Court Opinion

ID: 9580561
Source: CourtListenerOpinion
Date Created: 2023-08-21 22:06:08.31483+00
Date Added: 2024-06-11T13:36:21.552892
License: Public Domain

MONTGOMERY, Justice (specially concurring). I (and the undersigned concurring Justices) concur with the foregoing opinion by Justice Frost, except that we disagree with his and Justice Baca’s conclusion that the trial court erred in awarding prejudgment interest and costs. A majority of the Court has concluded that prejudgment interest and costs were properly awarded to each of the claimants. This opinion therefore announces the ruling of the Court on this issue and explains our reasoning.  We do not agree with the Association that the trial court’s award of prejudgment interest was inconsistent with the Act’s limitation on the Association’s liability. The Association argues that the $100,-000 limit on “covered claims” in Section 59A-43-4(C) precludes awarding prejudgment interest to the claimants since the amount of the court’s judgment to each claimant, not including prejudgment interest, was already equal to $100,000. In other words, the Association argues that the statutory cap of $100,000 on a covered claim includes prejudgment interest, so that a total judgment against the Association on a claim, including prejudgment interest (and costs), cannot exceed $100,000. To support its position, the Association contends that the Act’s cap on covered claims limits the Association’s liability on all compensatory damages. It then argues that prejudgment interest is an element of compensation and is therefore included within the statutory cap. We do not dispute the Association’s characterization of prejudgment interest as an element of compensation. See Ranch World, Inc. v. Berry Land & Cattle Co., 110 N.M. 402, 404, 796 P.2d 1098, 1100 (1990) (award of prejudgment interest is compensation for loss of use of funds). However, the issue before us is not whether prejudgment interest constitutes compensation for loss of the use of funds; rather, the issue is whether prejudgment interest is included within the definition of “covered claims” so as to be limited or excluded by the Act’s liability cap of $100,-000 per occurrence on individual “covered claims.” We hold that it is not. Section 59A-43-4(C) defines “covered claims” in pertinent part as follows: an unpaid claim of an insured or of a liability claimant ... that arises out of and within the coverage and not in excess of the applicable limits of an insurance policy ... issued by an insurer authorized to transact insurance in this state, if such insurer becomes an insolvent insurer____ (Emphasis added.)  We believe that an “unpaid claim” refers to an amount that a claimant seeks to recover from an insolvent insurer and subsequently against the Association; it does not include prejudgment interest, which is an amount that is awarded later, after litigation has begun and been completed, to a successful claimant. The words of the section themselves (quoted in Justice Frost’s opinion) support this interpretation by expressly excluding supplementary payment obligations, including interest and court costs, from the definition of covered claims. The statutory cap on covered claims, therefore, while limiting the Association’s liability on an unpaid claim, does not limit the total amount that a successful claimant may recover in a judgment against the Association. “Court costs” is one of the types of “supplementary payment obligations” referred to in the statute. “Interest” is another.1 A third is “attorneys’ fees and expenses.” This third type of supplementary payment obligation might arise, for example, if the Association unreasonably refused payment of an insured’s claim against an insolvent insurer under a policy providing first-party coverage and the court awarded reasonable attorney’s fees under NMSA 1978, Section 39-2-1 (Repl.Pamp.1991). The notion that an insured or a liability claimant seeking payment of a claim against an insolvent insurer may not recover these types of supplementary payment obligations in a successful action against the Association — whether the claim is less or greater than $100,-000 — strikes us as simply untenable.  