of prejudgment interest, there is no discretion in the rate of interest. The legislature has established a statutory interest rate which controls prejudgment interest.” The relevant statutory provision is Florida Statutes Section 687.01. Subsequently, Florida’s Fourth District Court of Appeal in Palm Beach Florida Hotel v. Nantucket Enterprises, Inc., 211 So.3d 42 (Fla. 4th DCA 2016), explained that, “[i]n all cases, either of tort of contract, where the loss is wholly pecuniary, and may be fixed as of a definite time, interest should be allowed as a matter of right, whether the loss is liquidate or unliquidated. … [T]he plaintiff will not be fully compensated unless he receive, not only the value of what he has lost, but receive it as nearly as may be as of the date of his loss”, quoting William B. Hale, The Law of Damages, § 67 (2d ed. 1912).
Peter Mavrick is a Fort Lauderdale business litigation lawyer, and represents clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.