Court Opinion

ID: 9667810
Source: CourtListenerOpinion
Date Created: 2023-08-24 01:55:29.454352+00
Date Added: 2024-06-11T18:15:40.620763
License: Public Domain

D. F. Walsh, J.
(concurring in part, dissenting in part). I concur with the result reached by the majority except insofar as it limits the amount of prejudgment interest payable by defendant-appellant to an amount which when added to the judgment for damages does not exceed the policy limits of liability for damages.
The majority opinion holds, and I concur, that prejudgment interest is not damages. It also holds, however, that the amount of prejudgment interest when added to the amount of the judgment cannot exceed the policy limits of liability for damages. This to me is inconsistent. If prejudgment interest is not damages, why should the limits of liability for damages have any effect on the amount of interest payable by the insurance company.
Defendant-appellant’s policy contains the following provisions:
*444"Michigan Mutual Liability Company * * * agrees * * * [t]o pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of:
"A. bodily injury * * * ;
"The limit of bodily injury liability stated in the declarations as applicable to 'each person’ is the limit of the company’s liability for all damages, * * * sustained by one person as the result of any one occurrence”. (Emphasis supplied.)
Defendant-appellant’s argument runs thus. Prejudgment interest is part of the damages which the insured has become legally obligated to pay. Therefore the insurer must pay prejudgment interest under the liability provision of its policy. However, the limits of the insurer’s liability for damages in this case is $250,000. Hence, since the total amount of damages for which the insurer is liable cannot exceed $250,000, it cannot be liable for any amount of prejudgment interest which when added to the judgment exceeds $250,000.
The majority opinion rejects, and I think rightly so, the defendant-appellant’s argument that prejudgment interest is part of the damages which the insured has become legally obligated to pay. It then accepts, I think inconsistently, the defendant-appellant’s conclusion that since the insurance company has limited its liability for damages under the terms of its policy the total award cannot exceed those limits of liability.
I would hold that public policy requires that the insurer pay any and all interest allowable on that amount of any judgment which the insurer is liable to pay.
Any other holding would seem to me to be so unfair to the policyholder as to be unconscionable. It is the insurance company that has control of the litigation. The policyholder cannot settle the law*445suit even if he wants to, except out of his own funds. Why should defendant Geyman, the policyholder in this case, who insured himself against liability in the amount of $250,000 be forced to pay in excess of $30,000 in interest because the insurance company would not agree to a settlement of the claim against him when it could have done so within the policy limits.
Moreover I disagree with the majority that the effect of allowing prejudgment interest in an amount beyond the policy limits would be to force an insurer to pay a plaintiff’s demand at an early stage of the proceedings even though it may have had a meritorious defense. Rather than pay the demand the insurer could invest the same money in an interest earning reserve. In the end, if the plaintiff prevailed, the insurer would have accumulated the interest which it would then be required to pay to the claimant. I see nothing unfair or unreasonable about requiring such a procedure. A plaintiff who has a valid claim has a right to his damages as of the date the claim accrues. In reality the insurance company which is liable for the payment of those damages holds the funds in trust for the claimant pending judicial determination of the validity of the claim. It would seem to me that public policy would require that the insurance company invest those funds for the benefit of the claimant should he succeed in proving his claim to be valid. If the claimant fails to prove his claim, the insurance company has its profit from the investment of the reserve.
As indicated above, I would concur in the result reached by the majority except insofar as it limits the amount of prejudgment interest payable by the insurance company to an amount which does not exceed the insurance company’s limits of liability for damages.