Arcadia Farms Partnership v. Audubon Insurance Co.
2012 Miss. LEXIS 10
| Miss. | 2012Background
- Arcadia Farms Partnership’s cotton-picking machinery burned; insurance paid $100,000 after initial denial.
- Arcadia sued Audubon Insurance for bad-faith denial and delay in payment under the policy.
- Audubon moved for summary judgment, arguing no prejudgment interest could be recovered pre-complaint per §75-17-7, and lack of specific prejudgment-interest pleading.
- Trial court granted partial relief limiting damages to post-judgment compensatory claims and denying prejudgment-interest pre-complaint.
- Court of Appeals reversed, holding §75-17-7 does not bar pre-complaint prejudgment interest in contract cases, and that leave to amend pleading may be appropriate.
- Court granted certiorari to resolve the statute’s interpretation in contract cases; Mississippi Supreme Court adopts view that prejudgment interest may precede the complaint in contract-based damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §75-17-7 prohibits pre-complaint prejudgment interest in contract cases. | Arcadia: pre-judgment interest from breach date allowed under contract. | Audubon: §75-17-7 bars pre-complaint prejudgment interest absent contract rate. | §75-17-7 does not prohibit pre-complaint prejudgment interest in contract cases. |
| Whether Arcadia may seek prejudgment interest from the breach date despite lack of explicit pleading. | Arcadia: pleading for damages including interest suffices; may amend. | Audubon: no explicit demand for prejudgment interest; no amendment allowed. | Court of Appeals correct to allow potential pre-complaint prejudgment interest and leave to amend. |
| Whether the trial court abused discretion limiting damages and denying amendment. | Arcadia: should be allowed to plead/amend for prejudgment interest. | Audubon: damages limited; pre-complaint interest not allowed. | Trial court abused discretion; remanded for proceedings consistent with the opinion. |
Key Cases Cited
- State Farm Mut. Auto. Ins. Co. v. Bishop, 329 So.2d 670 (Miss. 1976) (prejudgment interest as damages when due is liquidated or denial is in bad faith)
- Moeller v. Am. Guar. & Liab. Ins. Co., 812 So.2d 953 (Miss. 2002) (liability for prejudgment interest; bona fide dispute forecloses otherwise)
- Simpson v. State Farm Fire & Cas. Co., 564 So.2d 1374 (Miss. 1990) (prejudgment interest available when money due was liquidated and no dispute exists)
- In re Guardianship of Duckett, 991 So.2d 1165 (Miss. 2008) (interprets §75-17-7; pre-complaint interest allowed if contract-based; later overruled Lewis view)
- Sentinel Indus. Contracting Corp. v. Kimmins Indus. Serv. Corp., 743 So.2d 954 (Miss. 1999) (recognizes contract-based prejudgment interest from breach date)
- Lewis v. City of ..., 653 So.2d 1388 (Miss. 1995) (earlier view on §75-17-7 pre-complaint interest; overruled in Duckett lineage)
- Commercial Union Ins. Co. v. Byrne, 248 So.2d 777 (Miss. 1971) (endorses interest from payment due when total loss under valued policy)