McKinney v. State Farm Mut. Ins.
| Decision Date | 28 October 2003 |
| Docket Number | No. WD 61948.,WD 61948. |
| Citation | 123 S.W.3d 242 |
| Parties | James McKINNEY, et al., Respondents, v. STATE FARM MUTUAL INSURANCE, Appellant. |
| Court | Missouri Court of Appeals |
Michael E. McCausland, Kansas City, MO, for appellant.
Karen D. Renwick, Kansas City, MO, for respondents.
Before JAMES M. SMART, JR., P.J., ROBERT G. ULRICH and LISA WHITE HARDWICK, JJ.
State Farm Mutual Automobile Insurance Company ("State Farm") appeals the trial court's award of prejudgment interest on James McKinney's ("Mr. McKinney") uninsured motorist claim. State Farm claims that the trial court erred as a matter of law in awarding prejudgment interest under section 408.020, RSMo 2000, because Mr. McKinney's uninsured motorist claim was unliquidated and under section 408.040.2, RSMo 2000, because Mr. McKinney's claim is in contract not tort. The trial court's award of prejudgment interest is reversed.
The vehicle in which Mr. McKinney and his wife, Virginia McKinney ("Mrs. McKinney"), were riding on May 22, 1999, was struck in the rear by a phantom vehicle.1 An investigating law enforcement officer that was sent to the accident scene noted in the accident report that Mr. and Mrs. McKinney "advised him they had no injuries and refused medical attention." Approximately a month after the accident, Mr. McKinney sought medical treatment for back and neck pain that he attributed to the accident.2 At the time of the accident, Mr. McKinney was insured by a State Farm automobile insurance policy that included uninsured motorist coverage.
State Farm received a certified letter dated January 19, 2000, from the McKinneys' attorney notifying it of the unsuccessful efforts to identify the phantom motorist. In the same letter, Mr. McKinney sought insurance coverage under the uninsured motorist provision for injuries he claimed were sustained due to the accident. The letter also demanded that State Farm compensate Mr. McKinney $27,500 before March 20, 2000, or the McKinneys would file suit against State Farm. The letter noted that in the event the matter went to trial and the jury rendered a verdict in excess of the $27,500 demand, the McKinneys would be entitled to prejudgment interest pursuant to section 408.040.2, RSMo 2000. Medical records and physician's notes accompanied the demand letter. Counsel for the McKinneys sent a second letter to State Farm on April 17, 2000, indicating that the offer was extended until April 24, 2000, and included more medical documentation of Mr. McKinney's claimed injuries. State Farm paid $2,500 on Mr. McKinney's uninsured motorist claim and $1,135.10 on his medical claim.
The McKinneys filed suit against State Farm on October 10, 2001, alleging in the second amended petition for damages, numerous permanent and progressive physical injuries and mental anguish that Mr. McKinney sustained as a result of the vehicular accident. The petition also alleged Mrs. McKinney's claim for the loss of consortium as a result of her husband's injuries. The McKinneys also sought other recovery unrelated to the single issue now before this court. In its answer to the second amended petition, State Farm admitted that it was liable for benefits but disputed the amount of liability and the extent of Mr. McKinney's injuries.
The trial court and parties addressed the issue of prejudgment interest in pretrial proceedings. State Farm filed a motion in limine requesting that evidence regarding prejudgment interest be excluded. The trial court sustained the motion and determined that it would decide whether prejudgment interest should be awarded and, if so, the amount.
After a six day trial, the jury awarded Mr. McKinney $75,000 in uninsured motorist benefits and $2,000 in medical payment benefits.3 It also awarded Mrs. McKinney $8,000 for her loss of services and consortium claim. The trial court entered judgment on the jury's verdict on July 24, 2002.4 The trial court issued an amended judgment on August 23, 2002, awarding prejudgment interest on Mr. McKinney's personal injury claim at the rate of nine percent per annum from April 24, 2000, the date the McKinneys set for State Farm to respond to the $27,500 demand letter, through July 24, 2002, the date of judgment, in the amount of $14,851.89. The amended judgment omitted prejudgment interest on Mr. McKinney's medical payment benefits claim and Mrs. McKinney's claim for loss of services. This appeal by State Farm followed.
State Farm claims in its only point on appeal that the trial court erred as a matter of law in awarding prejudgment interest on Mr. McKinney's uninsured motorist claim because: (a) an uninsured motorist claim is a contract action and section 408.040.2, RSMo 2000, is inapplicable to contract actions; and (b) the damages that Mr. McKinney sought were unliquidated in that they were not readily determinable, and section 408.020 allows prejudgment interest to be assessed against liquidated damages only.
