Tag Archives: interest

DON’T IGNORE PREJUDGMENT INTEREST

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When it comes to contracts, there may be a clause that provides that untimely payments shall bear interest at a particular rate.  Or it may be the statutory rate.  That clause will come into play when determining prejudgment interest. In ANY dispute, prejudgment interest can be an important damages component that accrues from the date of the loss.  Don’t ignore prejudgment interest.

The Fourth District of Florida, in a construction dispute, maintained:

“[I]f a plaintiff establishes that he sustained out-of-pocket loss, prejudgment interest must be awarded from the date of the loss. The trial court has no discretion regarding awarding prejudgment interest and must do so applying the statutory rate of interest in effect at the time the interest accrues.”

Bensusan v. Design Engineering Group, LLC, 2025 WL 3466367 (Fla. 4th DCA 2025) (citation omitted).

In this dispute, a subcontractor prevailed on a claim with the owner after the owner entered into a guaranty agreement with the subcontractor if the subcontractor was not paid by the general contractor. The subcontractor was not paid and prevailed in its claim under the guaranty agreement with the owner. An issue was the application of prejudgment interest which was affirmed at the statutory rate since the guaranty agreement did not specify a rate.

Prejudgment interest is a legitimate category of damages and represents real money. It comes into play when trying a case or prevailing in that case. Now, to settle a case, it may require a party to overlook this category, which makes sense because settlement requires a give and take. But it is a real and legitimate category of damages that should not be ignored.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

TENDERING UNDISPUTED SUMS TO CUT OFF ACCRUAL OF INTEREST

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Disputes over the quantum of money owed are not uncommon.  For instance, say a subcontractor claims it is owed $500,000 from the general contractor and the general contractor disputes this amount.   Say that of this $500,000, $300,000 is undisputed contract balance and $200,000 is disputed change orders.   In this situation, what should the general contractor do?

 

The issue in this hypothetical is the $300,000 in undisputed contract balance.  I am a strong believer in paying or tendering undisputed amounts so that the dispute is confined to the issues and amounts actually disputed between the parties.

 

Why tender undisputed funds?  An appropriate tender is a tender of money without any conditions tied to the depositing of the money; the tender must be absolute and unconditional.  See James A. Cummings, Inc. v. Young, 589 So.2d 950,955 (Fla. 3d DCA 1991) (finding that a written proposal to pay money after litigation commenced does not constitute a tender and a tender cannot include conditions on the money).

 

The check should be cash or a cashier’s check and should include interest on the undisputed money owed.  “[T]he tender of a mere check does not constitute payment of cash or its equivalent and it thus makes such a tender of payment merely conditional.”  See Enriquillo Export & Import, Inc. v. M.B.R. Industries, Inc., 733 So.2d 1124, 1127 (Fla. 4th DCA 1999). 

 

The objective of the tender is to relieve the paying party from any subsequent accrual of interest owed on the money.  See Morton v. Ansin, 129 So.2d 177, 182 (Fla. 3d DCA 1961); see also Ismark v. W.G.Mills, Inc., 899 So.2d 1213 (Fla. 2d DCA 2005) (“[A] tender of sums due on a date certain under a contract will stop the accrual of prejudgment interest only when the tender is absolute and unconditional.”).  The effect of an appropriate tender is to cut off additional interest owed on the money from the date of the tender. 

 

“A tender of less than the full amount due, however, is insufficient.  Thus, if the amount of the tender does not include the interest to which a creditor is entitled, the tender is nugatory.”  Dade County v. American Re-Insurance Co., 467 So.2d 414 (Fla. 3d DCA 1985)  (internal citations omitted) (finding that tender was insufficient since it failed to include interest due on owed amount).

 

There is authority that a party can tender a disputed or protested amount as long as there are no conditions tied to the depositing of the money. See Gascoyne v. Bay Towne Property Owners Ass’n, Inc., 575 So.2d 671, 672 (Fla. 2d DCA 1991) (“A tender under protest will only be conditional if acceptance is predicated on the recipient being required to take some action.”).  The reason to do this would be to cut off the accrual of interest on the money.  However, in my opinion, tendering protested or disputed amounts should be carefully done to avoid the appearance that it is indeed a conditional payment or an insincere tender. 

Whether to tender money should ideally be done under the guidance of your attorney.  And, if a tender is considered, it is important that it is done properly so that you get the value of the reason for the tender–to cut off the accrual of interest.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.