Find Legal Information

Trask v. Automobile Ins. Co.
Download as PDF
Back to Opinions page

MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision: 	1999 ME 94
Docket: 	Pen-98-509
Argued:	June 9, 1999
Decided:	June 23, 1999	

Panel:WATHEN, C.J., and CLIFFORD, RUDMAN, SAUFLEY, and ALEXANDER, JJ.

VIOLA TRASK et al.

v.

AUTOMOBILE INSURANCE CO.

RUDMAN, J.

	[¶1]  Viola and Paul Trask appeal from the judgment entered in the
Superior Court (Penobscot County, Mead, J.) in favor of the Trasks in the
amount of $760,000 after a jury trial on their claims for underinsured
motorist coverage against Automobile Insurance Co. (AIC) and Green
Mountain Insurance Co. (GMIC).{1}  The Trasks, joined by the Maine Trial
Lawyers Association as amicus curiae, contend the trial court erred by
denying their post-trial motion for prejudgment interest in excess of the
coverage limitations and for costs and expenses.  We modify the judgment to
award the Trasks costs and expenses, and otherwise affirm.
	[¶2]  In December 1991, a vehicle driven by Kenneth Getchell
collided with a vehicle driven by Kazimiera Szczypiorkowski.  Ms. Trask, a
passenger in Ms. Szczypiorkowski's car, was injured in the accident.  Ms.
Trask's GMIC automobile insurance contract provided underinsured
motorist coverage up to $300,000 for each occurrence.  Ms.
Szczypiorkowski's AIC underinsured motorist coverage provided for up to
$500,000 for each accident and covered Ms. Trask as a passenger.
	[¶3]  Mr. Getchell's insurance carrier paid Ms. Trask his liability policy
limit of $25,000.  She also recovered an additional $15,000 from AIC and
GMIC pursuant to the medical payments coverage provided by the insurers. 
The Trasks then filed suit against AIC and GMIC for coverage on both
insurance contracts. 
	[¶4]  After trial, the jury rendered a verdict for the Trasks in the
amount of $821,000.  Before the entry of judgment, the Trasks filed a
motion for prejudgment interest and costs and expenses.  At a hearing on
the motion, the Trasks requested an opportunity to present witnesses and
made an offer of proof that the insurers delayed litigation in bad faith.  The
trial court disagreed, and found the insurers did not act in bad faith.  It also
concluded that the Trasks could not recover prejudgment interest in excess
of the coverage limitations and entered judgment for the Trasks in the
amount of $760,000, reflecting the $800,000 of available coverage less the
$40,000 Ms. Trask had previously received in both liability and medical
payments.{2}  The trial court also denied the Trasks their costs and expenses
because any such recovery would exceed their coverage, but stated that
should the issue become relevant after appeal, it would approve all of their
costs with the exception of those for a treating physician.

