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DTCI: Tort prejudgment interest statutes

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On Dec. 12, 2012, the Indiana Supreme Court decided four cases involving the tort prejudgment interest statutes: Kosarko v. Padula, 979 N.E.2d 144; Inman v. State Farm Mutual Automobile Insurance Co.,—N.E.2d—; Alsheik v. Guerrero, 979 N.E.2d 141; and Wisner v. Laney,—N.E.2d at—. These decisions clarified many questions regarding the TPIS, but also left several issues undecided.

ramsey-williamDTCI Ramsey

Overview of the TPIS

The TPIS allow a plaintiff in a civil action arising out of tortious conduct to recover prejudgment interest if the plaintiff makes a settlement offer that complies with the TPIS’ requirements. See Ind. Code §§ 34-1-4-1 through -6. The TPIS allow defendants to avoid prejudgment interest by making their own qualified settlement offer. See Ind. Code § 34-51-4-5.

Qualified settlement offers

For a plaintiff’s settlement offer to qualify, it must meet explicit statutory requirements. See Ind. Code § 34-51-4-6. If a plaintiff fails to make an offer that meets these requirements, a trial court cannot award prejudgment interest. See Alsheik, 979 N.E.2d at 154. The Indiana Supreme Court explained that the better practice is for parties to cite the TPIS in the letter, include the 60-day settlement window, and note the possibility of prejudgment interests. See id. at 155. However, although courts generally require strict compliance with prejudgment interest statutes, see Anthony E. Rothschild, Prejudgment Interests: Survey and Suggestion, 77 Nw. U. L. Rev. 192 (1982), and although statutes in derogation of the common law are strictly construed, see Bartrom v. Adjustment Bureau, Inc., 618 N.E.2d 1, 10 (Ind. 1993), both the Wisner and Alsheik decisions applied a relaxed standard and found that although offers did not strictly track the statutory language, the offers met a “minimum threshold” for compliance.

Discretionary nature of prejudgment interest award

Some debate had occurred over whether a trial court could deny prejudgment interest if a plaintiff had issued a qualified settlement offer. It is now clear that trial courts have this discretion. See Alsheik, 979 N.E.2d at 155. Trial courts need not offer any explanation for decisions denying prejudgment interest. See Inman. However, if a trial court gives reasons for denying a request for prejudgment interest and the reasons are improper, an appellate court will reverse the award. See id.

The TPIS’ effect on the common law

Indiana common law allowed parties to recover prejudgment interest in tort actions. See N.Y., C. & St. L. Ry. Co. v. Roper, 176 Ind. 497, 96 N.E. 468 (1911). Although the TPIS are thus somewhat consistent with the common law, our Supreme Court has concluded that the TPIS abrogate common-law prejudgment interest rules. See Kosarko, 979 N.E.2d at 148-49. Although the common law no longer applies (because trial courts have virtually unlimited discretion in awarding or declining to award prejudgment interest), Indiana common-law decisions that are not inconsistent with the TPIS may still have some persuasive effect with trial courts regarding their discretionary decisions.

Open Questions

A new approach to statutory interpretation?

The TPIS require that qualified settlement offers must be made: “within one (1) year after a claim is filed in the court, or any longer period determined by the court to be necessary upon a showing of good cause.” Ind. Code § 34-51-4-6. The Wisner and Alsheik courts’ interpretation of this timing requirement may signal a subtle shift in the court’s approach to statutory interpretation.

In Wisner, the plaintiff filed suit in November 2002, sent the settlement letter in April 2005, dismissed the complaint in 2006, and refiled the complaint in August 2007. The court held the letter was untimely but suggested that if the plaintiff had sent a second letter within one year of refiling, the letter would have complied with the TPIS. This suggestion seems contrary to the TPIS’ requirement that a plaintiff make an offer “within one year after filing.” Further, it is difficult to see how allowing parties to resurrect waived claims for prejudgment interest furthers the TPIS’ purpose of encouraging prompt claim resolution. See Inman.

