Joyce Steel Erection, Ltd. v. Gordon Ray Bonner

In The
Court of Appeals
Sixth Appellate District of Texas at Texarkana

No. 06-14-00064-CV

JOYCE STEEL ERECTION, LTD., Appellant

V.

GORDON RAY BONNER, Appellee

On Appeal from the 202nd District Court
Bowie County, Texas
Trial Court No. 11C0822-202

Before Morriss, C.J., Moseley and Carter,* JJ.
Opinion by Justice Carter

_________________
*Jack Carter, Justice, Retired, Sitting by Assignment
 OPINION
While working on the construction of a building at Red River Army Depot, Gordon Ray

Bonner was pinned between a 150,000-pound concrete tilt wall and a concrete embankment wall.

As a result, Bonner suffered severe injuries to his pelvis, arteries, genitals, bladder, urethra, and

right leg that required numerous surgeries and other medical procedures. Bonner asserted claims

against Joyce Steel Erection, Ltd.,1 Caruthers Construction, Inc., and Self Concrete, Inc., for his

injuries. Caruthers Construction and Self Concrete settled with Bonner before trial. A jury found

that Bonner had incurred $3,500,000.00 in past damages and $3,500,000.00 in future damages. It

also found that Joyce Crane was thirty-four percent responsible for the occurrence; Bonner was

thirty-three percent responsible; and Premier Constructors, Inc.,2 Bonner’s employer, was thirty-

three percent responsible. In addition, the parties stipulated that Bonner’s past medical expenses

were $358,205.52 and that his past lost wages were $147,633.29. After making deductions for

Bonner’s percentage of responsibility and the pretrial settlements,3 the trial court entered judgment

against Joyce Crane in the amount of $2,345,480.69, including prejudgment interest. Joyce Crane

appeals to this Court asserting that the trial court erred in (1) failing to exclude damages attributable

to Premier, the responsible third party, and (2) in failing to follow the declining-principal formula

1
Both parties refer to Joyce Steel Erection, Ltd., as “Joyce Crane” in their briefs; therefore, we will refer to this party
as Joyce Crane as well.
2
Joyce Crane designated Premier as a responsible third party. See TEX. CIV. PRAC. & REM. CODE ANN. § 33.004(a)
(West 2015).
3
Bonner received $1,000,000.00 in settlement from Self Concrete on November 1, 2013, and $2,100,000.00 in
settlement from Caruthers Construction on March 10, 2014. The jury found that the negligence of neither Self
Concrete nor Caruthers Construction proximately caused the occurrence.

2
in calculating prejudgment interest. We find that the trial court did not err in failing to exclude

damages attributable to the responsible third party, but that it erred in its calculation of prejudgment

interest by not following the declining-principal formula. We, therefore, modify the trial court’s

judgment and affirm the judgment, as modified.

I. The Trial Court Did Not Err in Failing to Exclude Damages Attributable to Premier

In Chapter 33 of the Texas Civil Practice and Remedies Code, the Texas Legislature

established a comprehensive system for apportioning fault among all persons responsible for harm

arising from tortious acts or acts that violate the Texas Deceptive Trade Practices–Consumer

Protection Act. TEX. CIV. PRAC. & REM. CODE ANN. §§ 33.001–.017 (West 2015). In so doing,

the Legislature also limited the availability of joint and several liability. See id. Under this system,

the trier of fact determines the percentage of responsibility attributable to each claimant, each

defendant, each settling party, and each designated responsible third party. TEX. CIV. PRAC. &

REM. CODE ANN. § 33.003(a). If a claimant’s responsibility exceeds fifty percent, the claimant is

barred from recovering damages. TEX. CIV. PRAC. & REM. CODE ANN. § 33.001. Further,

Chapter 33 places a limit on a claimant’s potential recovery by requiring that the amount of

recoverable damages be reduced by the percentage of responsibility apportioned to the claimant

and by all the amounts received in settlement. TEX. CIV. PRAC. & REM. CODE ANN. § 33.012(a),

(b); Battaglia v. Alexander, 177 S.W.3d 893, 906 (Tex. 2005). It also limits the liability of a

defendant whose responsibility does not exceed fifty percent to an amount equal to the percentage

of responsibility apportioned to that defendant. TEX. CIV. PRAC. & REM. CODE ANN. § 33.013(a);

Battaglia, 177 S.W.3d at 906. Only when a defendant’s responsibility exceeds fifty percent is it

3
jointly and severally liable for the entire amount of the claimant’s recoverable damages, minus the

amount attributed to the claimant and all settlement proceeds. TEX. CIV. PRAC. & REM. CODE ANN.

