Wm. R. Clarke Corp. v. Safeco Insurance

*357 Opinion

A judgment debtor with an equitable right to an offset calculated the amount due under the judgment by subtracting the offset from the principal amount of the judgment, then using the remainder to calculate postjudgment interest due as of the date of payment. The judgment creditor objected, contending the postjudgment interest should have been calculated before the judgment debtor credited itself with the offset. The trial court agreed with the judgment creditor and so do we.

Facts

In 1990, a property owner retained a general contractor (Keller Construction Company, Ltd.) to rehabilitate an old building. Keller obtained a payment bond from Safeco Insurance Company of America, and in early 1991 subcontracted the electric work to Wm. R. Clarke Corporation. Clarke obtained a payment bond from California Bonding and Insurance Company (CBIC), then purchased $208,000 worth of materials from three suppliers. 1 Several months later, the property owner stopped paying Keller, after which Keller stopped paying Clarke, after which Clarke failed to pay the suppliers. In September 1992, Clarke filed a chapter 11 bankruptcy petition. At some point, the suppliers filed creditors’…