Prejudgment Interest in Family Law & Divorce Cases

In the case of Bufkin vs. Bufkin, the trial court awarded one spouse, “...prejudgment interest, measured from [the Divorce Date] at the rate of 8.25% per annum simple interest, in the sum of One Hundred Twenty Four Thousand Five Hundred Seventy Nine and 12/100 Dollars ($124,579.12).” However, on review by the higher Texas Supreme Court under "abuse of discretion" standards, Wilmer-Hutchins Indep. School Dist v. Smiley, 97 S.W.3d 702, 706 (Tex.App.-Dallas 2003, pet. denied), the Supreme court reasoned that courts do have the equitable power to award prejudgment interest. Perry Roofing Co. v. Olcott, 744 S.W.2d 929 (Tex.1988); Rio Grande Land & Title Co. v. Light, 758 S.W.2d 747 (Tex. 1988) (per curiam). However, where prejudgment interest is sought at common law as an element of the damages, a plaintiff must plead for it. Benavidez, 726 S.W.2d at 25 (citing Republic Nat. Bank v. Northwest Nat. Bank, 578 S.W.2d 109, 117 (Tex. 1978)). A prayer for general relief does not suffice. Id.; Vidor Walgreen Pharm. v. Fisher, 728 S.W.2d 353 (Tex. 1987)(per curiam). In the case of Bufkin, only a general relief prayer was originally sought in the original pleadings, and thus the prejudgment interest was reversed for abuse of discretion by the trial court in awarding prejudgment interest.

There are two separate bases for an award of prejudgment interest: an enabling statute, or general principles of equity. Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507 (Tex. 1998); Granite Const. Co. v. Mendoza, 816 S.W.2d 756 (Tex.App.-Dallas 1991, writ denied). If the claimant's or Petitioner's recovery is predicated on a statutory right, he/she is not required to plead a claim for prejudgment interest. City of Houston v. Fletcher, 166 S.W.3d 479, 493 (Tex.App.-Eastland 2005, pet.denied); Olympia Marble & Granite v. Mayes, 17 S.W.3d 437, 441 (Tex.App.-Houston[1 Dist.] 2000, no pet.)(citing Benadividez v. Isles Const. Co., 726 S.W.2d 23, 25 (Tex. 1987)). Until its repeal in 1997, Article 5069-1.06 of the Texas Revised Civil Statutes provided for prejudgment interest in contract cases. Tex. Rev. Civ. Stat. Ann. Art. 5069-1.03 (Vernon 1987 & Supp. 2007). The statute now governing prejudgment interest is the Texas Finance Code. Tex. Fin. Code Ann. §§ 301.001-304.302 (Vernon 2006); de la Garza v. de la Garza, 185 S.W.3d 924, 927-29 (Tex. App.-Dallas 2006, no pet.). The Finance Code provides for the recovery of prejudgment interest in cases involving extensions of credit, wrongful death, personal injury, property damage or condemnation. Tex. Fin. Code Ann. §§ 302.002, 304.101, 304.201 (Vernon 2006).