Opinion ID: 2525148
Heading Depth: 1
Heading Rank: 3

Heading: prejudgment interest falls within the insurer's definition of a claim expense

Text: ¶ 7 When statutorily authorized, prejudgment interest is an item of recovery that constitutes an integral part of the judgment debtor's total adjudged liability that is recovered. It stands in the law as an item of damages owed for the delayed satisfaction of an obligation on which it accrues. [8] In the absence of adverse statutory or constitutional provisions, the common law imposes on the insurer liability for prejudgment interest. The insurer is obligated to pay the costs of, or interest on, a judgment recovered against the insured even though these added items may bring the total payment beyond the policy limits. [9] It is the insurance company's responsibility to draft, for inclusion in its policy, language that is clear and will allow it to escape such liability. The language of an insurance policy must be accepted in its plain, ordinary, and popular sense. [10] A clear reading of the contract here in suit logically lends itself to including interest as a cost of investigation. Even if the contract were ambiguous, Oklahoma law would require that the policy be interpreted against the drafting party. [11] ¶ 8 Prejudgment interest obligation is (a) a consequence of delay caused by the decision to defend against the claim, (b) constitutes an expense incident to the chosen course of litigation, [12] and (c) presents a recovery component that stems directly from the insurer-adopted set of forensic strategy choices. All of the litigation-attendant expenses are within the direct and exclusive control of the insurer. The latter party investigates the claim and chooses whether to settle or defend it. Delay is a product of the insurer's will and conduct. The longer the delay, the more prejudgment interest accrues. Without an obligation for that interest insurers would be provided with incentive to prolong litigation in order to take advantage of the time value of money still in their hands. [13] ¶ 9 An inspection of the insurance policy's terms reveals the presence of insurer's absolute control over the course of the litigation. The policy states: We have the right and will defend any claim. We will: 1. do this even if any of the charges of the claim are groundless, false, or fraudulent; 2. investigate any claim as we feel appropriate 3. not settle any claim without your consent. [14] ¶ 10 The policy clearly provides that the insured must (a) notify Continental in writing of any possible claims and (b) furnish the names and addresses of the injured persons or of the witnesses. The insured also must furnish information regarding time, place, and nature of the event and immediately forward all documents received in connection with the claim. Lastly, the insured must cooperate in making settlements, in lawsuits or other proceedings, including attending trials and hearings, assisting in searching for and giving evidence and in securing the attendance of witnesses. [15] The insured could in no way affect or limit the amount of time to be spent in these endeavors; he should hence not now be held liable for attendant delay. [16] ¶ 11 Continental argues prejudgment interest that is in excess of the policy's liability limit is not a claim expense and points out that the policy does not in haec verba list prejudgment interest as a claim expense. While the quantum of prejudgment interest does depend on the date judgment is given, the amount of that recovery component is solely within the insurer's power to control. It would not arise but for Continental's decisions as unquestionable dominus litis. [17] Shifting to the insured the attendant financial burden of waging litigation the insurer undertook to conduct in the defense of the claim would contravene the clear language of the policy.