When can Utah courts award prejudgment interest in contract cases? Lefavi v. Bertoch Explained

The Utah Court of Appeals’ decision in Lefavi v. Bertoch provides important guidance on when prejudgment interest is appropriate in contract disputes, particularly when parties have failed to maintain adequate records.

Background and Facts

Lefavi invested $68,875 in a Las Vegas real estate partnership with Bertoch and Poulson, with an agreement that he would receive his investment back plus his proportional share of profits. When properties were sold between 1983-1988, Bertoch and Poulson fraudulently told Lefavi no proceeds were distributed, while actually receiving over $3.3 million. Lefavi discovered the deception in 1991 and sued for his share of the proceeds. The parties stipulated to investment amounts and total proceeds, though defendants disputed various offsets and expenses.

Key Legal Issues

The case presented two main issues: (1) whether the trial court properly calculated Lefavi’s proportional share of proceeds, and (2) whether prejudgment interest was appropriate when complete accounting records were unavailable and parties had to use accounting experts to reconstruct investments and proceeds.

Court’s Analysis and Holding

The court applied clear error review to the trial court’s factual findings and affirmed the damages calculation. Defendants failed to marshal the evidence supporting the trial court’s findings, which the court noted requires presenting all evidence favorable to the findings before demonstrating clear error. On prejudgment interest, the court applied correctness review and held that damages were calculable with mathematical certainty because the sale proceeds were fixed amounts, investments were determinable, and only disputed offsets lacked credible support.

Practice Implications

This decision demonstrates that breaching parties cannot avoid prejudgment interest simply because they maintained poor records or raise non-meritorious offset claims. When the core contract terms and performance can be established through available evidence, courts will award prejudgment interest even if reconstruction of financial details requires expert testimony. The marshaling requirement remains strictly enforced—appellants challenging factual findings must present all supporting evidence before arguing clear error.