Posted On: March 11, 2012 by Parr Richey Obremskey Frandsen & Patterson

Indiana Court of Appeals Awards Prejudgment Interest to Plaintiff in Lake County Auto Accident Case

In Kosarko v. The Estate of Herndobler (Cause No. 45A03-1012-CT-668), the Lake County trial court denied a motor vehicle collision plaintiff prejudgment interest. Margaret Kosarko (plaintiff) was injured in an automobile accident involving Daniel Herndobler. Kosarko sued Herndobler for her injuries arising from the crash.

Herndobler died while his case was pending and the administrator of his estate was substituted as the defendant. On March 18, 2008, Kosarko served the administrator with a settlement offer of $100,000 payable within sixty (60) days, but it was not accepted. Following a jury trial, a verdict was returned in favor of Kosarko in the amount of $210,000. Kosarko filed a motion with the trial court for prejudgment interest and the trial court denied the motion.

According to Indiana law, a trial court may award prejudgment interest as part of a judgment in “any civil action arising out of tortious conduct.” Ind. Code § 34-51-4-1 (1998). Furthermore, the period of time for which prejudgment interest may be awarded may not exceed forty-eight (48) months. Ind. Code § 34-51-4-8 (1998). Prejudgment interest should not be awarded if:

(1) within one (1) year after a claim is filed in the court, or any longer period determined by the court to be necessary upon a showing of good cause, the party who filed the claim fails to make a written offer of settlement to the party or parties against whom the claim is filed; (2) the terms of the offer fail to provide for payment of the settlement offer within sixty (60) days after the offer is accepted; or (3) the amount of the offer exceeds one and one-third (1 1/3) of the amount of the judgment awarded.

Ind. Code § 34-51-4-6 (1998).

The purpose of the statute is to encourage settlement and to compensate the plaintiff for the lost time value of money. Hupfer v. Miller, 890 N.E.2d 7, 9 (Ind. Ct. App. 2008). If a person is denied an opportunity to use money that is owed to them, then that person is also denied the opportunity to make a gain on an investment. Therefore, prejudgment interest is considered to be additional damages the plaintiff may seek to accomplish full compensation for the harm done. Wayne Twp. V. Lutheran Hosp. of Fort Wayne, Inc., 590 N.E.2d 1130, 1134 (Ind. Ct. App. 1992), trans. denied.

The trial court denied prejudgment interest because “[Kosarko’s] damages . . . were not ascertainable within a time frame that justifies granting [Kosarko’s] motion for prejudgment interest.” In September 2008, Kosarko asserted that her medical expenses were approximately $31,000. On March 25, 2009, Kosarko provided new medical bills to the administrator and asserted her medical expenses were approximately $72,000. The trial was held on March 24, 2010.

In its opinion, the Indiana Court of Appeals determined that the amount of Kosarko’s medical bills were not in dispute because she provided an accounting of her health care expenditures at all times while the case was pending. The Court determined that the administrator had ample time to evaluate the monetary value of the dispute and consider settlement because nearly a year had elapsed from the time Kosarko provided an updated accounting (March 2009) to the time of trial (March 2010). Moreover, the Court noted that there was no evidence that the increase in medical expenses was unnecessary, fraudulent, or unrelated to the automobile accident, or that Kosarko unduly delayed the surgery that caused the large increase in her medical expenses from her September 2008 accounting to her March 2009 accounting. Ultimately, the Court determined that the trial judge had abused his discretion by denying Kosarko’s motion for prejudgment interest and awarded Kosarko prejudgment interest in the amount of $79,627.40, as requested in her motion. The Court reasoned that under these circumstances, “the defendant and not the plaintiff should bear the cost of the time value of money in the intervening period if the ultimate result is within the parameters set by the legislature.” Cahoon v. Cummings, 734 N.E.2d 535, 547 (Ind. 2000).