[This decision has been published in Ohio Official Reports at
95 Ohio St.3d 456.]
HARTMANN, APPELLANT, v. DUFFEY ET AL., APPELLEES.
[Cite as Hartmann v. Duffey, 2002-Ohio-2486.]
Judgments—Interest—Plaintiff who enters into a confidential settlement
agreement that has not been reduced to judgment is entitled to interest on
the settlement, which becomes due and payable on the date of settlement—
R.C. 1343.03(A) and (B), construed.
(No. 2001-0741—Submitted March 12, 2002—Decided June 12, 2002.)
APPEAL from the Court of Appeals for Stark County, No. 2000CA00239.
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SYLLABUS OF THE COURT
Pursuant to R.C. 1343.03(A), a plaintiff who enters into a settlement agreement that
has not been reduced to judgment is entitled to interest on the settlement,
which becomes due and payable on the date of settlement.
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FRANCIS E. SWEENEY, SR., J.
{¶1} On April 5, 1999, plaintiff-appellant, Christina R. Hartmann, filed a
medical malpractice action against defendants-appellees Jeffrey A. Duffey, M.D.,
Family Practice Development, Inc., and Community Health Care, Inc. On June 5,
2000, the first day of trial, the parties entered into a confidential settlement
agreement, and the case was dismissed without a formal judgment entry. Seventeen
days later, appellant filed a motion to enforce interest on the settlement amount
pursuant to R.C. 1343.03(A) and (B). Appellees ultimately delivered the settlement
check to appellant on June 30, 2000.
{¶2} Pursuant to R.C. 1343.03(B), the trial court denied appellant’s motion
for interest on the ground that the settlement had not been journalized. In a split
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decision, the court of appeals affirmed on similar grounds. The cause is now before
the court upon the allowance of a discretionary appeal.
{¶3} In this case, we are asked to construe R.C. 1343.03(A) and (B) and
determine whether a plaintiff who enters into a confidential settlement agreement
that has not been reduced to judgment is entitled to interest on the settlement, and,
if so, when that interest begins to accrue.
{¶4} R.C. 1343.03 provides:
{¶5} “(A) In cases other than those provided for in sections 1343.01 and
1343.02 of the Revised Code, when money becomes due and payable upon any
bond, bill, note, or other instrument of writing, upon any book account, upon any
settlement between parties, upon all verbal contracts entered into, and upon all
judgments, decrees, and orders of any judicial tribunal for the payment of money
arising out of tortious conduct or a contract or other transaction, the creditor is
entitled to interest at the rate of ten per cent per annum, and no more, unless a
written contract provides a different rate of interest in relation to the money that
becomes due and payable, in which case the creditor is entitled to interest at the rate
provided in that contract.
{¶6} “(B) Except as provided in divisions (C) and (D) of this section,
interest on a judgment, decree, or order for the payment of money rendered in a
civil action based on tortious conduct, including, but not limited to a civil action
based on tortious conduct that has been settled by agreement of the parties, shall be
computed from the date the judgment, decree, or order is rendered to the date on
which the money is paid.” (Emphasis added.)
{¶7} Appellant argues that pursuant to R.C. 1343.03(A), a plaintiff who
enters into a confidential settlement agreement is automatically entitled to interest
on his or her settlement and that such interest becomes “due and payable” upon
creation of the settlement debt, which she says is the settlement date. Appellees,
however, contend, and the majority of the court of appeals found, that R.C.
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1343.03(A) has no applicability to this case. Instead, appellees state that R.C.
1343.03(B) is the controlling subsection and that under this provision, since no
judgment, decree, or order was rendered in this case, appellant is precluded from
obtaining interest.
{¶8} We reject appellees’ position based upon the plain language of the
statute. We have repeatedly stated that “if the meaning of a statute is clear on its
face, then it must be applied as it is written.” Lake Hosp. Sys., Inc. v. Ohio Ins.
