Opinion ID: 149882
Heading Depth: 2
Heading Rank: 6

Heading: St. Paul may owe prejudgment interest on the defense costs.

Text: In its briefing, St. Paul appears to acknowledge that the plaintiffs would like us to determine whether St. Paul owes prejudgment interest for the plaintiffs' general defense costs, in addition to those costs incurred by Monogram and the settlement payment. St. Paul contends that an order in the Zurich action works to collaterally estop an award of interest and, moreover, the sums are unliquidated. The district court denied the plaintiffs' motion for prejudgment interest because it held that St. Paul was not responsible for the settlement payment or Monogram's expensesit did not address pre-judgment interest as to plaintiffs' defense costs apart from those sums. See Santa's Best III, 2008 WL 4328192, at . An Illinois statute allows prejudgment interest for written sums. 815 ILCS 205/2 provides: § 2. Creditors shall be allowed to receive at the rate of five (5) per centum per annum for all moneys after they become due on any bond, bill, promissory note, or other instrument of writing; on money lent or advanced for the use of another; on money due on the settlement of account from the day of liquidating accounts between the parties and ascertaining the balance; on money received to the use of another and retained without the owner's knowledge; and on money withheld by an unreasonable and vexatious delay of payment. In the absence of an agreement between the creditor and debtor governing interest charges, upon 30 days' written notice to the debtor, an assignee or agent of the creditor may charge and collect interest as provided in this Section on behalf of a creditor. Prejudgment interest is available for sums due on insurance policies. See, e.g., Couch v. State Farm Ins. Co., 279 Ill.App.3d 1050, 216 Ill.Dec. 856, 666 N.E.2d 24, 27 (1996). The decision to award prejudgment interest is within the trial court's sound discretion and will not be reversed absent an abuse of that discretion. See Statewide Ins. Co. v. Houston Gen. Ins. Co., 397 Ill.App.3d 410, 336 Ill.Dec. 402, 920 N.E.2d 611, 624 (2009). Interest begins to accrue when the underlying attorneys' fees become liquidated, i.e. due and capable of exact computation. See Conway v. Country Cas. Ins. Co., 92 Ill.2d 388, 65 Ill.Dec. 934, 442 N.E.2d 245, 250 (1982) (finding that insurer breached its duty to defend). A sum is liquidated if calculation does not require judgment, discretion, or opinion. See Dallis v. Don Cunningham & Assocs., 11 F.3d 713, 719 (7th Cir.1993) (quoting First Nat'l Bank Co. of Clinton, Ill. v. Ins. Co. of N. Am., 606 F.2d 760, 770 (7th Cir. 1979)). But, a good-faith defense to liability does not bar prejudgment interest if the amount is ascertainable. See, e.g., Couch, 216 Ill.Dec. 856, 666 N.E.2d at 27. The court should examine the relevant insurance policy and the circumstances of the case. See Cent. Nat. Chi. Corp. v. Lumbermens Mut. Cas. Co., 45 Ill.App.3d 401, 3 Ill.Dec. 938, 359 N.E.2d 797, 802-03 (1977); DiLeo v. U.S. Fid. & Guar. Co., 109 Ill.App.2d 28, 248 N.E.2d 669, 676-77 (1969) (holding that interest began to accrue as specified by the terms of the policy60 days after the defendants were furnished the proof of loss). St. Paul's policy provides that it will: pay the interest that accumulates before a judgment and is awarded against the protected person on that part of a judgment we pay. But if we make a settlement offer to pay the available limit of coverage, we won't pay the prejudgment interest that accumulates after the date of our offer. Because the district court never explicitly considered the issue of prejudgment interest as to St. Paul's defense expenditures, it is instructed to make such a holding on remand. As for St. Paul's arguments about collateral estoppel: the Zurich court's December 2005 order denied the plaintiffs' motion for prejudgment interest on Zurich's payments. St. Paul agreed to be bound by certain rulings in the Zurich action, and the December 2005 holding suggests that the plaintiffs may be bound by the Zurich court's order's language about prejudgment interest. See Santa's Best Craft, LLC v. St. Paul Fire & Marine Ins. Co., No. 04 C 1342 (N.D.Ill. Mar. 21, 2006). Collateral estoppel bars a party from asserting a claim that has been resolved in another lawsuit between the same parties (or those in privity with them). See Aaron v. Mahl, 550 F.3d 659, 665 n. 5 (7th Cir.2008). It applies if: (1) the issue decided in the prior adjudication is identical with the one presented in the suit in question, (2) there was a final judgment on the merits in the prior adjudication, and (3) the party against whom estoppel is asserted was a party or in privity with a party to the prior adjudication. Gumma v. White, 216 Ill.2d 23, 295 Ill.Dec. 628, 833 N.E.2d 834, 843 (2005); see also Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373, 380, 105 S.Ct. 1327, 84 L.Ed.2d 274 (1985) (applying state laws of preclusion to determine the effect of a prior state court action on a federal diversity case). The plaintiffs argue that, in the Zurich action, they never litigated the issue of St. Paul's duty to pay prejudgment interest on the defense costs. It seems doubtful that St. Paul is correct that the Zurich court's order affects prejudgment interest as to St. Paul's defense expenses generally but, on remand, the district court should evaluate whether any issues decided in the Zurich action act as collateral estoppel for a determination about prejudgment interest on St. Paul's defense cost reimbursements. As noted above, on remand, the parties are admonished to restrict their briefing to a succinct statement of the issues and the district court may certainly consider sanctions for any further excessive commitments to briefing and arguing the few remaining issues in this case, consistent with the foregoing. AFFIRMED in part, REVERSED and REMANDED in part.