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Matthews v. Desoto

Supreme Court of Texas
Nov 26, 1986
721 S.W.2d 286 (Tex. 1986)

Summary

holding that Cavnar does not give the trial court discretion to reduce prejudgment interest in response to dilatory tactics by the plaintiff

Summary of this case from C H Nationwide Inc. v. Thompson

Opinion

No. C-5809.

November 26, 1986.

Appeal from the 133rd District Court, Harris County, David Hittner, J.

Barclay A. Manley, Roger Townsend, Scott Rothenberg, Fulbright Jaworski, Houston, for petitioner.

Keith M. Fletcher, Simmons, Zwernemann, Hamilton Fletcher, Houston, for respondent.


This is a prejudgment interest case. The court of appeals stated that a trial court may reduce or eliminate a plaintiff's prejudgment interest award upon a finding that the plaintiff used dilatory tactics in bad faith to prevent resolution of the lawsuit. 714 S.W.2d 133.

In Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549, 554 (Tex. 1985), we held that a prevailing plaintiff may recover prejudgment interest on damages that have accrued by the time of judgment. We reviewed various methods of determining the exact amount of prejudgment interest, including allowing the trial court to suspend interest in exceptional circumstances. Id. at 554, n. 4. The approach we adopted provides the trial court no discretion to lessen or increase the interest amount for delays caused by either party.

The policies underlying Cavnar would not be advanced by giving the trial court discretion in determining the amount of prejudgment interest. Our decision was based on the equitable grounds that an injured party should be made whole. Id. at 554. A plaintiff should be compensated for the defendant having the beneficial use of the damage funds between the time of the occurrence and judgment. Id. at 552. Prejudgment interest is not intended to punish the defendant's misbehavior. Id. at 555. It merely compensates the plaintiff for being denied the opportunity to invest and earn interest on the amount of damages. Id. at 552.

Matthews contends that allowing a reduction in prejudgment interest awards would further advance the important Cavnar policy of encouraging settlements. The policy of encouraging settlements is founded upon a desire by this Court to insure that an injured party is fairly and fully compensated and to conserve judicial resources. A dilatory penalty would not enhance full and fair compensation because the plaintiff is still deprived of the use of his funds for which he deserves full recompense. Additionally, trial court discretion with regard to prejudgment interest would further complicate the trial process and often require a trial within a trial on the issue of the plaintiff's possible dilatory conduct.

Finally, Matthews argues that we should create an equitable limitation on Cavnar to prevent plaintiffs from being rewarded for employing dilatory tactics. In Cavnar, we expressly observed that our prejudgment interest scheme does not create incentives for plaintiff delay. Id. at 554. Few if any plaintiffs would prefer to have defendants retain their funds in order to increase the amount of interest instead of obtaining the full compensation to which they are entitled as quickly as possible. In the event a plaintiff unnecessarily delays resolution of the case, the defendant has several tools to force the case to trial such as objecting to the granting of continuances, objecting to the passing of the case, and moving for a special trial setting. An equitable exception to Cavnar is not necessary at this time.

We disapprove the court of appeals language that a trial court has the discretion to reduce a plaintiff's prejudgment interest award. The application for writ of error is refused, no reversible error.


Summaries of

Matthews v. Desoto

Supreme Court of Texas
Nov 26, 1986
721 S.W.2d 286 (Tex. 1986)

holding that Cavnar does not give the trial court discretion to reduce prejudgment interest in response to dilatory tactics by the plaintiff

Summary of this case from C H Nationwide Inc. v. Thompson

recognizing that prejudgment interest is intended to compensate a plaintiff for being denied the opportunity to invest and earn interest on the amount of damages

Summary of this case from Siam v. Builders

In Matthews v. DeSoto, 721 S.W.2d 286 (Tex. 1986), the Texas Supreme Court had before it a case in which the intermediate appellate court had ruled that a trial court could reduce or eliminate a plaintiff's prejudgment interest award upon a finding that the plaintiff used dilatory tactics in bad faith to prevent resolution of the lawsuit.

Summary of this case from Nationwide Mut. Ins. Co. v. Lafarge Corp.

In Matthews, the Texas Supreme Court adopted an approach that "the trial court [has] no discretion to lessen or increase the interest amount for delays caused by either party."

Summary of this case from Mid-Century Insurance v. Kidd

In Matthews the Court of Appeals for the First District had stated that a trial court could reduce or eliminate a prejudgment interest award upon a finding the plaintiff had used dilatory tactics in bad faith to prevent resolution of the lawsuit.

Summary of this case from Morgan v. Ebby Halliday Real Estate, Inc.
Case details for

Matthews v. Desoto

Case Details

Full title:Bruce Wayne MATTHEWS, Petitioner, v. Barbara DeSOTO, Respondent

Court:Supreme Court of Texas

Date published: Nov 26, 1986

Citations

721 S.W.2d 286 (Tex. 1986)

Citing Cases

Siam v. Builders

The Texas Supreme Court has long recognized that prejudgment interest is "compensation allowed by law as…

Nationwide Mut. Ins. Co. v. Lafarge Corp.

Id. The Court observed that the prejudgment interest scheme which it had adopted did not create incentives…