In July 2011, the State Legislature amended A.R.S. 44-1201, the statute governing interest rates applicable to legal matters, and changed the interest rate from 10% to 1% plus the prime rate (currently 4.25%) for “interest on any judgment.” Since then, the defense community has argued at the trial court level, often with success, that this change in the law applied to the interest rate applicable to Rule 68 offers. Plaintiff Metzler and her attorneys have always maintained that the amendment did not apply to Rule 68 offers because prejudgment interest is not interest on a judgment.
In today’s opinion, the Court of Appeals issued its third decision on the Metzler case (the first coming in 2011 and the second in 2012), finding that Rule 68 prejudgment interest is an “obligation” that falls under subsection (A) of A.R.S. 44-1201 and is therefore still subject to 10 percent interest, even after the 2011 amendment.
In May 2005, plaintiff Metzler was injured when she slipped and fell on a puddle of water leaking out of a Coca-Cola refrigerator inside a Fry’s grocery store. In May 2007, she offered to settle her case against BCI Coca-Cola for $150,000 via a Rule 68 offer to confess judgment. BCI Coca-Cola refused to settle. In August 2009, a jury awarded Metzler $1.5 million and found Coca-Cola 100% at fault.
“This is a significant decision for all injured persons in the State of Arizona, and for all plaintiffs’ attorneys who utilize Rule 68 offers to confess judgment,” said Metzler’s attorney, Louis Hollingsworth of Hollingsworth Kelly, PLLC.
“Our law firm has been battling the defense bar and often the judiciary in Pima County for over two years on the Rule 68 prejudgment interest rate,” said Michael Kelly, who also represents Metzler. “We have always maintained that when a plaintiff beats her offer to confess judgment, she is entitled to 10 percent prejudgment interest on the amount of the damages award, dating back to the date of the offer. We are very pleased with the Court’s favorable opinion in this matter, which now resolves the issue for all personal injury lawsuits in Arizona.”