Cochran v. Auto Club Ins. Ass'n

• Decision Date: 18 July 1988
• Docket Number: Docket No. 94730
• Citation: 169 Mich.App. 199,425 N.W.2d 765
• Parties: Carol Ann COCHRAN, Plaintiff-Appellee, Cross-Appellant, v. AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellant, Cross-Appellee, and Francis Myers, Defendant.
• Court: Court of Appeal of Michigan — District of US

Page 765

425 N.W.2d 765

169 Mich.App. 199

Carol Ann COCHRAN, Plaintiff-Appellee, Cross-Appellant, v. AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellant, Cross-Appellee and Francis Myers, Defendant.

Docket No. 94730.

Court of Appeals of Michigan.

Submitted Dec. 8, 1987.

Decided June 7, 1988.

Released for Publication July 18, 1988.

Donald G. Jennings, P.C. by Donald G. Jennings, Manistee, for plaintiff-appellee, cross-appellant.

Menmuir, Zimmerman, Rollert & Kuhn, P.C. by P. David Vinocur, Traverse City, and MarArthur, Cheatham, Acker & Smith, P.C. by Mary T. Nemeth, Detroit, for Auto Club Ins. Ass'n.

Before MAHER, P.J., and GRIBBS and SIMMONS, ^* JJ.

SIMMONS, Judge.

Defendant Auto Club Insurance Association appeals as of right from a Manistee Circuit Court determination that it failed to tender payment sufficient to terminate its liability for postjudgment interest. Plaintiff filed a cross-appeal claiming that the trial court erred by calculating the judgment interest on the policy limit of $50,000 rather than on the jury verdict of $125,000. We affirm.

On November 29, 1981, plaintiff was injured when her car was rear-ended by defendant Myers while he was driving his GMC truck. Myers was insured by Auto Club. The policy limit was $50,000. This case went to trial and the jury awarded plaintiff $125,000 for economic loss after determining that defendant was negligent. The jury also determined that plaintiff's injuries did not constitute a serious impairment of body function. On February 21, 1984, the trial court entered a judgment awarding plaintiff $125,000 plus interest from the date the complaint was filed until the judgment was paid and costs of $554.57.

Auto Club subsequently filed motions for a new trial, judgment notwithstanding the verdict and remittitur. On April 15, 1984, these motions were denied. Auto Club then appealed as of right. The trial court's determination was affirmed on appeal. See Cochran v. Myers, 146 Mich.App. 729, 381 N.W.2d 800 (1985), lv. den. 425 Mich. 867, 387 N.W.2d 387 (1986).

On July 2, 1986, plaintiff filed a motion in the Manistee Circuit Court to compel payment of a bond pursuant to MCR 7.208(E). Plaintiff sought payment of the $50,000 policy limit, $554.57 in costs, plus prejudgment and postjudgment interest on the $125,000 jury verdict. The total amount plaintiff sought was $126,178.29. Auto Club responded by claiming that it was only liable for the $50,000 policy limits, $554.57 in costs, prejudgment interest on the $50,000 policy limit and postjudgment interest on a $125,000 verdict up until Auto Club's May 30, 1984, tender of payment. The total amount Auto Club claimed it owed was $66,075.51. On December 16, 1986, the trial judge heard plaintiff's motion and determined that Auto Club owed prejudgment interest on the $50,000 policy limit and postjudgment interest on the $125,000 judgment through the date of December 16, 1986.

Interest on a money judgment recovered in a civil action is statutorily created. M.C.L. § 600.6013; M.S.A. § 27A.6013. This statute provides in pertinent part:

"(1) Interest shall be allowed on a money judgment recovered in a civil action, as provided in this section....

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"(4) For complaints filed on or after June 1, 1980, but before January 1, 1987, interest shall be calculated from the date of filing the complaint to the date of satisfaction of the judgment at the rate of 12% per year compounded annually...."

This Court has held that postjudgment interest should be calculated based upon the policy limits and not the amount of the judgment. Matich v. Modern Research Corp., 146 Mich.App. 813, 824, 381 N.W.2d 834 (1985), lv. gtd. 425 Mich. 871 (1986); Sederholm v. Michigan Mutual Ins. Co., 142 Mich.App. 372, 388-390, 370 N.W.2d 357 (1985), lv. den. 424 Mich. 857 (1985). However, if an insurance company contracts to provide interest on the entire judgment, the insurance company will be liable to pay interest on the judgment. Matich, supra, 146 Mich.App. pp. 827-828, 381 N.W.2d 834.

In the instant case, the insurance policy provided for payment, in addition to the applicable limits of liability, of:

"(a) all expenses incurred by the Exchange [Auto Club], all costs taxed against the insured in any such suit and all interest on the entire amount of any judgement [sic] which accrues after the entry of judgment and before the Exchange has paid, tendered or deposited in court that part of such judgment which does not exceed the limits of the Exchange's liability thereon...."

Therefore, based upon the insurance contract, Auto Club agreed to pay interest on the entire amount of any judgment accruing after the entry of judgment and before tender of payment. In fact, in appellant's brief, appellant admitted that, pursuant to M.C.L. § 600.6013(4); M.S.A. § 27A.6013(4), interest was to be calculated upon the $125,000 judgment from the date the complaint was filed until the date the judgment was satisfied.

Auto Club claims that its offer of May 30, 1984, constituted sufficient tender of payment so as to relieve it from the obligation to pay postjudgment interest on the entire amount beyond that date. In its policy of insurance, Auto Club did provide that interest on the judgment accrues up until Auto Club pays, tenders, or deposits in court that part of the judgment which does not exceed the limits of the policy. In the May 30, 1984, letter, Auto Club authorized its attorney to offer, as a final settlement proposal, the $50,000 policy limit plus interest on the $50,000 through judgment plus costs, and interest on the...