Guar. Assn. (1994), 69 Ohio St.3d 521, 524,
634 N.E.2d 611. Thus, if the statute
is unambiguous and definite, there is no need for further interpretation. State ex
rel. Herman v. Klopfleisch (1995),
72 Ohio St.3d 581, 584,
651 N.E.2d 995. The
wording of R.C. 1343.03(A) is clear. The statute is written in the conjunctive and
expressly provides that a creditor is entitled to interest in the following situations:
(1) when a bond, bill, note, or other instrument of writing becomes due and payable;
(2) upon any book account; (3) upon settlement between parties; (4) upon verbal
contracts entered into; and (5) upon all judgments, decrees, and orders of any
judicial tribunal for the payment of money arising out of tortious conduct or a
contract or other transaction. Based upon the plain language of the statute, a
settlement that has not been reduced to judgment clearly falls within the purview
of R.C. 1343.03(A), and under this subsection, plaintiffs are entitled to interest on
such a settlement.
{¶9} In contrast, R.C. 1343.03(B) is a more narrow provision that is
triggered only when a settlement has been reduced to judgment or where there has
been a decree or order. In such a case, interest is computed from the date of the
judgment, decree, or order. If we were to accept appellee’s interpretation and apply
R.C. 1343.03(B) to the instant type of case, this would render R.C. 1343.03(A)
meaningless as it pertains to settlements not reduced to judgment. Moreover, this
result would preclude a plaintiff who enters into a confidential settlement
agreement from collecting interest, since the existence of a judgment, decree, or
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order is a condition precedent to receiving interest under R.C. 1343.03(B). For
these reasons, we conclude that R.C. 1343.03(B) has no application to the present
case. Instead, we find that R.C. 1343.03(A), which entitles a creditor to interest
upon settlement, is the controlling provision.
{¶10} Having decided that interest may arise from a settlement not reduced
to judgment, we next consider when that interest accrues. To answer this question,
we again look at the language of the statute. Pursuant to R.C. 1343.03(A), the
creditor is entitled to interest “when money becomes due and payable.” Appellant
maintains that in the absence of a specific “due and payable” date, interest becomes
“due and payable” on the date of settlement. Appellant contends that this
interpretation is consistent with the public policy of promoting prompt payment of
settlements, of fully compensating the plaintiff, of ensuring that the plaintiff
receives the use of money that rightfully belongs to her, and of preventing a party
from benefiting from its own delay.
{¶11} We agree with the position advanced by appellant. The plain
language of R.C. 1343.03(A) states that money becomes due and payable “upon
any settlement between parties.” Thus, from this language, it is clear that the date
of settlement is the accrual date for interest to begin to run. At the point of
settlement, a settlement debt is created, and plaintiff becomes a creditor entitled to
the settlement proceeds. Thus, the plaintiff is entitled to be compensated for the
lapse of time between accrual of that right (the date of settlement) and payment.
{¶12} This conclusion is further supported by the public policy reasons
behind the award of interest. In Musisca v. Massillon Community Hosp. (1994), 69
Ohio St.3d 673, 676,
635 N.E.2d 358, a case involving the issue of when the right
to prejudgment interest accrues, we stated that “any statute awarding interest has
the … purpose of compensating a plaintiff for the defendant’s use of money
which rightfully belonged to the plaintiff.” (Emphasis added.) Therefore, the
entitlement to interest, whether it be prejudgment interest, postjudgment interest,
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or postsettlement interest, “ ‘is allowed, not only on account of the loss which a
creditor may be supposed to have sustained by being deprived of the use of his
money, but on account of the gain being made from its use by the debtor.’ ” Landis
v. Grange Mut. Ins. Co. (1998), 82 Ohio St.3d 339, 342,
695 N.E.2d 1140, quoting
Hogg v. Zanesville Canal & Mfg. Co. (1832),
5 Ohio 410, 424,
1832 WL 26. By
assessing interest from the date of settlement as provided for in R.C. 1343.03(A),
we believe that this public policy of fully compensating the plaintiff will be
achieved.
{¶13} Accordingly, we hold that pursuant to R.C. 1343.03(A), a plaintiff
who enters into a settlement agreement that has not been reduced to judgment is
entitled to interest on the settlement, which becomes due and payable on the date
of settlement. We reverse the judgment of the court of appeals and grant appellant’s
motion for interest on the settlement amount, to run from June 5, 2000, to June 30,
2000.
Judgment reversed.
MOYER, C.J., DOUGLAS, RESNICK and PFEIFER, JJ., concur.
COOK and LUNDBERG STRATTON, JJ., dissent.
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COOK, J., dissenting.
