Kollman v. National Union Fire Insurance Co.
711 F. App'x 400
| 9th Cir. | 2017Background
- Kollman (Daryl Kollman and Helen Frazer) obtained a $40 million state-court judgment against an insured; National Union issued an insurance policy with a $5 million limit obligating payment of "judgments (including pre/post-judgment interest on a covered judgment)."
- The district court allocated the $5 million policy limit and entered a judgment on September 16, 2015, resolving coverage and allocation among claimants.
- Kollman sought statutory prejudgment interest on the district-court judgment awarding them insurance proceeds from National Union.
- The district court denied prejudgment interest, concluding that prejudgment interest was "interest on a covered judgment" and thus subject to the $5 million policy limit already exhausted.
- The Ninth Circuit reviewed de novo, applied Oregon contract law, and examined whether prejudgment interest on the insurer-judgment is covered by the policy or recoverable under Oregon’s prejudgment interest statute.
- The Ninth Circuit reversed and remanded, holding that (1) the policy did not preclude prejudgment interest on the judgment against the insurer and (2) Kollman is entitled to prejudgment interest under ORS § 82.010(1)(a) because the amount due and start date are ascertainable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether prejudgment interest on the district-court judgment awarding insurance proceeds is a covered loss under the policy | Kollman: Policy does not address prejudgment interest on a judgment against the insurer; not barred by policy limit | National Union: Such prejudgment interest is "interest on a covered judgment" and thus falls within the policy’s $5M limit | Held: Policy does not preclude prejudgment interest on the insurer-judgment; district court erred to treat it as within the exhausted policy limit |
| Whether prejudgment interest is recoverable under Oregon statute ORS § 82.010(1)(a) | Kollman: Amount due and interest start date are ascertainable, so statutory prejudgment interest applies | National Union: (Implicit) disputes ascertainability or applicability | Held: Amount and start date are ascertainable; prejudgment interest under ORS § 82.010(1)(a) applies; remand to determine start date and calculate amount |
| When prejudgment interest should run | Kollman: From the date National Union became obligated to pay under the policy (post-2004 state judgment) | National Union: (Implicit) obligation was not clearly fixed or was suspended during litigation | Held: Interest runs from the date insurer became obligated to pay under policy; obligation arose after the 2004 state-court judgment and was not suspended during later litigation |
| Whether district court’s allocation disputes prevent ascertainment for prejudgment interest | Kollman: Allocation and calculation were ascertainable by simple computation despite litigation over coverage | National Union: Litigation over allocation precludes simple ascertainment | Held: District court’s computation shows amount is ascertainable; litigation over coverage does not defeat statutory interest eligibility |
Key Cases Cited
- Trishan Air, Inc. v. Fed. Ins. Co., 635 F.3d 422 (9th Cir. 2011) (governing de novo review and insurance-policy interpretation principles)
- Interstate Fire & Cas. Co. v. Underwriters at Lloyd’s, London, 139 F.3d 1234 (9th Cir. 1998) (identifies insurer’s obligation start date as the interest start date)
- Wilson v. Smurfit Newsprint Corp., 107 P.3d 61 (Or. Ct. App. 2005) (explains ascertainability standard for prejudgment interest under Oregon law)