On March 11, 2025, the Massachusetts Supreme Judicial Court (the “SJC”) issued a decision concluding that once a losing party satisfies a judgment in full, postjudgment interest stops running even if the losing party then appeals. The decision stands to have a potentially significant impact for Massachusetts litigants’ strategic appellate decisions going forward.
In the case, H1Lincoln, Inc. v. S. Washington St., LLC[1], the defendants, having lost at trial, paid the entire amount of the more than $20 million judgment against them, in full, and proceeded to appeal. They argued that their payment meant that the judgment should therefore have been considered fully satisfied regardless of their appellate rights, and so postjudgment interest should stop running. The Superior Court motion judge disagreed and ruled to allow postjudgment interest to continue to accrue pending appeal.
In taking up the case, the SJC dealt with the issue in the context of a 2021 SJC decision (“Governo”)[2] which had held that conditional payments do not constitute full satisfaction of a judgment. In Governo, the defendants sought to deposit funds with the court (effectively in escrow) pending appeal. The defendant offered to release the deposited funds immediately if the plaintiff did not appeal, but to keep the deposit if an appeal proceeded. The SJC noted that such a conditional payment of a judgment cannot stop the accrual of postjudgment interest, as it prevents the plaintiff from having use of the funds unless it agreed to forfeit its right to appeal.
In H1 Lincoln, the evolved question therefore became: “whether a payment in full by a judgment debtor who intends to appeal is only a ‘conditional payment.’” The SJC concluded that “full payment of a judgment fully satisfies the [postjudgment interest] statutory requirement and terminates the accrual of interest, even if the judgment debtor pursues an appeal.” The SJC supported its rationale by reiterating the established premise that postjudgment interest is not punitive, but rather compensatory. It found support in the postjudgment interest statute’s history, noting that “the purpose of postjudgment interest is to compensate the prevailing party for the loss of the use of money” when a judgment is not immediately paid. The statutory purpose thereby puts “the judgment creditor and the judgment debtor in the same position they would have enjoyed had the debtor paid the judgment promptly.”
Where the plaintiff in such circumstances is made whole by virtue of a fully satisfied judgment, the Court reasoned, there can be no further compensatory need to run the interest clock any further. The Court further noted that it would be contrary to the Legislature’s intent in a statute designed to encourage prompt payment to read the law in a way that would discourage judgment debtors who exercise their right to appeal from paying the entire judgment up front.
Importance of the Decision
As Massachusetts litigators are well aware (but others may not be), statutory postjudgment interest in Massachusetts accrues at an incredible rate of 12% per annum. Such an unusually high interest rate can be a debilitating stumbling block to a party considering an appeal; after all, appeals can take upwards of a year (or more), during which time interest is steadily accruing. The skyrocketing cost of a potential loss plus 12% interest certainly complicates the decision on whether to pursue a meritorious appeal.
This new decision gives would-be appellants more strategic breathing room. If they so choose, such parties can now pay the judgment in full and then prosecute an appeal, knowing they will not be on the hook for endlessly accruing 12% interest. Of course, this strategy is only of interest to parties capable of paying the underlying judgment in the first place. Nonetheless, it adds a layer of flexibility for litigants who might have otherwise written off their appeal rights as prohibitively expensive.
The Natural Next Question – What if the Appeal Succeeds?
The plaintiff in H1 Lincoln argued, unsuccessfully, that it should continue to accrue interest as it did not truly have full use and enjoyment of the judgment as-paid, “because the payment remains subject to risk and uncertainties of appeal.” The SJC was more persuaded by the defendants’ response: that defendants assumed a significant financial risk in paying the judgment because the plaintiff might dissipate all of the funds before the defendants had an opportunity to prevail on appeal. In contemplating this point, the decision proceeded to mention, but not answer, the question of what does happen if the appeal is successful.
Clearly, a successful appeal is pointless if the previously paid judgment proves unrecoverable. Fortunately, courts have the inherent authority to order restitution, as recognized by the Restatement of Restitution § 74, and at least one unreported Massachusetts decision.[3] What remains murky is how such restitution would be handled and executed in practice. The refund process during a successful appeal therefore remains an important consideration for parties involved in both paying judgments and appealing them.
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Ultimately, while the H1 Lincoln decision clarifies postjudgment interest considerations surrounding appellate rights, the issue of restitution in the event of a successful appeal remains a significant consideration for successful and unsuccessful litigants’ strategies in similar cases.
