COA affirms prejudgment interest on reduced jury verdict

IL file photo

A trial court properly awarded interest on a reduced jury verdict, not the original verdict amount, the Court of Appeals of Indiana has ruled, pointing to the parties’ pretrial stipulation.

Following an auto collision in November 2017, Hannah Wormgoor was diagnosed with post-traumatic headaches, occipital neuralgia and cervical radiculopathy. She sent a demand to her insurer, State Farm Mutual Automobile Insurance Company, for $75,000, but State Farm countered with less than $8,000.

In 2019, Wormgoor sued State Farm and the other driver, Christopher Vervaet, for damages. The insurer allowed Wormgoor to accept $25,000 from Vervaet’s policy, so the lawsuit continued between Wormgoor and her insurer.

Settlement talks were unsuccessful, so the case proceeded to trial. The parties entered into a stipulation providing that if the jury’s verdict were greater than $110,000 — the maximum available under Wormgoor’s policy — the court would reduce the verdict to $67,168.52, accounting for $10,000 that had been paid for her medical treatment, $7,831.48 advanced to her and the $25,000 she received from Vervaet.

The Marion County jury ultimately returned a $1.05 million verdict in Wormgoor’s favor, which was immediately reduced to $67,168.52. She also sought prejudgment interest based on the full $1.05 million verdict, but the trial court determined interest would be calculated based on the reduced verdict amount.

The final interest award was $11,559.77.

On appeal, Wormgoor argued the trial court erred in calculating interest. The Court of Appeals disagreed.

“Our review of the record reveals that the plain language of the pretrial stipulations provides that any jury verdict in excess of $110,000 should be reduced to $67,168.52,” Judge Rudolph Pyle wrote. “Thus, the judgment that the trial court used to calculate prejudgment interest cannot be the $1,050,000 jury verdict, because it was immediately reduced, pursuant to the pretrial stipulations, to $67,168.52.”

The COA looked to Kosarko v. Padula, 979 N.E.2d 144 (Ind. 2012), and Inman v. State Farm Mut. Auto. Ins. Co., 981 N.E.2d 1202, (Ind. 2012), in reaching its decision.

“… (W)e hold that a trial court has the discretion to award prejudgment interest upon a jury verdict, even when that amount exceeds a final judgment stipulated to by the parties,” Pyle wrote. “Here, the trial court granted the request for prejudgment interest. However, it based the award on the final judgment stipulated to by the parties, not the jury verdict award. The record supports the trial court’s decision.

“Here, the record reveals that the parties did not avoid efforts to settle their dispute and there is no evidence that State Farm took steps to unreasonably delay the case being decided at trial,” Pyle concluded. “In fact, the record reveals that much of the delay getting this case to trial involved COVID-19 emergency orders delaying in-person hearings during the pandemic. As a result, the trial court did not abuse its discretion in calculating prejudgment interest based on the stipulated reduced judgment instead of the jury verdict amount.”

The case is Hannah Wormgoor v. State Farm Mutual Automobile Insurance Company, 21A-CT-2612.

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