Webb v. McCarthy

This matter came before the Court to determine the amount of interest due Plaintiff on an award of punitive damages. Plaintiff asserts that the rate of interest at the time of judgment remains in effect notwithstanding subsequent legislative changes in the judgment rate.

On July 2, 1985, judgment was entered for the Plaintiff in the amount of $45,103 in compensatory damages and $100,000 in punitive damages for wrongful death arising out of an automobile accident. In addition, interest on the judgment was ordered to accrue beginning June 7, 1985. Plaintiff then moved for a declaratory judgment against the Defendant’s insurance company to determine whether it was liable for the punitive damage amount. The insurance company appealed the trial court’s decision that it was liable for the punitives. On June 10, 1988, the Supreme Court of Virginia affirmed the trial court.

At the time the trial court rendered judgment, the rate of interest was 12%. Va. Code § 6.1-330.10. On July 1, 1987, the legislature enacted a new judgment rate of 8%. Va. Code § 6.1-330.54. A subsequent change in the *220statutory rate of interest does not effect a prior judgment because interest is contractual in nature and thus subject to the rate at the time the judgment was entered. See Brooke v. Roane & Co., 5 Va. (1 Call) 205 (1798). To hold otherwise would be to allow the Defendant the benefit of a lower rate of interest after an unsuccessful appeal.

Further, the Defendant seeks to apply the current statutory rate to a judgment obtained two years before the statute went into effect. Such a retrospective application of a statute is not permitted in the absence of clear legislative intent to the contrary. Ferguson v. Ferguson, 169 Va. 77 (1937).

For the reasons stated above, interest on the punitive damage award is to be calculated at a rate of 12% from June 7, 1985, until paid.