When does Utah Code section 15-1-1's ten percent interest rate apply to judgments? Fuller v. Bohne Explained

In Fuller v. Bohne, the Utah Court of Appeals clarified a crucial distinction in Utah’s prejudgment interest statutes that significantly impacts damage calculations in civil litigation.

Background and Facts

The Fullers owned a home and business that were destroyed in a 2007 fire. They sued their insurance agency, Western States Insurance Agency, for negligent misrepresentation after discovering they were severely underinsured and received only $3,000 in coverage. The jury awarded the Fullers $101,595 in property damages. The dispute centered on whether prejudgment interest should be calculated at ten percent under Utah Code section 15-1-1 or at a lower rate under section 15-1-4.

Key Legal Issues

The court addressed two primary issues: first, whether the parties had stipulated to a specific prejudgment interest rate, and second, which statutory provision governed the interest calculation for tort-based judgments versus contract-based claims.

Court’s Analysis and Holding

The Court of Appeals affirmed the trial court’s decision, holding that Utah Code section 15-1-1 applies only to judgments arising from contracts “for the loan or forbearance of any money, goods, or chose in action.” The court relied on the Utah Supreme Court’s decision in USAPower, LLC v. PacifiCorp to limit section 15-1-1’s application to specific contract types. Since the Fullers’ claims sounded in tort, not contract, the court applied Utah Code section 15-1-4, which provides for the federal postjudgment interest rate plus two percent.

Practice Implications

This decision emphasizes the importance of understanding which interest statute applies based on the underlying cause of action. Practitioners should carefully analyze whether claims are truly contract-based or tort-based when calculating potential prejudgment interest. The distinction can be financially significant—here, the difference between ten percent and 2.27% annual interest substantially affected the damage award. Additionally, when stipulating to prejudgment interest, parties must clearly specify both entitlement and rate to avoid post-verdict disputes over calculation methods.