Legal Memorandum: Interest Award in Divorce Judgments in MN

Issue: Does the Court have the authority to award interest in a situation where a spouse brought an action against a former spouse to enforce the property distribution provisions of their Marital Termination Agreement, which had been ratified by the trial court?

In Redleaf v. Redleaf, 807 N.W.2d 731 (Minn. Ct. App. 2011), the former wife brought an action against her former husband to enforce the property distribution provisions of their Marital Termination Agreement, which had been ratified by the trial court.  The district court entered judgment in the wife’s favor in the amount of $4.5 million, on which the husband was ordered to pay 10% interest in accordance with the post judgment interest statute, Minn. Stat. § 549.09, subd. 1(c)(2) (which applies to judgments over $50,000).  The husband appealed. 

The husband in Redleaf argued that, if interest was ordered at all, it should be less than the statutory 10% because, he said, such a high rate was inequitable in light of the market interest rate at the time.  Id. at 732.  The court disagreed.  Minnesota law provides that, when a judgment or award is for the recovery of money, “interest shall accrue on the unpaid balance of the judgment or award from the time that it is entered or made until it is paid.”  Id. at 733 (quoting Minn. Stat. § 549.09, subd. 2 (2010)).  Until 2009, § 549.09 imposed post-judgment interest at a variable rate that mirrored the market rate of interest, no matter what size the judgment.  Id.  But in 2009, the legislature added a new provision setting a fixed rate of interest on large judgments, such that now, “[f]or a judgment or award over $50,000 . . . the interest rate shall be ten percent per year until paid.”  Id. (quoting […]