Is interest on money owed ever granted in lawsuits?

[Rigamarole]

Pretty simple question, and I'm sure there's a complicated answer.

Say someone owes you $10,000 but you have to sue them to get it, and due to whatever prevailing circumstances it takes you a year to do so and get an actual judgement, during which time they have been holding on to the money which the court has now deemed rightfully yours. Are there any types of cases in which it is allowed to sue for the initial $10,000 plus the interest you would have earned on the money if you had it in say, a high-yield savings account? If it is permitted, how is a "reasonable" interest rate determined and how often is this actually granted in real cases? (I know there are also court costs and legal fees to be considered, but that is another topic. Right now I'm just interested in the interest. Hee-hee )

I am in the state of CA but just want to know the general framework of the system here.

[A.R. Cane]

IANAL but there is a Statutory Interest. This would be most common in the case of delinquent taxes. I believe it can be imposed by a court, but is usually only done so in suits involving commercial obligations.

[Northern Piper]

It would depend on the law of the jurisdiction in question. For example, under Anglo-Canadian common law, there is a distinction between pre-judgment interest (interest owing on the damages between the date of the loss and the date of judgment) and post-judgment interest (interest owing on the amount the court orders the defendant to pay to the plaintiff).

Pre-judgment interest was not generally available. It was only allowed on certain types of contractual claims, usually where the amount in issue was for a sum certain, such as an action for debt, but not where the amount of damages had to be proven by detailed testimony and calculations (e.g. - personal injury, speculative losses on an action for breach of contract).

The common law theory was that courts lacked the ability to calculate interest on complex situations, so would only allow it when the law suit was over a sum certain. (In other words, lawyers and judges were generally not considered to be good at math, so interest was only available in cases that wouldn't strain their limited math abilities. )

The situation changed over the past 30 years or so, particularly when interest rates shot up in the early 80s. Various jurisdictions passed laws allowing for pre-judgment interest on most claims. Usually the interest rate is set by regulations under the statute, and is tied to the prime rate set by the central bank (in Canada, that would be the Bank of Canada).

Post-judgment interest has been generally availbale for a much longer period, because a judgment is for a set amount, so calculating the interest wouldn't strain the lawyers' and judges' limited abilities. In Canada, if the court doesn't set the interest rate for the post-judgment interest, then the default rate of 5%, set by s. 3 of the federal Interest Act, would apply.

[Schnitte]

The German civil code specifically provides for this: The debtor has to pay the initial sum plus interests for the period from pendency until judgment. The rate is the current European Central Bank key rate plus five percentage points in cases where consumers are involved and key rate plus eight points in cases without consumer involvement.

[Rube E. Tewesday]

Hey, Northern, why all the rolly eyes about lawyers' limited math abilities? I've been there when a bunch of lawyers' tried to divide a restaurant bill, and it wasn't pretty.

[Northern Piper]

In our personal capacities, perhaps, but we're supposed to be good at finding the experts who can testify about how multiplication works and how to carry the 1!

[Gfactor]

What Northern Piper said.

This paper (http://papers.ssrn.com/sol3/papers.c...#PaperDownload) discusses state and federal prejudgment interest rulesin the first few paragraphs.

Here is a state-by-state summary: http://www.ncsconline.org/WC/Publica...eCivPJIPub.pdf