Title: STATE ex rel. STATE INSURANCE FUND v. ACCORD HUMAN RESOURCES, INC.
Citation: 2003 OK 109, 82 P.3d 1015
Docket Number: 
State: Oklahoma
Issuer: Oklahoma Supreme Court
Date: December 16, 2003

STATE ex rel. STATE INSURANCE FUND v. ACCORD HUMAN RESOURCES, INC. Annotate this Case STATE ex rel. STATE INSURANCE FUND v. ACCORD HUMAN RESOURCES, INC. 2003 OK 109 82 P.3d 1015 Case Number: 98621 Decided: 12/16/2003 Modified: 01/12/2004 THE SUPREME COURT OF THE STATE OF OKLAHOMA STATE OF OKLAHOMA, ex rel. STATE INSURANCE FUND, now known as COMPSOURCE OKLAHOMA, Plaintiff/Appellant, v. ACCORD HUMAN RESOURCES, INC., CARL EDWARDS, DALE HAGEMAN, and FORD C. PRICE, JR., Defendants/Appellees. ON CERTIORARI TO THE OKLAHOMA COURT OF CIVIL APPEALS, DIVISION IV ¶0 The State Insurance Fund brought an action against in the District Court of Oklahoma County for alleged unpaid workers' compensation insurance premiums. Both sides to the dispute filed motions for summary judgment. The Honorable Vicki L. Robertson, District Judge, granted judgment against Defendants in the amount that the parties agreed to, and denied the Fund's motion for attorney's fees. The trial court granted the Funds motion for prejudgment interest and costs, but used a date to commence interest different from that requested by the Fund. The Fund appealed and the trial court's judgment was affirmed by the Court of Civil Appeals. We hold: (1) The trial court correctly denied the motion for attorney's fees, State of Oklahoma, ex rel. State Insurance Fund v. Great Plains Center, Inc., CERTIORARI PREVIOUSLY GRANTED; OPINION OF THE COURT OF CIVIL APPEALS VACATED; AND JUDGMENT OF THE DISTRICT COURT AFFIRMED W. Rogers Abbott, II, Abbott & Associates, Oklahoma City, Oklahoma, for Plaintiff/Appellant. Joseph Walters, McAfee & Taft, Oklahoma City, Oklahoma, for Defendant/Appellee SUMMERS, J. ¶1 This controversy presents two questions. The first, whether the State Insurance Fund ¶2 The controversy involves an action brought by the State Insurance Fund (Fund) against Defendants (Accord Human Resources, Inc.) to recover unpaid workers' compensation premiums. A continuing audit and/or negotiations resulted in the parties agreeing that Accord owed the Fund a net amount of $43,757.60, an amount considerably less than that originally demanded by the Fund. The parties reached their agreement on January 24, 2002, but payment was not tendered until May 13, 2002. The Fund refused to accept the payment because it did not include attorney's fees, interest, and court costs. ¶3 The Fund sought summary judgment on the agreed amount of $43,757.60, plus additional amounts for attorney's fees, interest, and costs. The Fund argued that the action was on an open account and that attorney's fees were proper. The Fund also sought prejudgment interest at a rate of six percent commencing on October 19, 1994. The Fund claimed as the prevailing party it was entitled to costs. ¶4 Accord sought summary judgment. Accord denied that the action was suit on an open account, and argued that the amount it agreed to pay was the result of negotiation and compromise, and that the Fund was not a prevailing party for the purpose of interest and costs. ¶5 The District Court granted judgment against Accord in the amount agreed by the parties, $43,757.60. The Court rejected the Fund's argument that the action was an open account, and denied the motion for attorney's fees. The Court granted the Fund's motion for prejudgment interest, but limited it to commencing on January 24, 2002 and ending on May 13, 2002 for a total amount of $783.71. Costs against Accord was granted in the amount of $187.00. ¶6 The Fund appealed and the Court of Civil Appeals affirmed the District Court. The appellate court concluded that the action was on an account stated, but that an attorney's fee was not proper because the account stated did not involve goods or services. No party urged in the trial court, or on appeal, that the underlying obligation is an account stated. The Fund argues on certiorari that if the underlying obligation is an account stated as determined by the Court of Civil Appeals, or an open account as the Fund argued, then it is entitled to attorney's fees pursuant to I. The Attorney's Fees Question ¶7 The Fund's action was brought to recover an amount for unpaid workers' compensation insurance premiums. In State of Oklahoma, ex rel. State Insurance Fund v. Great Plains Center, Inc., ¶8 The appellate court concluded that the negotiations and subsequent agreement