Nationwide Prop. & Cas. v. Selective Way
473 Md. 178
| Md. | 2021Background
- Highpointe Apartments suffered pervasive water-related construction defects. Questar (general contractor) was named an additional insured on four subcontractors’ CGL policies issued by Selective Way.
- Selective Way denied a duty to defend Questar; Nationwide (Questar’s primary insurers) defended Questar and paid defense costs, then sued Selective Way for reimbursement and declaratory relief.
- After summary judgment rulings and a jury trial limited to notice/prejudice, the jury awarded Nationwide $994,719.54 in defense costs; Nationwide later sought prejudgment interest by letter to the court.
- The circuit court awarded $430,534.82 in prejudgment interest post-verdict; the Court of Special Appeals reversed that portion of the award.
- The Court of Appeals granted certiorari limited to the prejudgment-interest question and affirmed: defense costs from a breached duty to defend are unliquidated and prejudgment interest is discretionary for the factfinder; the court could not add interest after a jury verdict that did not separately state interest as required by Md. Rule 2-604(a).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether prejudgment interest on defense costs is recoverable as a matter of right | Defense costs were fixed/ascertainable when invoiced/paid, so interest is owed as of right | Defense costs (ongoing litigation fees) were unliquidated and not ascertainable until adjudicated | Not a matter of right; defense costs are unliquidated and interest is discretionary for the factfinder |
| Whether a court may add prejudgment interest after a jury verdict that did not address interest | The court properly awarded interest post-judgment | Jury should have been asked; Md. Rule 2-604(a) requires a separate statement on interest | Court may not add discretionary prejudgment interest after a jury verdict absent the jury separately stating/deciding it per Rule 2-604(a) |
| Whether attorneys’ fees for ongoing defense are "liquidated" | Invoices and payments make fees definite and liquidated | Hourly, ongoing litigation fees are not settled or exactly ascertainable at breach | Ongoing hourly legal fees are unliquidated; prejudgment interest is not automatic |
Key Cases Cited
- Buxton v. Buxton, 363 Md. 634 (establishes when prejudgment interest is allowed as of right)
- Harford County v. Saks Fifth Ave. Distrib. Co., 399 Md. 73 (purpose of prejudgment interest: compensate for loss of use of funds)
- I. W. Berman Props. v. Porter Bros., Inc., 276 Md. 1 (general rule: prejudgment interest is within factfinder’s discretion)
- United Cable Television of Balt. Ltd. P’ship v. Burch, 354 Md. 658 (discusses liquidated-sum exception)
- First Virginia Bank v. Settles, 322 Md. 555 (defines "ascertainable at time of breach" standard)
- Crystal v. West & Callahan, Inc., 328 Md. 318 (contract cases between extremes fall to factfinder’s discretion)
- Fraidin v. Weitzman, 93 Md. App. 168 (Rule 2-604 requires prejudgment interest to be separately stated by jury)
- Mullan Contracting Co. v. International Bus. Machs. Corp., 220 Md. 248 (distinguishes cases where disputed amounts were treated as liquidated)
- Travel Committee, Inc. v. Pan Am. World Airways, Inc., 91 Md. App. 123 (prejudgment interest awarded where money was collected/used by defendant)
- Maxima Corp. v. 6933 Arlington Dev. Ltd. P’ship, 100 Md. App. 441 (attorneys’ fees are unliquidated; prejudgment interest discretionary)
- Eden v. Amoco Oil Co., Inc., 741 F. Supp. 1192 (federal case relied on for the proposition that a court cannot add discretionary prejudgment interest after a jury verdict that was not instructed on interest)
- Affiliated Distillers Brands Corp. v. R.W.L. Wine & Liquor Co. Inc., 213 Md. 509 (early authority recognizing interest as factfinder discretion)
- Nesbit v. Gov’t Emps. Ins. Co., 382 Md. 65 (procedural/interpretive authority cited)
- Davis v. Slater, 383 Md. 599 (standard of review for Maryland Rule interpretation)