In Alsheik, the plaintiff filed the lawsuit in May 2002, dismissed the suit in January 2003, sent the settlement letter in April 2003, and refiled a complaint in February 2006. Citing the purpose of the TPIS, the court concluded that settlement offers sent before a claim is filed in court fulfill the TPIS’ requirement that a settlement offer must be extended “within one year after a claim is filed in the court.” See Wisner. The court thereby essentially interpreted the statute either as saying “before one (1) year after a claim is filed in the court” or discounting the term “after.” The court explained: “We believe this interpretation is broader and more in line with the Legislature’s intent to facilitate and encourage settlement of claims amicably without legal recourse, but also to give real meaning and effect to the prejudgment interest statute.” Wisner; see Alsheik, 979 N.E.2d at 155.

The Supreme Court’s rules for statutory interpretation are well established. “If a statute is unambiguous, we may not interpret it, but must give the statute its clear and plain meaning.” Elmer Buchta Trucking, Inc. v. Stanley, 744 N.E.2d 939, 942 (Ind. 2001) (emphasis added). “It is only when the language of the statute or ordinance is ambiguous that the courts should search for legislative intent.” Ott v. Johnson, 262 Ind. 548, 552, 319 N.E.2d 622, 624 (1974). Neither the Wisner nor Alsheik court stated that the TPIS’ timing provision was ambiguous or explained the ambiguity.

The court would not be the first to find ambiguous a timing requirement including the word after following the word within. See Young v. Waldrop, 109 P.2d 59, 60 (Mont. 1941). But the greater weight of authority holds that such language is not ambiguous. See People Holding Co. v. Brey, 173 A. 233, 234-35 (Conn. 1934) (holding appraisal made four days before time for redemption expired failed to comply with statute requiring the appraisal to be made “within ten days after the time limited for redemption shall have expired”); Scribner v. Sachs, 164 N.E.2d 481, 484 (Ill. 1960); Hulegaard v. Garrett, 446 P.2d 975, 977 (Or. 1968) (holding document filed before a notice of appeal failed to meet the statutory requirement that document be filed “within five days after the notice of appeal is given or filed”); State v. Dyches, 28 Tex. 535, 538 (1866) (“The use of the term ‘after conviction’ excludes the idea that it was intended that he should do so at any time before conviction.”); American Hous. Found. v. Calhoun County Appraisal Dist., 198 S.W.3d 816, 819 (Tex. App. 2006) (“Moreover, an interpretation of the statute that makes the phrase ‘constructed after December 31, 2001’ mean constructed before or after December 31, 2001, is grossly contrary to the ordinary meaning of the word ‘after.’”), review denied; see also Formal Opinion Vermont Attorney General #2008-01 (explaining that a proposed interpretation that “expands [constitutional language] to include adjournments ‘before the presentation’ of a bill as well as adjournments ‘within three days after the presentation’” must fail because “the plain meaning of ‘after’ does not include ‘before’”); Silva v. Maplewood Care Ctr., 582 N.W.2d 566, 570 (Minn. 1998) (Tomljanovich, J., dissenting with Stringer, J.) (“Surely the word ‘after’ is not ambiguous.”); State v. Scott, 15 S.E. 405, 406 (Va. 1892) (“[I]t is impossible for us to construe the word ‘after’ as if it had been written ‘before.’”).

Whether these decisions signal the new Supreme Court’s willingness to look at the Legislature’s intent without finding a statute to be ambiguous, or whether the court simply found the statute ambiguous and declined to explain the ambiguity remains to be seen.

Can UM/UIM carriers explicitly exclude coverage for prejudgment interest?

In Inman, the court held that the TPIS apply to UM and UIM claims and that a prejudgment interest award can exceed UM/UIM policy limits. The Inman court based its conclusion on TPIS’ failure to state that UM/UIM carriers may exclude coverage for prejudgment interest. Indiana statutes regarding punitive damages make no mention of whether insurance companies can exclude coverage, see Ind. Code §§ 34-51-3-0.2 through -6, and it is well established that insurance policies may permissibly exclude coverage for punitive damages, see, e.g., Crabtree ex rel. Kemp v. Estate of Crabtree, 837 N.E.2d 135, 139-40 (Ind. 2005). In fact, the Court of Appeals and Supreme Court have recognized that public policy considerations weigh against insurance coverage for punitive damages in the UM/UIM context. See Shuamber v. Henderson, 563 N.E.2d 1314, 1317 (Ind. Ct. App. 1990), adopted in relevant part, 579 N.E.2d 452 (Ind. 1991).

