Opinion
ID No. 04C-09-238-FSS.
May 29, 2007.
Upon Plaintiffs' Motion for Prejudgment Interest — DENIED.
Thomas C. Marconi, Esquire Losco Marconi, P.A., 1813 N. Franklin Street, P.O. Box 1677, Wilmington, DE 19899.
Sherry R. Fallon, Esquire Tybout Redfearn Pell, 750 South Madison Street, P.O. Box 2092, Wilmington, DE 19899-2092.
Dear Counsel:
After a jury awarded them $50,000.00 on their underinsured motorist claim, Plaintiffs filed a motion for costs and interest. As the court understands it, Defendant promptly paid the damages and costs, but not prejudgment interest. Now, Plaintiffs argue they are entitled to prejudgment interest because, at its heart, their claim is contractual, and therefore, under Citidel Holding Corporation v. Roven and Moskowitz v. Mayor Council of Wilmington, they are entitled to prejudgment interest as a matter of right. Plaintiffs contend that interest runs from the date of the court-appointed arbitrator's award.
603 A.2d 818, 826 (Del. 1992).
391 A.2d 209, 210 (Del. 1978).
Defendant counters that although it is contractually obligated to Plaintiffs under their insurance policy, Plaintiffs' claim is "an unliquidated claim for personal injury damages." Accordingly, until the jury announced its verdict, Plaintiffs' damages did not fall under Citidel and Moskowitz. Defendants rely on Rollins Environmental Services, Inc. v. WSMW Industries, Inc., which "precludes allowance of interest on damages for bodily harm. . . ."
426 A.2d 1363, 1366 (Del.Super.Ct. 1980) ("The standard which appears to be common to the Delaware cases it that interest has been allowed where the type of damages permitted testimony from which the amount of the recovery was calculable, that is, testimony of a pecuniary nature. This test precludes allowance of interest on dama ges for bo dily injury. . . .").
While Plaintiffs are correct that under Citidel and Moskowitz, "prejudgment interest is awarded as a matter of right," Citidel and Moskowitz, however, do not apply on their facts. Citidel concerned a damages award in a contract action brought by a former, corporate director under an indemnification agreement. Relying on Watkins v. Beatrice Companies, Inc., Citidel holds that "[w]here, as here, the underlying obligation to make payment arises ex contractu, we look to the contract itself to determine when interest should begin to accrue." Under the agreement in Citidel, plaintiff was entitled to his costs of defending certain lawsuits, but when claims were made against him, he was left to fend for himself. Based on the agreement, Citidel decided that interest accrued from when plaintiff specified the reimbursement damages and produced his written promise to repay.
Citidel, 603 A.2d at 826.
Id. at 819.
560 A.2d 1016 (Del. 1989).
Id. at 826.
Id. at 826 n. 10.
In Moskowitz, a municipality collected excessive taxes from a taxpayer. After protracted litigation, this court decided for the taxpayer. The municipality refunded the overpaid taxes together with interest, calculated only from the judgment date. Under Moskowitz:
As a general rule, interest accumulates from the date payment was due the plaintiff, because full compensation requires an allowance for the detention of the compensation awarded and interest is used as a basis for measuring that allowance.
Read together, Citidel and Moskowitz clearly hold that a prevailing plaintiff in a contract case is entitled to prejudgment interest from the date payment was due under the contract. Implicit in Citidel and Moskowitz is the holding that plaintiff must establish how and when defendant breached the contract.
In this case, the court does not know when State Farm breached. Plaintiffs have not made their insurance policy part of the record. Plaintiffs filed an Amended Complaint, ostensibly to add a loss of consortium claim. Actually, the Amended Complaint silently changed the wording of the original Complaint's paragraphs 7 and 8, which touch on the insurance policy. The Amended Complaint reads:
7. Upon learning of the minimum coverage limits carried by [the tortfeasor], Lewis contacted State Farm and notified it that he would be making a claim under his underinsured motorist policy. The underinsured motorist coverage provided that in the event Lewis was injured in a motor vehicle accident and the person responsible for the accident does not have sufficient coverage to fully compensate Lewis for his loss, State Farm would cover the loss up to the coverage limits.