The Association submits, as an alternative argument, that if prejudgment interest is not included within a “covered claim” and therefore is not subject to the statutory cap, the trial court nonetheless erred in awarding it because the Act does not authorize such an award. We disagree because we do not believe that specific authority within the Act itself is necessary to award prejudgment interest. While we would certainly abide by an express prohibition in the Act against an award of prejudgment interest, the absence of an express allowance did not deprive the court of authority to make such an award. On the contrary, the trial court had that authority under either NMSA 1978, Section 56-8-3 or Section 56-8-4(B) (Repl.Pamp.1986).2 See United Nuclear Corp. v. Allendale Mut. Ins. Co., 103 N.M. 480, 488, 709 P.2d 649, 657 (1985) (prejudgment interest under § 56-8-3(A) awarded for breach of contract); Southard v. Fox, 113 N.M. 774, 776-78, 833 P.2d 251, 253-55 (Ct.App.1992) (prejudgment interest awarded under § 56-8-4(B) in action based on tort).  Our holding furthers the general purposes of awarding prejudgment interest. One such purpose is to compensate a plaintiff for the loss of the use of money, resulting from the defendant’s failure to pay, during the pendency of a lawsuit. Ranch World, 110 N.M. at 404, 796 P.2d at 1100. We perceive no reason why we should not advance this purpose in the present context. On the contrary, it would be inequitable to deny successful claimants under the Act the cost of the lost opportunity to use the money of which the Association had use during the lawsuit. Cf. Ulibarri v. Gee, 107 N.M. 768, 769, 764 P.2d 1326, 1327 (1988) (when award is remanded for a new decision because of excessiveness, new award accrues interest from the date of the original judgment). Our holding also furthers the purposes of fostering settlement and preventing delay. See Southard, 113 N.M. at 778, 833 P.2d at 255 (purpose of § 56-8-4(B) is to foster settlement and prevent delay). By allowing an award of prejudgment interest to a successful claimant in an action against the Association, we encourage the parties to settle their disputes promptly.  This Court has previously held that an injured party is generally entitled to prejudgment interest as a matter of right when the amount due by contract is fixed or liquidated. E.g., United Nuclear, 103 N.M. at 488, 709 P.2d at 657; Shaeffer v. Kelton, 95 N.M. 182, 187-88, 619 P.2d 1226, 1231-32 (1980). When the amount is not fixed or readily ascertainable, the trial court has discretion to award prejudgment interest. United Nuclear, 103 N.M. at 488, 709 P.2d at 657; Shaeffer, 95 N.M. at 187, 619 P.2d at 1231. In the present case, the award of prejudgment interest might very well be viewed as a matter of right since the amount due to each claimant was fixed and readily ascertainable. In any event, the Association has not demonstrated that the trial court abused its discretion in making the award. On the issue of prejudgment interest and costs, then, as well as on the other issues discussed in Justice Frost’s opinion for the Court, the trial court’s judgment is affirmed in all respects. IT IS SO ORDERED. RANSOM, C.J., and FRANCHINI, J., concur.  . The statute does not distinguish between pre- and post-judgment interest. Since both forms of interest accrue after the insured’s claim against the insolvent insurer has ripened into a "covered claim" and the Association has been adjudicated liable therefor, we see no reason to draw any such distinction ourselves.   . The trial court did not specify whether it was awarding prejudgment interest under § 56-8-3 or § 56-8-4(B). Section 56-8-3 (which, as demonstrated by, e.g., United Nuclear, has been interpreted to authorize prejudgment interest in an appropriate case) provides in part: The rate of interest, in the absence of a written contract fixing a different rate, shall be not more than fifteen percent annually in the following cases: A. on money due by contract____ Section 56-8-4(B) provides: The court in its discretion may allow interest of up to ten percent from the date the complaint is served upon the defendant after considering among other things: (1) if the plaintiff was the cause of unreasonable delay in the adjudication of the plaintiffs claims; and (2) if the defendant had previously made a reasonable and timely offer of settlement to the plaintiff. The fact that the court allowed prejudgment interest at the rate of 15% suggests that the court was relying on § 56-8-3, which probably was proper since the money due to the claimants from the Association was "due by contract." On the other hand, the fact that the court granted prejudgment interest from the date the complaint was filed, instead of an earlier date, such as the date the Association or the Conservator was notified of the claims, suggests that the court may have had § 56-8-4(B) in mind. In any event, because no issue is raised on this appeal as to the applicable statute, the appropriate rate, or the proper date from which the prejudgment interest started to run, we do not rule on any of these potential issues.