The Inman court also correctly recognized that the TPIS do not permit insurance companies to exclude coverage for prejudgment interest. But no provision of the TPIS precludes insurance companies from excluding coverage for prejudgment interest. The General Assembly has demonstrated that when it wishes to require or preclude certain provisions in insurance policies, it will do so explicitly. See, e.g., Ind. Code § 27-7-5-2 (requiring insurance companies to provide UM and UIM coverage unless insured rejects coverage in writing); Ind. Code § 27-1-13-7 (requiring certain casualty insurance policies to provide coverage even in the event of the insolvency or bankruptcy of the insured entity); Ind. Code § 27-8-14.7-4 (requiring insurers to provide coverage for prostate screening).

The Inman court recognized that one jurisdiction, Georgia, has held that UM/UIM insurance companies have no duty to pay prejudgment interest that exceeds policy limits. The Inman court noted that the Georgia court offered no analysis for its position and declined to adopt its holding. However, several other decisions not cited by the Supreme Court reached the same conclusion as the Georgia court. See USAA v. Parker, 200 P.3d 350 (Colo. 2009); Trask v. Auto. Ins. Co., 736 A.2d 237, 239 (Me. 1999); Ricke v. Progressive Specialty Ins. Co., 577 N.W.2d 512 (Minn. Ct. App. 1998), review denied; Baxley v Nationwide Mut. Ins. Co., 430 S.E.2d 895 (N.C. 1993); Carney v State Farm Mut. Auto. Ins. Co., 877 P2d 1113 (Okla. 1994). These decisions, unlike the Georgia decision, included thoughtful analyses explaining that policy limits are bargained-for contractual terms and should not be ignored.

The natural reaction of insurance companies would be to include language in their policies specifically precluding coverage for prejudgment interest. Public policy would seem to favor giving consumers the option to reject certain coverage in exchange for lower premiums. See, e.g., Green v. Great Am. Ins. Co., 516 SW.2d 739, 740 (Tex. Civ. App. 1974). The Inman court suggested that insurance companies cannot include such terms in policies by stating, “it is not within the parties’ power to contractually preclude a prejudgment interest award made under the TPIS.” The Inman court, however, addressed only a general coverage limit, not an explicit exclusion. Therefore, although Inman will undoubtedly present a substantial hurdle for a party arguing that an exclusion of coverage for prejudgment interest is permissible, this issue remains open.

Can liability insurance companies exclude coverage for prejudgment interest?

Inman did not address the issue of whether an insurance company must provide coverage for prejudgment interest awarded against its insured if the prejudgment interest exceeds policy limits. The strong majority rule is that insurance companies have no duty to provide such coverage. See Lessard v. Milwaukee Ins. Co., 514 N.W.2d 556, 559 (Minn.1994); Buckhannon-Upshur County Airport Auth. v. R & R Coal Contracting, Inc., 413 S.E.2d 404, 410-11 (W. Va. 1991) (collecting cases). Although the Inman decision seems to suggest that the Indiana Supreme Court might reject this majority rule, the court made no explicit statement on the issue.

At what point in a case must a plaintiff formally request prejudgment interest?

The TPIS are silent on the timing of a plaintiff’s formal request for prejudgment interest. Significant authority from other jurisdictions indicates that a plaintiff must make this request before a judgment is entered in the complaint or pretrial order. See, e.g., First State Bank of Monticello v. Ohio Cas. Ins. Co., 555 F.3d 564, 572 (7th Cir. 2009); Uphoff v. Elegant Bath, Ltd., 176 F.3d 399, 409-10 (7th Cir. 1999); Landstar Ranger, Inc. v. Parth Enters., Inc., 725 F. Supp. 2d 916, 923 (C.D. Cal. 2010); Rowland v. Magna Millikin Bank of Decatur, N.A., 812 F. Supp. 875, 881 (C.D. Ill. 1992); McLaurin v. Old S. Life Ins. Co., 334 So. 2d 361, 362 (Miss. 1976); Gonzales v. Lockwood Lumber Co., 668 S.W.2d 813, 815 (Tex. App. 1984). Until the Supreme Court explicitly addresses this issue, it makes sense for defendants to argue that plaintiffs who have failed to request prejudgment interest before trial have waived their right to prejudgment interest.

