Indiana Does Not Have Commercial Usury Laws

Apologies for the lack of content the past 30 days.  Significant personal and business commitments have gotten in the way.  I'm alive and well, however.

Sometimes I'm asked whether Indiana has commercial interest rate caps or, in other words, whether there are usury laws applicable to business loans.  Black's Law Dictionary defines "usury" as "the laws of a jurisdiction regulating the charging of interest rates" or "an unconscionable and exorbitant rate or amount of interest." 

Based on my experience and understanding of Indiana law, there are no statutory caps on interest rates for commercial loans.  This is not to suggest that, for instance, a default interest rate of some massive amount (say, 90% per annum) would ultimately be enforceable, if challenged in court.  I'm only passing along that Indiana's legislature is "hands off" when it comes to regulating interest charged on business loans.    

(There are, however, so-called usury laws applicable to consumer loans, which are not the subject of today's post.)

To my knowledge the only statute that could possibly fall into the category of a commercial rate cap is Indiana Code 24-4.6-1-101, sometimes called the "Post-Judgment Interest Statute," which generally provides for a post-judgment interest rate of eight percent (8%) per annum.  The rate runs from the date of the Court finding (judgment) until the date the defendant (borrower/guarantor) satisfies the judgment.  Why could this be labeled a cap?  Because 8% could be less than the rate called for in the underlying promissory note, especially if the note provided for default interest.  

Prior Posts.

• What Is Indiana's Post-Judgment Interest Rate?
• Indiana Supreme Court’s COVID Order Interpreted: Post-Judgment Interest
• Indiana’s Post-Judgment Interest Statute Applies to Awards of Attorney’s Fees

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Part of my practice involves representing parties in disputes arising out of loans in default. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at [email protected]. Also, don’t forget that you can follow me on X @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.

       

Indiana’s Post-Judgment Interest Statute Applies to Awards of Attorney’s Fees

Lesson. A money judgment that includes an award of attorney’s fees accrues statutory post-judgment interest.

Case cite. Piccadilly Mgmt. v. Abney, 215 N.E.3d 1078 (Ind. Ct. App. 2023)

Legal issue. Whether an award of attorney’s fees is separate from a judgment and thus excluded from the calculation of post-judgment interest.

Vital facts. This case was an eviction matter in which the Plaintiff landlord received a judgment against the Defendant tenant for unpaid rent plus attorney’s fees. During post-judgment garnishment proceedings, Plaintiff sought recovery of statutory post-judgment interest on both the unpaid rent and the attorney’s fees components of the judgment.

Procedural history. The trial court denied Plaintiff’s request for post-judgment interest on the award of attorney’s fees. Plaintiff appealed.

Key rules. In Indiana, "post-judgment interest is a creature of statute, borne of legislative authority," and is not subject to being denied by the discretion of a judge.

The relevant statute is Indiana Code Section 24-4.6-1-101, which states:

Except as otherwise provided by statute, interest on judgments for money whenever rendered shall be from the date of the return of the verdict or finding of the court until satisfaction at an annual rate of eight percent (8%) if there was no contract by the parties.

The “shall” in the statute means that prevailing plaintiffs are “automatically entitled” to post-judgment interest.

Further, established Indiana precedent provides that “awards of … attorney's fees … accrue post-judgment interest under the statute.”

Holding. The Indiana Court of Appeals reversed the trial court.

Policy/rationale. Piccadilly arose out of a small claims court proceeding, and the court interpreted a specific small claims statute as prohibiting interest from running on an award of fees. The Court of Appeals saw things differently. For purposes of this blog, lenders should be aware that, when obtaining foreclosure-related judgments, counsel’s fees are to be considered an element of the underlying judgment – not unlike unpaid principal or other damages items – that will accrue statutory post-judgment interest.

Related posts.

• What Is Indiana's Post-Judgment Interest Rate?
• Indiana Supreme Court’s COVID Order Interpreted: Post-Judgment Interest

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Part of my practice involves representing parties in loan enforcement actions. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at [email protected]. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.

Indiana Supreme Court’s COVID Order Interpreted: Post-Judgment Interest

Lesson. Post-judgment interest was not tolled by the Indiana Supreme Court’s 2020 COVID-related emergency orders.

