Pre-judgment Interest Recoverable after Settlement (PA)
In Gen Refractories Co v First State Ins P., PICS Case No. 15-1406 (E.D. Pa. Sept. 19. 2015), the Eastern District of Pennsylvania affirmed the practice of awarding prejudgment interest at the statutory rate, even if the parties settle for the policy limit. Since 1978, approximately 31,440 litigants have filed asbestos-related claims against General Refractories Co., which in turn has sued its excess insurance carrier multiple times for breach of contract. This was one such case. In response to General Refractories’ demand for coverage, defendant excess carrier Travelers argued that it was not required to pay because its insurance policy included an asbestos exclusion. However, back in March 2015, the court held that the asbestos exclusion was not enforceable, and so the parties agreed to settle for the policy limit of $21 million. Thereafter, General Refractories filed a motion for an award of prejudgment interest. Not surprisingly, Travelers objected, arguing that General Refractories was not entitled to recover any amount in excess of the policy limit. The district court analogized General Refractories position to that of a commercial claimant, likening them to a “plaintiff insured suing under liability, casualty, life, and fire insurance contracts to recover definite sums of overdue proceeds that are fixed, certain, and readily ascertainable.” In those instances, prejudgment interest in excess of the insurer’s limits of liability has been awarded. Accordingly, the district court granted prejudgment interest at the Pennsylvania statutory rate of six percent, $15 million in this case. Thanks to Hillary Ladov for her contribution to this post. Please email Brian Gibbons with any questions.
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