In the Missouri Court of Appeals Eastern District DIVISION FOUR
PENZEL CONSTRUCTION COMPANY, ) No. ED110487 INC., ) ) Respondent, ) Appeal from the Circuit Court of ) Cape Girardeau County vs. ) ) Honorable Benjamin F. Lewis JACKSON R-2 SCHOOL DISTRICT, ) ) Appellant. ) Filed: November 8, 2022
Introduction
Jackson R-2 School District (“the District”) appeals the judgment of the 32nd Judicial
Circuit Court denying its motion for an order showing satisfaction of the original judgment
obtained by Penzel Construction Company, Inc. (“Respondent”). The District raises three points
on appeal. In Point I, the District argues the trial court erred in denying its motion for an order
showing satisfaction of the judgment because the money they tendered to Respondent satisfied
the plain and unambiguous meaning of the judgment. In Point II, the District argues the trial
court erred in denying its motion for an order showing satisfaction of the judgment because the
trial court impermissibly altered the judgment by effectively changing the rate of interest due. In
Point III, the District argues the trial court erred in denying its motion for an order showing
satisfaction of the judgment because neither the judgment nor the Prompt Pay Act provide for
compound interest. Because the trial court erroneously applied the law in interpreting the Prompt Pay Act to
provide for compound penalty interest, we grant Point III. Because we grant Point III we grant
Point I. Because Points III and I are dispositive, we decline to address Point II.
We reverse and remand.
Factual and Procedural History
This case comes to us for the third time. The District sought to build an addition to
Jackson High School. As part of the bidding process, the District provided plans to Respondent,
which in turn provided the plans to its subcontractor Total Electric, Inc. Neither Respondent nor
Total Electric recognized errors in the plans. Total Electric submitted a $1,040,444.00 bid to
Respondent for electrical work. On September 15, 2006, the District contracted with Respondent
and Respondent subcontracted with Total Electric. The District notified Respondent it expected
substantial completion within 550 days. Total Electric substantially completed its work
significantly late and claimed the delay resulted from defects in the plans. The District refused to
pay Respondent. Penzel Constr. Co., Inc. v. Jackson R-2 Sch. Dist. (Penzel II), 635 S.W.3d 109,
139 (Mo. App. E.D. 2021), reh'g and/or transfer denied (Aug. 23, 2021), transfer denied (Dec.
21, 2021).
Respondent sued the District for breach of contract and raised a claim under section
34.057 (the “Prompt Pay Act”),1 arguing the District made an implied warranty the plans were
adequate and complete and the defective plans harmed Total Electric. In July 2010, Total
Electric authorized Respondent to pursue Total Electric’s claims. Respondent filed an amended
petition seeking damages for Total Electric and for Respondent’s markup for overhead and profit
caused by the defective plans provided by the District.
1 All statutory citations are to RSMo (2000), unless otherwise indicated.
2 The trial court entered summary judgment for the District. On appeal, this court reversed
and remanded in Penzel Constr. Co., Inc. v. Jackson R-2 Sch. Dist. (Penzel I), 544 S.W.3d 214
(Mo. App. E.D. 2017). On remand, a jury awarded Respondent $800,000.00 in damages. The
trial court’s judgment (“Judgment”), issued November 14, 2019, awarded Respondent: (1) the
$800,000.00 principal; (2) nine percent annual pre-judgment interest beginning May 10, 2020;
(3) Prompt Pay penalty interest “at the rate of one and one half percent (1½%) per month
commencing May 10, 2010”; and (4) $630,884.00 in attorney’s fees. The trial court assessed
costs against the District. The trial court denied the District’s post-trial motions for judgment
notwithstanding the verdict and for a new trial. On appeal, this Court affirmed in Penzel II, 635
S.W.3d 109.
The District paid Respondent and Total Electric $4,585,762.94. The District asserts this
amount includes the judgment principal, pre-judgment and post-judgment interest, attorneys’
fees, costs, and Prompt Pay penalty interest calculated at one and a half percent per month in
simple interest. On February 28, 2022, the District moved under Rule 74.11(c) for an order
showing satisfaction of the Judgment.2 On April 5, 2022, the trial court entered an order and
judgment denying the District’s motion. The trial court found the District had not satisfied the
Judgment because the District calculated the Prompt Pay Act penalty in simple interest. The trial
court reasoned the Prompt Pay Act provides for compounding penalty interest through its use of
a monthly rather than an annual interest provision so the District’s payment did not satisfy the
Judgment.