{¶14} I agree with Justice Lundberg Stratton that R.C. 1343.03(B) is the
relevant provision for determining the date of interest accrual here. Inasmuch as
this is “a civil action based on tortious conduct,” the settlement between these
parties more appropriately falls under this division and interest would be payable
as of the date the trial court entered its judgment of dismissal following the parties’
settlement agreement.
{¶15} Although I would apply R.C. 1343.03(B) in this case, I recognize that
R.C. 1343.03(A) could apply in an appropriate case. If the settling parties expressly
agree to a term specifying the date on which the settlement proceeds become “due
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and payable,” the parties will have triggered R.C. 1343.03(A) as the relevant
provision governing the calculation of interest. Conversely, if the settlement
agreement contains no such term, R.C. 1343.03(B) becomes the default provision
governing the calculation of interest.
{¶16} The appellant in this case offered no evidence of record that the
parties agreed to settlement terms specifying a date on which settlement proceeds
were due and payable. Absent any proof that such a term was part of the parties’
settlement, the trial court correctly denied Hartmann’s motion to enforce interest.
I would therefore affirm the judgment of the court of appeals.
LUNDBERG STRATTON, J., concurs in the foregoing dissenting opinion.
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LUNDBERG STRATTON, J. dissenting.
{¶17} I dissent from the majority’s interpretation of R.C. 1343.03(A) and
(B). I believe that the majority’s interpretation is based on a misreading of this
section and renders part of subsection (B) meaningless and incapable of ever
applying.
{¶18} R.C. 1343.03(A) refers to a “settlement between parties” as
triggering the accrual of interest. One could accept the majority’s interpretation
only if subsection (B) did not exist. However, subsection (B) states:
{¶19} “Except as provided in divisions (C) and (D) of this section, interest
on a judgment, decree, or order for the payment of money rendered in a civil action
based on tortious conduct, including but not limited to a civil action based on
tortious conduct that has been settled by agreement of the parties, shall be
computed from the date the judgment, decree, or order is rendered to the date on
which the money is paid.” (Emphasis added.)
{¶20} The majority misconstrues subsection (B), which refers to a
settlement arising out of a civil action that has been settled by the parties and
reduced to a judgment, decree, or order. The order or judgment could simply be
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the order of dismissal. There is no requirement that it contain the language of the
settlement. But all civil actions that are settled are terminated by some entry or
order. That entry triggers the accrual of interest.
{¶21} Since subsection (B) specifically refers to a “civil action based on
tortious conduct,” it controls over subsection (A), which only generally refers to
“any settlement between parties” and makes no reference to any court action. It
could be any dispute between parties that was resolved outside court. This is logical
because there would be no “judgment, decree, or order” to start the clock if there
were no lawsuit filed. But if a civil action based on tortious conduct is filed, a
different time frame applies because there is a definite point at which the clock can
begin to run, i.e., the date of the judgment, decree, or order. However, under the
majority’s interpretation, the settlement language of subsection (B) would never
apply because once the case was settled, subsection (A) would kick in and interest
would start. The legislature surely inserted the settlement language in subsection
(B) for a purpose and certainly did not intend it to be merely window dressing. The
majority’s interpretation turns subsection (B) into merely superfluous language;
under its version, the clock started the moment “settled” was uttered regardless of
when the entry went on. A party always would have settled at some point before
actually putting on the dismissal entry. As the majority states, “if the meaning of a
statute is clear on its face, then it must be applied as it is written.” Lake Hosp. Sys.,
Inc. v. Ohio Ins. Guar. Assn. (1994), 69 Ohio St.3d 521, 524,
634 N.E.2d 611.
Thus, if the statute is unambiguous and definite, there is no need for further
interpretation. State ex rel. Herman v. Klopfleisch (1995),
72 Ohio St.3d 581, 584,
651 N.E.2d 995. In addition, the specific controls over the general, and the
legislature has devised a specific procedure to apply once a civil action has been
filed.
{¶22} Therefore, I respectfully dissent.
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The Okey Law Firm., L.P.A., Steven P. Okey and Scott A Washam, for
appellant.
Hanna, Campbell & Powell, L.L.P., Michael Ockerman, Robert L. Tucker
and John R. Chlysta, for appellees.
Allen Schulman, Jr., urging reversal for amicus curiae Ohio Academy of
Trial Lawyers.
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