§ 33.013(b). The 1995 amendments to Chapter 33 allowed a defendant to significantly reduce the

potential for joint and several liability by enabling it to join a third party who was not sued by the

claimant but who might bear some percentage of responsibility for the claimant’s damages.4 See

Act of May 8, 1995, 74th Leg., R.S., ch. 136, § 1, 1995 Tex. Gen. Laws 971, 972–73 (amended

2003, 2011) (current versions at TEX. CIV. PRAC. & REM. CODE ANN. §§ 33.003(a)(4), 33.004,

33.011(6)).5

Section 33.012 requires the trial court to “reduce the amount of damages to be recovered

by the claimant” by the percentage of the claimant’s responsibility and the sum of all settlements

received. TEX. CIV. PRAC. & REM. CODE ANN. § 33.012(a), (b). In its first point of error, Joyce

Crane argues that Section 33.012 requires the trial court to exclude any damages attributable to the

responsible third party before making deductions for the claimant’s percentage of responsibility

and the value of any settlements. Joyce Crane points to the language used in Section 33.012

requiring the trial court to “reduce the amount of damages to be recovered by the claimant.” It

first points out that “the amount of damages to be recovered by the claimant” is not necessarily the

same as the “damages found by the jury,” citing to health care liability claim cases where, although

the jury may find actual non-economic damages exceeding the statutory cap, the statutory cap is

4
Chapter 33 no longer requires joinder of a responsible third party; rather, a defendant files a motion to “designate” a
responsible third party. TEX. CIV. PRAC. & REM. CODE ANN. § 33.004. In addition, persons who may be designated
responsible third parties have been greatly expanded. See TEX. CIV. PRAC. & REM. CODE ANN. § 33.011(6).
5
See also David W. Holman, Responsible Third Parties, 46 S. TEX. L. REV. 869, 877–89 (2005).
4
“the amount to be recovered by the claimant.” See Valley Grande Manor v. Paredes, No. 13-11-

00752-CV, 2013 WL 3517806, at *2 (Tex. App.—Corpus Christi July 11, 2013, pet. denied) (mem.

op.) (jury’s award of $275,000.00 damages reduced to $250,000.00 by trial court before reducing

amount to be recovered by $10,000.00 settlement). Joyce Crane then argues that since Section

33.0046 prevents the claimant from recovering against the responsible third party, then the amount

of damages caused by the responsible third party is not included in “the damages to be recovered

by the claimant” under Section 33.012. Therefore, it reasons, the trial court should deduct an

amount equal to the percentage of fault apportioned to the responsible third party from the damages

found by the jury to determine “the damages to be recovered by the claimant” under Section

33.012.7 According to Joyce Crane, it is from this reduced figure that the trial court should then

deduct amounts for the claimant’s percentage of responsibility and the sum of all settlements.8

A. Standard of Review

Our analysis of whether Section 33.012 requires the trial court to deduct an amount equal

to the percentage of fault apportioned to a responsible third party from the damages found by the

jury to determine “the damages to be recovered by the claimant” involves statutory construction,

which is a question of law that we review de novo. See CI Sales & Serv., Inc. v. Hinton, 329

6
Section 33.004 provides, in pertinent part, that “a finding of fault against the [responsible third party] . . . does not
by itself impose liability on the [responsible third party] . . . .” TEX. CIV. PRAC. & REM. CODE ANN. § 33.004(i)(1).
7
The parties direct us to, and we have found, no authority that considers this issue.

8
Joyce Crane then uses this reduced figure and proposes a formula for determining Bonner’s responsibility that after
deducting for settlements, results in a take-nothing judgment for Joyce Crane. Since we do not agree that the
Legislature intended that “the amount to be recovered by the claimant” excludes the amounts attributable to a
responsible third party, we do not reach this portion of Joyce Crane’s argument.
5
S.W.3d 475, 500 (Tex. 2010); McIntyre v. Ramirez, 109 S.W.3d 741, 745 (Tex. 2003). Our primary

goal in construing a statute is to ascertain and give effect to the Legislature’s intent. Hinton, 329

S.W.3d at 500; Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 865 (Tex. 1999);

Pilgrim’s Pride Corp. v. Cernat, 205 S.W.3d 110, 117 (Tex. App.—Texarkana 2006, pet. denied).

