Court Opinion

ID: 9516742
Source: CourtListenerOpinion
Date Created: 2023-08-06 23:50:56.91004+00
Date Added: 2024-06-11T09:39:05.631418
License: Public Domain

Boyle, J.
(concurring in part and dissenting in part). We are asked to decide in this case the relative liability of two insurance carriers for prejudgment and postjudgment interest on a jury award that exceeded the combined contractual liability of each insurer. I agree with the majority that as between a primary and secondary insurer, liability for prejudgment interest should not rest solely with the insurer that controlled the defense of the underlying litigation. Pro-rata distribution between a primary and a secondary insurer will serve to assure that an otherwise interested party will not avoid participation in the resolution of a dispute to avoid possible prejudgment interest liability. I agree with the majority that as to post-judgment interest the language of the standard *28interest clause contained in the policies of Canadian Universal and ina is dispositive. The standard interest clause clearly obligates an insurer to pay interest on the entire amount of the judgment. This interpretation enjoys the support of the majority of courts that have addressed this issue,1 and no compelling legal argument or policy consideration is offered to disturb that to which the parties have agreed.
Thus, while I agree with the majority on the apportionment and postjudgment interest issues, I write separately to express my concern over the analysis employed to decide the scope of the defendants’ prejudgment interest liability. In Denham v Bedford, 407 Mich 517; 287 NW2d 168 (1980), this Court concluded that the prejudgment interest statute, MCL 600.6013; MSA 27A.6013, becomes part of the insurance contract and that it replaces any contractual provisions with which it conflicts. Id., p 530. Consequently, to properly measure an insurer’s liability for prejudgment interest we must first examine the insurance contract in light of the statute together with any other agreements between the parties to discern the limits of their understanding.
The policies for both defendants provided for the payment of postjudgment interest only.2 Under the *29rule in Denham, MCL 600.6013; MSA 27A.6013 also is part of both agreements.3 Thus, the "contracts” provided that Canadian Universal and ina would be responsible for prejudgment interest to be calculated from the date of filing the complaint, and postjudgment interest on the entire judgment to be calculated from the date of entry of the judgment until payment, tender, or deposit with the court of their portions of the judgment. The only question left unanswered from the language of the agreement as modified by MCL 600.6013(2); MSA 27A.6013(2) is whether prejudgment interest would be calculated on the basis of the limits of their respective policies or the entire judgment.
On this issue the majority concludes that the proper resolution is that of Cosby v Pool, 36 Mich App 571; 194 NW2d 142 (1971), and Cates v Moyses, 57 Mich App 405; 226 NW2d 106 (1975), modified 394 Mich 762; 228 NW2d 380 (1975). The rule to be gleaned from these decisions is that because "[a]n insurer can limit the risk it assumes . . . [i]t follows that the insurer should be liable only for the interest that accrues on the *30amount of risk it has assumed.” Cosby, supra, p 578. Applying this rule, the majority then concludes:
[T]he law of Michigan with respect to an insurer’s liability for prejudgment interest is well settled, at least to this extent: An insurer whose policy includes the standard interest clause is required to pay prejudgment interest from the date of filing of a complaint until the entry of judgment, calculated on the basis of its policy limits, not on the entire judgment, and interest on the policy limits must be paid even though the combined amount exceeds the policy limits. [Ante, P 23.]
I am not persuaded that it is necessary or appropriate to resolve this question as a matter of law. Rather, we should resolve this case on the basis of an examination of the understanding of the parties as to that which Canadian Universal and ina had bound themselves. I would look to the language of the amended order of judgment and consent judgment entered into by Canadian Universal, ina, Modern Research Corporation, and Steven Matich.
The relevant portion of the consent judgment provides:
It is further hereby ordered that Canadian Universal Insurance Company, Ltd., and Insurance Company of North America, shall pay to the said Steven P. Matich, and his attorneys, Zeff and Zeff, interest owed if any, on the amount of their policy limits from the date of filing of the Complaint in this action until the date of Judgment, along -with interest owed, if any, on the entire amount of the Judgment ($2,250,000.00) from the date of entry of said Judgment until the date of payment of said insurer’s policy limits, under the terms of its insurance policy or otherwise to be paid by such *31insurance carrier under the laws of the State of Michigan; it being ordered and understood between the parties that the alleged liability of Canadian Universal Insurance Company, Ltd., and Insurance Company of North America for any interest claimed owing on the Judgment by either carrier shall be litigated in this action before the Honorable James A. Hathaway and it is further understood between the parties and ordered that neither the Canadian Universal Insurance Company, Ltd., nor the Insurance Company of North America shall be relieved of its liability to the Plaintiif for the payment of such interest by reason of the release of Modern Research Corporation from liability under the Judgment. [Emphasis added.]
In my view, the parties agreed that interest owed on the judgment, if any, would be limited to the policy limits for prejudgment interest and extend to the entire judgment for postjudgment interest. That portion of the order dealing with postjudgment interest is consistent with the language of the standard interest clause. The portion pertaining to prejudgment interest appears also to be consistent with the parties’ understanding of the obligations that Canadian Universal and ina had agreed to assume.4
At issue, then, is simply a construction of the agreement between Canadian Universal, ina, Modern Research, and Steven Matich. It is the consent *32judgment that reflects the intent of those parties. Union v Ewing, 372 Mich 181, 186; 125 NW2d 311 (1963); Dora v Lesinski, 351 Mich 579, 582; 88 NW2d 592 (1958). Because the parties each have agreed to limit the insurers’ prejudgment interest liability to the limits of their respective policies, it is unnecessary for this Court to decide that the award of prejudgment interest must, as a matter of law, be confined to the limits of an insurance policy. Certainly the parties could agree to measure prejudgment interest on the basis of the actual judgment. Similarly, as in this case, the parties could agree that if a court should find interest to be due, that interest would be calculated on the basis of the limits of the insurance policy.5
Canadian Universal and ina could have drafted their policies to limit their obligations to pay prejudgment interest to their respective policy limits; this they did not do. Instead, a provision for prejudgment interest was drafted into the consent judgment. We need only construe that which the parties have agreed to; having done so, we need go no further.
I concur in the result reached today on the issue of prejudgment interest. To the extent that our ruling mandates that prejudgment interest must be limited to the limits of an insurer’s policy, I respectfully dissent.
Archer, J., concurred with Boyle, J.

