Supreme Court vacates summary judgment for prejudgment interest award

The Supreme Court last Friday issued its opinion in Isla Development Property, Inc. v. Steve K. Jang, 2017 MP 13. The court vacated the trial court’s order granting summary judgment as to prejudgment interest and remanded the case for a determination of prejudgment interest that considers appellee Isla Development Property, Inc.’s damages.

Steve K. Jang owed Isla Development $29,000 in back rent. In order to pay off this back rent, Isla Development and Jang executed a promissory note payable in six months, due on or before October 2014. Jang did not pay the note on time. Eight months later, Isla Development sued to collect the $29,000 principal owed, as well as prejudgment interest and attorney’s fees. The note provided that failure to pay any part of the principal before the note was due would allow Isla, the note’s holder, to exercise all rights and remedies it possessed as well as to declare immediately due the whole unpaid principal balance and accrued interest. The parties disagreed as to what this part of the note meant. The trial court found the note provided for prejudgment interest and applied the Commonwealth’s post-judgment interest rate of nine percent, ordering Jang to pay the $6,328.36 in prejudgment interest that had accrued.

The Supreme Court reinterpreted the promissory note’s provisions. First, the court found the provision at issue provided for interest that accumulated before and up to Jang’s default, or pre-default interest. The note did not provide for interest that accumulated between Jang’s default and the entry of judgment, or prejudgment interest. Because the note did not include language allowing for collection of prejudgment interest, the only way Isla would be able to collect prejudgment interest from Jang would be as a damage award that compensated Isla for losses it suffered as a result of Jang’s delay in payment. The trial court had incorrectly interpreted the note and the record on appeal did not include any evidence as to the damages Isla suffered. Without this information, the Supreme Court was unable to decide the amount of prejudgment interest owed. The court sent the case back down for the trial court to reanalyze.

The court’s full opinion is available at http://www.cnmilaw.org/supreme17.html. (PR)