To ascertain that intent, we look first to the “‘plain and common meaning of the statute’s words.’”

McIntyre, 109 S.W.3d at 745 (quoting State ex rel. State Dep’t of Highways & Pub. Transp. v.

Gonzalez, 82 S.W.3d 322, 327 (Tex. 2002); Fitzgerald, 996 S.W.2d at 865); see TEX. GOV’T CODE

ANN. § 311.011 (West 2013). We construe the statute according to its plain language if the

language is unambiguous. McIntyre, 109 S.W.3d at 745; Fitzgerald, 996 S.W.2d at 865; Cernat,

205 S.W.3d at 117. Further, in determining legislative intent, we look to the statute as a whole and

not isolated portions. In re M.N., 262 S.W.3d 799, 802 (Tex. 2008). We presume that the

Legislature had a purpose for words included in the statute and that it purposefully omitted words

excluded from the statute. Id.; Cernat, 205 S.W.3d at 117. When a statutory term is undefined,

we will not find “a meaning that is out of harmony or inconsistent with other provisions in the

statute.” McIntyre, 109 S.W.3d at 745. Other matters, such as the object to be attained,

circumstances of the statute’s enactment, legislative history, and the consequences of a particular

construction, may also be considered in determining the Legislature’s intent. See TEX. GOV’T

CODE ANN. § 311.023(1)–(3), (5) (West 2013); McIntyre, 109 S.W.3d at 745; Fitzgerald, 996

S.W.2d at 866. However, when a statute is unambiguous, these other matters will not be used to

create an ambiguity. Fitzgerald, 996 S.W.2d at 865–66. Compare Molinet v. Kimbrell, 356 S.W.3d

407, 414 (Tex. 2011) (inappropriate to consider extrinsic aids to alter clear and unambiguous

6
statutory language), with State v. Hodges, 92 S.W.3d 489, 494 (Tex. 2002) (even when statute is

clear and unambiguous, appellate court may consider statute’s objectives and consequences of

particular construction, among other things) (citing TEX. GOV’T CODE ANN. § 311.023 (West

2013)).

B. Plain and Ordinary Meaning

Since Joyce Crane argues that the trial court should have reduced the “amount of damages

to be recovered” by the percentage of fault attributed to the responsible third party, we will examine

the references to the term “recover damages” in the statute. In Chapter 33 of the Civil Practice

and Remedies Code, the Legislature employs variations of “recover damages” at least nine times.

Section 33.001 provides that “a claimant may not recover damages if his percentage of

responsibility is greater than 50 percent.” TEX. CIV. PRAC. & REM. CODE ANN. § 33.001 (emphasis

added). Section 33.003 requires the trier of fact to determine the percentage of responsibility of

the claimant(s), defendant(s), and other persons who caused “the harm for which recovery of

damages is sought.” TEX. CIV. PRAC. & REM. CODE ANN. § 33.003(a) (emphasis added). A

claimant is defined as “a person seeking recovery of damages,” and a defendant “includes any

person from whom . . . a claimant seeks recovery of damages.” TEX. CIV. PRAC. & REM. CODE

ANN. § 33.011(1)–(2) (emphasis added). The phrase “harm for which recovery of damages is

sought” is also used in defining “percentage of responsibility,” “settling person,” and “responsible

third party.” TEX. CIV. PRAC. & REM. CODE ANN. § 33.011(4)–(6) (emphasis added). Finally,

Section 33.012 requires the trial court to reduce “the amount of damages to be recovered by the

claimant . . . by the claimant’s percentage of responsibility” and the sum of all settlements. TEX.

7
CIV. PRAC. & REM. CODE ANN. § 33.012(a), (b) (emphasis added). “Recover,” in the context of a

legal cause of action, means “to gain by legal process” or “to obtain a final legal judgment in one’s

favor.” MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 1040 (11th ed. 2006); see also BLACK’S

LAW DICTIONARY 1389 (9th ed. 2009). In this same context, “recovery” means “[t]he obtainment

of . . . [damages] by a judgment.” BLACK’S LAW DICTIONARY 1389. Thus, the plain and common

usage of these phrases would be to obtain a judgment for damages. There is nothing within these

statutes to indicate that the Legislature meant to use the word “recover” in the phrases “recover

damages,” “recovery of damages,” or “damages to be recovered” in any manner other than its plain

and common usage. Under this usage, “the amount of damages to be recovered by claimant” under

Section 33.012 means simply the amount of money damages that will be obtained by the claimant

in the final judgment. Although the starting point is generally the amount of damages found by

the trier of fact, Section 33.012 establishes the process by which the amount of damages to be

recovered by the claimant is determined.

