“Questions Presented: Family Law. Interest on money judgment. KRS 360.040. Application of KRS 360.040, governing interest on a judgment in a
domestic relations case.”
Husband owed wife $24,277.02 for a 1998 property equalization settlement. Wife attempted to garnish Husband’s funds ultimately getting a judgment lien on his property in 2008 after he failed to pay. In 2012, Husband filed a motion to prohibit the collection of interest on the Judgment which the family court granted. Wife appealed and the Court of Appeals held that “the granting of interest pursuant to KRS 360.040 is within the trial court's discretion.” On remand, the family court again denied any interest. Wife appealed and the Court of Appeals affirmed. The Supreme Court granted discretionary review.
The Supreme Court first turns to Husband’s argument that the law of the case precluded review because Wife failed to appeal the first Court of Appeals case holding that because the “Court of Appeals' holding was clearly erroneous, causing a manifest injustice, the law of the case doctrine does not preclude review” of the present case.
The Supreme Court holds that “The plain language of KRS 360.040 is clear. A judgment shall bear interest. The trial court has discretion in the amount of interest awarded in two situations: (1) when the judgment is for an unliquidated amount (and if equity favors a lower amount) and (2) if the interest is provided for in a written obligation.” The Supreme Court then considers whether or not Husband’s obligation was liquidated holding the award was clearly unliquidated until it was reduced to a judgment, as the claim is controlling the amount was unliquidated. Thus, “interest on liquidated and unliquidated claims is mandatory and liquidated claims must bear interest at the statutory rate. Trial courts do have some discretion, however, in setting the amount of interest on unliquidated claims.” The family court did not have discretion to deny interest, but did have discretion to balance the equities and set interest at something other than the statutory rate.
The Supreme Court goes on to address the equities in the matter at hand holding the family court's findings “were unreasonable and an abuse of discretion as an award of the statutory interest rate was more than appropriate in this case.” The family court inappropriately considered the length of time between Wife’s attempts to collect the judgment, Husband’s attempts to settle child support, the property lien and Husband’s alleged belief he didn’t have to pay the settlement until child support was settled. Moreover, the family court ignored Husband’s failure to comply with Court order and the length of time Wife was deprived of use of her funds.
Justice Cunningham dissents arguing the trial court did not abuse its discretion.
Digested by Elizabeth M. Howell