This appeal follows.
2 All Rule citations are to the Missouri Supreme Court Rules (2022), unless otherwise indicated.
3 Standard of Review
We review a trial court’s ruling on a Rule 74.11(c) motion under the standard in Murphy
v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). McLean v. First Horizon Home Loan, Corp.,
369 S.W.3d 794, 799 (Mo. App. W.D. 2012) (citing Rhodus v. McKinley, 71 S.W.3d 191, 195
(Mo. App. W.D. 2002)). We will affirm the trial court’s judgment unless there is no substantial
evidence to support it, it is against the weight of the evidence, or it erroneously declares or
applies the law. Id. We review questions of statutory interpretation de novo. Truman Med. Ctr.,
Inc. v. Am. Standard Ins. Co., 508 S.W.3d 122, 124 (Mo. App. W.D. 2017) (citing Ivie v. Smith,
439 S.W.3d 189, 202 (Mo. banc 2014)).
Discussion
Point III: Penalty Interest Under the Prompt Pay Act
We take Appellant’s points out of order to ease our analysis. The District argues, in
denying its motion for an order showing satisfaction of the Judgment, the trial court erred by
adding an unexpressed provision of compound interest to the Judgment and to the Prompt Pay
Act. The District argues the Judgment and the Prompt Pay Act provide only for simple interest,
which the District paid in full.
The District argues the trial court erred in finding it granted compound interest not
expressly stated in its Judgment. Medlin v. RLC, Inc., 467 S.W.3d 865, 869 (Mo. App. S.D.
2015). The District argues the Prompt Pay Act, under which the Judgment awarded penalty
interest, is silent on compound interest and therefore provides only for simple interest. The
District contends no case holds the Prompt Pay Act provides for compound interest and cites
cases which reject attempts to read language into statutes or contracts. Stoner v. Evans, 38 Mo.
461 (Mo. 1866); Wallemann v. Wallemann, 817 S.W.2d 548, 549 (Mo. App. E.D. 1991). The
4 District argues it satisfied the Judgment because it paid Respondent “$1,691,346.54 for ‘Prompt
Pay penalty interest at the rate of one and one half percent (1½%) per month commencing May
10, 2010’ for 140.945545 months from May 10, 2010, to February 7, 2022, on the principal sum
of $800,000.00.”
The District argues the trial court erroneously added a compound interest provision to the
Prompt Pay Act despite its duty to interpret statutes according the language written by the
legislature. Peters v. Wady Indus., Inc., 489 S.W.3d 784, 792 (Mo. banc 2016). The District
argues compound interest is disallowed because interest is not listed as subject to the statute’s
penalty provision. § 34.057.1(5). The District argues the Prompt Pay Act provides only for
penalty interest “in addition to the payment due,” to the exclusion of any other amounts
including accumulated penalty interest. § 34.057.1(5). The “payment due” includes: “[E]stimates
or invoices for supplies and services purchased, approved and processed, or final payments,” but
not interest. § 34.057.1(5).
Finally, the District argues Respondent’s reliance on City of Independence for Use of
Briggs v. Kerr Construction Paving Company., Inc., for its assertion the Prompt Pay Act
provides for interest compounding monthly is erroneous. 957 S.W.2d 315, 323 (Mo. App. W.D.
1997). The District argues the statement interest compounded monthly in Briggs was dicta
because the Court’s holding did not concern the proper Prompt Pay Act interest rate. The District
suggests this statement was erroneous because the jury award in Briggs did not include
compound interest. Id. The District argues no case has applied compound interest under the
Prompt Pay Act but other cases have applied simple interest. Fru-Con/Fluor Daniel Joint
Venture v. Corrigan Bros., Inc., 154 S.W.3d 330 (Mo. App. E.D. 2004); Env’t. Prot., Inspection,
& Consulting, Inc. v. City of Kansas City, 37 S.W.3d 360 (Mo. App. W.D. 2000).
5 Respondent argues the District’s claim has not been preserved because its interpretation
of the Prompt Pay Act has been raised for the first time on appeal. Cornerstone Mortgage, Inc. v.