Conclusion

Although this article focused on questions created and unanswered by the Supreme Court, the court’s recent decisions have provided significant clarity regarding prejudgment interest claims. Although litigation over the issues discussed above will undoubtedly occur, the Supreme Court has eliminated many open issues regarding the TPIS and has provided guidance for parties and trial courts faced with TPIS claims.•

Mr. William Ramsey is a member of DTCI and an associate in Murphy Ice & Koeneman, Fort Wayne. Firm partners, Edward Murphy and Heidi Koeneman, served as defense counsel in Wisner v. Laney. The opinions expressed in this article are those of the author.
 

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  1. Am I the only one who sees that the City is essentially giving away the MSA site AND giving millions to build new buildings on the site when this site would be the perfect place for the Justice Complex? Across from City-County, check; keeping it centrally located, check, etc. It's my understanding that the GM site must be purchased by the City from Motors Liquidation Company. STOP WASTING WHAT WE ALREADY HAVE AND OUR TAX DOLLARS! The Ballard Administration has not been known for it's common sense...never voted for him and never will!

  2. This guy sounds like the classic molester/manipulator.

  3. Louis D. Brandeis was born in 1856. At 9 years of age it would have been 1865. The Brandeis family did not own slaves. My source Louis D. Brandeis: A Life, by Melvin L. Urofsky.