of the partieschanged the nature of the obligation into an account stated. The phrase "account stated" refers to a type of contract where an agreement on a balance owed becomes a new an independent obligation that supercedes and merges the prior contractual obligation. Great Plains, ¶9 In Edwards v. Walden, ¶10 The Fund argued on summary judgment that Defendants agreed to the amount due. However, this mid-litigation allegation of an agreement does not turn the Fund's action into one on an account stated. First, the Fund did not allege an account stated. Secondly, the Fund sought to enforce a contractual obligation that arose prior to the January 24th agreement. II. The Pre-judgment Interest Question ¶11 Recovery of interest on a judgment must be based upon a statute. Withrow v. Red Eagle Oil Co., The legal rate of interest shall be six percent (6%) in the absence of any contract as to the rate of interest, and by contract the parties may agree to any rate as may be authorized by law, now in effect or hereinafter enacted. 15 O.S.1991 § 266. We agree that the Fund is entitled to interest, but disagree on the applicable statute. The applicable statute is 23 O.S. § 22 and not 23 O.S. § 6. ¶12 In Fidelity-Phenix Fire Ins. Co. v. Board of Education, 1948 OK 223, 204 P.2d 982 the plaintiff brought an action against an insurance company for loss sustained by reason of damage to a building from a storm. Id. 204 P.2d at 984. The judgment on the verdict included prejudgment interest commencing on the date that payment was due under the provisions of the policy. Id. 204 P.2d at 985. The insurance company asserted that 23 O.S. § 6 was the applicable statute, and its application precluded an award of interest. We disagreed.3 ¶13 We first stated the issue thusly: Involved in the consideration of the question is a determination of whether section 6 or section 22, of Tit. 23 O.S.1941, is applicable. The sections are as follows: "Sec. 6. Any person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, except during such time as the debtor is prevented by law, or by the act of the creditor from paying the debt." "Sec. 22. The detriment caused by the breach of an obligation to pay money only is deemed to be the amount due by the terms of the obligation, with interest thereon." Id We said that § 22 and not § 6 applied: "Hence, under our construction of the insurance contract the issue as to interest does not fall within the purview of section 6 but does fall within that of Section 22, even if certainty in the amount owing is required thereby." Id. 204 P.2d 988. ¶14 In Fidelity-Phenix the insurance company relied upon American Eagle Fire Ins. Co. v. Lively, We hold that section 22, supra, is applicable and controlling and that by reason thereof plaintiffs were entitled as a matter of right to interest on the judgment from the time loss was payable under the terms of the policy. We further hold that section 6, supra, is not applicable to the question of recovery of interest in such actions as here involved, and that American Eagle Fire Ins. Co. v. Lively, supra, and Hartford Fire Ins. Co. v. Bernard, supra, in so far as they hold that the allowance of interest on the amount adjudged owing under insurance policy is controlled by Tit. Fidelity-Phenix ¶15 We followed Fidelity-Phenix, in Sebring v. Federal Deposit Ins. Corp ., This argument of the commissioner is without merit. The relation between a bank and its depositor is contractual. Brown v. Eastman National Bank of Newkirk, Okl., 291 P.2d 828, 55 A.L.R.2d 971. Therefore this is a matter where the bank has breached its obligation to pay money only. The issue of interest in this proceeding is not controlled by 'The detriment caused by the breach of an obligation to pay money only is deemed to be the amount due by the terms of the obligation, with interest thereon.' Section 22 is a special statute applying to a specific subject matter (the detriment caused by breach of obligation to pay money only) whereas section 6 is a general statute applying to damages generally. A special statute will apply as to matters provided for therein and the general statute will not apply. Lewis v. Lewis, Okl., In the case of Fidelity-Phenix Fire Ins. Co. of New York v. Board of Education, 201 Okl. 250, Sebring v. Federal Deposit Ins. Corp. ¶16 We followed Fidelity-Phenix, in Poteete v. MFA Mut. Ins. Co., MFA also argues that the trial court erred in failing to submit the issue of interest to the jury and by increasing the damage award