It is true that there may be amounts of damages allowed by law, such as prejudgment

interest, that are added to the amount of damages found by the trier of fact and that are included in

the amount of damages to be recovered. See Battaglia, 177 S.W.3d at 907. Conversely, in some

instances, there is a statutory limit on the amount of damages a claimant may recover for certain

claims. See, e.g., TEX. CIV. PRAC. & REM. CODE ANN. §§ 74.301–.303 (West 2011) (limiting

amount of damages claimant may recover in health-care liability claims). Joyce Crane argues that

since statutorily-mandated limitations vary the “amount of damages to be recovered by the

claimant,” the Legislature must have intended that the amount of damages attributable to a

8
responsible third party would also be excluded from this amount. However, the limitations on

recovery of certain damages in health-care liability claims are based on specific statutory

provisions. Id. There is no such statutory provision excluding the amount of damages attributable

to a responsible third party from the amount of damages to be recovered by the claimant. Further,

an examination of Chapter 33 shows that this is clearly not what the Legislature intended.

C. What Was Put In, What Was Left Out

In Chapter 33, the Legislature sets forth the process for determining, for each person at

fault for the claimant’s alleged harm, that person’s proportionate responsibility for claimant’s

damages. TEX. CIV. PRAC. & REM. CODE ANN. § 33.003(a). It also places a limit on the amount

of damages the claimant may recover and a limit on the amount for which a defendant bearing fifty

percent or less of the fault may be liable. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 33.012,

33.013(a); Battaglia, 177 S.W.3d at 906; Cernat, 205 S.W.3d at 118.

Under Section 33.003(a), the trier of fact determines the proportionate responsibility of

each claimant, each defendant, each settling person, and each responsible third party. TEX. CIV.

PRAC. & REM. CODE ANN. § 33.003(a). Of these four categories of persons responsible for the

claimant’s damages, the Legislature has provided that only two will limit the amount of damages

to be recovered by the claimant. First, an amount equal to the claimant’s proportionate

responsibility is deducted from this amount. TEX. CIV. PRAC. & REM. CODE ANN. § 33.012(a).

Then, the trial court is directed to further reduce the amount “by the sum of the dollar amounts of

all settlements.” TEX. CIV. PRAC. & REM. CODE ANN. § 33.012(b). Significantly, Section 33.012,

which places limits on the amount of damages the claimant may recover, is silent regarding any

9
amount of damages attributable to a responsible third party. By including deductions for the

claimant’s proportionate responsibility and the amounts of settlements, it appears that the

Legislature intended to reduce the amount of damages to be recovered by the claimant only by

these amounts. At the same time, by excluding any mention of the amount of damages attributable

to a responsible third party, the Legislature expressed an intention that the amount of damages to

be recovered by the claimant would not be reduced by this amount.

D. Legislative History

The legislative history of Chapter 33 also lends support to this interpretation. The

Legislature first provided for a determination of the proportionate responsibility of settling persons

in 1987. In that year, the Legislature added Section 33.003 to require the trier of fact to determine

the percentage of responsibility of each claimant, each defendant, and each settling person. Act of

June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 2.06, 1987 Tex. Gen. Laws 37, 41 (amended 1995, 2003)

(current version at TEX. CIV. PRAC. & REM. CODE ANN. § 33.003). The same year, the Legislature

amended Section 33.012, adding provisions requiring the trial court to “reduce the amount of

damages recovered by the claimant” by the percentage of the claimant’s responsibility and

settlements. Act of June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 2.08, 1987 Tex. Gen. Laws 37, 41–

42 (amended 1995, 2003, 2005) (current version at TEX. CIV. PRAC. & REM. CODE ANN.

