California Prejudgment Interest

Prejudgment interest is the amount of interest the law provides to a plaintiff to compensate for the loss of the ability to use the funds. In California, prejudgment interest is also recoverable on tort damages and contract damages.

Author: Brad Nakase, Attorney

Email | Call (800) 484-4610

The interest that a creditor, usually a plaintiff in the case, is entitled to collect, derived from the amount of a judgment, which compensates the creditor for an injury which occurred before the judgment. California Civil Code section 3289 provides guidance and specifies that prejudgment interest on a tort claim is set at seven percent (7 percent) per annum, in simple interest. (Michelson v. Hamada (1994) 29 Cal.App.4th 1455.) Prejudgment interest is recoverable on tort damages under California Civil Code § 3287(a).

Civil Code section 3289 states:

(a) Any legal rate of interest stipulated by a contract remains chargeable after a breach thereof, as before, until the contract is superseded by a verdict or other new obligation.
(b) If a contract entered into after January 1, 1986, does not stipulate a legal rate of interest, the obligation shall bear interest at a rate of 10 percent per annum after a breach.

For the purposes of this subdivision, the term contract shall not include a note secured by a deed of trust on real property.

In this article, our business dispute attorney in San Diego discusses prejudgment interest in California as follows:

1. How can a plaintiff get prejudgment interest on a judgment?

2. What is the prejudgment interest for tort?

3. What is the prejudgment interest for contract?

4. Who is entitled to prejudgment interest?

How can a plaintiff get prejudgment interest on a judgment?

A plaintiff who wins his claim against a defendant may request the court to award prejudgment interest by making a motion for prejudgment interest under California Civil Code 3289. Prejudgment interest is essentially additional money that a court can award based on the interest that the judgment would have earned over the period of time from when the claimant was entitled to receive those monies.

Prejudgment interest serves two purposes: first, it compensates the plaintiff for the loss of the use of his or her money; and, second, it forces the defendant to relinquish any benefit that it has received by retaining the plaintiff’s money in the interim. Prejudgment interest is allowed on most judgments entered in the federal courts from the date of judgment until paid.

What is the prejudgment interest for tort?

A 7% prejudgment interest is also recoverable on tort damages under California Civil Code § 3287(a). Where interest is awarded on tort and other non-contractual claims, the rate is 7% per annum. See California Constitution, Article 15, section 1; and Children’s Hospital and Medical Center v. Bonta, (2002) 97 Cal. App. 4th 740, 775.

What is the prejudgment interest for contract?

Under California Civil Code § 3289(a) “Any legal rate of interest stipulated by a contract remains chargeable after a breach thereof…until the contract is superseded by a verdict or other new obligation.” However, “[i]f a contract does not stipulate a legal rate of interest, the obligation shall bear interest at a rate of 10 percent per annum after breach.” California Civil Code § 3289(b).

Who is entitled to prejudgment interest?

Only prevailing parties can recover interest on prejudgments. What does this mean? In brief, a prevailing party is a party that wins in court or succeeds with its lawsuit.

The winning party does not need to win a set amount. For example, even if the court awards the plaintiff less money or damages than they sought, the winning plaintiff is still the prevailing party and is treated as such.

However, when a settlement occurs before or during the trial, the prevailing party does not exist.

Have a quick question? We answered nearly 2000 FAQs.

See all blogs: Business | Corporate | Employment

Most recent blogs:

How to File a DBA in Los Angeles

File a DBA in Los Angeles County by choosing an available name, filing the FBN statement, and completing newspaper publication. Review fees, renewal terms, tax details, and filing steps for using a fictitious business name in Los Angeles.

Elements of a Breach of Contract in California

California breach of contract claims require proof of a valid agreement, performance, breach, and measurable damages. This article covers breach types, legal defenses, and the damages available in California contract disputes.

Steps on How to Build Business Credit

Build business credit with practical steps that can help your company secure financing, better vendor terms, and stronger growth opportunities. This article covers registration, reporting accounts, timely payments, and common mistakes that can hurt your business credit profile.

What is The Fraud Triangle Theory?

Fraud triangle theory shows how pressure, opportunity, and rationalization can lead to fraud in the workplace. This article covers ways businesses can reduce fraud risk with internal controls, ethical culture, realistic goals, and staff support.

Businesses That Have the Highest Success Rate for Profits

See which business ideas offer strong profit potential, lower startup costs, and room for growth in today's market. This article covers service, mobile, and online ventures that can earn more with practical planning and steady demand.

What is Slander? Meaning, Examples, and Libel vs. Slander

Slander is spoken defamation that harms a person’s reputation through false statements presented as fact to other people. This article covers meaning, examples, defenses, and the difference between slander and libel in defamation law.

What Does A General Counsel Do?

See what a general counsel does, from legal oversight and compliance to risk management, board support, and business strategy. Get a concise look at daily duties, core skills, and the right time for companies to hire one.

What Does Accretion Mean? Definition, Examples, Bond Accounting, and EPS Impact

Accretion is the gradual rise in value through acquisitions, business growth, or discounted bond purchases. This article covers bond accounting, EPS effects, and practical accretion examples in finance.

Sole Proprietorship vs LLC: Key Differences and Considerations

Compare sole proprietorships and LLCs, including liability, taxes, costs, and legal obligations before choosing a business structure. See how asset protection, ownership, compliance, and California rules can affect your decision when starting or changing a business.

