California Civil Jury Instructions (CACI) (2017)

3935. Prejudgment Interest (Civ. Code, § 3288)

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3935.Prejudgment Interest (Civ. Code, § 3288)
If you decide that [name of plaintiff] is entitled to recover damages for
past economic loss in one or more of the categories of damages that
[she/he/it] claims, then you must decide whether [he/she/it] should also
receive prejudgment interest on each item of loss in those categories.
Prejudgment interest is the amount of interest the law provides to a
plaintiff to compensate for the loss of the ability to use the funds. If
prejudgment interest is awarded, it is computed from the date on which
each loss was incurred until the date on which you sign your verdict.
Whether [name of plaintiff] should receive an award of prejudgment
interest on all, some, or none of any past economic damages that you
may award is within your discretion. If you award these damages to
[name of plaintiff], you will be asked to address prejudgment interest in
the special verdict form.
New December 2016
Directions for Use
Give this instruction if the court determines that the jury may award prejudgment
interest. In an action for the breach of an obligation not arising from contract, and
in every case of oppression, fraud, or malice, interest may be given, in the
discretion of the jury. (Civ. Code, § 3288.) The statute allows the jury to award
prejudgment interest on any claim within its scope. (Bullis v. Security Pac. Nat’l
Bank (1978) 21 Cal.3d 801, 814 [148 Cal.Rptr. 22, 582 P.2d 109].) The special
verdict form may need to be augmented for the jury to make factual finding that
need to be determined before an amount of prejudgment interest can be calculated.
The role of the jury in awarding prejudgment interest is not clear from Civil Code
section 3288. This instruction assumes that the court exercises a gatekeeper
function of deciding whether the case is one to which the statute applies. The jury
does not select the interest rate, which is 7 percent as a matter of law. (Michelson
v. Hamada (1994) 29 Cal.App.4th 1566, 1585 [36 Cal.Rptr.2d 343].)
It is settled that prejudgment interest cannot be awarded on damages for the
intangible, noneconomic aspects of mental and emotional injury because they are
inherently nonpecuniary, unliquidated, and not readily subject to precise calculation.
(Greater Westchester Homeowners Assn v. L.A. (1979) 26 Cal.3d 86, 102−103 [160
Cal.Rptr.733, 603 P.2d 1329].) This instruction assumes that implicit in the
reasoning for denying prejudgment interest for noneconomic damages is
authorization to award it on all past economic damages, as these amounts are
pecuniary and subject to more precise calculation. This instruction should not be
given unless damages of this nature are claimed.
Since the statute is permissive, the jury has the discretion to deny prejudgment
interest, even if it might otherwise be authorized. (See King v. Southern Pacifi Co.
(1895) 109 Cal. 96, 99 [41 P. 786] [error to instruct jury that it must add
prejudgment interest to award of damages].)
Whether interest may be compounded is also not resolved. (Compare Douglas v.
Westfall (1952) 113 Cal.App.2d 107, 112 [248 P.2d 68] [trustee cannot be charged
with compound interest unless s/he has been guilty of some positive misconduct or
willful violation of duty; in cases of mere negligence, no more than simple interest
can properly be added] and State v. Day (1946) 76 Cal.App.2d 536, 554 [173 P.2d
399] [general rule is that interest may not be computed on accrued interest unless
by special statutory provision, or by stipulation of the parties] with Michelson,
supra, 29 Cal.App.4th at p. 1588 [jury is vested with discretion to award
prejudgment interest under section 3288, including compound interest] and McNulty
v. Copp (1954) 125 Cal.App.2d 697, 712 [271 P.2d 90] [compound interest is
properly allowed on a claim for wrongful and fraudulent detention of personalty].)
Sources and Authority
• Interest on Obligation Not Arising From Contract. Civil Code section 3288.
“Under Civil Code section 3288, the trier of fact may award prejudgment
interest ‘[in] an action for the breach of an obligation not arising from contract,
and in every case of oppression, fraud, or malice . . . ’ ” (Bullis,supra, 21
Cal.3d at p. 814, original italics.)
