Opinion
No. 54573-6-I
Filed: March 7, 2005 UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 03-2-25367-7. Judgment or order under review. Date filed: 06/24/2004. Judge signing: Hon. James A. Doerty.
Counsel for Appellant(s), Daniel W. Ferm, Williams Kastner Gibbs PLLC, 601 Union St Ste 4100, Seattle, WA 98101-2380.
Matthew D. Green, Williams Kastner Gibbs, 601 Union St Ste 4100, Seattle, WA 98101-2380.
Counsel for Respondent(s), Timothy William Dore, Attorney at Law, 1201 3rd Ave Ste 3400, Seattle, WA 98101-3034.
Bruce Kriegman, 16225 39th Ave NE, Seattle, WA 98155.
Judgments founded on written contracts that provide for payment of interest at a specified rate shall bear interest at the rate specified in the contracts until paid. Here, the promissory note is the relevant contract that provides for the payment of interest at a specified rate. Moreover, the judgment is composed of unpaid principal, pre-judgment interest, and costs. Accordingly, the plain words of the statute require that interest shall accrue on the amount of the judgment, nothing less. We reverse.
Jerry Fiorito and his spouse, together with non-respondent defendants Brown, Schumsky, Rasmussen and their spouses, signed a short-term $650,000 promissory note payable with interest of 12.978 percent per month, to Jerry Ivy. The default rate of interest is 18 percent per annum above the monthly rate. There is no claim that the note was for anything other than business purposes. The obligors on the note failed to pay the note when due. Ivy sued and obtained an order of summary judgment against the four defendants and their respective marital communities. The trial court entered judgment in favor of Ivy for the principal amount plus prejudgment interest on the note for a judgment in the amount of $1,793,730.90, plus fees and costs of $3,055, for a total judgment of $1,796,785.90 with interest to run thereon at the contract rate.
The promissory note was actually for $975,000, the principal sum of $675,000 plus interest to the due date of $325,000. The term of the note was for six months, from July 11, 2002 to January 11, 2003.
Fiorito, but no other defendant, moved for reconsideration. He argued that although the judgment amount was correct, post-judgment interest ought to run at the contract rate on the principal amount of the note only, not on pre-judgment interest. The motion for reconsideration was heard by another trial court judge, who agreed with Fiorito and entered a `corrected judgment' reducing post-judgment interest at the contract rate only on the principal judgment amount of $653,055. The court determined that this corrected judgment affected only the Fioritos. Ivy appeals.
At some point, the Fioritos filed for bankruptcy protection. After the appeal was filed, the bankruptcy trustee sought to be substituted as respondent. The motion was granted.
DECISION
The issue in this case is controlled by the 1989 version of RCW 4.56.110 and case law interpreting the statute. It provides in relevant part that:
Laws 1989, ch. 360, sec. 19, inserted subsec. (2); redesignated former subsec. (2) as (3); and corrected the internal reference accordingly. There was additional legislation in 2004, effective June 10, 2004, but that legislation did not change any language necessary to this decision.
Interest on judgments shall accrue as follows:
(1) Judgments founded on written contracts, providing for the payment of interest until paid at a specified rate, shall bear interest at the rate specified in the contracts: PROVIDED, That said interest rate is set forth in the judgment.
(Emphasis added.).
. . .
There is no dispute that the promissory note at issue here sets forth the normal rate of 12.978 percent per month plus a default rate of 18 percent per annum over the monthly rate until paid. Moreover, there is no dispute over what the principal amount of the debt is. The judgment amount is composed of unpaid principal, pre-judgment interest, and costs. The plain words of the statute mandate that post-judgment interest shall run at the contract rate on the judgment, which is the total of these sums.
To the extent there is any doubt about the plain language of the statute, case authority makes clear that interest shall run in this case on the judgment amount, not just the unpaid principal.
State v. Trask, 98 Wn. App. 690, 695-96, 990 P.2d 976 (2000); Xebek, Inc. v. Nickum Spaulding Assocs., Inc., 43 Wn. App. 740, 743, 718 P.2d 851 (1986).
Because there is no claim of usury in this case, we need not discuss those arguments. Likewise, any arguments to the effect that the statute is inequitable should be directed to the legislature, not this court.
Additionally, the promissory note provides for the recovery of attorney fees and costs by the prevailing party in the event of litigation. Ivy is awarded fees and costs incurred on appeal upon compliance with the provisions of RAP 18.1.
We reverse the order correcting the summary judgment.
COX, COLEMAN and BECKER, JJ.