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Insurer’s offer to settle wasn’t ‘offer to pay’

Scott Lauck//March 8, 2021

Insurer’s offer to settle wasn’t ‘offer to pay’

Scott Lauck//March 8, 2021

The Court of Appeals Western District ruled on March 2 that an insurer is liable for prejudgment interest in a wrongful death case, despite its offer to settle early in the litigation. Exactly how much is owed is yet to be determined.

The case stems from the 2014 death of Robert Norman, whose vehicle was struck in the rear by another vehicle on a Cass County highway when he slowed down to let law enforcement officers remove a deer carcass from the road. 

The at-fault driver, Amber Ralston, was insured by Progressive Preferred Insurance Company. The month after the accident, Progressive offered to pay the $100,000 policy limits in exchange for a release of all claims against Ralston. An attorney for Norman’s widow, Sylvia, countered with a demand for $950,000. After the settlement demand expired 90 days later, Norman filed suit. 

In 2017, a judge found Ralston had been looking at her cell phone while driving and entered a $7.55 million judgment against her. After the massive judgment was entered, Progressive issued three checks totaling about $111,000 for the policy limits plus court costs and postjudgment interest. 

Norman, however, argued that the insurer also owed prejudgment interest. Under state law, plaintiffs who follow certain procedural requirements can claim such interest if the judgment they win exceeds the earlier offer of settlement. 

At issue was a clause in the insurance policy that said Progressive would not pay any prejudgment interest accruing after it made an “offer to pay” its policy limits. The insurer argued that it had done just that when it offered to settle the case less than a month after Robert Norman’s death. 

But Judge Edward R. Ardini Jr., writing for the Western District, found that the “offer to pay” phrase is “not synonymous with an offer to settle or compromise a claim; under the Progressive policy, an ‘offer to pay’ the policy limits must be unconditional in order to terminate its obligation to cover its part of the award of prejudgment interest in the wrongful death action.”

The case was a matter of first impression in Missouri, though the court relied on Davis v. Allstate Insurance Co., a 2001 ruling from Massachusetts, as well as other out-of-state precedents. 

Judge Gary D. Witt concurred. Judge Alok Ahuja agreed in a separate opinion, to which he added that the “offer to pay” language was ambiguous and should be construed in favor of the policyholder. 

The court remanded the case to Cass County Circuit Court for further proceedings without specifying exactly how much Progressive now owes.  Mike McCausland of McCausland Barrett & Bartalos, an attorney for the insurer, said it would be a fairly modest sum, as the policy says it would pay prejudgment interest “on that part of the judgment that does not exceed” the policy limits.

“The opinion is clear that any prejudgment interest owed by Progressive is just on the principal amount of $100,000,” he said.

The prejudgment interest on the original $7.55 million judgment, however, totaled $556,470. Dirk Vandever of The Popham Law Firm in Kansas City, an attorney for Norman, said there would be additional litigation on whether the insurer owed any of that amount. 

“This saga is not over yet,” he said.

The case is Norman v. Progressive Preferred Insurance Company, WD83345. 

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