Godwin v. Nationwide Mutual Insurance

ARNOLD, Chief Judge. Plaintiff assigns error to the trial court’s conclusions of law that plaintiff is not entitled to recover prejudgment interest on (1) his property damage verdict, and (2) his personal injury verdict. We note initially that the trial court found that plaintiff failed to include in his complaint for declaratory relief a claim that he was entitled to prejudgment interest on the property damage portion of the verdict, and thus, summarily concluded that plaintiff was not entitled to recover any additional amount on the property damage verdict. We disagree with the court’s finding. Although he specifically stated in his complaint that defendant refused to pay “the $6,000.00 for the property damage and interest thereon from June 6, 1990 [the date of the judgment] through February 12, 1991 [the date Nationwide paid the difference between the earlier collision payment and the property damage verdict],” plaintiff nevertheless demanded in the same paragraph prejudgment interest on the entire $70,000 judgment. Therefore, as defense counsel conceded at oral argument, the question presented for appellate review is whether plaintiff was entitled to prejudgment interest on the personal injury and property damage judgments. Our Supreme Court has held that an underinsured motorist (UIM) carrier is obligated to pay prejudgment interest on a judgment rendered in the underlying tort action up to, but not in excess of its UIM policy limits. Baxley v. Nationwide Mutual Ins. Co., 334 N.C. 1, 430 S.E.2d 895 (1993). In the present case, however, plaintiff seeks prejudgment interest on the personal injury verdict in addition to its UM policy limit, $25,000, which has already been exhausted. The issue of whether a claimant is entitled to prejudgment interest in an amount exceeding the insurer’s limit of liability has been addressed by this Court most recently in Watlington v. N.C. Farm Bureau Mut. Ins. Co., 116 N.C. App. 110, 446 S.E.2d 614 (1994). In Watlington we held that “courts must look to the actual language in each insurance policy at issue to determine whether the insurance company is obligated [306] to pay prejudgment interest in excess of its contractual limit of liability.” Id. at 112, 446 S.E.2d at 616. The Nationwide policy contained the following relevant UM provision: PART D - Uninsured Motorists Coverage We will pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of: 1. Bodily injury sustained by a covered person and caused by an accident; and 2. Property damage caused by an accident. LIMIT OF LIABILITY The limit of bodily injury liability shown in the Declarations for “each person” for Uninsured Motorists Coverage is our maximum limit of liability for all damages for bodily injury sustained by any one person in any one auto accident. . . . Our appellate courts have continuously interpreted the term “damages” in similar provisions to include prejudgment interest as an element only “up to, but not in excess of, its ... policy limits.” Baxley, 334 N.C. at 11, 430 S.E.2d at 901; see Watlington, 116 N.C. App. 110, 446 S.E.2d 614; Baxley v. Nationwide Mutual Ins. Co., 115 N.C. App. 718, 446 S.E.2d 597 (1994) (Baxley II); Nationwide Mutual Ins. Co. v. Mabe, 115 N.C. App. 193, 444 S.E.2d 664, review allowed, 337 N.C. 802, 449 S.E.2d 748 (1994); United Services Automobile Assn. v. Gambino, 114 N.C. App. 701, 443 S.E.2d 368, disc. review denied, 337 N.C. 698, 448 S.E.2d 539 (1994); Wiggins v. Nationwide Mutual Ins. Co., 112 N.C. App. 26, 434 S.E.2d 642 (1993). We see no reason to distinguish this UM case from any UIM or liability case which has refused to order prejudgment interest once the policy limits have been exhausted. See Cochran v. N.C. Farm Bureau Mutual Ins. Co., 113 N.C. App. 260, 437 S.E.2d 910, disc. review denied, 335 N.C. 768, 442 S.E.2d 513 (1994). Both parties made commendable arguments but, we are bound by former holdings. Plaintiff articulates sound policy arguments to support his position, but “policy alone is not sufficient to overcome the plain and unambiguous language of the policy.” Mabe, 115 N.C. App. [307] at 202, 444 S.E.2d at 669. Therefore, we hold that Nationwide is obligated to pay prejudgment interest as part of the damages up to its UM coverage limit of $25,000. In this case, because the judgment exceeds the policy’s limit of liability, $25,000 (plus the postjudgment interest) is the extent of Nationwide’s liability, and plaintiff is not entitled to any prejudgment interest on the personal injury portion of the judgment. However, plaintiff is entitled to prejudgment interest on the property damage verdict (less the 18 March 1988 payment) up to the policy limit because the policy limit on property damages was $10,000, and plaintiff’s claim did not exceed this amount. For the foregoing reasons, we affirm the judgment as to prejudgment interest on the personal injury verdict, but we reverse that portion of the judgment denying plaintiff prejudgment interest on the property damage verdict and remand for the entry of judgment consistent with this opinion. Affirmed in part, reversed in part. Judges WYNN and JOHN concur.