Brief Fact Summary. Defendant owed Plaintiff a settlement based on an oral agreement to settle Plaintiff’s personal injury claim. Defendant did not pay promptly. This lead to a hearing to determine when and how defendant should pay and what interest is owed.
Synopsis of Rule of Law. A debtor is discharged of his duty to pay interest on a debt when the amount of the debt or duty to pay is undetermined.
Issue. Should Defendant pay the interest?
The court held that the parties would determine how to distribute the money at arbitration, but the court also determined that Plaintiff was entitled to the entire $2.5 million immediately, not after the arbitration.
Because Plaintiff was entitled to the entire $2.5 million immediately after the settlement agreement, the amount of money was not in limbo, and Defendant is not excused from paying interest on it.
Discussion. Because the Defendant was obligated to pay the Plaintiff right away, Defendant is not excused from paying interest.