Douthwright v. Northeast Corridor Foundation

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.

Facts. Plaintiff was severely injured by Defendant’s negligence when a load of concrete pylons crushed his leg. Plaintiff and Defendant agreed to a settlement in which Defendant promised to pay Plaintiff $2.5 million. Defendant’s insurance paid one million. Defendant denied that they were required to pay the remaining $1.5 million right away. Plaintiff brought an action against Defendant for the rest of the settlement. Defendant paid the $1.5 million, but not the interest before the court date.

Issue. Should Defendant pay the interest?

Held. Yes.
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.