Orders Enforcing Settlement Agreements Are Not Money Judgments Giving Rise to Interest

Lesson. Foreclosure and commercial collection cases are often resolved through an agreement that includes the payment of money to the lender/creditor. If you, as the plaintiff, want the right to collect interest on the settlement payment(s), then you should articulate that right in the settlement agreement or otherwise file an agreed money judgment as part of the deal.

Case cite. Hair v. Goldsberry, 204 N.E.3d 275 (Ind. Ct. App. 2023)

Legal issue. Whether the payment called for in a settlement included consideration of statutory pre- or post-judgment interest.

Vital facts. Plaintiff Hair sued to foreclose on two judgment liens and named a number of defendants, including a mortgagee, which had an interest in the subject real estate. During the course of the litigation, the courts found that the parties had reached a settlement. The resulting court order was that “[defendants] would pay Hair ‘the settlement amount of $18,000’ and that Hair would release the judgment liens.” (The enforceability of the settlement agreement [an exchange of emails, nothing formal] was the subject of a prior appeal, but I’ll spare you those details.)

Procedural history. During subsequent proceedings, Hair sought an order that the settlement included pre- and post-judgment interest over and above the $18K. The trial court denied Hair’s request. The defendants tendered the $18K to Hair, who refused to release the judgment liens and instead filed an appeal seeking interest.

Key rules. “A settlement agreement is a compromise, the purpose of which is to end a claim or dispute and avoid, forestall, or terminate litigation … [and] Indiana law strongly favors settlement agreements, which are governed by general principles of contract law.”

Holding. The Indiana Court of Appeals affirmed the trial court’s ruling that Hair was not entitled to an award of interest.

Policy/rationale. The Court reasoned that an order to comply with a settlement agreement requiring the payment of money is not a money judgment, but rather an order for “specific performance.” As such, the order did not qualify for interest. Had the settlement agreement included a stipulation for the entry of a money judgment or otherwise provided for the payment of interest upon non-compliance, the outcome could have been different. Here, the settlement agreement “did not provide for any payments of interest whatsoever.”

It is not uncommon for parties to enter into a stipulation for the entry of judgment. But, here, the parties did something different. When the parties reached a settlement, they knew — and we presume they took into account — that interest had accrued on the judgment lien of $7,107 entered in 2010 and the judgment lien of $3,225 entered in 2012. The order, which concluded that the parties had settled their dispute and enforced their settlement agreement, merely acknowledged and ratified the agreement and did not alter its terms.

Hair contended that any order requiring the payment of a sum of money is a “money judgment” giving rise to interest on the amount due. The Court disagreed and concluded that the prior order simply was “that an act be done”:

Here, the court did not find and adjudicate that one party owed money to the other party and did not award a money judgment for one party and against the other party. The court ordered that the contract between the parties, the settlement agreement, an accord and satisfaction to resolve disputed claims, be enforced. This was not a money judgment but a decree in equity for specific performance.

Related posts.

• What Is Indiana’s Post-Judgment Interest Rate?
• Indiana Supreme Court’s COVID Order Interpreted: Post-Judgment Interest
• Judgment Requiring Payment Of Sum Certain Through Monthly Installments Until Paid Or “Until Death” Does Not Create Judgment Lien

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I represent parties involved in disputes arising out of loans that are in default. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at john.waller@dinsmore.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.