In Bean v. Pacific Coast Elevator Corp. (2015) 234 Cal.App.4th 1423, the California Court of Appeal for the Fourth Appellate District held that a trial court erred when it granted prejudgment interest on costs awarded in a personal injury lawsuit.

Plaintiff Daniel Bean was victorious in a personal injury lawsuit in which the jury awarded the him more than $1.2 million in damages. Subsequently, the trial court entered judgment in favor of the plaintiff for $1,306,425, which included $34,830 in costs that the trial court found to be proper. The trial court, however, also ordered prejudgment interest to be calculated on the entire amount of the judgment and the costs.

The Court of Appeal reversed the award of prejudgment interest on the entire sum. The court noted that pursuant to Civil Code Section 3291, the statute provides authority for a party to recover “interest on the damages” in “any action brought to recover damages for personal injury.” Also, where a plaintiff makes a pretrial offer under CCP 998, where the defendant does not accept the offer, and plaintiff then obtains a more favorable judgment, Section 3291 provides that “the judgment shall bear interest” pursuant to CCP 998.

The Court of Appeal analyzed the statutory language and concluded the wording was ambiguous. The court then reviewed applicable case law and concluded that no case has ever held that prejudgment interest may be awarded on costs. The court reasoned that awarding prejudgment interest on costs was improper because costs are not ordinarily considered part of the judgment. Hence, the court found that the trial court erred in awarding prejudgment interest on costs.