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Court hits on 2 first impression issues about prejudgment interest

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The Indiana Court of Appeals has reversed a trial judge decision against awarding a litigant prejudgment interest in an uninsured motorist case, examining two issues of first impression and finding that state statute warrants the litigant receive that money even when it exceeds insurance policy limits for those types of claims.

A unanimous decision came today in Kathy Inman v. State Farm Mutual Automobile Insurance Co., No. 41A01-1005-CT-223, which involves a Johnson County woman’s action against State Farm Insurance Company stemming from a November 2006 car collision. Kathy Inman sued on grounds that the other driver was negligent when he struck the rear of her vehicle. Though she later settled with that driver’s insurance company for the $50,000 limit, Inman amended her complaint against State Farm seeking an additional $50,000 in underinsured motorist benefits from her policy that had a $100,000 per person liability cap.

In June 2009, she filed a written offer to settle the case for the policy limit of $50,000, pursuant to Indiana Code 34-51-4-6. State Farm didn’t respond to that request, and earlier this year a jury returned a verdict in Inman’s favor for $50,000. She filed a motion for prejudgment interest in the amount of $3,616.44, plus $13.10 per day after that filing on April 12, 2010. Special Judge Richard Tandy summarily denied that motion.

Analyzing that state law known as the Tort Prejudgment Interest Statute, the appellate court looked at State Farm’s contention that Inman doesn’t meet the TPIS requirements because an underinsured motorist claim is not a civil action arising out of tortious conduct as required by the statute. Though no Indiana cases address that issue, the panel turned to Woods v. Farmers Insurance of Columbus, Inc, 666 N.E.2d 283 (Ohio Ct. App. 1995) for guidance, as well as rulings from Oklahoma, North Carolina, Georgia, and Louisiana.

“We find the reasoning of these cases, as well as similar ones in other jurisdictions, to be persuasive,” Judge Patricia Riley wrote. “We therefore hold that a claim against one’s insurer for underinsured motorist benefits is a civil action arising out of tortious conduct, and the award of prejudgment interest pursuant to IC 34-51-4-5 in such a case is appropriate.”

The court also looked at prejudgment interest in excess of the policy limits, a second issue that no Indiana court has addressed. They looked to Potomac Insurance Company v. Howard, 813 S.W.2d 557 (Tex Ct. App. 1991) for guidance, as well as the Michigan Supreme Court in Denham v. Bedford, 287 N.W.2d 168 (Mich. 1979).

“Here, based on the purpose of the TPIS as well as public policy considerations as already stated in Denham, we hold that an insurer can be required to pay prejudgment interest in excess of uninsured and/or underinsured motorist limits in an action brought by an insured for failure to pay uninsured and/or underinsured motorist coverage,” Judge Riley wrote.

The holding is consistent with what the Northern District of Indiana concluded in Schimizzi v. Illinois Farmers Insurance Company, 928 F. Supp. 760 (N.D. Ind. 1996), and also with the Indiana Supreme Court’s treatment in Cahoons v. Cummings, 734 N.E.2d 535, 547 (Ind. 2000) of prejudgment interest in medical malpractice cases where the court had held a qualified health care provider is responsible for collateral litigation prejudgment interest expenses over the statutory cap.

“The rationale for this treatment is the same rationale set forth in other civil actions arising out of tortious conduct,” the court wrote. “Specifically, in Cahoons, the Indiana supreme court explained that if the defendant has the option to terminate the dispute at a known dollar cost, and chooses not to do so, that defendant and not the plaintiff should bear the cost of the time and value of money in the intervening period if the ultimate result is within the parameters of the legislature.”

Noting State Farm didn’t challenge the prejudgment interest amount here, the appellate court reversed the trial judge and ordered that amount be paid.
 

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  1. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

  2. As a lawyer who grew up in Fort Wayne (but went to a real law school), it is not that hard to find a mentor in the legal community without your school's assistance. One does not need to pay tens of thousands of dollars to go to an unaccredited legal diploma mill to get a mentor. Having a mentor means precisely nothing if you cannot get a job upon graduation, and considering that the legal job market is utterly terrible, these students from Indiana Tech are going to be adrift after graduation.

  3. 700,000 to 800,000 Americans are arrested for marijuana possession each year in the US. Do we need a new justice center if we decriminalize marijuana by having the City Council enact a $100 fine for marijuana possession and have the money go towards road repair?

  4. I am sorry to hear this.

  5. I tried a case in Judge Barker's court many years ago and I recall it vividly as a highlight of my career. I don't get in federal court very often but found myself back there again last Summer. We had both aged a bit but I must say she was just as I had remembered her. Authoritative, organized and yes, human ...with a good sense of humor. I also appreciated that even though we were dealing with difficult criminal cases, she treated my clients with dignity and understanding. My clients certainly respected her. Thanks for this nice article. Congratulations to Judge Barker for reaching another milestone in a remarkable career.

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