Ponzar, 619 S.W.3d 524, 531 (Mo. App. E.D. 2021). Even if preserved, Respondent argues the
District misinterpreted the Prompt Pay Act. Respondent argues “the statutory text permits a
reasonable reading that if the withheld sum is not timely paid, the monthly interest is added to
the withheld sum, i.e., the payment due, and the next month’s interest accrues based on the total
unpaid amount” and there are no statutory terms “to limit the monthly interest as accruing each
month only on the originally withheld sum.”
Noting we interpret statutes based on their plain language and that of related statutes,
Respondent argues the legislature chose not to include terms limiting interest to “the original
wrongly withheld sum,” demonstrating an intent to impose a penalty rate that compounds each
month. State ex rel. T.J. v. Cundiff, 632 S.W.3d 353, 357 (Mo. banc 2021); State v. Sledd, 949
S.W.2d 643, 646 (Mo. App. W.D. 1997). Respondent emphasizes Missouri’s Prompt Pay Act
provides for penalty interest monthly, unlike non-penalty statutes which provide for simple
interest annually. See § 408.020; § 408.030.1; § 408.040.2; § 408.040.4. Respondent concludes
the legislature “intentionally deviated from its typical per annum rate and elected to adopt a
monthly rate for penalty interest,” manifesting an intent to provide for compound interest in the
Prompt Pay Act. Respondent quotes X.P.E.L. by Next Friend C.T. v. J.L.L.: “the legislature's use
of different terms . . . is presumed to be intentional and for a particular purpose.” 627 S.W.3d
592, 598 (Mo. App. E.D. 2021), reh’g and/or transfer denied (July 13, 2021), transfer denied
(Aug. 31, 2021) (quoting Jefferson ex rel. Jefferson v. Mo. Baptist Med. Ctr., 447 S.W.3d 701,
708 (Mo. App. E.D. 2014)).
6 Respondent argues we would render the legislature’s deliberate use of monthly or annual
terms superfluous if we find statutes provide for simple interest if they do not expressly provide
for compound interest. Nelson v. Crane, 187 S.W.3d 868 (Mo. banc 2006). Respondent cites the
statement in Briggs that Prompt Pay Act interest is compounded monthly. 957 S.W.2d at 323.
Respondent argues there is a strong policy interest in providing for compound interest on
withheld payments to contractors and we liberally construe the Prompt Pay Act. Systemaire, Inc.
v. St. Charles Cnty., 432 S.W.3d 783, 785–86 (Mo. App. E.D. 2014). Respondent cites foreign
cases holding withheld payments warrant compound interest. Brown v. Mountainview Cutters,
LLC, 222 F. Supp. 3d 504, 511 (W.D. Va. 2016); Bowles v. United States, 31 Fed. Cl. 37, 52
(1994).
Analysis
The District’s argument has been preserved. In its motion for an order showing
satisfaction of the trial court’s Judgment, the District argued the language of the Prompt Pay Act
did not provide for compound interest. This properly alerted the trial court of the District’s
argument and permits our review. See, e.g., Daniels v. Bd. of Curators of Lincoln Univ., 51
S.W.3d 1, 6 (Mo. App. W.D. 2001). We note the District violated Rule 84.04(e) in its failure to
include in its appellate brief a preservation statement describing how its claims are preserved for
appellate review.3 Hale v. Burlington N. & Santa Fe Ry. Co., 638 S.W.3d 49, 61 (Mo. App. S.D.
2021), reh'g and/or transfer denied (Dec. 27, 2021). Because the District’s argument is readily
understandable, we exercise our discretion to review its claim ex gratia. We cautiously exercise
this discretion because each time we review a noncompliant brief ex gratia, we send an implicit
message that substandard briefing is acceptable. It is not. Scott v. King, 510 S.W.3d 887, 892
(Mo. App. E.D. 2017). 3 All Rule citations are to the Missouri Rules of Civil Procedure (2022), unless otherwise indicated.
7 We agree with the District the Judgment does not in its terms award compound Prompt
Pay penalty interest. The Judgment awards “Prompt Pay penalty interest “at the rate of one and
one half percent (1½%) per month . . . .” It is a trial court’s prerogative to enforce its own
judgment. McLean, 277 S.W.3d at 876 (citing SD Invs., Inc. v. Michael-Paul, L.L.C., 157
S.W.3d 782, 786 (Mo. App. W.D. 2005)). This power is limited to enforcing the judgment as
originally rendered. SD Invs., Inc., 157 S.W.3d at 786 (citing Mo. Hosp. Ass'n v. Air
Conservation Comm'n of State of Mo., 900 S.W.2d 263, 267 (Mo. App. W.D. 1995)). The
Judgment’s language mirrors the statutory language in the Prompt Pay Act, nothing more.