§ 33.012(a), (b)). Eight years later, the Legislature added the provisions regarding responsible

third parties. Act of May 8, 1995, 74th Leg., R.S., ch. 136, § 1, 1995 Tex. Gen. Laws 971, 972–

73. Although these amendments added the current requirement for the determination of the

percentage of fault of responsible third parties under Section 33.003(a), the Legislature made no

10
provision—nor has it since 1995—for reducing “the amount of damages recovered by the

claimant” under Section 33.012 by the amount of damages attributable to a responsible third party.

See id. This supports our determination that the Legislature did not intend the amount of damages

to be recovered by the claimant to be reduced by the amount of damages attributable to the

responsible third party.

Further, prior to the 1995 amendments, Chapter 33 allowed the claimant to control the

submission of the comparative responsibility issue. See Holman, 46 S. TEX. L. REV. at 876–77.

This greatly affected whether a defendant would, or would not, be held jointly and severally liable.

Id. at 877. For instance, in a situation in which there were three potential defendants, two of whom

were not capable of satisfying any judgment against them, and one of whom could satisfy the entire

judgment (the solvent defendant), the claimant could strategically decide to file suit only against

the solvent defendant. Since only the percentages of responsibility attributed to the claimant,

defendant, and any settling party were submitted under Section 33.003, a claimant could, under

the right circumstances, obtain a jury finding that would result in the solvent defendant being

jointly and severally liable. Under the pre-1995 law, the solvent defendant could only join the

other two defendants as contribution defendants in an effort to recoup some of the money he was

required to pay the claimant. See Act of June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 2.11, 2.11(a),

1987 Tex. Gen. Laws 37, 43 (amended 1995) (current version at TEX. CIV. PRAC. & REM. CODE

ANN. §§ 33.015–.016). However, the percentage of the contribution defendants’ responsibility was

determined as a separate issue. See Act of June 3, 1987, 70th Leg., 1st C.S., ch. 2, § 2.11(a), 1987

Tex. Gen. Laws 37, 43–44 (amended 1995) (current version at TEX. CIV. PRAC. & REM. CODE ANN.

11
§ 33.016(c)). This could lead to a defendant being found jointly and severally liable even if its

responsibility for the occurrence was only minor. For instance, assume the claimant filed suit

against D1 (the solvent defendant) and obtained jury findings that D1 was seventy percent at fault

for $100,000.00 in damages. D1 would be liable to the claimant for $70,000.00. Also, assume D1

joined DA and DB as contribution defendants and obtained a jury finding on the contribution issue

that D1 was twenty percent responsible, DA was thirty percent responsible, and DB was fifty

percent responsible. If DA and DB are insolvent, then D1 must pay claimant $70,000.00, even

though he was only fourteen percent (twenty percent x seventy percent) responsible.

The bill analysis for the bill that contained the 1995 amendments to Chapter 33 makes clear

that the Legislature’s goal in adding the responsible third party provisions was to remedy this

result. House Comm. on State Affairs, Bill Analysis, Tex. S.B. 28, 74th Leg., R.S. (1995). After

setting forth the example in the previous paragraph, the analysis explains,

[I]f DA and DB are insolvent, D1 must pay $70,000 even though D1 actually caused
only 14 percent of the harm. If all of these parties were submitted to the jury on
one question [as provided in S.B. 28], D1 would not have had to pay any more than
$14,000 . . . . SB 28 would correct this problem by requiring all responsible parties
to be apportioned a percentage of the liability at the same time.

Id. at 8. Thus, the Legislature sought to give a liable defendant an effective means of limiting its

potential for joint and several liability. See Holman, 46 S. TEX. L. REV. at 877–79. At the same

time, there is no indication in the bill analysis that the Legislature sought to limit the claimant’s

recovery through the responsible third party amendments.

12
 E. Joyce Crane’s Interpretation is Inconsistent with Other Provisions of Chapter
33

Joyce Crane’s interpretation is also out of harmony with other provisions of Chapter 33

and would foster inconsistent results. This can best be seen in a case in which one of the defendants

is jointly and severally liable. Section 33.013(b)(1) provides that if a liable defendant is found to

be more than fifty percent responsible for the claimant’s damages, he is “jointly and severally

liable for the damages recoverable by the claimant under Section 33.012.” TEX. CIV. PRAC. &

REM. CODE ANN. § 33.013(b)(1). As we have noted, Section 33.012 places a limit on the damages

the claimant may recover by reducing the amount to be recovered by the percentage of the

claimant’s responsibility and the sum of all settlements. The claimant’s recovery from the jointly

and severally liable defendant will be the amount remaining after these reductions. See Dalworth

