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September 19, 2008

Legislation Adjusting Postjudgment Interest Rate Applies to Cases On Appeal On Date Law Changed

~ written by The Supreme Court of Ohio

Legislation Adjusting Postjudgment Interest Rate Applies to Cases On Appeal On Date Law Changed

MAYNARD V. EATON CORPORATION, CASE NO. 2007-1069
THIRD DISTRICT COURT OF APPEALS (MARION COUNTY)

The Supreme Court of Ohio ruled today that 2004 legislation changing the rate of postjudgment interest payable to the prevailing party in a civil lawsuit applies to cases in which a trial court judgment had been entered before the law changed, but appeals were still pending on the effective date of the legislation. The Court’s 7-0 decision was written by Justice Robert R. Cupp.

Section 1343.03 of the Ohio Revised Code sets a standard rate of post-judgment interest that is payable to the prevailing party in any civil lawsuit when the non-prevailing party does not make immediate payment of a court-ordered judgment award. Prior to June 2004, the statutory rate of post-judgment interest payable under R.C. 1343.03 was set at 10 percent. In 2004, the legislature enacted H.B. 212, which amended the post-judgment interest rate from 10 percent to a variable rate to be recalculated annually by applying a statutory formula. The effective date of the amendment was June 2, 2004. The language of the amended statute specified that the new interest rate “applies to actions pending on the effective date of this act.”

Today’s ruling involves a lawsuit filed by Leonard Maynard against his former employer, Eaton Corporation, in 1999 based on injuries Maynard suffered in a workplace accident. A Marion County common pleas court jury awarded Maynard compensatory and punitive damages, and the trial court recorded its judgment entry in the case on April 3, 2003.

Eaton withheld payment of the judgment amount while it pursued appeals of the trial court’s decision and damage award. Those appeals were still pending on June 2, 2004, the effective date of H.B. 212. Maynard subsequently filed a legal challenge to Eaton’s calculation of post-judgment interest. The Third District Court of Appeals ruled that Maynard was entitled to 10 percent interest for all of the time from the date of the trial court judgment entry to the date of Eaton’s final satisfaction the judgment award, because the 10 percent rate was in force at the time the trial court’s judgment was entered. The Third District certified, however, that its ruling on the calculation of interest was in conflict with decisions of the Eighth and 10th appellate districts on the same issue. The Supreme Court agreed to review the case to resolve the conflict among the courts of appeals.

Writing for a unanimous Supreme Court in today’s decision, Justice Cupp held that the Third District erred in applying the pre-H.B. 212 10-percent interest rate to the portion of Maynard’s post-judgment interest that accrued after H.B. 212 took effect.

“When R.C. 1343.03(A) was amended by H.B. 212, the fixed statutory rate of interest on judgments was replaced with a variable rate tied to the variable federal short-term rate,” wrote Justice Cupp. “ ... The General Assembly recognized at the time it enacted H.B. 212 that a special situation existed for cases in active litigation. Consequently, the General Assembly provided for a transition to the new method of calculating the amount of statutory interest through an uncodified section in the act. … The uncodified section of H.B. 212 directs that the fixed rate of ten percent per annum in effect prior to June 2, 2004, applies through June 1, 2004, and is to be used to calculate the amount of interest accrued through June 1, 2004; the annually determined rate then applies and is used to calculate the amount of interest to be paid from June 2, 2004, forward.”

In determining that Maynard’s case remained “pending” during Eaton’s appeal, Justice Cupp cited the Supreme Court’s 1988 holding in Van Fossen v. Babcock & Wilcox, and took particular note that in its decision, “The Van Fossen court expressly rejected a narrower interpretation that would have held that a case is no longer ‘pending’ despite the trial court’s final judgment, since an appeal suspends the effect of the trial court’s judgment until the court of appeals enters its own final judgment. … In view of the foregoing … (w)e hold that the amendment to R.C. 1343.03(A), applies to cases in which the trial court has entered final judgment prior to June 2, 2004, the effective date of the amendment, but the judgment is not yet paid in full and the case was pending on appeal as of that date.”