Alleged Error In Applying a Statute Under a Separate Choice of Law Analysis
In American Home Assurance Co. v. Dykema, Gossett, Spencer, Goodnow & Trigg, 811 F.2d 1077 (7th Cir. 1987) the plaintiff argued that the district court erred in applying the Michigan, not Illinois, prejudgment interest statute under a separate choice of law analysis. American Home Assurance Co., 811 F.2d at 1087.
The district court "concluded that a party's entitlement to prejudgment interest is governed by the law of the state which governs the interpretation of the contract in question." American Home Assurance Co., 811 F.2d at 1088.
Because Michigan law controlled the contract issue, it also controlled the prejudgment interest issue. American Home Assurance Co., 811 F.2d at 1088.
The Seventh Circuit agreed with the district court's conclusion, stating:
"We think that the district court here correctly concluded that an Illinois court would decide the prejudgment interest under the same law as that used to interpret the contract." American Home Assurance Co., 811 F.2d at 1088.
The American Home Assurance Co. court relied upon Morris v. Wibaux, 159 Ill. 627, 43 N.E. 837 (1895), in which the court addressed the issue of whether Montana or Illinois law applied to the issue of prejudgment interest.
The Morris court ultimately awarded prejudgment interest under Montana's statute. Morris, 159 Ill. at 651. See also Johnson v. Continental Airlines Corp., 964 F.2d 1059, 1063-64 (10th Cir. 1992) (holding that prejudgment interest is an integral element of compensatory damages and is not subject to an independent choice of law analysis, particularly since the plaintiffs were attempting "to pick and choose prejudgment interest law in the present case" where they agreed that Idaho law governed the issue of compensatory damages (no prejudgment interest available), but then argued that Colorado law governed the issue of prejudgment interest (prejudgment interest available)).