In re Templeton, Bankruptcy No. 92 B 04870
| Decision Date | 14 January 1993 |
| Docket Number | Bankruptcy No. 92 B 04870,Adv. No. 92 A 00417. |
| Citation | 150 BR 214 |
| Parties | In re Leonard E. TEMPLETON, Jr., and Larrilee H. Templeton, Debtors. WEST BEND MUTUAL INSURANCE CO., Plaintiff, v. Leonard E. TEMPLETON, Jr., a/k/a Len Templeton, Larrilee H. Templeton, a/k/a Larri Templeton, Larrilee Harbin, Larri Harbin and Regina Sukosd, individually and as Special Administrator of the Estate of John Sukosd, Defendants. |
| Court | U.S. Bankruptcy Court — Northern District of Illinois |
Allan S. Brilliant, Holleb & Coff, Chicago, IL, for debtors.
C. John Ruddy, Truemper, Hollingsworth, Wojtecki, Courtin & Ruddy, John M. Lamont, Thompson, Lamont & Flaherty, P.C., Wayne F. Weiler, Aurora, IL, for Regina Sukosd.
M. Scott Michel, U.S. Trustee, Chicago, IL.
Sara E. Cook, McKenna, Storer, Rowe, White & Farrug, Chicago, IL for West Bend Mut. Ins. Co.
This matter comes before the Court on the complaint filed by West Bend Mutual Insurance Co. ("West Bend"), seeking relief by way of declaratory judgment, interpleader and injunction against Leonard E. Templeton, Jr. and Larrilee H. Templeton (the "Debtors"), and Regina Sukosd, individually and as Special Administrator of the Estate of John Sukosd (the "Creditor"). This controversy concerns the determination of the total amount of West Bend's liability under an insurance policy. The principal issues are: if and when West Bend made a timely and sufficient tender of all the subject policy proceeds; computation of the correct amount of the requisite post-judgment interest accrued and owing thereunder; and whether the Court should enter injunctive relief in favor of West Bend against the Debtors and the Creditor. For the reasons set forth herein, the Court having considered the pleadings and the evidence adduced at trial, makes its findings and conclusions discussed hereinafter for the relief sought by way of declaratory judgment and interpleader. The injunctive relief sought is denied.
The Court has jurisdiction to entertain this matter pursuant to 28 U.S.C. §§ 1334, 2201, and General Rule 2.33(A) of the United States District Court for the Northern District of Illinois. This matter constitutes a core proceeding under 28 U.S.C. § 157(b)(2)(B) and (O).
Some of the relevant facts and background are contained in an earlier opinion of the Court. See In re Templeton, 146 B.R. 757 (Bankr.N.D.Ill.1992). West Bend issued a homeowner's insurance policy to the Debtors effective November 30, 1988 to November 30, 1989, with limits of liability at $100,000 per occurrence. (West Bend Ex. No. 1). On August 29, 1989, John Sukosd, the Creditor's spouse, was injured as a result of a fall sustained on the Debtors' premises. His fall and subsequent death led to a personal injury and wrongful death action ultimately prosecuted by the Creditor against the Debtors and others. Suit was filed on September 14, 1989, in the Circuit Court for the Sixteenth Judicial Circuit, Kane County, Illinois. West Bend provided counsel and a defense for the Debtors, who also retained separate defense counsel because the Creditor's claim exceeded policy limits. Pretrial settlement negotiations were unsuccessful despite West Bend's policy limits settlement offer.
On February 12, 1992, before the jury rendered its verdict in that action, other codefendants orally agreed to settle the claims against them in the sum of $500,000. An order approving that settlement was entered on March 3, 1992. Thereafter, the Creditor, through her attorneys, received those settlement funds on March 4, 1992. On February 14, 1992, however, judgment was entered upon the jury verdict in favor of the Creditor against the Debtors in the amount of $3,000,000. (West Bend Ex. No. 2 and Sukosd Ex. No. 1).