Restoration, Inc. v. Rife-Marshall, 433 S.W.3d 773, 787 (Tex. App.—Fort Worth 2014, pet. dism’d

w.o.j.) (finding defendant wholly responsible for claimant’s damages does not preclude application

of settlement credit); Taveau v. Brenden, 174 S.W.3d 873, 881–82 (Tex. App.—Eastland 2005, pet.

denied) (jointly and severally liable defendant liable for amount of damages after reduction for

settlements); Sugar Land Props., Inc. v. Becnel, 26 S.W.3d 113, 119–21 (Tex. App.—Houston [1st

Dist.] 2000, no pet.) (same). Consider two fact scenarios. In Scenario No. 1, claimant C files suit

for damages against three defendants, D1, D2, and D3, but settles with D3 for $10,000.00 before

trial. Under the legislative scheme, the trier of fact will determine the percentages of responsibility

for C, Dl, D2, and D3 under Section 33.003. Assume the jury finds C ten percent responsible, D1

sixty-five percent responsible, D2 twenty percent responsible, and D3 five percent responsible,

and assume $100,000.00 in damages. Ignoring prejudgment interest and any contribution claims,
13
under Section 33.012, the trial court would reduce the amount of damages by $10,000.00 (ten

percent x $100,000.00) for C’s percentage of responsibility and by another $10,000.00 for D3’s

settlement, leaving $80,000.00 as the amount of damages recoverable by C. Under Section

33.013(b)(1), D1 is jointly and severally liable for $80,000.00. In Scenario No. 2, assume the same

facts, except that D2 has not been sued by C; rather, assume that D2 was designated as a responsible

third party by D1. Under our interpretation of “the amount of damages to be recovered by the

claimant,” the result is the same in both scenarios, resulting in the claimant being made whole.

However, under Joyce Crane’s proposed interpretation, the trial court would initially reduce the

amount of damages by $20,000.00 (twenty percent x $100,000.00, the amount attributable to the

responsible third party, D2), then by an additional $10,000.00 for C’s percentage of responsibility

and $10,000.00 for D3’s settlement, leaving $60,000.00 as the amount of damages recoverable by

C and payable by D1. Thus, this interpretation would result in a less than full recovery by the

claimant and would nullify D1’s joint and several liability under Section 33.013(b)(1), a result the

Legislature could not have intended.9

We find that “the amount of damages to be recovered by the claimant” under Section

33.012 of the Texas Civil Practice and Remedies Code does not exclude damages attributable to a

responsible third party. The trial court did not err in failing to exclude the damages attributable to

the responsible third party, and we overrule Joyce Crane’s first point of error.

9
We recognize that a jointly and severally liable defendant may, in some cases, reap the benefits of large settlements
paid by settling parties that, in effect, also nullify joint and several liability. However, in those cases, the claimant
still makes a full recovery of its damages. That is quite different from the result dictated by Joyce Crane’s
interpretation, which would result in a less-than-full recovery by the claimant and allow the jointly and severally liable
defendant to nullify his joint and several liability through a responsible third party who has paid the claimant nothing.
14
II. The Trial Court Erred in Calculating Prejudgment Interest

In its second point of error, Joyce Crane asserts that the trial court erred in its calculation

of prejudgment interest by failing to follow the “declining-principal” formula as set forth by the

Texas Supreme Court in Battaglia. See Battaglia, 177 S.W.3d at 908; see also Brainard v. Trinity

Universal Ins. Co., 216 S.W.3d 809, 816–17 (Tex. 2006). We agree.

Prejudgment interest is “‘“compensation allowed by law as additional damages for lost use

of the money due as damages during the lapse of time between the accrual of the claim and the

date of judgment.”’” Battaglia, 177 S.W.3d at 907 (quoting Columbia Hosp. Corp. of Houston v.

Moore, 92 S.W.3d 470, 473 (Tex. 2002) (quoting Cavnar v. Quality Control Parking, Inc., 696

S.W.2d 549, 552 (Tex. 1985)); Natural Gas Pipeline Co. of Am. v. Justiss, 397 S.W.3d 209, 225

(Tex. App.—Texarkana 2010), rev’d on other grounds, 397 S.W.3d 150 (Tex. 2012). Since this

case involves personal injury, prejudgment interest accrues on past damages “during the period

beginning on the earlier of the 180th day after the date the defendant receives written notice of a

claim or the date the suit is filed and ending on the day preceding the date judgment is rendered.”

