Prejudgment Interest Now a Reality in Illinois

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The Governor of Illinois signed into law Public Act 102-0006 on May 28, 2021. The effective date of the act is July 1, 2021. The act applies to all wrongful death and personal injury action arising out of negligence, willful and wanton misconduct, intentional conduct, or strict liability.

The prejudgment interest rate is 6% per annum and interest can only run for a total of 5 years. The plaintiff will recover prejudgment interest on all damages except punitive damages, sanctions, statutory attorney’s fees, and statutory costs as set out in the judgment. Prejudgment interest can not be assessed against the State of Illinois, local government, school districts, community college districts, or any other governmental entity.

For claims arising after the effective date of this act, interest begins to run from the date the suit is filed. For actions that accrued before the effective date, interest begins to run on the later of the date of when the suit was filed or the date of the enactment of the statute.

What happens when a defendant is brought into a case a year after the case was filed? Does prejudgment interest on that defendant revert to the original filing of the suit or the time the action was brought against the new defendant? The courts will have to determine how the statute is enforced in that case. Perhaps a motion, prior to trial to have the court clarify its position in that event would be a wise move to know what your client is facing.

Should a plaintiff voluntarily dismiss an action and then refile at a later date prejudgment interest is tolled during that period.

Interest can be cut if the defendant makes a written offer within 12 months after the later of the effective date of the act or the filing of the action whichever is later and not accepted within 90 days of the offer or rejected by the plaintiff, if the judgment is greater than the offer plaintiff will only recover prejudgment interest in the amount that is the difference between the judgment and the highest written offer. If the judgment is lower than the written offer plaintiff will recover no prejudgment interest. Note how the plaintiff is not required to reject in writing. The defendant would be wise to memorialize the plaintiff’s oral rejection in writing to plaintiff’s counsel so that any appropriate dates can be calculated later.

Should a defendant withdraw an offer such will not be considered a rejection by a plaintiff.

We expect many attacks on this act soon including the position that the act violates the Illinois Constitution Due Process Clause. It will be interesting to see how the courts handle this.

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