Therefore, if the District owes compound interest, this obligation must be found in the Prompt
Pay Act.
The primary rule of statutory interpretation is to give effect to legislative intent as
reflected in the plain language of the statute. Truman Med. Ctr., Inc., 508 S.W.3d at 124 (citing
ITT Com. Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993)).
We look beyond the plain meaning of the statute only when the language is ambiguous or would
lead to an absurd or illogical result. Truman Med. Ctr., Inc., 508 S.W.3d at 124 (citing Bateman
v. Rinehart, 391 S.W.3d 441, 446 (Mo. banc 2013)). A statute is ambiguous when its plain
language does not answer the current dispute as to its meaning. Truman Med. Ctr., Inc., 508
S.W.3d at 124 (citing BASF Corp. v. Dir. of Revenue, 392 S.W.3d 438, 444 (Mo. banc 2012)).
As relevant here, the Prompt Pay act provides:
(5) All estimates or invoices for supplies and services purchased, approved and
processed, or final payments, shall be paid promptly and shall be subject to late
payment charges provided in this section. Except as provided in subsection 4 of
this section, if the contractor has not been paid within thirty days as set forth in
8 subdivision (1) of subsection 1 of this section, the contracting agency shall pay
the contractor, in addition to the payment due him, interest at the rate of one and
one-half percent per month calculated from the expiration of the thirty-day period
until fully paid; . . . .
(7) If the contractor, without reasonable cause, fails to make any payment to his
subcontractors and material suppliers within fifteen days after receipt of payment
under the public construction contract, the contractor shall pay to his
subcontractors and material suppliers, in addition to the payment due them,
interest in the amount of one and one-half percent per month, calculated from the
expiration of the fifteen-day period until fully paid. This subdivision shall also
apply to any payments made by subcontractors and material suppliers to their
subcontractors and material suppliers and to all payments made to lower tier
subcontractors and material suppliers throughout the contracting chain;
§ 34.057.1(5), (6). To promote timely payment of contractors, subcontractors, and suppliers on
contracts with public owners for public works construction projects, the Prompt Pay Act “allows
courts to impose late payment interest of 1.5% per month” on top of payments withheld in bad
faith. Env’t Prot., Inspection, Consulting, Inc. v. City of Kansas City, 37 S.W.3d 360, 369 (Mo.
App. W.D. 2000). The statute is silent as to whether it calls for simple or compound interest.
Simple interest is interest computed solely on principal. Wallemann, 817 S.W.2d at 549 (citing
Vaughn v. Graham, 121 S.W.2d 222, 226 (Mo. App. E.D. 1938)). Compound interest is interest
upon interest, where accrued interest is added to the principal sum and the whole treated as a new
principal for the calculation of interest for the next period. Wallemann, 817 S.W.2d at 549 (citing
Vaughn, 121 S.W.2d at 226–27).
9 “This Court must be guided by what the legislature said, not by what the Court thinks it
meant to say.” Metro Auto Auction v. Dir. of Revenue, 707 S.W.2d 397, 401 (Mo. banc 1986)
(citing Mo. Pub. Serv. Co. v. Platte-Clay Elec. Coop., 407 S.W.2d 883, 891 (Mo. 1966)). We
must give effect to statutes as written and cannot add provisions which do not appear either
explicitly or by implication. Knight by & Through Knight v. Knight, 609 S.W.3d 813, 823 (Mo.
App. W.D. 2020), transfer denied (Aug. 27, 2020), transfer denied (Nov. 24, 2020) (citing
Garza v. Valley Crest Landscape Maint., Inc., 224 S.W.3d 61, 64 (Mo. App. E.D. 2007)). We
note that Respondent’s quotation from X.P.E.L. is incomplete. The full quotation provides the
“legislature's use of different terms . . . is presumed to be intentional and for a particular purpose,
and we cannot simply insert terms that the legislature has omitted under the pretense of statutory
construction.” X.P.E.L., 627 S.W.3d at 598 (quoting Jefferson, 447 S.W.3d at 708) (emphasis
added). We decline to add an unexpressed compound interest provision to the Prompt Pay Act.