The sole issue in this case is whether the trial court erred in applying sections 408.040.2, RSMo 2000, and 408.020, RSMo 2000, to award prejudgment interest on the jury's award of uninsured motorist benefits to Mr. McKinney. This issue involves the interpretation of a statute and its application. Interpretation of a statute is a question of law. Ochoa v. Ochoa, 71 S.W.3d 593, 595 (Mo. banc 2002) (citing Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976); Delta Air Lines, Inc. v. Dir. of Revenue, 908 S.W.2d 353, 355 (Mo. banc 1995)). Whether a statute applies to a given set of facts is also a question of law. Dep't of Natural Res. Parks & Recreation v. Lossos, 960 S.W.2d 537, 542 (Mo.App. S.D.1998) (citing Laclede Gas Co. v. Labor & Indus. Relations Comm'n, 657 S.W.2d 644, 649 (Mo.App. E.D.1983)). Appellate review of questions of law is de novo. Baris v. Layton, 43 S.W.3d 390, 397 (Mo.App. E.D.2001) (citing Boillot v. Conyer, 861 S.W.2d 152, 155 (Mo.App.1993)). A reviewing court gives no deference to the trial court's judgment "where resolution of the controversy involves a question of law." MFA Mut. Ins. Co. v. Home Mut. Ins. Co., 629 S.W.2d 447, 450 (Mo.App. W.D.1981) (citing See v. St. Paul Ins. Co., 577 S.W.2d 150 (Mo.App. 1979)).
State Farm claims in its only point on appeal that the trial court erred as a matter of law in awarding prejudgment interest on Mr. McKinney's uninsured motorist coverage claim for personal injuries. "Judgments do not bear interest either as a matter of legal right or under the common law." A.G. Edwards & Sons, Inc. v. Drew, 978 S.W.2d 386, 396 (Mo.App. E.D. 1998) . Prejudgment interest must be based upon either a statute or a contract, either express or implied. Id. (citing Denton Constr. Co. v. Mo. State Highway Comm'n, 454 S.W.2d 44, 59 (Mo.1970); St. John's Bank & Trust Co. v. Intag, Inc., 938 S.W.2d 627, 630 (Mo.App.1997)). The insurance policy between State Farm and Mr. McKinney does not provide for prejudgment interest. Thus, the trial court's award of prejudgment interest must be based upon statute.
Prejudgment interest is provided for under sections 408.020, RSMo 2000 (contract), and 408.040.2, RSMo 2000 (tort). The trial court's amended judgment does not state which statute the court applied in awarding prejudgment interest on Mr. McKinney's uninsured motorist claim. The portion of the judgment awarding prejudgment interest states: "personal injury prejudgment interest at the rate of 9% per annum from April 24, 2000, through July 24, 2002." Although the trial court does not specify the statutory basis for its prejudgment award, the language of the judgment suggests the award is in tort and that the trial court applied section 408.040.2 in awarding prejudgment interest. Section 408.040.2, RSMo 2000, provides:
In tort actions, if a claimant has made a demand for payment of a claim or an offer of settlement of a claim, to the party, parties or their representatives and the amount of the judgment or order exceeds the demand for payment or offer of settlement, prejudgment interest, at the rate specified in subsection 1 of this section, shall be calculated from a date sixty days after the demand or offer was made, or from the date of the demand or offer was rejected without counter offer, whichever is earlier. Any such demand or offer shall be made in writing and sent by certified mail and shall be left open for sixty days unless rejected earlier. Nothing contained herein shall limit the right of a claimant, in actions other than tort actions, to recover prejudgment interest as otherwise provided by law or contract.
The trial court awarded prejudgment interest beginning April 24, 2000, the date the McKinney's demand for settlement of their claims was rejected by State Farm without counteroffer.
State Farm contends that the trial court erred in awarding prejudgment interest on Mr. McKinney's uninsured motorist claim pursuant to section 408.040.2, RSMo 2000, because that statute is inapplicable to this action in that this is a contract action and section 408.040.2 is limited to tort actions. Mr. McKinney counters that the insurance policy between him and State Farm provides that State Farm will step into the shoes of an uninsured motorist and pay him the damages he could legally recover from the uninsured motorist for the motorist's tortious conduct.
Section 408.040.2 unambiguously states that it applies to tort actions. A statute is interpreted by its plain and ordinary meaning. Craven v. State ex rel. Premium Standard Farms, Inc., 19 S.W.3d 160, 164 (Mo.App. W.D.2000) (citing In re Estate of Chevalier, 996 S.W.2d 156, 158 (Mo.App.1999)). When a statute's language is clear, a reviewing court must give...
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