My colleague, Jason Cieri, in a recently published blog post, Interest in condemning, what is it and how it helps me explained what prejudice is and how it helps a policyholder:
jurisdictions that do not have legal fees changing statutes, the insured have very few tools to compare the terms with the behemoth insurance companies. Depending on your jurisdiction, prejudice can be used to level the playing field.
The United States District Court for the Southern District of New York recently granted a prejudicial interest in the period before and after an arbitration award, despite the Tribunal previously refusing to award the plaintiff. 1
It is expressly agreed that decisions, awards or agreed settlements made as a result of an ADR process shall be limited to the limits of the liability of this policy.
In 2019, the court awarded a policy award of as much as $ 25 million. Referring to New York case law and statutory provisions, ExxonMobil requested that the tribunal also award prejudicial interest in excess of $ 6 million. However, the General Court refused to do so.
The General Court justified that its "award [or] award" was "limited by the parties' agreement not to exceed the political boundaries" because the "common understanding of the terms of arbitration" decision "or" award "would include interest. "When examining the language of the ADR approval, the court found that the 'award' was an 'all-encompassing term' which 'includes damages, interest, costs and legal fees which a panel may determine for a claim' and for which the General Court lacked jurisdiction to award an award. exceeding the $ 25 million policy limit.
ExxonMobil then requested that the court confirm the award and that it also award interest after the infringement, consisting of acquisition interest from (1) date of infringement to date of arbitration and (2) date of arbitration The court found for ExxonMobile, with the following statement:
According to TIG's interpretation, the longer it delays a judgment in this case – for example as here, by filing a non- meritorious proposal to make – the longer it will have free use of Mobil's money and the more Mobil's recovery will be reduced,
This decision is a reminder that policyholders should not exclude their right to interest before judgment. Policyholders can use this tool to encourage quick payment and to avoid delays from the insurance company. As the court explained, a refusal to introduce interest rates would encourage insurers to withhold payment incorrectly without any significant consequences.
1 ExxonMobil Oil Corp. against TIG Ins. Co. No. 16-cv-9527 (S.D.N.Y. 18 May 2020).
2 See Oldcastle Precast, Inc. vs. Liberty Mut. Ins. Co. 2019 WL 5884528, at * 3 (S.D.N.Y. 8 Nov. 2019) (citing Love v. State 78 N.Y.2d 540, 544 (1991)).