On February 20, 1992, West Bend, through one of its local attorneys, James C. James, III, hand-delivered a letter of that same date, signed by another one of its attorneys, Mark Pheanis, together with a draft in the amount of $100,000, payable to the Creditor and her attorney, and a partial relief and satisfaction of judgment. (Sukosd Ex. No. 4 and West Bend Ex. No. 3). Same had been authorized by West Bend's in-house attorney, Rollin Krafft. That letter and the accompanying documents were delivered to one of the Creditor's attorneys, Charles F. Thompson, Jr., who declined to accept the draft and partial release and satisfaction. Later that day, James faxed to Thompson the declaration pages from the West Bend policy. (Sukosd Ex. No. 5). Thereafter, on February 24, 1992, James delivered to Thompson, a certified copy of the complete subject policy. (Sukosd Ex. No. 6 and West Bend Ex. No. 4). Significantly, during this time period, no discussion of interest owing under the policy occurred among the various attorneys.
The policy provides in Section II—Liability Coverages, in relevant part:
The policy further provides in Section II—Additional Coverages, in part:
The policy also provides, in part, in Section II—Conditions:
7. Bankruptcy of an Insured. Bankruptcy or insolvency of an insured will not relieve us of our obligations under this policy.
In order to stay post-judgment collection and enforcement proceedings by the Creditor, the Debtors filed their Chapter 11 petition on March 3, 1992. They disclosed the insurance policy proceeds on their schedules as an asset of the estate, and listed the judgment as one of their liabilities.
Some of the parties' attorneys were in contact with each other thereafter on several occasions, but never documented or exchanged written communications on the interest dispute. James and Pheanis testified they verbally offered to Thompson at some uncertain time or times, in late February or early March, to pay whatever was required under the policy to satisfy its terms concerning post-judgment interest. Thompson, on the other hand, testified that the subject of post-judgment interest was not discussed with him by either James or Pheanis until some time in March.
On March 13, 1992, Thompson, by letter to James, again declined to accept the $100,000 draft and accompanying release and satisfaction which had been delivered on February 20, 1992. Instead, he presented a counter-proposal that the draft would be acceptable in exchange for a partial satisfaction of judgment. (Sukosd Ex. No. 13 and West Bend Ex. No. 5). The attorneys, however, did not agree on the appropriate amount of accrued but unpaid interest owing under the terms of the policy. As a result, West Bend filed the instant complaint on April 8, 1992.
In the complaint, West Bend seeks a determination that its liability for post-judgment interest under the policy should be capped at the sum of $4,438.35. It alleges that interest should be calculated on the principal sum of $2,500,000 reflecting the $500,000 in settlement proceeds received from the other co-defendants. In their answer, the Debtors ask that the Court limit any relief granted to West Bend to the determination of its obligation to pay the requisite interest. The Creditor seeks a finding that the actions of West Bend through its attorneys on February 20, 1992, and thereafter, did not constitute a lawful tender of the full limits of West Bend's liability under the indemnity provisions of the policy, and that the injunctive relief requested should be denied.
After some initial non-dispositive motions, on May 15, 1992, the Court allowed West Bend to pay the $100,000 policy principal proceeds into the registry of the Court maintained by the Clerk of the Bankruptcy Court, plus the sum of $67,315.07 as disputed post-judgment interest, pending trial and determination of the rights of the parties under the policy on the issues at bar. (West Bend Ex. No. 7). Annual interest on a $3,000,000 judgment at nine percent, pursuant to the Ill.Rev.Stat. ch. 110, para. 2-1303 is $270,000 per year, with a per diem figure of $739.72602. Annual interest at nine percent on $2,500,000 is $225,000 with a per diem of $616.44. Thus, the total deposit made by West Bend of $100,000 plus $67,315.07 represents the principal policy limits, plus ninety-one days of post-judgment interest on the $3,000,000 judgment from the date of entry of the judgment, February 14, 1992, through the date of deposit, May 15, 1992. On September 25, 1992, the state court ordered a setoff in the amount of $500,000 against the judgment, effective March 4, 1992, by reason of the settlement with the other parties to that litigation.
West Bend first contends that its written offer of February 20, 1992, as supplemented by a verbal offer made in late February or early March, 1992, to pay whatever the appropriate post-judgment accrued interest, was a valid and sufficient tender. Alternatively, West Bend argues that the filing of the Chapter 11 petition by the Debtors tolled the continuing accrual of its liability for post-judgment interest. Thirdly, at the latest, further...
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