Nunez v. Nationwide Mut. Ins. Co.

• Decision Date: 15 March 1983
• Citation: 472 A.2d 1383
• Court: Maine Supreme Court
• Parties: John T. NUNEZ v. NATIONWIDE MUTUAL INSURANCE CO., et al. 1 . Originally

Page 1383

472 A.2d 1383

John T. NUNEZ v. NATIONWIDE MUTUAL INSURANCE CO., et al. ¹

Supreme Judicial Court of Maine.

Originally Argued March 15, 1983.

Re-submitted after Remand Oct. 7, 1983.

Decided March 27, 1984.

Pierce, Atwood, Scribner, Allen, Smith & Lancaster, Ernest J. Babcock (orally), Gregory W. Powell, Portland, for plaintiff.

Hunt, Thompson & Bowie, James M. Bowie (orally), Glenn H. Robinson, Portland, for defendant.

Before GODFREY, ^* NICHOLS, ROBERTS, CARTER, ^** VIOLETTE and WATHEN, JJ.

ROBERTS, Justice.

By means of a report under M.R.Civ.P. 72(a) from Superior Court, Cumberland County, the parties seek a declaratory judgment whether Nationwide Mutual Insurance Co. is obligated to pay on the personal injury claim of John T. Nunez prejudgment interest in excess of the limits under an automobile insurance policy which provided liability coverage to Carlos Valldejuli. Although Nationwide concedes that 14 M.R.S.A. § 1602 (1980) would be applicable to Nunez's claim, ² it denies that it is obligated to pay any prejudgment interest ³ and claims that, in any event, its obligation is limited by the overall $50,000 coverage limitation. ⁴ We agree that any obligation to pay prejudgment interest would, in the circumstances of this case, be precluded by the coverage limitation and we so declare.

We express no approval of the method utilized by the parties to resolve their dispute about insurance coverage. We previously pointed out the failure of the original record on report to generate an issue for decision. Nunez v. Nationwide Mutual Insurance Co., 460 A.2d 585 (Me.1983). Although the present record is somewhat more complete, there remain ambiguities, such as (1) no court has specifically awarded Nunez prejudgment interest on his claim against Valldejuli and (2) in his signed release, Nunez acknowledged receipt of "such prejudgment interest as is due under [the policy]...."

The present record, along with the exhortations of counsel, does satisfy us that a genuine controversy will be resolved by our answering the request for a declaratory judgment. ⁵ The record discloses that Nunez and Nationwide, as liability insurer of Valldejuli, agreed to settle Nunez's suit then pending against Valldejuli in United States District Court for the District of Maine. That agreement apparently involved payment of the policy limit of $50,000 plus prejudgment interest if, and only if, the insurer could be required to pay prejudgment interest in excess of the policy limit. Thereafter, the parties sought to resolve the dispute over the coverage afforded by the policy by means of this declaratory judgment action reported from Superior Court.

Nunez relies heavily upon the statute mandating the payment of prejudgment interest, 14 M.R.S.A. § 1602, and the insurance policy provisions for payment of other costs of litigation. Citing the statutory purpose to reduce litigation delay as described in Batchelder v. Tweedie, 294 A.2d 443 (Me.1972) and pointing to the insurer's control of the litigation, Nunez claims that the public policy embodied in section 1602 will be defeated if the insurance carrier is not liable for prejudgment interest. The statute, however, is essentially neutral regarding the question now before us. Nationwide concedes that section 1602 would apply to the suit against Valldejuli. Likewise the statute would be applicable to a direct action against Nationwide pursuant to 24-A M.R.S.A. § 2904. As to the extent of coverage under a liability policy, the statute is silent.

Nunez also argues, somewhat paradoxically, that prejudgment interest is included by implication within the coverage afforded by the policy but that prejudgment interest is not within the limitation of the company's liability for all damage sustained by one person. Nationwide, with equivalent semantic difficulty, maintains that prejudgment interest is not included within its general obligation to pay sums the insured becomes liable "to pay as damages ... because of ... personal injury," but that prejudgment interest is within the limitation of its liability "for all damages sustained because of the injury to one person." At this time we need decide only the issue of limitation, and we address the question solely as postured by the limited facts of this case.

At oral argument, Nunez's counsel agreed that nothing in the record indicated any bad faith or delay on the part of Nationwide. The issue, therefore, is not whether under some circumstances an insurer could become obligated to pay prejudgment interest in excess of the coverage limitation. Rather, the issue is whether Nationwide is obligated in any and all circumstances to pay prejudgment interest even when the payment exceeds the policy limits. The better rule and the weight of...