Monday, September 7, 2009

Indiana Supreme Court - Judgment Interest Not Mandatory for Family Law Cases

Why cases need read and not just their summaries:  Rovai v. Rovai.  That includes my summaries.

Reading the initial report on the case, it seemed that the Indiana Supreme Court had removed all use of the judgment interest statute from family law proceedings.

What the court actually decided was whether or not judgment interest was mandatory in family law cases.  Here is what the court wrote (for those not knowing what equity means, divorce courts came under the category of equity):

Cleanly put, the question is whether the statute directing interest on money judgments compels post-judgment interest be paid whenever money changes hands pursuant to a dissolution decree, or whether the dissolution statutes grant a court discretion to impose interest, or not, in the course of fashioning what the latter calls a “just and reasonable” division of property. I.C. § 31-15-7-4.


In a straight civil judgment, post-judgment interest and the time value of money bear such a straightforward relationship that courts are led to deploy adages like “interest goes with the principal as the fruit with the tree.” Reese v. Reese, 696 N.E.2d 460, 463 (Ind. Ct. App. 1998). By contrast, judicial decrees that assign debts, personal property, and real estate represent a more complex allocation of economic values. To these are added orders that reflect social objectives, such as enabling children and the leading custodian to continue living in the marital residence.
In such judicial decrees (and we rate the one before us as quite typical), where courts allot everything from physical objects to responsibility for debts of differing character to conditional rights of residence, the time value of money acquires a much more nuanced meaning than it does when a court hears a credit card collection case and says, “Judgment for $5,800.”
We conclude that the statute on civil post-judgment interest does not compel that interest run on the various internal elements of dissolution decrees. Rather, the dissolution statutes confer upon trial courts the authority to order interest or not in the course of fashioning a just and reasonable division of property.
Opinion at 4 - 5.

Interest becomes important any time there a need exists to collect money from an opposing party.  I think I am typical in that when I am collecting a money judgment from a spouse I use the judgment interest to help finance the collection efforts.  I think that might put the importance of judgment interest into proper perspective.

What this means is that from now on, the judge must specifically order judgment interest on money issues.

Also, it means that without a specific order from a judge, there is no interest on child support arrears.

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