 See anno: Liability insurer’s liability for interest and costs on excess of judgment over policy limit, 76 ALR2d 983.

 The interest clause found in Canadian Universal’s policy provides in part:
"The company will pay, in addition to the applicable limit of liability:
"(a) all expenses incurred by the company, all costs taxed against the insured in any suit defended by the company and all interest on the entire amount of any judgment therein which accrues añer entry of the judgment and before the company has paid or tendered or deposited in court that part of the judgment which does not exceed the limit of the company’s liability thereon.” [Emphasis added.]
*29Similarly, the ina policy provided that ina would pay:
"all expenses incurred by ina, all costs taxed against the Insured in any suit defended by ina and all interest on the entire amount of any judgment therein which accrues after entry of the judgment and before ina has paid or tendered or deposited in court that part of the judgment which does not exceed the limit of ina’s liability thereon.” [Emphasis added.]

 MCL 600.6013(2); MSA 27A.6013(2) provides:
(2) For complaints filed before June 1, 1980, in an action involving other than a written instrument having a rate of interest exceeding 6% per year, the interest on the judgment shall be calculated from the date of filing the complaint to June 1, 1980, at the rate of 6% per year and on and after June 1, 1980, to the date of satisfaction of the judgment at the rate of 12% per year compounded annually.

 On February 27, 1984, Canadian Universal tendered its draft to plaintiffs counsel in the amount of $508,044.81 representing their policy limits of $300,000, costs and taxes of $43,928.25, and interest of $164,116.56. The interest payment represented interest on the entire judgment from May 20, 1983, the date of entry of the judgment, to July 8, 1983, the date of Canadian Universal’s tender to ina, and prejudgment interest on its policy limits. Further, a review of the relevant transcripts of proceedings before Judge Hathaway reveals that ina believed that it was not responsible for any interest because it was an excess insurer, but that if liability was found, it only could be liable for prejudgment interest on $1,000,000, its policy limits.

 The determination of prejudgment interest, although statutorily provided, need not be considered at all. The prevailing party in a dispute could waive any prejudgment interest as part of a postjudgment settlement.