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Insurance Law

Troutman Sanders LLP: Illinois Appellate Court Affirms Victory for Insurer in $5 Million Post-Judgment Interest Coverage Dispute

By Rebecca L. Ross, David F. Cutter, James J. Sanders

The Illinois Appellate Court has upheld a victory for Occidental Fire & Casualty Company of North Carolina in a dispute over the scope of its obligation to cover post-judgment interest. The plaintiff-appellant, Maria Colella, contended that Occidental was obligated to cover approximately $5 million in post-judgment interest that had allegedly accrued and was continuing to accrue on an $8.3 million wrongful death verdict that she had secured against two Occidental insureds on May 1, 2007. Under the Illinois post-judgment interest statute, interest began to accrue on the judgment at a rate of 9% per annum, or $2,055.98 per day, when the verdict was rendered.

The Occidental policy included a Supplementary Payments provision which extended coverage for post-judgment interest until Occidental “paid, offered to pay, or deposited in court the part of the judgment that is within our Limit of Insurance.” On June 15, 2007, Occidental’s defense counsel sent a letter to Colella’s counsel that offered to pay Colella the limit of the Occidental policy plus accrued post-judgment interest, which at that time was approximately $96,000. Colella never responded to the offer, and the amount was not paid until 2012 when Colella’s attorneys finally requested payment.

In 2012, the Circuit Court of Cook County granted summary judgment to Occidental and denied Colella’s cross-motion for summary judgment on the issue of post-judgment interest. The circuit court found that the June 15, 2007 letter was an “offer to pay” that terminated Occidental’s obligation to cover any additional post-judgment interest.

On appeal, Colella argued that Occidental’s June 15, 2007 letter did not terminate its obligation to cover post-judgment interest because, according to her, it did not convey an unconditional offer. Colella relied on an affidavit from her counsel in which he claimed that during a conversation on June 14, 2007 Occidental’s defense counsel had “indicated” to him that he had authority to offer the $1 million policy limit as “full satisfaction” of the underlying judgment. Colella argued that her counsel’s affidavit created a fact dispute about whether the offer conveyed in the June 15, 2007 letter was unconditional. The appellate court disagreed, finding that the June 15, 2007 letter plainly conveyed an unconditional offer to pay Colella the $1 million policy limit plus post-judgment interest. Thus, the appellate court affirmed the circuit court’s order granting summary judgment to Occidental and denying Colella’s cross-motion for summary judgment.

Occidental is represented by Rebecca Ross, David Cutter and James Sanders from Troutman Sanders’ Chicago office.

A copy of the order can be found here. [enhanced version available to subscribers]

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