8. State Farm has failed to compensate Mr. Lewis for the losses sustained in the motor vehicle accident as required under the policy. State Farm's failure to provide adequate coverage under Lewis's underinsured motorist policy is a breach of the insurance contract, entitling Lewis to damages.
Instead of pointing to a particular clause in the contract where Defendant promised to cover Plaintiffs' loss at a particular time, Plaintiffs argue that Defendant breached, as a matter of law, when it failed to pay the Superior Court Civil Rule 16.1 arbitrator's award. As to that, Plaintiffs rely on Brown v. Federal Kemper Insurance Company and Continental Insurance Company v. Rizzi. Those cases, however, are not controlling, and they are unhelpful here.
1992 WL 114027, C.A. No. 86C-FE20 (Del.Super.).
1992 WL 20022 (Del.Super.).
Brown was a breach of contract case concerning unpaid PIP benefits. The underlying issue in Brown concerned Plaintiff's entitlement to
PIP coverage for any future and thus undeterminable liability due to the loss of sick leave that Plaintiff may have been able to accumulate if the plaintiff continued to work but is now lost due to his early retirement.Brown awarded prejudgment interest starting sixty days after the collision. Brown held that the plaintiff was only entitled to the uncontested, accrued sick days. And so, Brown awarded plaintiff the uncontested value of the uncontested sick days and prejudgment interest on that specific amount. Rizzi involved an appeal from an award by an insurance arbitration panel pursuant to the parties' insurance policy. Rizzi awarded prejudgment interest from the date of the arbitration panel's award, not from the date of the underlying collision. That was because not until the arbitration panel made its award was the insurance company contractually obligated to pay.
1991 WL 190386, at *1, C.A. No. 86C-FE20 (Del.Super.).
There are common threads running through Brown and Rizzi missing here. In Brown and Rizzi, the damage awards did not turn on disputed, personal injuries. In those cases, the court and the parties knew the disputed damages' extent. In effect, all the court decided was each plaintiff's entitlement under the contract to the claimed amount. In this case, the damage award determined the extent of Plaintiffs' personal injury and their damages.
As a matter of law, State Farm did not breach on the date of: the collision; Plaintiffs' pre-suit demand; the Complaint's filing; or, as Plaintiffs argue, the Rule 16.1 arbitrator's award. Unlike the insurance arbitration in Rizzi, which was called for by the parties' contract, Rule 16.1 arbitration is imposed by court rule. When Defendant demanded a trial de novo here, the arbitrator's award became a nullity. Here, the arbitrator's award exceeded Plaintiffs' demand. (The award was $125,000.00, and Plaintiffs listed the case as subject to arbitration.) Ultimately, the verdict was much lower than Plaintiffs' demand and the arbitrator's award.
Super. Ct. Civ. R. 16.1 (k)(11)(D)(i). See also Stewart v. Moderacki, 552 A.2d 496, 497 (Del.Super.Ct. 1998).
In any event, Plaintiffs are not entitled to ignore their insurance policy's terms, whatever they were, and rely on the Rule 16.1 arbitrator's order as the legal starting-point for prejudgment interest. Simply put, Plaintiffs have failed to make a record from which the court can decide when State Farm was contractually obligated to pay. On the record, and consistent with Rollins Environment, Inc., the court has no reason to hold that interest began to accrue before the jury decided what State Farm owed on Plaintiffs' personal injury claim.
Finally, the court appreciates Plaintiffs' public policy argument that denying prejudgment interest in underinsured motorist cases discourages settlements. This case, however, is a poor example. Plaintiffs demanded policy limits, and apparently, they never backed-off. When they filed their Complaint, they chose the civil case code "CPIA," which stands for "Person al Injury Auto." Eventually, the jury awarded Plaintiffs half of what they demanded. Comparing Plaintiffs' demand with the verdict suggests that public policy supports not awarding prejudgment interest here. In any event, considering how this case began and considering the record presented, Plaintiffs have not presented a factual basis for a specific prejudgment interest award.
In conclusion, Defendant's post-judgment payments moot Plaintiffs' Motion for Costs. But as for prejudgment interest, for the foregoing reasons, Plaintiffs' Motion is DENIED .
IT IS SO ORDERED.