Business & Insurance Litigation Newsletter for Indiana

Prejudgment Interest in State Contract Action

Under Indiana law, an award of prejudgment interest in a contract action is warranted if the amount of the claim rests upon a simple calculation and the terms of the contract make such a claim ascertainable. Noble Roman's, Inc. vs. Ward, 760 N.E.2d 1132, 1139 (Ind. Ct. App. 2002). "The test for determining whether an award of prejudgment interest is appropriate is whether the damages are complete and may be ascertained as of a particular time." Id. "The award is considered proper when the trier of fact need not exercise its judgment to assess the amount of damages." Id.; City of Indianapolis vs. Twin Lakes Enter., Inc., 568 N.E.2d 1073, 1086-87 (Ind. Ct. App. 1991) (holding that damages not sufficiently ascertainable and therefore prejudgment interest inappropriate when contractor used three different methods to calculate damages which resulted in three different amounts); Gibson-Lewis Corp. vs. N. Ind. Public Serv. Co., 524 N.E.2d 1316, 1319 (Ind. Ct. App. 1988) (holding that contractor was only entitled to prejudgment interest on undisputed part of claim); Thomas J. Henderson, Inc. vs. Leibowitz, 490 N.E.2d 396, 400 (Ind. Ct. App. 1986) (holding that trial court did not err in failing to award prejudgment interest because damages were not readily ascertainable in light of competing clams that work was incomplete versus charges for extra work).

An award of prejudgment interest generally is not considered a matter of discretion. Noble Roman's, 760 N.E.2d at 1139. "Prejudgment interest is computed from the time the principal amount was demanded or due and is allowable at the permissible statutory rate when no contractual provision specifies the interest rate." Sand Creek County Club, Ltd. vs. CSO Architects, Inc., 582 N.E.2d 872, 876 (Ind. Ct. App. 1991).