  4. My name is Matthew Lucas Major, I recently went through a jury trial in Bloomington , In. It was the week of Feb 19-21. Although I have been incarcerated since August 5, 2014. The reason I 'am writing to you sir is on the 21 of February the jury came in with a very excessive and wrongful verdict of guilty on 6 child molesting charges against my daughter who was 9 at the time I was accused. I also had 2 other Felonies one of Intimidation and 1 of Sexual Vicarious Gratification. Judge Marc Kellam on the second day of trial gave me a not guilty on those 2 felonies. The jury was sent out during that time and when brought back Judge Kellam told them to not concern themselves with the 2 Felonies that he ruled on them. They were told to not let evidence they had already heard influence there verdicts. I never in my life touched any child sexually and definitely not with my own daughter. When I was arrested Detective Shawn Karr told me I would be convicted guilty just on my daughters word even without evidence. That's just what happened. my public defender did me so wrong he never once proved to the court and jury all the lies the child told, and Jeremy Noel my public defender could of proven the lies easily. The stories in Serenity's depositions and Forensic interview changed and were not consistent as Prosecutor Darcie Fawcett claimed they were. Yet my attorney never mentioned that. The facts that the child accused me of full penetration in her vagina and rectum was proven lies. Doctor Roberta Hibbard of Riley hospital in Indianapolis confirmed Serenity's hymen intact, no scars, no tearing, no signs of rape to her. Yet my attorney didn't use that knowledge . the DNA was all in my favor. I tell you I will spend my entire life in prison going through rape and beatings etc. even Judge Kellam abused his authority by telling the jurors to listen and believe what the prosecutors side in evidence like my daughters testimony. In one interview with the detectives my daughter got flustered with her mom and said on camera " I'm saying what you told me to mom"!! Yet Mr. Noel said nor did anything to even resemble a defense attorney. Judge Kellam allowed edited version of a taped conversation between the child and her mother. Also Judge Kellam allowed the Prosecutor too bring in to my case a knife found under my seat, the knife wasn't part of my case. She was allowed by my attorney and the judge to put a huge picture of it on the screen and huge picture of my naked privates in a full courtroom and open court. Ms. Fawcett says to jury see how easy Mr. Major could reach the knife and cut his Childs throat. Even though I had no weapons charge against these cases. This gave the jurors prejudice thought against me thinking I threatened her with that knife and how scared she would of been knowing i could get it and kill her. On my sentencing court March 19, 2014 my public defender told Judge Kellam he wish to resign from being my attorney and wished for the court to give me outside council to file a error to trial or appeal. We were denied. Now after openly knowing my public defender don't want to represent me he has to. Well when as parents we make our kids clean a room when they really don't wish to, well the child will but don't mean she will do a good job, that's where I'm at with Mr. Noel. please dont ignore mine and my families pleas for your help . we have all the legal proof you could need to prove Im innocent. Please dont make my spend years in prison innocent when you can fix this wrong. Im not saying Im a perfect man or that I was a perfect dad to my 2 children none of us are. Ive made some bad choices in life and I paid for them. But I didnt ever touch or rape my daughter . I love my children with all my heart. And now through needing attention and a ex-wife who told my granny several times she wish she could put me in prison to get me out of their lives. Well my ex finally accomplished her goal. Sad part is she is destroying our daughter with all this horrific lies and things she taught my daughter to say. My daughter will need therapist to ever hope for a chance of a normal life after what she had done to her by her mom and their side of the family. My daughter told everyone even on stand she had a dream months before i supposedly molested her in this dream I was molesting her and when I finally did it matched her dream perfectly. She admitted to watching movies about little girls being molested and watching U-Tube videos about child molesting all before it happened supposedly to her. Doesn't that sound very unusual that a non molested 9 yr old would need to know so much about being molested? The only reason I could think a 9 year old would need so much information is to be prepared to know what to say and be able to say how it felt what took place etc.. So when questioned by authorities she would be prepared. And there again sir if a parent is pre grooming a 9 year old child she would need intimate details . Like telling her daughter about a couple moles on my private area. The child admitted to sneaking my cell and looking many many times at nudes of me and my girlfriend even one where my penis was entering my girlfriends vagina. In that picture my moles are obvious. Yet when prosecutor showed everyone in court my privates and pictures of the moles she said the only way the child would know about them is if she saw them for herself. My attorney once again said nothing about the pictures my child saw. Or could a ex-wife be able to describe my moles to help her case against getting rid of me? I beg you help me. This is my very existence. Ive lost everything , a good job, a wonderful girlfriend, my freedom, but worse thing Ive lost is my children. They were my reason to get up every morning and strive to be better. The wonderful bond I had with my Serenity is gone. After this I would be afraid to even hug her for fear of what next can they do to me. I'm not afraid to tell you I sit here in this cell and try to hold back my tears. Everyone knows you cant show weakness in prison. My life has already been threatened here at Wabash Valley Prison. After only 3 days of arrival. I was tricked into signing a waiver now Im in G Block General Population with 6 child molesting felony charges. Mrs. Hart as a 18 year old I almost died hooked to machines in hospital almost 1 month and now I know that fear was childish compared to this . I cant help but put emotions in this, after all Mrs. Hart Im human and God help Me I never been more afraid in my life. I didnt hurt my little girl I didnt touch her sexually. As much as it shreds me and fills my mind what Im facing I worry more about my mom and granny because of their great love for me mam they are suffering so deeply. I aint done this things but my loved ones suffering right along beside me and If you take my case you will be in essence freeing them also. I sent momma this letter and asked her to email it to you. I'm scared I have been done so unjustly by our legal system and I need you to fix this and give me freedom. I ask you please don't just ignore my pleas. Here in America its nice to be able to trust our legal justice system, well they destroyed my and my loved ones trust in our justice system . And I'm trusting in You !!! My entire family is suffering this nightmare with me. My 77 year old granny had a stroke and isn't doing so well. My single mother that raised 3 kids alone is dying from Lupus and since my arrest has stayed so sick and weary. Our lives torn to peices by a government I was taught I could trust in. my momma has tried so many innocent project and wrongfully accused and cant get anywhere. please please help me. A quote from the late Nelson Mandela: To be free is not merely to cast off ones chains, But to live in a way that respects and enhances The Freedom Of Others. I have Faith in you and your clinic to cast my chains off and give me freedom I do deserve as a wrongfully accused Man, son, brother, father, friend. Matthew Major DOC# 246179 Cause # : 53c02-1308-FA-000779 God Bless you. Please contact me with your decision so I know you made a life changing decision for me , just please at least write me so I know you care enough about your citizens to respond to cries for your help. You can speak openly with my mother Charlotte Spain (828) 476-0406: 71 Lakeview Dr. Canton, NC 28716 Thank You Matthew Major I know yall get thousands of request and inmates claiming innocence, and each person who are innocent deserve to have organizations like yours willing to fight for them and I give yall so much Thanks and I thank God everyday yall are out there caring enough to help free the innocents. Since discovering firsthand how easily lives and families can be destroyed by Poor Defense attorneys not doing their job . And Prosecutors allowed to do as they please in court

  5. 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.

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