Opinion ID: 1618299
Heading Depth: 2
Heading Rank: 3

Heading: Accrual of Prejudgment and Post-Judgment Interest

Text: The Farmers policy expressly requires Farmers to pay prejudgment interest on that part of any judgment against it that the company pays, stating: The Company will pay, in addition to the applicable limit of liability, prejudgment interest awarded against the insured on that part of the judgment the Company pays. If the Company makes an offer to pay the applicable limit of its liability, the Company will not pay any prejudgment interest based on that period of time after the offer. (emphasis in original). Here, Farmers' portion of the judgment was its policy limits of $1 million. Farmers did not take advantage of the opportunity offered by the second sentence just quoted to limit its potential liability for prejudgment interest by making an offer to pay the applicable limit of its liability prior to judgment. Accordingly, Farmers is liable to pay prejudgment interest on the full $1 million of its limit of liability. Mr. Burns argues that the second sentence quoted above should be read to mean that if the company does not offer to pay its policy limits prior to trial, then it should be held liable for prejudgment interest on the whole judgment. This entirely misreads the provision. The second sentence contains a limitation on the liability the company otherwise would have to pay on prejudgment interest, not an expansion of that liability. Neither it nor any other provision of the policy makes the company liable for prejudgment interest on more than its limit of liability. As Mr. Burns bases his argument solely on the policy language (there being no other statutory or common law right to prejudgment interest available here), this argument is without merit. See Levin v. State Farm Mut. Auto. Ins. Co., 510 S.W.2d 455, 459 (Mo. banc 1974) (interest due only up to liability limit on policy). [8] Farmers, therefore, is liable for prejudgment interest only on the $1 million limit of liability, which the parties do not dispute is $329,431. The language of the Farmers' policy does not limit, however, its liability for post-judgment interest to the amount of the judgment it is obligated to pay. To the contrary, the policy provides Farmers will pay as post-judgment interest: [A]ll interest on the entire amount of the judgment which accrues after entry of judgment and before this Company has paid or tendered or deposited in Court that part of the judgment which does not exceed the limit of this Company's liability thereon. (emphasis added). Farmers' own policy provides that it will pay the amount of post-judgment interest that accrues on the entire judgment up to the time it pays, deposits or tenders its policy limits. The provision clearly provides an incentive to the insurer to pay its policy limits expeditiously, even if other parties do not or if other aspects of the judgment are still in contention. Here, Farmers has not paid, tendered or deposited that part of the judgment that does not exceed its liability limits of $1 million; therefore, it is liable for all interest that has accrued on the entire amount of the judgment, $2,044,278. Interest accrued on the full $2,044,278 until co-defendant Oak River paid $675,000, after which interest continued to accrue on the remainder of the judgment. The trial court, however, directed that Farmers pay post-judgment interest on the entire judgment even after Oak River's payment. Interest accrues on unpaid monies. Once monies are paid, there is no debt on which interest can accrue. Here the trial court should have calculated interest on the entire judgment only up to the time of the Oak River payment and should calculate interest on the remainder of the judgment until the time Farmers pays the amount of the judgment that does not exceed its $1 million limit of liability. See, e.g., Levin, 510 S.W.2d at 461; Miller v. Secura Ins. and Mut. Co. of Wis., 53 S.W.3d 152, 157 (Mo. App.2001) (such a provision limits the duration of the liability for interest); Ennulat, 231 S.W.3d at 307 (the insured is liable for post-judgment interest only until such time as it pays the policy limits).