We are unpersuaded by Respondent’s position we should interpret the Prompt Pay Act to
provide for compound interest simply because it provides for monthly interest. Respondent
concedes “the statute upon which the judgment language relies” does not “say expressly that the
penalty interest shall be simple or compound[.]” Respondent also concedes courts have held the
plain meaning of “annual interest” in our statutes means simple interest. Lucas v. Cent. Mo. Tr.
Co., 162 S.W.2d 569 (Mo. banc 1942). Respondent correctly notes we give meaning to the
deliberate word choices of the legislature but provides no authority suggesting compounding
interest is related to time periods. We can see the legislature’s intent and particular purpose
without adding an unexpressed compound interest provision to the Prompt Pay Act. One and a
half percent interest per month totals eighteen percent per year, significantly higher than the
annual interest rates in the statutes cited by Respondent. The interest awarded by the legislature
10 in the Prompt Pay Act is a penalty amount to fulfill its public policy purpose to promote prompt
payment. Env’t Prot., Inspection, Consulting, Inc., 37 S.W.3d at 369. Respondent is asking us to
do what we cannot do, add a provision to the statute which does not explicitly, or by implication,
appear within it. Knight, 609 S.W.3d at 823. The plain meaning of “per month” is no different
than the plain meaning of “per annum,” other than the obvious time frame. We hold the interest
called for in the Prompt Pay Act is simple interest.
We acknowledge the statement of the Western District in Briggs that the Prompt Pay Act
provides for interest “compounded monthly.” Briggs, 957 S.W.2d at 323. In support, the Court
provided a footnote stating, without elaboration, “[t]he statute refers to the penalty as being ‘one
and one-half percent per month.’” Id. at 326 n.4. The parties agree the compound interest
comment in Briggs is dicta — a gratuitous opinion, unessential to the Court's decision of the
issue before it. Husch & Eppenberger, LLC v. Eisenberg, 213 S.W.3d 124, 132 (Mo. App. E.D.
2006) (citing Richardson v. QuikTrip Corp., 81 S.W.3d 54, 59 (Mo. App. W.D. banc 2002)).
Dicta is not binding. Husch & Eppenberger, LLC, 213 S.W.3d at 132 (citing McPherson v. U.S.
Physicians Mut. Risk Retention Grp., 99 S.W.3d 462, 484 (Mo. App. W.D. 2003)).
The Briggs Court discussed several portions of the statute before concluding disputes
under the Prompt Pay Act must be in good faith to present a valid defense under the statute.
Briggs, 957 S.W.2d at 324. Respondent points out “the decision in Briggs does not state whether
the jury was instructed to compound the penalty interest monthly and failed to do so” and the
Court “was not asked to validate whether the jury properly calculated the penalty interest.”
Respondent states “there is no indication in the opinion that the court even attempted to dissect
how the jury reached its dollar award for penalty interest.” The Court provided no discussion as
to whether the jury awarded simple or compound interest. Id. at 325. Because the Western
11 District’s statement regarding the Prompt Pay Act’s penalty interest “compounded monthly” was
not essential to its holding, it is non-binding dicta. We distinguish our holding from the Briggs
dicta on compound interest because we directly address whether Prompt Pay interest is simple or
compound. Briggs did not.
Because neither the trial court’s Judgment nor the Prompt Pay Act provide for compound
interest, the trial court erred in determining the District owed Respondent compound interest
under its Judgment.
Point III is granted.
Point I: Satisfaction of the Judgment
The District argues the trial court’s Judgment plainly provides for penalty interest of one
and one half percent per month beginning May 10, 2010. The Judgment does not provide for
compound interest and cannot be expanded beyond its terms. The Prompt Pay Act, referenced by
the Judgment, does not provide for compound interest, either. Respondent argues the trial court
acted within its authority in interpreting its Judgment and the Prompt Pay Act to determine the
District must pay compound penalty interest to satisfy the Judgment.
Because the parties agree the Judgment mirrors the Prompt Pay Act, their meaning is the
same. As explained in Point III, the plain language of the Prompt Pay Act requires simple
interest. To the extent the trial court’s denial of the motion for satisfaction of the Judgment is due
to a misinterpretation of the Prompt Pay Act, the trial court erroneously applied the law.
Point I is granted.
12 Conclusion
We reverse and remand for proceedings consistent with this opinion. Because Points III
and I are dispositive, we decline to address Point II.
_______________________________ Philip M. Hess, Judge
Kelly C. Broniec, P.J. and James M. Dowd, J. concur.