LLC versus Corporation: Key Differences, Tax Impacts, Ownership Structures, and Management Considerations

LLC and corporation structures differ in taxes, ownership, management, liability protection, formation rules, and funding options for new businesses. This guide outlines how each entity affects investor access, compliance duties, profit treatment, and long-term business goals before you choose.

All Types of 1099 Forms Explained

A practical guide to 1099 forms, covering common and lesser-known types, filing deadlines, and what each form reports. See how 1099 reporting works, when forms should arrive, and what to do if a form is missing.

Advantages of a Limited Liability Company

Advantages of Limited Liability Company: Key Benefits and Tax Advantages

An LLC offers liability protection, pass-through taxation, flexible management, and simple formation for many business owners. This article covers LLC tax advantages, ownership rules, transfer limits, and key risks tied to personal guarantees.

What Are Leadership Skills? Skills Every Leader Should Know

Leadership skills shape how people motivate teams, build trust, make decisions, and improve performance at work. This article covers key leadership traits, leadership styles, and practical ways leaders strengthen teams and results.

Material Breach of Contract: All You Need To Know

Material breach of contract covers serious violations that defeat an agreement's purpose and may justify termination and damages. This article outlines material, anticipatory, actual, and minor breaches, plus common defenses, court factors, and legal remedies.

What is a Retained Earnings Statement?

A retained earnings statement shows how profits stay in a business after dividends and over each accounting period. It helps assess reinvestment, financial health, and changes in equity using beginning balances, net income, and payouts.

How to Obtain a Business License in California

Get the steps to secure a California business license, from local filing rules to state permit requirements. See costs, renewal rules, approval timing, and when LLCs, online sellers, and regulated trades may need licenses.

The Most Common Types of Business Organizations in The United States

Compare common U.S. business organization types, from sole proprietorships and partnerships to LLCs, corporations, nonprofits, and cooperatives. See how taxes, liability, ownership, and funding can shape the right structure for a new business.

Types of Adaptability Skills You and Your Team Need

Adaptability skills help professionals adjust to workplace changes, solve problems, communicate well, and work with teams across shifting roles. This article covers key adaptability skills, workplace examples, and ways to present those strengths on your resume.

Does a Verbal Agreement Count as a Contract?

Find out when verbal agreements are legally binding in California and what courts review to enforce them. Review Statute of Frauds rules, exceptions, and why written contracts offer stronger proof and protection.

How Much Profit Should a Small Business Make?

Profit margins reveal how revenue and expenses shape small business performance across gross, operating, and net benchmarks. See industry averages and strategies to raise margins through cost control, inventory discipline, and stronger cash flow.

What is ROI? How to Calculate Return On Investment

Return on investment (ROI) measures profit compared to cost and is expressed as a percentage for easy comparison. This guide explains the ROI formula, examples, benefits, limits, and how industries and investors evaluate performance.

What is the Definition of Gross Income in Business Finance?

Gross income in business finance refers to total revenue minus cost of goods sold before taxes and other expenses. This guide explains calculation methods, key differences from net income, and examples for individuals and companies.

What Does EBITDA Mean?

EBITDA measures operating profitability by excluding interest, taxes, depreciation, and amortization to highlight core business performance. Review formulas, examples, comparisons with EBIT and EBT, along with criticisms and practical business context.

Holder In Due Course: Meaning, Rights, Limits, and Examples

Holder in due course covers definition, key rights, limits, and enforcement rules for checks and promissory notes. See consumer protections, the FTC Holder Rule, and practical examples showing when HDC status applies.

Do I Need a Permit to Operate a Vending Machine?

This article explains permits, licenses, taxes, and placement rules for operating vending machines in California businesses and public locations. It covers compliance duties, ADA access, school and property requirements, budgeting basics, and marketing considerations for vending operators.

Open A Restaurant Checklist: California Licenses and Permits (2026)

This California restaurant opening checklist covers permits, health inspections, labor rules, and 2026 wage changes affecting new food businesses. It helps owners avoid shutdowns, control costs, and build a compliant restaurant brand in one of the nation’s toughest markets.

Unruh Act Definition: California Website Accessibility Law

California’s Unruh Civil Rights Act can trigger $4,000 statutory damages per access barrier on inaccessible websites. See how it ties to ADA claims, why intent doesn’t matter, and steps to meet WCAG 2.1 AA.

Merger and Acquisition Due Diligence Checklist

Merger & Acquisition M&A Due Diligence Checklist

M&A due diligence checklist covering financials, contracts, IP, cybersecurity, tax, and regulatory risks before signing a merger or acquisition. Includes who leads diligence, what documents to request, red flags to spot, and how findings shape negotiations and integration.

Who Has More Right - A Trustee Or The Beneficiary

Who Has More Rights a Trustee Or The Beneficiary?

This article explains trustee and beneficiary roles, comparing rights, duties, and limits within trusts and living trusts. It covers fiduciary duties, removal options, shared roles, and tips for choosing and supervising trustees.

Can you change the name of your LLC?

Change your LLC name by filing a Certificate of Amendment and updating records with the state, IRS, and FinCEN. Update bank accounts, permits, contracts, vendors, and marketing materials, or use a DBA for a faster public-name switch.

4,923

California Prejudgment Interest

How can a plaintiff get prejudgment interest on a judgment?

What is the prejudgment interest for tort?

What is the prejudgment interest for contract?

Who is entitled to prejudgment interest?

Free Consultation