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Motion for determination of prejudgment interest
1. CASE # CASE NAME HEARING NAME LQ INVESTMENTS, L.P. VS MOTION FOR DETERMINATION OF
KIM PREJUDGMENT INTEREST Tentative Ruling:
This is a lease dispute. Plaintiff LQ Investments, L.P. alleges that defendant Jooyoun Kim (“Kim” or “Defendant”) and his wife, Heanam Grace Kim (collectively the “Kims”) rented commercial space for 25 years at a shopping center known as La Quinta Village to operate a drycleaning business, Mint Dry Cleaners. On May 2, 1996, the Kims and Plaintiff’s predecessor La Quinta Village Limited Partnership entered into a written lease, which was assigned to Plaintiff in 2002. On May 21, 2007, the Kims and Plaintiff entered into a lease amendment, which expired on July 31, 2016. The Kims thereafter continued to occupy the space on a month-to-month basis until July 31, 2021, when the Kims retired and ceased operating the business.
Plaintiff alleges that from 2015 to July 2021, the Kims paid less rent each month than required under the Lease. Plaintiff seeks back rent in the amount of $190,778.92. Plaintiff filed the complaint on November 3, 2021, alleging 1) breach of written lease; and 2) account stated.
The matter went to trial in March 2023 and resulted in a court award of $0 to Plaintiff. Plaintiff appealed this ruling and was successful. The judgment was reversed. The remittitur provides that the trial court is to enter judgment in favor of Plaintiff for the full amount of rent due under the parties’ lease from May 2018 onward, excluding any amounts based on the 150 percent holdover rate. The trial court was instructed to hold an evidentiary hearing or rely on the evidence presented at trial for said determination.
The Court set an evidentiary hearing for 3/27/26. Before the 3/27/26 hearing date, the parties submitted a Stipulation and Manner of Determining Prejudgment Interest, Attorneys’ Fees and Costs (“Stipulation”). In the Stipulation the parties agreed that the unpaid rent that is recoverable is $203,460.59. They agreed the amount of prejudgment interest and attorneys’ fees to be recovered by Plaintiff shall be determined by a noticed motion.
Plaintiff brings this motion seeking a determination of the amount of prejudgment interest to be awarded. It requests $123,430.01 in prejudgment interest. It asserts that prejudgment interest is proper under Civil Code § 3287.
In opposition, the Kims do not dispute/challenge the calculation of the amount sought. Instead, they argue that prejudgment interest should not be allowed at all because the remittitur does not mention prejudgment interest and the trial court lacks jurisdiction to expand the judgment beyond the remittitur. They assert that prejudgment interest cannot be added after appeal.
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In reply, Plaintiff argues that the Court of Appeal’s decision calls for full effect to be given to the written lease. It asserts this lease specifically calls for interest. It argues the request for prejudgment interest is timely.
Analysis:
Under Civil Code § 3287(a),
A person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in the person upon a particular day, is entitled also to recover interest thereon from that day, except when the debtor is prevented by law, or by the act of the creditor from paying the debt. This section is applicable to recovery of damages and interest from any debtor, including the state or any county, city, city and county, municipal corporation, public district, public agency, or any political subdivision of the state.
Under subsection (b), “[e]very person who is entitled under any judgment to receive damages based upon a cause of action in contract where the claim was unliquidated, may also recover interest thereon from the date prior to the entry of judgment as the court may, in its discretion, fix, but in no event earlier than the date the action was filed.” A party entitled to prejudgment interest does not get such an award automatically. (North Oakland Medical Clinic v. Rogers (1998) 65 Cal.App.4th 824, 829.)
Prejudgment interest is not a cost but an element of damages. (Id. at 830.) “[P]rejudgment interest should be awarded in the judgment on the basis of a specific request therefor made before entry of judgment.” (Id.) The Court in North Oakland Medical Clinic states “we think appropriate, requests for prejudgment interest under section 3287 by a successful plaintiff must be made by way of motion prior to entry of judgment, or the request must be made in the form of a motion for new trial no later than the time allowed for filing such a motion.” (Id.at 831.) “A request for interest must be made in the trial court; it cannot be made for the first time on appeal.” (Id. at 829.)
This is a breach of lease matter. Rent was required to be paid on the first day of each motion, under the lease agreement. (Lease, ¶ 4.01.) Rent not paid when due was agreed to bear interest at the maximum rate allowed by law from the date due until paid. (Lease, ¶ 4.04.) The Kims underpaid rent owed from July 2018 to July 2021. Due to this, it appears that interest is appropriate for this unpaid amount under Civil Code § 3287. The parties compromised on the amount owed for post-July 2021 rent.
As such, Plaintiff contends that this amount is arguably unliquidated, but it asserts interest it is allowed under Civil Code § 3287(b) for the $12,681.67 post-July 2021 rent. It has calculated the interest on May 2018 through July 2021 at $117,686.81 and interest on post-July 2021 delinquencies at $5,743.20. Both rates are calculated using the statutory 10% prejudgment rate under Civil Code § 3289(b). The amounts calculated appear appropriate. The Kims do not attack these calculations.
Instead, the Kims argue that no prejudgment interest should be allowed because it is not set forth in the remittitur. “Where there has been a decision upon appeal, the trial court is reinvested with jurisdiction of the cause, but only such jurisdiction as is defined by the terms of the remittitur. The trial court is empowered to act only in accordance with the direction of the reviewing court; action which does not conform to those directions is void.” (Hampton v. Superior Court (1952) 38 Cal.2d 652, 655.) “In interpreting the language of a judicial opinion, the appellate court looks to the wording of
the dispositional language, construing these directions ‘in conjunction with the opinion as whole.’” The disposition in the remittitur states:
The judgment is reversed. On remand, the trial court shall enter judgment in favor of LQ for the full amount of rent due during the parties’ written lease from May 2018 onward, excluding any amounts based on 150 precent holdover rate. LQ shall recover its costs incurred on appeal.
While this language does not specifically mention prejudgment interest, it does not appear that allowing said interest is outside the terms of the remittitur. Elsewhere in the remittitur, the Court stated that “the Kims owed the full amount called for under the written lease so long as the lease was in effect.” It also stated, “[o]n remand, the court must enter judgment in favor of LQ for the full amount due under the lease.” As discussed above, under the lease, Plaintiff was specifically entitled to prejudgment interest on any rent amount not paid by the Kims. (Lease, ¶ 4.04.) (It should be noted the lease agreement attached to this motion is incredibly hard to read.
However, the lease agreement attached to the Complaint is more legible. Based on this document, it is clear that interest is owed on any past due amounts.) Based on the terms of the lease agreement, the Court of Appeal’s language “full amount due under the lease” would include prejudgment interest. As such, an award of prejudgment interest does not appear to be outside the terms of the remittitur.
The Kims also contend that Plaintiff is seeking prejudgment interest too late. However, the Court in North Oakland Medical Clinic states “we think appropriate, requests for prejudgment interest under section 3287 by a successful plaintiff must be made by way of motion prior to entry of judgment, or the request must be made in the form of a motion for new trial no later than the time allowed for filing such a motion.” (North Oakland Medical Clinic, supra, 65 Cal.App.4th at 831.) Judgment has not been entered yet.
As such, this motion prior to entry of judgment appears proper. The Kims cite to no authority, that the Court’s prior judgment that has been reversed would make this motion untimely. Additionally, this argument is disingenuous because the Kims agreed to have the issue of prejudgment interest decided by motion in the parties’ Stipulation. As such, this argument lacks merit. Since the Kims arguments fail, the motion is granted and prejudgment interest is awarded in the amount of $123,430.01.