Illinois Appellate Court Rules Prejudgment Interest Act is Constitutional

August 2023

Jeffrey F. Clement

In Cotton v. Coccaro, 2023 IL App (1st) 22028, the Illinois Appellate Court for the First Judicial District upheld the constitutionality of the Illinois Prejudgment Interest Act, 735 ILCS 5/2-1303 (the “Act”). Prior lower court decisions, specifically Hyland in Cook County, found the Act unconstitutional. However, Hyland did not result in an appeal. Cotton is the first appellate decision to address the constitutionality of the Act. The Cotton decision will have statewide precedential effect unless a contrary ruling is issued by the Illinois Supreme Court or one of the other Illinois appellate district courts.

As background, effective July 1, 2021, the Illinois legislature amended 735 ILCS 5/2-1303 to provide for the awarding of prejudgment interest at a rate of 6% per annum in all actions to recover damages for personal injury or wrongful death resulting from or occasioned by negligence, willful and wanton misconduct, intentional conduct or strict liability. The interest award is to be applied to “all damages” except punitive damages, sanctions, and statutory fees and costs. The only way to avoid interest is for the defendant to make a written settlement offer which ends up being equal to or greater than the ultimate judgment. The written settlement offer must be made within 12 months of July 1, 2021 or the filing of the action, whichever is later. The Act is silent as to when the clock runs as to newly added parties and third-party defendants.

The defendants in Cotton made a host of arguments as to the constitutionality of the Act. We will not focus on all of them. As to whether the Act invades the right to a jury trial, the Appellate Court held prejudgment interest is not a component of tort damages but rather an additur to compensate the plaintiff for delay. As such, the Act did not impinge on the jury’s province to determine damages.

The most notable portion of the Cotton decision addressed the defendant’s due process arguments. The defendants correctly pointed out that the Act allows the double recovery on future damages such as future lost wages. The Court agreed it seemed “illogical” for the Act to allow this because the jury has already adjusted its award of future damages to present cash value. Yet, the Cotton court upheld the Act regardless. The Court indicated that Act only needed to satisfy a “rational basis to pass constitutional muster.” According to the Court, “’[w]here the language of the statute is clear, as it is here, we have an obligation to enforce it. If experience provides that a new statutory provision requires refinement, the General Assembly – not this court – has the authority to rewrite it.” As such, the Cotton Court acknowledged there were portions of the Act that were “illogical” and/or vague, but sidestepped these issues by applying a low review threshold and indicating the General Assembly could refine the Act at a later time.

Addressing the argument that the amendment discriminates against defendants joined more than one year after a plaintiff filed suit, the Court indicated “a reasonable trial court could construe the [Act] such that the grace period is one year from the filing of the action as to that defendant.”

We will continue to monitor this matter as it is unclear if an appeal to the Illinois Supreme Court will be pursued and/or accepted. Cook County previously stayed all motions to declare the Act unconstitutional and/or to toll or extend the deadline make a qualifying offer. As Cotton is now the law of the land, each particular case will need to be reevaluated to determine whether a qualifying settlement offer should be made and/or whether an extension of time should be pursued with the trial court.