Case cite. Denman v. St. Vincent Med. Grp., Inc., 2021 Ind. App. LEXIS 254 (Ind. Ct. App. 2021)

Legal issue. Whether the Indiana Supreme Court’s order that “no interest shall be due or charged during the tolled period” was unconstitutional with respect to statutory post-judgment interest.

Vital facts. Plaintiff obtained a $4.75 million judgment against Defendant in January 2020. Beginning on March 13, 2020, the Indiana Supreme Court entered a series of orders that dealt with the COVID public health emergency. The order pertinent to the Denman case included the following language:

The Court authorizes the tolling … of all laws, rules, and procedures setting time limits for speedy trials in criminal and juvenile proceedings; public health and mental health matters; all judgments, support, and other orders; and in all other civil and criminal matters before Indiana trial courts. Further, no interest shall be due or charged during this tolled period.

Procedural history. On March 30, 2020, the trial court in Denman ordered that post-judgment interest on Plaintiff’s judgment shall be tolled per the Supreme Court’s order. Plaintiff appealed that ruling and others.

Key rules.

Ind. Code § 24-4.6-1-101 states that: “[e]xcept as otherwise provided by statute, interest on judgments for money whenever rendered shall be from the date of the return of the verdict or finding of the court until satisfaction at: . . . (2) an annual rate of eight percent (8%) if there was no contract by the parties.”

As opposed to prejudgment interest, trial courts have no discretion over whether post-judgment interest will be awarded. Prevailing plaintiffs are awarded it automatically.

Holding. The Indiana Court of Appeals reversed the trial court’s order tolling the accrual of post-judgment interest.

Policy/rationale. The Court found that the trial court erred in applying the Supreme Court’s interest-tolling order to post-judgment interest “because so doing would give the [order] effect beyond the power constitutionally and statutorily allocated to the courts.” Post-judgment interest is a “creature of statute, borne of legislative authority.”

The Court upheld the trial court’s tolling of prejudgment interest, however, which is discretionary. One of its reasons in doing so was the Supreme Court’s “inherent authority,” in an emergency, to supervise all courts of the state. This authority “allows it to suspend trial courts' discretionary decision-making, like the grant of prejudgment interest.” The Court explained:

Permitting grants of prejudgment interest would have cost litigants for a delay they did not cause. As we explained above, Indiana's Tort Prejudgment Interest Statute is meant to influence litigants' behavior. To award prejudgment interest for delays not attributable to any party would not advance that goal. Post-judgment interest, on the other hand, arises just as automatically during a pandemic as it does any other time—and it will continue to do so until the legislature decides otherwise.

The “elephant in the room” is whether the Supreme Court’s order impacted interest accruing on a loan, such as contractual interest under a promissory note. The Indiana Court of Appeals’ treatment of pre- and post-judgment interest in Denman is telling on this point. Interest on a loan is not discretionary (in my view, at least). It is based on a contract entered into between private parties that, arguably, is constitutionally protected from an emergency order from the judicial branch. Contractual interest, not unlike post-judgment interest, arises automatically during the pandemic - as it does any other time. Accordingly, I do not believe that the Supreme Court’s COVID-related orders in 2020 tolled the accrual of interest on loans, and the outcome in Denman supports that conclusion.

Related posts.

• What Is Indiana's Post-Judgment Interest Rate?
• Force Mejeure And The COVID-19 Pandemic: Impact On Indiana Notes and Mortgages

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I represent judgment creditors and lenders, as well as their mortgage loan servicers, entangled in loan-related disputes. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at [email protected]. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.

What Is Indiana's Post-Judgment Interest Rate?

General rule.  Indiana Code 24-4.6-1-101, sometimes called the "Post-Judgment Interest Statute," generally provides for a post-judgment interest rate of eight percent (8%) per annum (the annual rate).  The statute applies to money judgments, including in personam (personal) judgments entered in favor of lenders in commercial foreclosure actions.  The rate runs from the date of the Court finding (judgment) until the date the defendant (borrower/guarantor) satisfies the judgment.

Exception.  8% actually is a statutory cap.  The rate can be less if the original contract sued upon, such as a promissory note, provides for a lesser rate.  In other words, the loan documents will control the post-judgment interest rate if the negotiated rate is less than 8%.  See, I.C. 24-4.6-1-101(1).  Otherwise, the statutory rate of 8% per annum will apply.