Michigan law provides for the imposition of pre-judgment interest, accruing from the date a lawsuit is filed until a Judgment is paid. The purpose of allowing pre-judgment interest is to compensate the winning party for the loss of the use of funds awarded as well as to offset the expenses of litigation. Although there is a statutory basis for pre-judgment interest, in some circumstances, Michigan courts will require that interest not accrue for certain periods of time.
In Primetime Landscaping & Snow Removal, LLC v Damico Development, INC., the Michigan Court of Appeals considered whether a trial judge could completely disallow all pre-judgment interest. The trial court ruled that plaintiff was not entitled to pre-judgment interest because plaintiff breached the contract by charging double the contract price for the salt.
During the litigation, the sole shareholder, Asaro, of plaintiff attempted to represent the corporation without an attorney. Additionally, three other attorneys were either fired or withdrew from representation due to difficulties with Asaro, causing months of delay in the case.
In considering whether pre-judgment interest could be withheld, the Court of Appeals ruled that absent a substantial breach of contract by the plaintiff, that pre-judgment interest should be assessed. The Court of Appeals noted that there was no substantial breach by the plaintiff because it provided the services it was required to under the contract. The fact that it tried to charge double the contract price for the salt did not constitute a substantial breach.
The Court of Appeals did rule that pre-judgment interest should not accrue during points in time where a delay resulted as a result of the actions seeking interest.
The court also noted that pre-judgment interest would not accrue after the defendant tendered payment to the trial court. Tendering payment to the other party was not sufficient to stop interest from accruing.