returned by the jury by adding interest. It is provided by This statute was interpreted by this court in Fidelity-Phenix Fire Ins. Co. v. Board of Education, 201 Okl. 250, 'Under Tit. The court further stated at page 988: 'If the obligation under the insurance contract is one to pay money and default in payment justifies the allowance of interest under such rule, it is manifest same not only falls within the purview of said section 22, supra, but that the allowance of interest becomes mandatory by force of the statute.' Poteete v. MFA Mut. Ins. Co. ¶17 Prejudgment interest commences on the date that payment was due under the provisions of the policy. Fidelity-Phenix Fire Ins. Co., ¶18 The rights and obligations created by an insurance agreement are contractual in nature. State of Oklahoma, ex rel. State Insurance Fund v. Great Plains Center, Inc., ¶19 In our case today the obligation to pay an insurance premium was created by a contract of insurance. The date that obligation was to be performed was specified by the statutes then in effect, Premiums for any policy period shall be paid into the State Insurance Fund at the beginning of the period according to the estimated expenditure of wages for the period. At the end of the period an adjustment of the premium shall be made according to the actual expenditure of wages. If such adjusted premium is more than the premium paid at the beginning of the period, the employer shall pay the difference immediately upon notification of the amount of the true premium paid in advance, the employer shall at his option receive either refund of the difference or a credit of the amount thereof on his account with "The State Insurance Fund." 85 O.S.1991 § 142. This statute provides for payment of an adjusted premium upon notification from the State Insurance Fund.5 ¶20 The Fund's motion for summary judgment states that it audited Accord's records in 1995 and again in 1999. The Fund filed its action in 1999 seeking $138,789.60 from Accord. Accord disputed the amount owed, and the Fund's auditor continued to meet with Accord. The Fund states that the parties met on January 24, 2002, and agreed that Accord owed $43,757.60. ¶21 Defendants responded to the motion for summary judgment and stated that the parties had agreed that $43,757.60 was owed by Defendants. Defendants pointed to a revised final audit summary sent to them by the Fund in July 2001. But in September 2001 the Fund and Defendants were still discussing certain items that the Fund agreed should not be included for calculation of the premium for a final audit summary. ¶22 The Fund replied and noted that Defendants asserted that the audit was not complete until January 24, 2002. The Fund stated that the completion date of the audit did not matter for calculating interest, and argued that interest accrued commencing on the date it could first file suit to collect an unpaid premium on the contract of insurance, and that this date was, as a matter of law, the date the policy period expired. ¶23 Title 85 § 142 requires an insured to pay the adjusted premium upon notification by the Fund that an amount is due. In other words, the contractual obligation to pay the adjusted premium did not arise until Defendants were given notification of the amount owed, and interest did not commence until that date. The Fund notified the Defendants that an amount was allegedly due, but the Fund continued to audit the Defendants' records to determine the correct amount due. Attached as an exhibit to the Fund's motion for summary judgment is a document titled "Final Audit Summary Date of Billing: 02/20/02," but the earlier date of January 24, 2002 shows that Defendants received notice, by at least that date, of the final audited amount sought by the Fund. Filing and service of the petition in 1999 provided notice to Defendants that the Fund sought an unpaid premium. But again, the summary judgment materials show that the Fund during this period of time was continuing to audit and/or negotiate with Defendants on the amount owed. ¶24 The trial court determined that interest commenced on January 24, 2002 and stopped on May 13, 2002, when payment was tendered, and we agree. On certiorari the parties do not discuss the legal consequences of a debtor's tendering payment to a creditor, and we need not address the issue. The trial court did not state upon what statutes it was awarding interest. We conclude that it properly awarded interest pursuant to 23 O.S.1991 § 22 and ¶25 ALL JUSTICES CONCUR FOOT