Woodline Motor Freight, Inc. v. Troutman Oil Co.
327 Ark. 448, 1997 Ark. LEXIS 117, 938 S.W.2d 565 (1997)
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Rule of Law:
Prejudgment interest is recoverable only when the amount of damages is liquidated as a dollar sum or definitely ascertainable by fixed standards and mathematical computation, without reliance on opinion or discretion, regardless of whether the underlying action is in tort or contract.
Facts:
- Lattermore Belcher's automobile collided with a tractor-trailer driven by William Moore, an employee of Woodline Motor Freight, Inc.
- As a result of the collision, Moore lost control of his truck.
- Moore's truck crashed into a convenience store and gas station owned by Troutman Oil Company, Inc. and leased by Jerry Crosland.
- The building and its contents were destroyed in the crash.
Procedural Posture:
- Troutman Oil Company and Jerry Crosland (plaintiffs) sued Lattermore Belcher and Woodline Motor Freight, Inc. (defendants) in trial court for negligence.
- A jury returned a special verdict, finding Belcher 80% at fault and Woodline 20% at fault.
- The jury awarded Troutman $100,000 for property damage and Crosland $31,426.05 for property damage, plus awards for lost profits.
- Following a post-trial hearing, the trial court entered a judgment that included an award of prejudgment interest on the property damage amounts to Troutman and Crosland.
- Woodline Motor Freight, Inc. (appellant) appealed the trial court's award of prejudgment interest to the Arkansas Supreme Court.
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Issue:
Does a trial court err in awarding prejudgment interest on property damages in a negligence action where the value of the damages was not liquidated and could not be determined without reliance on conflicting opinions and subjective valuations?
Opinions:
Majority - W.H. 'Dub' Arnold, Chief Justice
Yes. A trial court errs in awarding prejudgment interest where the damages are not capable of exact determination, both in time and amount. The court clarified Arkansas law, holding that the test for prejudgment interest is not whether the action is in tort or contract, but whether the damages are liquidated or ascertainable by fixed standards. The court reviewed the historical confusion in its jurisprudence and formally adopted the rule that interest is not recoverable on claims that require opinion or discretion to value. In this case, Troutman's damages were not ascertainable because expert opinions on the cost to repair versus replace the building varied substantially (from $62,939 to $203,128). Similarly, Crosland's damages for the store's contents were based on his own subjective valuation—'to the best of his knowledge'—rather than a fixed, objective standard. Because both claims required reliance on opinion to determine their value at the time of the loss, they were not ascertainable, and the award of prejudgment interest was improper.
Analysis:
This decision clarifies a previously confusing area of Arkansas law by establishing a clear, unified standard for awarding prejudgment interest. It explicitly rejects the distinction between tort and contract actions as the basis for such awards. The holding narrows the scope for prejudgment interest, emphasizing that damages must be objectively certain and calculable at the time of the loss. This makes it more difficult for plaintiffs to recover prejudgment interest in cases involving complex property damage or other claims where valuation depends on expert testimony, subjective assessment, or discretionary judgment.