• “[U]nlike Civil Code section 3287, which relates to liquidated and contractual
claims, section 3288 permits discretionary prejudgment interest for unliquidated
tort claims.” (Greater Westchester Homeowners Assn,supra, 26 Cal.3d at p.
• “In Bullis, we characterized prejudgment interest as ‘awarded to compensate a
party for the loss of his or her property.’ The award of such interest represents
the accretion of wealth which money or particular property could have produced
during a period of loss. Using recognized and established techniques a fact
finde can usually compute with fair accuracy the interest on a specifi sum of
money, or on property subject to specifi valuation. Furthermore, the date of
loss of the property is usually ascertainable, thus permitting an accurate interest
computation.” (Greater Westchester Homeowners Assn, supra, 26 Cal.3d at pp.
102−103, internal citations omitted.)
• “The award of [prejudgment] interest represents the accretion of wealth which
money or particular property could have produced during a period of loss.
(Canavin v. Pac. Southwest Airlines (1983) 148 Cal.App.3d 512, 525 [196
Cal.Rptr. 82].)
• “However, damages for the intangible, noneconomic aspects of mental and
emotional injury are of a different nature. They are inherently nonpecuniary,
unliquidated and not readily subject to precise calculation. The amount of such
damages is necessarily left to the subjective discretion of the trier of fact.
Retroactive interest on such damages adds uncertain conjecture to speculation.
Moreover where, as here, the injury was of a continuing nature, it is particularly
difficult to determine when any particular increment of intangible loss arose.
Acknowledging the problem, the trial court arbitrarily resorted to an ‘averaging’
method applied to both the amount and duration of the loss. In our view this
process was impermissibly speculative.” (Greater Westchester Homeowners
Assn,supra, 26 Cal.3d at p. 103.)
• “The amount of damages awarded in a wrongful death case designed to
compensate these noneconomic losses are akin to those awarded for pain and
suffering and emotional distress in Greater Westchester and do not support
prejudgment interest. However, plaintiffs are entitled to prejudgment interest on
those damages attributable to an ascertainable economic value, such as loss of
household services or earning capacity, as well as funeral and related expenses.
‘[It] is important to underscore that [an] award is invalid only to the extent it
represents interest on “the intangible noneconomic aspects of mental and
emotional injury” claimed by plaintiffs. [Citation.] If plaintiffs allege specifi
damage that is supported by tangible evidence, prejudgment interest may
properly be awarded under Civil Code section 3288.’ ” (Canavin,supra, 148
Cal.App.3d at p. 527, internal citations omitted.)
• “Whether the proper interest rate was applied is a question of law. There is no
legislative act specifying the rate of prejudgment interest for a fraud claim, and
therefore the constitutional rate of 7 percent applies . . . .” (Michelson,supra,
29 Cal.App.4th at p. 1585.)
• “Section 3288 . . . allows interest from date of monetary loss at the discretion
of the trier of fact even if the damages are unliquidated.” (Stein v. Southern Cal.
Edison Co. (1992) 7 Cal.App.4th 565, 572 [8 Cal.Rptr.2d 907].)
• “[T]his action lies in tort and it is the generally accepted view that
[prejudgment] interest cannot be awarded on damages for personal injury.”
(Curtis v. State of California ex rel. Dept. of Transportation (1982) 128
Cal.App.3d 668, 686 [180 Cal.Rptr. 843].)
Secondary Sources
6 Witkin, Summary of California Law (10th ed. 2005) Torts, §§ 1643–1646
4Levy et al., California Torts, Ch. 50, Damages, §§ 50.51, 50.52 (Matthew
15 California Forms of Pleading and Practice, Ch. 177, Damages, § 177.53
(Matthew Bender)
12 California Points and Authorities, Ch. 121, Interest, §§ 121.33, 121.54 (Matthew
3936–3939. Reserved for Future Use