State Farm Fire & Casualty Co. v. Haley

2007 ME 42, 916 A.2d 952, 2007 Me. LEXIS 42

• Court: Supreme Judicial Court of Maine
• Decided: March 2, 2007
• Status: Published

Opinions

Majority: SAUFLEY, C.J., and ' ALEXANDER, CALKINS, LEVY, and SILVER, JJ.

Dissent: DANA, J.

SILVER, J.

[¶ 1] Angela and Stephen Haley appeal from a summary judgment entered in the Superior Court (Cumberland, Crowley, J.) denying the Haleys prejudgment interest on a $100,000 settlement they reached with State Farm Fire and Casualty Company. The settlement reached the limit of the tortfeasor’s insurance policy. The Haleys argue that because State Farm agreed in the release of claims to pay the policy limit, it is also obligated under the terms of its policy to pay prejudgment interest beyond that limit. We disagree and affirm the judgment.

I. BACKGROUND

[¶ 2] The facts are undisputed. While driving, Hazel Stygles, an individual insured by State Farm, ran a stop sign and flashing red light and crashed into the driver’s side door of Angela Haley’s vehicle. Consequently, Haley suffered serious long-term injuries. The Haleys filed suit in the Superior Court. The Haleys and State Farm reached a policy limit settlement of $100,000 before judgment. The release of claims described the settlement. They did not agree, however, on whether State Farm was responsible for prejudgment interest and costs in excess of the policy limit.

[¶ 3] The Haleys agreed that State Farm would file a declaratory judgment action to determine whether prejudgment interest and costs should be awarded. After commencement of the action, the Haleys filed a motion for a summary judgment, which the Superior Court denied in part and granted in part, holding that State Farm was not responsible for prejudgment interest. This appeal followed.

II. DISCUSSION

[¶4] The Haleys contend that the language of State Farm’s policy obligates it to pay prejudgment interest in excess of a policy limit settlement. We have determined that “the plain language of the policy controls” whether an insurer is obligated to pay prejudgment interest beyond its policy limit. Nunez v. Nationwide Mut. Ins. Co., 472 A.2d 1883, 1385 (Me.1984); see Moholland v. Empire Fire & Marine Ins. Co., 2000 ME 26, ¶ 4, 746 A.2d 362, 364; Trask v. Auto. Ins. Co., 1999 ME 94, ¶ 8, 736 A.2d 237, 239.

[¶ 5] The State Farm policy provides:

In addition to the limits of liability, we will pay for an insured any costs listed below resulting from such accident.

1. Court costs of any suit for damages that we defend.

2. Interest on damages owed by the insured due to a judgment and accruing:

a. after the judgment, and until we pay, offer or deposit in court the amount due under this coverage; or

b. before the judgment, where owed by law, and until we pay, offer or deposit in court the amount due under this coverage, but only on that part of the judgment we pay.

(Emphasis in original.) The Haleys contend that paragraph b obligates State Farm to pay them prejudgment interest.

[¶ 6] We disagree. The plain language of that paragraph clearly dictates that State Farm pay interest only in the instance of a judgment. A settlement is not a judgment and State Farm is not obligated to pay prejudgment interest in excess of its policy limit.

The entry is:

Judgment affirmed.