Commercial Division Blog
Where Contract Has Choice of Law Provision, Substantive Law of Chosen Jurisdiction Controls Award of Prejudgment Interest
On August 21, 2019, Justice Scarpulla of the New York County Commercial Division issued a decision in Cricket Stockholder Rep, LLC v. Project Cricket Acquisition, Inc., 2019 NY Slip Op. 32469(U), holding that where a contract has a choice of law provision, the substantive law of the chosen jurisdiction controls the award of prejudgment interest, explaining:
Project Cricket does not oppose the motion except to the extent CSR requests the application of New York's statutory rate for prejudgment interest.
Review of the Report indicates that the record amply supports Referee Feinberg recommendation, and I confirm the Report. The Report does not specifically address the issue of whether New York or Delaware's statutory interest rate applies to prejudgment interest because that is beyond the scope of the issue referred.
. . .
In any event, it is undisputed that the Agreement is governed by Delaware law. In a contract action with a choice of law provision, the substantive law of the chosen jurisdiction controls the award of prejudgment interest. Therefore, I direct plaintiff Cricket Stockholder Rep, LLC to submit a proposed judgment for the Tax Refund amount of $2,773,406.00 and also showing the calculation of prejudgment interest for each of the individual Tax Refunds and its corresponding accrual date as confirmed herein.
(Internal quotations and citations omitted) (emphasis added).
The New York statutory rate of prejudgment interest is 9 percent--several times the prevailing Federal Reserve funds rate. This means that, for an old claim (or a claim that has been litigated for a long time), the interest award can be as big as the base damages. Contact Schlam Stone & Dolan partner John Lundin at email@example.com if you or a client have questions regarding the statute of limitations or the calculation of interest on a damages award.