TEX. FIN. CODE ANN. § 304.104 (West 2006). Section 304.104 does not address how settlement

payments received by the claimant during the period in which prejudgment interest is accruing

should be applied. In this case, the trial court applied prejudgment interest to the entire amount of

past damages found by the jury, plus the amounts stipulated to by the parties for past medical

expenses and past lost wages, totaling $4,005,838.81.10 The trial court then applied the settlement

Although the trial court did not reduce this amount by Bonner’s percentage of responsibility, Joyce Crane raised no
10

objection at trial to the trial court’s failure to do so.
15
amounts to the principal ($4,005,838.81), but not to prejudgment interest. This yielded

prejudgment interest in the amount of $621,744.31.11 The parties agree that if the settlement

payments are applied using the declining-principal formula, prejudgment interest would be

reduced to $12,769.13, yielding a final judgment of $1,937,467.32.

In Brainard v. Trinity Universal Insurance Co., a case in which prejudgment interest was

also recoverable under Section 304.104,12 Brainard argued that prejudgment interest should be

applied to the entire amount of damages found by the jury and that the settlement credits should

not be applied until the date the parties moved for judgment. Brainard v. Trinity Universal Ins.

Co., 216 S.W.3d 809, 816 (Tex. 2006). The Supreme Court held that the settlement credit should

be applied as of the date the claimant received the settlement payment. Id. at 816–17. It reasoned

that if the claimant was awarded compensation other than for the lost use of money, it would be a

windfall to the claimant and a penalty for the defendant, and not interest. Id. at 816 (citing

Battaglia, 177 S.W.3d at 907); Justiss, 397 S.W.3d at 225. The court also reaffirmed that “the

11
The trial court’s calculations were:

Amount subject to prejudgment interest $4,005,838.81
($3,500,000.00 + $500,838.81 in stipulated past medical and lost wages)

5% prejudgment interest on $4,005,838.81 for 1021 days $560,273.75
(January 16, 2011 to November 1, 2013)

5% prejudgment interest on $3,005,838.81 for 130 days $53,528.80
(November 2, 2013 to March 10, 2014)

5% prejudgment interest on $905,838.81 for 32 days $7,941.76
(March 11, 2014 to May 12, 2014)

Total Prejudgment Interest $621,744.31

Although Bonner characterizes Brainard as “an underinsured motorist case,” the prejudgment interest considered
12

by the court applied to the underlying wrongful death action. Brainard, 216 S.W.3d at 815.
16
proper way to apply credits in the calculation of prejudgment interest” is by applying the

“‘declining-principal’ formula,” whereby settlements are credited on the date they are received.

Brainard, 216 S.W.3d at 907 (citing Battaglia, 177 S.W.3d at 907–09). Under the declining-

principal formula, settlement payments are applied “‘first to accrued prejudgment interest as of the

date the settlement payment was made, then to ‘principal,’ thereby reducing or perhaps eliminating

prejudgment interest from that point in time forward.’” Id. (quoting Battaglia, 177 S.W.3d at 908).

Under Brainard and Battaglia,13 the settlement credits in this case were required to be applied first

to the accrued prejudgment interest as of the date of the settlement payment and then to the

principal. We find that the trial court erred in failing to do so.

The parties agree that the correct amount of the judgment in this case under Brainard is

$1,937,467.32. We, therefore, modify paragraph 1(a) of the trial court’s judgment to reflect an

award of actual damages to Bonner in the amount of $1,937,467.32.

We affirm the judgment of the trial court, as modified.

Jack Carter
Justice
Date Submitted: May 21, 2015
Date Decided: June 17, 2015

13
Although Bonner contends Battaglia limited its holding to cases involving jointly and severally liable defendants,
we find no such limitation by the court. To the contrary, the court specifically stated that for a defendant who is not
jointly and severally liable, “a settlement payment would be applied first to accrued interest on that amount as of the
date of the settlement payment.” Battaglia, 177 S.W.3d at 908; see also Alvarez v. Garcia, No. 04-14-00142-CV,
2014 WL 6687529, *3 (Tex. App.—Fort Worth Nov. 26, 2014, no pet.) (mem. op.) (applying settlement credits using
declining-principal formula to non-joint-and-several defendant).
17