The Minnesota Supreme Court has issued a ruling that could significantly affect how businesses and creditors recover prejudgment interest in lawsuits. Prejudgment interest is the additional money awarded on top of damages to compensate for the time value of money lost while a case is pending. Until now, many parties expected this interest to begin accruing from the date they served written notice of a claim. But in its 2025 decision in Scheurer v. Shrewsbury, the Court clarified that this only applies if the lawsuit is filed within two years of that notice. If the case is filed later than that, interest only begins from the date the lawsuit is actually commenced.
The case involved a personal injury claim following a car accident. The plaintiff had served notice of his injury claim in 2017 but waited more than three years to file the lawsuit. When a jury eventually awarded damages, the district court ruled that interest would not run from the 2017 notice date because the claim was filed too late. Instead, it would only begin from the date the lawsuit was actually filed. On appeal, the Supreme Court agreed, confirming that Minnesota law requires a case to be started within two years of giving notice for interest to accrue from that earlier date.
This ruling has major consequences beyond personal injury cases. Businesses, banks, and other creditors often send demand letters or written notices of claims, particularly in disputes involving fraudulent transfers, preference claims, or other tort-related matters. The decision means that if they want prejudgment interest to run from the notice date, they must not delay litigation for more than two years. Otherwise, they lose out on what could amount to a very large sum. In one recent high-stakes case, Kelley v. BMO Harris Bank, prejudgment interest topped $500 million—a powerful reminder of the financial weight these rules carry.
Another important aspect of the ruling is that settlement talks do not extend the two-year period. Even if parties are negotiating in good faith or exchanging written offers, the clock does not pause. If the two years expire before the lawsuit is filed, interest cannot be backdated to the notice date. The Court also made clear that interest is only calculated on the final judgment after deducting collateral recoveries, such as insurance payouts or other reimbursements. This means creditors or lenders cannot claim interest on amounts they have already recouped.
For businesses, the takeaway is straightforward but critical: once a notice of claim or demand letter is issued, the timeline matters. To preserve the ability to collect prejudgment interest from that notice date, a lawsuit must be commenced within two years. Any delay beyond that can dramatically reduce the recovery, particularly in large cases where interest accrual over time can add up to millions. Companies should take care to document when demands are issued, ensure their legal teams are consulted early, and treat settlement negotiations with the awareness that they do not extend the statutory deadline.
The Supreme Court’s ruling in Scheurer v. Shrewsbury underscores the importance of swift action in litigation strategy. Businesses and financial institutions that are slow to move from notice to filing could see significant financial consequences. By aligning internal procedures to monitor demand dates closely and acting promptly when necessary, parties can better protect their ability to collect full recoveries, including the interest that may otherwise be lost through delay.
