All three of these issues arose in two Appellate decisions captioned Norman v. Progressive Preferred Ins. Co, 619 S.W.3d 126 (Mo. Ct. App. 2021) (I) and Norman v. Progressive Preferred Ins. Co., 646 S.W.3d 440 (Mo. Ct. App. 2022) (II).
In Norman I, Progressive issued an auto policy to its insured Ralston with limits of $100,000.00. Norman obtained an uncontested bench trial wrongful death judgment against Ralston for approximately six million dollars in actual damages and one million dollars for aggravated damages. The court also awarded Plaintiff $476,976.24 in pre-judgment interest, post judgment interest at 5.91% until the judgment was “fully paid” and $3,118.95 in court costs. Six days after the judgment Progressive sent Plaintiff’s counsel a check for $100,000.00, a check for $8,600.00 for post judgment interest and a third check for costs, in a sum equal to $3,118.95. Plaintiff filed a garnishment action claiming all amounts due had not been paid, thus, and that post judgment interest was continuing to accrue. Progressive defended, claiming it did not owe prejudgment interest, it had paid all court costs assessed, as well as all post judgment interest due.
RSMO 408.040 (3) governs an award of prejudgment interest in tort actions, and in part, provides that a plaintiff can recover prejudgment interest if that party makes an offer of settlement to the opposing party and any subsequent judgment in the case exceeds the amount specified in the settlement offer. In Norman I, Plaintiff’s counsel made an offer to settle for $950,000.00. Before that demand was made and on numerous occasions, Progressive had offered its $100,000.00 limits in exchange for a full release of Ralston. The Additional Payments section in the Progressive policy provided “If we make an offer to pay our limit of liability, we will not pay any prejudgment interest accruing after our offer to pay our limit of liability.” The Western District Court of Appeals, elevating form over substance, held that an offer to pay limits in exchange for a release, is not an “unconditional offer to pay.” Rather, they found it was an offer to settle, not pay, since the offer included a requirement that their insured Ralston be released.
However, in very strong and unequivocal dicta the Court held prejudgment interest would only be calculated on the $100,000.00 policy limit, based on this policy language, “In addition to our limit of liability, we will pay for an insured person: … prejudgment interest awarded against an insured person on that portion of the judgment that does not exceed our Limits of Liability under this Part I – Liability to Others.” On remand, in Norman II, the trial court did limit the prejudgment interest calculation on what Progressive would owe to just the policy limit, and not the entire judgment.
The Court did find Progressive paid all court costs taxed and due and therefore the alleged failure to pay those taxes could not be a reason to extend the post judgment interest accrual time. Taxing of costs is a complicated endeavor in Missouri and no two circuits do it the same way. The best way for a carrier to protect itself is to try to require that the judgment set forth the costs before it is entered. Then, there should be no basis to claim delay in payment.
Norman also claimed that because Progressive had not paid prejudgment interest, the judgment was not satisfied, and post judgment interest continued to accrue. The Court disagreed, finding that payment of the limit of liability cut off the accrual of post judgment interest, relying on Progressive’s policy language which read Progressive will pay “Interest accruing after entry of judgment, until we have paid, offered to pay, or deposited in court, that portion of the judgment which does not exceed our limit of liability.” Relying on Missouri Supreme Court precedent, the Court held, the “limit of liability” did not include additional coverage amounts, that the simple tender of the liability limit stops of the accrual of post judgment interest.
So, a mixed day for Progressive, but a good day for the industry in respect to the clear language limiting interest awards to policy limits: the Court found those policy provisions clear and unambiguous and applied them as written.