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By: Lee Whatling
The Eleventh Circuit Court of Appeals held recently that a claim for prejudgment interest made for the first time after liability had been determined was timely under Georgia law. In the underlying case, a Georgia district court found that the insurer owed coverage under a policy issued to Omni National Bank for the negligence of its directors and officers. Following affirmance of the decision, Omni’s receiver, the FDIC, sent the insurer a demand letter for the policy limits in which it also claimed for the first time prejudgment interest. The insurer paid the policy limits but disputed the interest claim. As a result, the FDIC filed a separate lawsuit to collect prejudgment interest under O.C.G.A. § 7-4-15. There, the Georgia district court found in favor of the insurer that the FDIC’s claim for interest was untimely because Georgia law requires the demand “before the entry of a final judgment as to the principal amount due.” However, the Eleventh Circuit reversed the district court’s decision in FDIC v. Certain Underwriters at Lloyd’s, London, No. 20-13604, 2022 WL 3568852 (11th Cir. Aug. 19, 2022).
In finding that the FDIC’s claim was asserted timely, the Eleventh Circuit reasoned that the underlying declaratory judgment was not a “coercive final judgment” (i.e., one ordering the payment of a liquidated amount, such as insurance proceeds) that could preclude the assertion of post-judgment demand for prejudgment interest. In other words, because the declaratory judgment only declared the parties’ rights and did not seek execution or order the insurer to act, it was not coercive. The Court further explained that “[t]he coercive judgment is critical because interest is merely a monetary award added to a judgment.” Absent any actual monetary award, then, the parties had an opportunity to litigate the interest claim such that it was not barred as untimely.
This decision should put insurers on notice that a declaration of coverage may not be the end of the story as the prevailing party may yet assert a post-judgment claim for prejudgment interest for the first time following the decision, even when the policy limits have been paid.