Unreported / Non-Citable
Background
State Compensation Insurance Fund, or SCIF, and ReadyLink Healthcare, Inc. disputed additional premiums under a workers’ compensation policy for 2005. SCIF alleged that ReadyLink owed $555,327.53 after a retroactive calculation. A central issue in the broader litigation was whether per diem payments reflected in ReadyLink’s payroll records counted as compensation. The policy used an estimated premium paid before the policy year, followed by an audit and a final adjustment through either an additional payment or a refund.
The superior court initially entered judgment on the pleadings for SCIF, but the Court of Appeal reversed in 2020 so ReadyLink could pursue its challenges. After remand, the case went to a jury. SCIF presented testimony supporting the premium calculation, while ReadyLink concentrated on waiver and did not rebut that evidence. The jury rejected waiver but found no additional premium due. The trial court then granted judgment notwithstanding the verdict and awarded SCIF $555,327.53. This panel affirmed that posttrial judgment in May 2026 in D083359.
While ReadyLink’s earlier appeal was pending, SCIF sought prejudgment interest under Civil Code section 3287(a). It requested $907,998.38, calculated from 30 days after its invoice through the judgment date. The trial court granted that request. ReadyLink appealed the postjudgment order, arguing either that no interest was warranted or that the court should have awarded interest for a shorter period. It did not challenge SCIF’s arithmetic on this appeal.
The Court’s Holding
The Court of Appeal affirmed. Reviewing the section 3287(a) award de novo, it explained that subdivision (a) makes prejudgment interest nondiscretionary for liquidated damages or damages certain, unlike subdivision (b)’s discretionary treatment of unliquidated contract damages. The statute requires both certainty and vesting. Those requirements compensate the creditor for lost use of its money while limiting interest to circumstances in which the amount owed is sufficiently certain.
The court found the required certainty because SCIF calculated the premium from ReadyLink’s own payroll records, witnesses corroborated the calculation, and ReadyLink neither impeached nor rebutted their testimony. ReadyLink’s trial counsel also expressly declined to dispute the premium calculations. The court rejected ReadyLink’s renewed arguments that SCIF could have declined to collect the premium, acted only prospectively, or did not need the money, identifying them as points already rejected as irrelevant to damages in the earlier appeal.
The right to interest vested when SCIF’s properly calculated invoice had remained unpaid for 30 days. The court also held that requiring a plaintiff to prove damages at trial does not make those damages uncertain under section 3287(a), because damages and their amount are elements of every breach-of-contract action. Finally, subdivision (b) did not authorize shortening the interest period: because the damages were liquidated, the trial court lacked discretion to exclude time before the complaint or during the earlier appeal. The order was affirmed, with costs on appeal to SCIF.
Key Takeaways
- Civil Code section 3287(a) provides nondiscretionary prejudgment interest when damages are certain or capable of calculation and the right to recover has vested.
- A premium calculated from the debtor’s payroll records and supported by unrebutted testimony can satisfy the certainty requirement even when the debtor later disputes liability.
- The need to prove a damages amount at trial does not by itself make that amount uncertain for purposes of section 3287(a).
- When subdivision (a) applies, subdivision (b) does not give the trial court discretion to reduce the interest period.
- The appellate court affirmed the $907,998.38 award and awarded SCIF its costs on appeal.
Why It Matters
The decision applies established prejudgment-interest principles to a retroactively audited workers’ compensation insurance premium. It distinguishes uncertainty about the amount owed from unsuccessful defenses concerning whether the insurer had to collect, could have acted prospectively, or needed the funds. The opinion also treats the earlier affirmance of the premium judgment as an important procedural foundation for resolving the interest dispute.
For contract litigants, the opinion underscores the practical consequences of leaving a calculation unrebutted and focusing trial defenses elsewhere. Once the amount was established as calculable and the statutory vesting date arrived, the interest award was mandatory rather than subject to equitable reduction for the pre-suit or appellate periods. The opinion is unpublished and subject to California’s restrictions on citation and reliance.