Lloyd’s of London’s insurer must pay an additional $3 million in prejudgment interest on top of the $10 million it has already paid under a directors’ and officers’ liability policy issued to an Atlanta bank that was taken over by the Federal Deposit Insurance Corp., a federal appeals court said on Thursday, overruling a lower court and issuing its second ruling in the case.
Lloyd’s underwriters sold the D&O policy to Omni National Bank in 2008, according to the first ruling in January 2018 by the 11th U.S. Circuit Court of Appeals in Atlanta in the case, now called Federal Deposit Insurance Corp., as receiver from Omni National Bank v. Certain Underwriters at Lloyd̵7;s of London.
The bank engaged in “unsound lending practices,” which led to the bank’s closure in March 2009 and its receivership by the FDIC. The FDIC filed suit against Lloyd’s, seeking the $10 million limit on the D&O policy.
The US District Court ruled in favor of the FDIC and was affirmed by the 11th Circuit. Lloyd’s paid the $10 million after the Supreme Court denied certiorari for its appeal of the declaratory judgment in the case, as well as $115,000 in post-judgment interest, but refused to pay $3,004,287.67 in prejudgment interest, according to Thursday’s ruling.
The FDIC again sued Lloyd’s in US District Court in Atlanta, seeking preliminary injunction. The court ruled in Lloyd’s favor, stating that the interest was “untimely” under Georgia law because the FDIC made its demand after the declaratory judgment had been entered and liability had been established.
It was overturned by a unanimous three-judge appeals court panel. The FDIC “argues that prejudgment claims are timely under Georgia law so long as they are made before the entry of a mandatory final judgment, which declaratory judgments are not. We agree,” the panel said in overturning the lower court.
The case was remanded to the lower court to determine when prejudgment interest began to run.
The FDIC said in a statement that it does not comment on litigation, while Lloyd’s lawyers did not respond to a request for comment.