Legal Definitions - postjudgment interest

Postjudgment interest refers to the interest that a winning party in a lawsuit can collect on a court judgment from the losing party. This interest begins to accrue from the moment the court officially records the judgment and continues until the entire judgment amount is fully paid.

Its purpose is to compensate the winning party for the delay in receiving the money they were legally awarded, ensuring they are not financially disadvantaged by the time it takes for the losing party to fulfill their obligation.

Here are a few examples illustrating how postjudgment interest works:

• Business Contract Dispute: Imagine a small software development firm, InnovateTech, successfully sues a larger client, GlobalCorp, for $500,000 in unpaid services. The court enters a judgment in InnovateTech's favor. However, GlobalCorp decides to appeal the decision, which delays payment for 18 months. InnovateTech would be entitled to postjudgment interest on the $500,000 from the date the original judgment was officially recorded until GlobalCorp finally pays the full amount, even after the appeal is resolved. This interest compensates InnovateTech for the financial value lost by not having access to those funds during the extended delay.

• Personal Injury Claim: Consider a scenario where Maria is severely injured in a car accident caused by another driver, David. Maria sues David and is awarded $1,000,000 in damages by the court. David's insurance company, while ultimately responsible for payment, takes several months to process the claim and finalize the settlement. During this period, Maria would accrue postjudgment interest on the $1,000,000 from the date the court officially entered the judgment until the day she receives the full payment. This ensures she is compensated for the time she had to wait to receive the funds she was legally entitled to, covering the lost opportunity cost of that money.

• Property Damage Lawsuit: Suppose a homeowner, Mr. Henderson, sues a construction company, BuildRight Inc., after faulty work led to significant water damage in his house. The court rules in favor of Mr. Henderson, awarding him $75,000 to cover repairs and other related costs. BuildRight Inc. experiences financial difficulties and takes a full year to pay the judgment. Mr. Henderson is entitled to postjudgment interest on the $75,000 from the date the judgment was recorded until BuildRight Inc. finally pays him. This interest accounts for the financial value Mr. Henderson lost by not having access to his awarded funds for that year, allowing him to be made whole despite the delay.