Prejudgment Interest on Equitable Distribution

Florida is an equitable distribution state. Fla. Stat. §61.075 governs the equitable distribution of marital assets in Florida. Distribution of marital assets can take different forms, including a cash payment “to be paid in full or in installments.” Fla. Stat. §61.075(2). We often call this payment an “equalizing payment.”

Fla. Stat. §61.075 does not specifically authorize prejudgment or retroactive interest on an equalizing payment. However, Fla. Stat. §61.075(2) does state, “If the court awards a cash payment for the purpose of equitable distribution of marital assets, to be paid in full or in installments, the full amount ordered shall vest when the judgment is awarded…”

Few Florida cases have addressed prejudgment interest on equitable distribution, but from a review of the appellate decisions thus far, there is a conflict among Florida’s district courts of appeal on this issue.

The Fourth District Court of Appeal, in the case of Catalfumo v. Catalfumo, 704 So. 2d 1095 (Fla. 4th DCA 1997), addressed prejudgment interest and allowed for it. That divorce case lasted over seven years. The trial court declined to award prejudgment interest on the equalizing payment awarded to the wife, stating:

No case cited by the wife allows for the assessment of interest prior to the entry of final judgment, the event which triggers her entitlement to a certain amount of assets. The cases requiring the assessment of prejudgment interest generally involve the occurrence of a wrong—such as a breach of contract or a tort—which causes a loss at a time certain in the past.

The appellate court disagreed with the trial court and instead agreed with the reasoning in a prior case from Alaska that stated prejudgment interest “is not to penalize the losing party, but rather to compensate the successful claimant for losing the use of the money between the date he or she was entitled to it and the date of judgment. A corollary purpose is to prevent the judgment debtor from being unjustly enriched by the use of that money.” The Fourth District Court of Appeal found that the record in the Catalfumo case showed that the husband had the benefit and use of the wife’s share of the assets for more than seven years, and under the particular facts of that case, it would be inequitable for the wife to be denied prejudgment interest on her equalizing payment.

The First District Court of Appeal more recently addressed the issue of prejudgment interest on equitable distribution in the case of Iarussi v. Iarussi, 353 So. 3d 75 (Fla. 1st DCA 2022). In that case, the trial court ordered the husband to make a cash payment to the wife of $1,709,141 as the equalizing payment. The trial court also ordered prejudgment interest on this amount retroactive to the date of the filing of the petition for dissolution of marriage. The First District Court of Appeal found that the trial court erred in applying prejudgment interest.

The First District Court of Appeal differed from the Fourth District Court of Appeal in its approach to prejudgment interest, emphasizing that “the purpose of equitable distribution is to distribute marital assets equitably, and does not deal in prior loss, entitlement, or unjust enrichment.” The First District Court of Appeal did not find statutory authority to add prejudgment interest to an equitable distribution award. The court went on to state:

The separation of married persons inevitably causes temporary distance between people and their property. But marital property, which is all that we deal with when discussing an equitable distribution, is owned by both parties…Because they both jointly owned all of the marital assets subject to distribution, it necessarily follows that neither could have suffered a deprivation of property warranting prejudgment interest prior to entry of final judgment…Dissolution of marriage cases, by their nature, have no winners or losers, no losses or gains, because the distribution of marital assets is simply the separation of existing interests…

The First District Court of Appeal emphasized its inability to add words to a statute. The court noted that Fla. Stat. §61.075(10)(b) does allow the trial court to order “security and a reasonable rate of interest or may otherwise recognize the time value of the money to be paid in the judgment or order” when an equitable distribution is ordered in installments. This secures payments and compensates for the time value lost when a party is unable to make the whole cash payment at the time of judgment. However, the statute does not extend this principle to payments made in full upfront at the time of judgment and in neither scenario is prejudgment interest authorized.

The Third District Court of Appeal, in the very recent case of Vindel v. Stewart, 388 So. 3d 228 (Fla. 3d DCA 2024), disagreed with the First District Court of Appeal’s approach in Iarussi, aligning more with the Fourth District Court of Appeal in citing favorably to Catalfumo, making note of the conflict in its decision. The Third District Court of Appeal in Vindel, reversed the trial court’s denial of prejudgment interest to the wife on her equitable distribution award. In that case, the husband filed for divorce in 2018, but there was a significant delay between the filing of the case and the trial, with the wife having no access to a substantial portion of her share of the martial assets for more than three years. The court did caution that a party in a divorce proceeding is not automatically “entitled” to prejudgment interest on equitable distribution in every case, as the trial court must have broad discretion to determine the most equitable distribution of marital property under the particular circumstances.

Florida family law practitioners and parties should be aware of the conflict among the district courts of appeal as to the applicability of prejudgment interest on equitable distribution. Even in the districts that appear to allow it, it is still a fact-based analysis dependent on the specific circumstances of each case.