Does Utah apply foreign interest rates to domesticated judgments? Sunstone v. Bodell Explained

The Utah Supreme Court recently clarified how postjudgment interest applies to foreign judgments domesticated in Utah, holding that Utah’s postjudgment interest rate governs rather than the rate from the rendering state.

Background and Facts

SunStone Realty Partners obtained a judgment exceeding $9.5 million against Bodell Construction Company in Hawaii following arbitration of construction defect claims. SunStone subsequently domesticated this judgment in Utah under the Utah Foreign Judgment Act (UFJA). When Bodell moved for application of Utah’s 2.29% postjudgment interest rate instead of Hawaii’s 10% rate, the district court granted the motion without analysis.

Key Legal Issues

The court addressed three primary arguments: (1) whether the UFJA requires application of the rendering state’s postjudgment interest rate to achieve uniformity among states; (2) whether contractual choice-of-law provisions mandated Hawaii’s rate; and (3) whether comity principles required deference to Hawaii’s interest rate.

Court’s Analysis and Holding

The Supreme Court affirmed, finding that postjudgment interest constitutes an enforcement mechanism rather than a substantive right. Under UFJA section 78B-5-302(3), foreign judgments are “subject to the same procedures, defenses, enforcement, satisfaction, and proceedings” as Utah judgments. Since postjudgment interest serves to encourage prompt payment and compensate for delayed satisfaction, it functions as an enforcement tool governed by Utah law. The court distinguished cases where postjudgment interest might be substantive, noting this occurs only when specifically awarded as part of the judgment itself.

Regarding the contract argument, the court held that general choice-of-law provisions apply only to substantive law, while procedural matters follow forum law. The contract’s interest provision applied only to “payments due” under the contract, not judgment awards for construction defects. Finally, the court rejected the comity argument because the UFJA provides statutory guidance that removes the issue from judicial discretion.

Practice Implications

This decision provides crucial guidance for practitioners handling foreign judgment domestication. Utah courts will apply Utah’s postjudgment interest rate unless the original judgment specifically includes interest as part of the substantive award. Parties seeking to preserve foreign interest rates should ensure such provisions are explicitly included in the underlying judgment rather than relying on contractual choice-of-law clauses or comity arguments.