On appeal from Superior Court of New Jersey, Law Division, Middlesex County.
Morton I. Greenberg, O'Brien and Gaynor. The opinion of the court was delivered by Gaynor, J.A.D.
In this asbestos product liability case, plaintiff appeals from the denial of an award of prejudgment interest for the four months the litigation was delayed because of the court ordered stay following the bankruptcy filing by Johns-Manville Corporation, a codefendant. We are satisfied the trial court did not abuse its discretion in suspending the running of prejudgment interest for this period and affirm.
Defendant cross-appeals from the award of prejudgment interest for the time period preceding Johns-Manville's filing of its petition in bankruptcy, contending for the first time that such award is not required under the circumstances of this case.
The controlling rule, R. 4:42-11(b), provides:
Except where provided by statute with respect to a public entity or employee, and except as otherwise provided by law, the court shall, in tort actions, including products liability actions, include in the judgment simple interest at 12% per annum on the amount of the award from the date of the institution of the action or from a date 6 months after the date the cause of action arises, whichever is later, provided that in exceptional cases the court may suspend the running of such prejudgment interest. The contingent fee of an attorney shall not be computed on the interest so included in the judgment.
The rule as originally adopted did not provide for any exception to the inclusion in a tort action judgment of interest for the specified period prior to the judgment. The 1975 amendment added the clause permitting the discretionary suspension of such interest by the court in exceptional cases. This addition to the rule reflected the urging of Judge Conford in his dissent in Busik v. Levine, 63 N.J. 351, app. dism., 414 U.S. 1106, 94 S. Ct. 831, 38 L. Ed. 2d 733 (1973), that the application of prejudgment interest should be left to the sound discretion of the trial court. Kotzian v. Barr, 81 N.J. 360, 363-364 (1979). In considering what might constitute an "exceptional case" justifying the
exercise of the permitted discretion, the following comments of Judge Conford in his dissent in Busik are instructive:
This court has observed "that the authorization of R. 4:42-11(b) for the judicial suspension of interest extends only to those cases where an award of interest would neither advance the aim of early settlement nor constitute fair compensation to plaintiff for money withheld and used or presumptively used by defendant." Kotzian v. Barr, 152 N.J. Super. 561, 566 (App.Div.1977), rev'd on other grounds 81 N.J. 360.
It should be noted that even before the amendment to the rule permitting the suspension of prejudgment interest, under certain circumstances, it was recognized that fairness and justice would not be served by the running of interest during the period of a plaintiff's inability or unwillingness to proceed with the case where defendant is not at fault. Espin v. Allergan, 127 N.J. Super. 496 (Law Div.1973).
Plaintiff urges that an exceptional circumstance justifying the suspension of interest can arise only through some fault of the plaintiff, citing Quinones v. Passaic Boys Club, 183 N.J. Super. 531, 536 (Law Div.1982), wherein the court concluded "that some fault on the part of plaintiff is necessary to create an 'exceptional case'. . . ." While the prejudgment interest rule may be for the benefit of a ...