Post Judgment Interest in Missouri
This article originally discussed the surprising opinion of the Missouri Court of Appeals for the Eastern District, Thomas Dennis and Sonya Cherry v. Riezman Berger, P.C., et al., No. ED103904 (Mo.App.ED 2016), holding that post judgment interest must be stated in the judgment in order to be collectible. After publication of the article below, the Missouri Supreme Court reversed the Missouri Court of Appeals for the Eastern District, holding that in non-tort cases, interest is awarded automatically and does not need to be stated in the judgment. However, if the amount of interest is not stated in the judgment, then interest shall accrue at the statutory rate, which is currently 9% per year, non-compounded. Below is the original article discussing the decision of the court of appeals, which is now moot.
On September 20, 2016, the Missouri Court of Appeals for the Eastern District handed down a surprising opinion. The court said that post judgment interest must be stated in the judgment. See: Thomas Dennis and Sonya Cherry v. Riezman Berger, P.C., et al., No. ED103904 (Mo.App.ED 2016).
This is surprising, because the Missouri statute allowing post judgment interest does not state that post judgment interest must be awarded in the judgment. As such, many attorneys regard post judgment interest as automatic, and they do not include it in the judgments that they draft. However, many attorneys include post judgment interest in the amount that they garnish pursuant to a judgment that does not award it.
The appeals court, in Dennis v. Riezman, now interprets the statute such that post judgment interest can be collected only if it is allowed by the judgment. A such, collecting post judgment interest on a judgment that does not award post judgment interest may violate the federal Fair Debt Collection Practices Act (FDCPA). It might also give rise to claims under Missouri’s Merchandising Practices Act (MMPA) and a cause of action for wrongful garnishment.
Facts of the Case
Mercy Hospital Jefferson (Mercy) sued Thomas Dennis (Dennis) and Sonya Cherry (Cherry), separately, for unpaid medical expenses. Dennis entered into a consent judgment with Mercy in which he agreed to pay the debt over time. The judgment did not provide for the recovery of post judgment interest. Mercy took a default judgment against Cherry, which likewise did not provide for post judgment interest.
Dennis made several payments pursuant to his consent judgment. Apparently he stopped making the payments. Mercy then retained the law firm of Riezman Berger, P.C. (Riezman), to issue a garnishment on a bank account of Dennis. The garnishment included an amount allegedly owed for post judgment interest. This amount apparently exceeded the balance in the account. The bank apparently withdrew an amount that exceeded the balance of the account, causing overdraft fees to be assessed on the account.
Cherry alleged in her separate lawsuit that Riezman caused three garnishments to be issued pursuant to the default judgment against her. She further claimed that the garnishments improperly included post judgment interest.
FDCPA
Both Dennis and Cherry sued Riezman claiming that the law firm’s collection of post judgment interest violated the FDCPA. The FDCPA states that the collection of any interest not expressly authorized by agreement or permitted by law is a debt collection violation. (See 15 U.S.C 1692.)
A debt collector who violates the FDCPA is liable for the amount of the actual damage caused by the violation. An individual who violates the FDCPA is liable for damages of up to $1,000. In the case of a class action lawsuit, each plaintiff may recover up to $1,000 from each individual who violates the FDCPA. Additionally, each member of the action may recover the lesser of up to $500,000, or one percent of the of the net worth of the debt collector.
Each debtor who prevails in such action may also recover his or her reasonable attorney’s fees as determined by the court and the costs of the action. Conversely, a defendant may recover its attorney’s fees and costs if the court finds that the action was brought in bad faith and for the purpose of harassment. Further, a debt collector may not be liable if the violation was not intentional and if it resulted from a bona fide error.
The FDCPA preempts state law only to the extent such laws are inconsistent with the FDCPA. State laws that provide greater debtor protection are not inconsistent with the FDCPA. Missouri has enacted no equivalent debt collection laws. Accordingly, the FDCPA governs debt collection as to Missouri residents.
Missouri’s Merchandising Practices Act
Dennis and Cherry additionally alleged that Mercy and Riezman violated the MMPA. The MMPA states that it is unlawful for a person to use deception or fraud in the sale of merchandise. The MMPA defines merchandise as goods, intangibles, real estate, and services. Dennis and Cherry claimed that Mercy and Riezman used deception and fraud in relation to the sale of the medical services and in the collection of payment for same. An individual may bring an action for a violation of the MMPA to recover the actual damages suffered by the individual, punitive damages, and the legal fees incurred in the action. The MMPA also allows class action lawsuits.
Wrongful Garnishment
Cherry alleged that the taking of interest on the judgment was a wrongful garnishment under Missouri law. Missouri does not provide a per se wrongful garnishment cause of action. Nonetheless many courts have permitted such action where claimants alleged abuse or misuse of Missouri’s garnishment laws.
Post Judgment Interest in Missouri
Missouri law allows interest to accrue on judgments. (See section 408.040.) A judgment includes the principal amount of the judgment, prejudgment interest, and costs and fees awarded by the court. Payments on a judgment are applied, in order of priority, to post judgment costs, post judgment interest, then the judgment balance.
In all non-tort Missouri cases, post judgment interest shall be allowed on the judgment at the rate of nine percent per year. A judgment on a contract shall bear a greater rate of interest as provided by the contract. In tort actions, post judgment interest shall be allowed at a rate equal to the intended Federal Funds rate, plus five percent. A judgment on a tort claim shall state the post judgment interest rate, which shall remain constant thereafter.
The appeals court in Dennis v. Riezman held that the above language permits post judgment interest only if the judgment allows it. Many judgments entered in Missouri during the past several years probably do not provide for post judgment interest. Nonetheless, many litigants, or their attorneys, have probably collected post judgment interest on such judgments. Such collection would have been improper according to Dennis v. Riezman.
Take-Away
Generally, a Missouri court is not permitted to enter a judgment for something unpled. The appeals court does not discuss whether post judgment interest must be pled. Attorneys will typically plead for pre judgment interest, but not always for post judgment interest. Some erroneously believe, like Riezman, that post judgment interest is automatic. Going forward, prudent attorneys will both plead post judgment interest and include post judgment interest in the judgment.
Sewell Law is located in St. Louis, Missouri and offers legal services in the areas of litigation and asset protection strategies, including LLCs and trusts. Feel free to contact Michael Sewell at (314) 942-3232 or at michael@sewelllaw.net if you have any questions about the subject matter of this article.
This article is for general informational purposes only. It does not include all of the laws and regulations related to the topics discussed in this article, and it is not intended as legal, tax, or investment advice. As such, you should not rely in this article alone in making decisions regarding the subject matter discussed in this article.
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