Travelers Property Casualty Insurance v. National Union Insurance
735 F.3d 993
| 8th Cir. | 2013Background
- Travelers previously won a ruling that it could recover $10 million from National Union’s 55% Rockwell judgment share, not from earlier $126 million settlement.
- Allocation Agreement between National Union and KCPL guided recoveries; Travelers did not participate in the allocation or subrogation litigation.
- Rockwell judgment and related recoveries created a potential common fund; Travelers argued for subrogation priority and consideration of fees/expenses and interest.
- On remand, district court applied common-fund offset and limited Travelers’ recovery, while denying prejudgment and postjudgment interest.
- This court held the common-fund doctrine applies but needed recalculation; the court also reversed the denial of prejudgment and postjudgment interest.
- Calculation on appeal centers on whether the common fund is National Union’s 55% share of Rockwell ($53.35 million) and which expenses are includable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Missouri's common-fund doctrine apply here? | Travelers argues common-fund applies despite subrogation priority. | National Union argues contract language precludes common-fund recovery. | Common-fund doctrine applies; countervailing contract language not enough to preclude. |
| What is the proper common-fund amount to credit National Union? | Travelers seeks a larger credit against the $10 million based on total subrogation fees. | National Union contends only its own incurred fees related to Rockwell should be credited. | Common fund defined as National Union’s 55% share of Rockwell; exclude KCPL-only expenses. |
| Is Travelers entitled to prejudgment interest on the $10 million? | Travelers seeks 9% prejudgment interest under Missouri law on a liquidated claim. | National Union argues issue was unsettled and not liquidated; prior decision foreclosed interest. | Travelers entitled to prejudgment interest at 9% from July 21, 2006. |
| Is Travelers entitled to postjudgment interest? | Travelers sought federal postjudgment interest on the judgment and related amounts. | National Union argues only state prejudgment rates apply; postjudgment interest not clearly addressed. | Postjudgment interest awarded under 28 U.S.C. § 1961 on applicable amounts. |
| How should the district court interpret the footnote 8 language about adjustments? | Travelers contends footnote 8 did not preclude interest or common-fund calculations. | National Union urges the phrase limits adjustments to reductions from the $10 million. | Footnote 8 does not preclude interest or common-fund adjustments; it was not an exclusive limit. |
Key Cases Cited
- Keisker v. Farmer, 90 S.W.3d 71 (Mo. 2002) (common-fund rule requires sharing expenses to create fund)
- Leggett v. Missouri State Life Insurance Co., 342 S.W.2d 833 (Mo. 1961) (purpose of common-fund to prevent inequitable windfalls)
- Mendenhall v. Prop. and Cas. Ins. Co. of Hartford, 375 S.W.3d 90 (Mo. 2012) (ambiguous contract language interpreted against drafter)
- Longaberger Co. v. Kolt, 586 F.3d 459 (6th Cir. 2009) (contract language about common fund may defeat application)
- Reliance Ins. Co. in Liquidation v. Chitwood, 433 F.3d 660 (8th Cir. 2006) (prejudgment interest available on liquidated claims)
- St. Joseph Light & Power Co. v. Zurich Ins. Co., 698 F.2d 1351 (8th Cir. 1983) (prejudgment interest when amount due is readily ascertainable)
- Hampton Foods, Inc. v. Aetna Cas. & Sur. Co., 787 F.2d 349 (8th Cir. 1986) (novel damages may deny prejudgment interest)
- Fohn v. Title Ins. Corp. of St. Louis, 529 S.W.2d 1 (Mo. 1975) (first-impression damages framework; distinguishable from current case)
- Hillside Enters. v. Carlisle Corp., 69 F.3d 1410 (8th Cir. 1995) (postjudgment interest awarded as a matter of law)
- St. Joseph Light & Power Co. v. Zurich Ins. Co., 698 F.2d 1351 (8th Cir. 1983) (prejudgment interest compelled when liquidated amount)