M Civ JI 53.04 Interest - As Part of Damages

If you decide plaintiff has suffered damages, you should determine when those damages began, and add interest from then to [ date complaint filed ] [ at a rate of [ insert rate ] percent per year/ at a rate per year that you decide is appropriate ].

Note on Use

This instruction does not include a rate of interest, which may differ depending on the type of action. If an issue about rate of interest is raised, the judge will have to decide whether the law requires the judge to give the jury a stated interest rate, or whether it should be left to the jury to determine a reasonable interest rate. See the comment below.

In non-personal injury actions, plaintiffs’ attorneys commonly agree that the trial judge not give this instruction in exchange for defense attorneys’ agreement that the judge not give MCivJI 53.03 Future Damages-Reduction to Present Cash Value, sometimes with the further agreement that the judge will make these computations after the jury returns its verdict. If the trial judge is to make these computations, the jury will still have to determine when the pre-complaint damages accrued and when the future damages will be sustained. (Note that in personal injury actions, MCivJI 53.03 is not given to the jury because the trial judge reduces future damages to present cash value. See comment to MCivJI 53.03.)

Comment

In Currie v Fiting, 375 Mich 440, 454-455; 134 NW2d 611, 616 (1965) (a wrongful death action), the Michigan Supreme Court held that in tort actions where a claim accrues as of a certain date and can be ascertained or computed as of that date, interest is properly awarded as a part of damages from that date to the date of verdict. While the Currie case was not tried to a jury, the Court went on to comment that in a jury trial, the jury should be instructed to ascertain the date damages accrued and add interest from that date to the date of its verdict. When Currie was decided, the judgment interest statute (MCL 600.6013) made a defendant liable for interest from the date of judgment forward-to the date judgment is satisfied. Shortly after Currie was decided, the statute was amended to prescribe interest from the date of filing of the complaint. Cases decided subsequent to the statutory amendment allow interest as part of damages only to the date the complaint is filed. Vannoy v City of Warren, 26 Mich App 283, 288-289; 182 NW2d 65, 68-69 (1970), aff’d on other grounds, 386 Mich 686; 194 NW2d 304 (1972).

The common law rule that interest may be awarded as an element of damages to compensate for lost use of funds has early origins in Michigan jurisprudence. Snow v Nowlin, 43 Mich 383; 5 NW 443 (1880). While MCivJI 53.04 was adopted with personal injury/wrongful death cases in mind, juries have been instructed to include pre-complaint (formerly pre-judgment) interest in other tort cases. Snow (misrepresentation); Capital Mortgage Corp v Coopers & Lybrand, 142 Mich App 531; 369 NW2d 922 (1985) (accountant negligence; but plaintiff failed to show when the loss accrued); Coan v Brownstown Township, 126 Mich 626; 86 NW130 (1901) (negligence-property damage).

In Vannoy (a wrongful death action), the court instructed the jury to add interest as part of damages at the rate of 5 percent per year from the date each type of damages was incurred. The 5 percent rate was not in dispute, but the appellate court did comment that the judgment interest statute, MCL 600.6013 (statutory rate was then 5% for judgments not on written instruments), and interest as part of damages serve the same function to compensate for loss of use of funds. Vannoy, 26 Mich App 283, 288. (Interest rates in the present version of MCL 600.6013 vary depending on the nature of the action and the date the complaint was filed, and are affected by offers of settlement.) An analogy to the reduction of future damages to present worth was noted in Currie, but there was no indication of the rate of interest used by the trial court in awarding interest as part of damages and the Supreme Court did not discuss rate of interest. As the comment to MCivJI 53.03 Future Damages - Reduction to Present Cash Value indicates, many decisions have approved a rate of 5 percent in reducing future damages to present worth. (Under present law, in personal injury actions, the judge, not the jury reduces future damages to present worth using a 5 percent rate (compounded annually for causes of action arising after March 28, 2013). MCL 600.6306(2). In Baxter v Woodward, 191 Mich 379; 158 NW 137 (1916) (a conversion case), the Court approved the trial court’s instruction to the jury to award the market value of the item at the date of conversion plus interest at 5 percent, but did not specifically discuss the rate used.

Pre-complaint interest in certain contract cases is covered by statute (MCL 438.7) but that does not preclude common law interest as part of damages in cases in which MCL 438.7 is not applicable. Gordon Sel-Way, Inc v Spence Brothers, Inc, 438 Mich 488, 499 n 9; 475 NW2d 704 (1991). The 5 percent legal rate under MCL 438.31 must be used when awarding interest under MCL 438.7. Gordon, 438 Mich 488, 505. But there is no indication that the 5 percent rate is mandatory in contract cases in which common law interest as part of damages is awarded. See the discussion of pre-complaint statutory and common law interest including rates in Manley, Bennett, McDonald & Co v St Paul Fire & Marine Ins Co, 821 F Supp 1225 (ED Mich 1993), aff’d 33 F3d 55 (6th Cir 1994). If the trial judge neglects to instruct a jury on pre-complaint interest, interest may be added after the jury returns its verdict. Gottesman v Fay-Bea Construction Co, 355 Mich 6; 94 NW2d 81 (1959).

For an extensive discussion of Michigan cases and statutes relating to pre-judgment interest, see Michigan Law of Damages and Other Remedies, Ch 28 (Barbara A. Patek et al, eds) (ICLE, 3rd ed 2002). “