I.     PREJUDGMENT INTEREST

	[¶5]  The Trasks contend that they are entitled to prejudgment
interest in excess of their underinsured motorist policy limits pursuant to
the language of 14 M.R.S.A. § 1602(1) (Supp. 1998).{3}  The statute creates a
presumption that a prevailing party is entitled to prejudgment interest and
places the burden of proof on the nonprevailing party to show "good cause"
for a waiver of that interest.  See Sawyer v. Walker, 572 A.2d 498, 499-500
(Me. 1990). 
	[¶6]  In the seminal Maine case on the issue of prejudgment interest
in excess of insurance coverage, Nunez v. Nationwide Mutual Insurance Co.,
we cited with approval to Guin v. Ha, 591 P.2d 1281 (Ala. 1979), where the
Alaska Supreme Court concluded that prejudgment interest is an element of
compensatory damages. See Nunez v. Nationwide Mut.Ins.Co., 472 A.2d 1383, 1384 (Me. 1984).  
The Alaska court reasoned that, as a result, prejudgment interest fell within
the liability clause of the policy at issue obligating the insurer to pay
"all sums which the Assured shall by law be held liable to pay for damages,
" and was thus subject to the coverage limitation.  Guin, 591 P.2d at 1286-87.
Other courts have come to the same conclusion that prejudgment interest
is a form of damages.  See, e.g., Allstate Ins. Co. v. Starke,
797 P.2d 14, 20 (Colo. 1990); Lessard v. Milwaukee Ins. Co., 514 N.W.2d 556,
558 (Minn. 1994).  
	[¶7]  In Simpson v. Hanover Insurance Co., 588 A.2d 1183, 1187 (Me.
1991), we affirmed the denial of prejudgment interest in excess of coverage
on facts similar to those in the case at bar.  In that case, the insured was
injured in an automobile accident, and suffered $71,000 in damages.  See 
id. at 1184-85.  After recovering the extent of the tortfeasor's liability
coverage, $25,000, the insured sued his insurance carrier to recover the
limit of his underinsured motorist benefits, $50,000.  See id. at 1184.  The
trial court denied the insured prejudgment interest because any additional
recovery would have exceeded his coverage and entered judgment for
$25,000.  See id. at 1185.  We held that absent bad faith by the insurer in
delaying the litigation process, an insured cannot recover prejudgment
interest in excess of the underinsured motorist policy limit.  See id. at 1186.  
	[¶8]  The underinsured motorist provision of the AIC policy at issue
here states:  "The limit of liability for 'each person' for bodily injury liability
is our maximum limit of liability for all damages for bodily injury sustained by
any one person in any one auto accident."  Because the prejudgment interest
the Trasks seek is an element of compensatory damages, it is governed by
this language limiting recovery for damages.  See Osgood v. Osgood, 1997
ME 192, ¶ 10, 698 A.2d 1071, 1073 ("Prejudgment interest, disapproved
of at common law, was created by the Legislature as a measure of damages to
penalize defendants for delay and to encourage the pretrial settlement of
clearly meritorious suits.")
	[¶9]  The principle of stare decisis "embodies the important social
policy of continuity in the law by providing for consistency and uniformity of
decisions."  Bourgeois v. Great N. Nekoosa Corp., 1999 ME 10, ¶ 5, 722
A.2d 369, 371.  In order for the Trasks to prevail, we must overrule
Simpson.  We decline, however, to disturb that precedent.  First, this is not
a situation where the authorities supporting the bar against prejudgment
interest in an amount greater than coverage limitations have eroded such
that the suppositions have been disproved or become counterproductive. 
See Myrick v. James, 444 A.2d 987, 998 (Me. 1982) (discussing stare
decisis).  To support their position, the Trasks raise policy arguments we
have previously rejected.  See Nunez, 472 A.2d at 1385 n.6.  In addition,
contrary to the Trasks' contention, the holding of Simpson has not been
repudiated by recent case law.  In Botting v. Allstate Insurance Co., 1998 ME
58, ¶ 7, 707 A.2d 1319, 1322, we awarded prejudgment interest in excess
of coverage limitations after the insurer admitted on appeal that it was liable
for such interest by the terms of its contract.  In contrast, the insurance
policies at issue both here and in Simpson limit liability by stating that the
insurer will pay damages only up to the coverage limitation.  In Greenvall v.
Maine Mutual Fire Insurance Co., 1998 ME 204, ¶ 8 n.6, 715 A.2d 949, 953
n.6, we merely clarified Simpson by stating a judgment against the tortfeasor
is not a condition precedent to recovery for underinsured motorist coverage.  
	[¶10]  Second, the conditions of society have not changed so
drastically that the rule in Simpson "no longer fulfill[s] the needs of a just
and efficient system of law," or creates "a cultural lag of unfairness or
injustice."  Myrick, 444 A.2d at 998.  On the contrary, our case law reflects
the majority position on this issue.{4}  
	[¶11]  Third, the Legislature has had eight years to amend the statute
on prejudgment interest if it disagreed with the policy ramifications of
Simpson, but has not done so.  We therefore conclude the trial court did not
commit an error of law by denying the Trasks prejudgment interest in
excess of their coverage.

II.     COSTS AND EXPENSES

	[¶12]  The Trasks also contend the trial court erred by denying their
motion for costs and expenses by both rule and statute.{5}  Few cases deal
explicitly with an award of costs and expenses in excess of coverage.  In
Simpson, however, we stated that the trial court did not abuse its discretion
by "reducing as an allowable cost the amount submitted . . . for an expert
witness's fee."  588 A.2d at 1187.  Thus, we have affirmed the award of costs
and expenses in excess of underinsured motorist coverage in the past.
	[¶13]  Although we did not explicitly say so, the rationale for allowing
costs, but not prejudgment interest, was that costs are not a form of
compensatory damages, and therefore were not contractually limited in
Simpson.  Costs do not compensate an injured person for loss, detriment, or
injury, but are simply the burden of litigating.  See Folsom v. Butte County
Ass'n of Gov'ts, 652 P.2d 437, 444 (Cal. 1982) (stating costs do not
constitute part of the judgment, but are merely incident to it); Walker v. St.
Louis-San Francisco Ry., 671 P.2d 672, 674 (Okla. 1983) (same); Harvey v.
Lewis, 158 N.W.2d 809, 814 (Mich. Ct. App. 1968) (stating taxation of costs
neither reward nor punishment, but merely a burden of the litigation). 
Costs in this case do not come within the AIC policy language stating that
the insurer will pay up to its limit of liability for "all damages."  Therefore,
the coverage limitation preventing recovery of prejudgment interest does
not apply to costs, and the contract is otherwise silent on the issue.  In that
case the presumptions by rule and statute apply that the prevailing party can
recover costs, even if they would cause the judgment to exceed the policy
limitation.{6} 
	[¶14]  The remaining issues raised by the Trasks do not merit
discussion.
	The entry is:
Judgment modified to grant costs and expenses of    
$18,396.43 to the Trasks, and otherwise affirmed.
Attorneys for plaintiffs:

N. Laurence Willey Jr., Esq., (orally)
Ferris, Dearborn & Willey
P O Box 609
Brewer, ME 04412-0609

Theodore S. Curtis Jr., Esq.
Curtis & Griffin
P O Box 400
Orono, ME 04473-0400

Attorneys for defendant:

Carl F. Rella, Esq., (orally)
Shaun B. Lister, Esq.
Law Office of Carl F. Rella, P.A.
P O Box 2700
Bangor, ME 04402-2700

Attorney for amicus curiae:

Richard L. O'Meara, Esq.
Murray Plumb & Murray
P O Box 9785
Portland, ME 04104-5085
(Maine Trial Lawyers Ass'n)