Arcadia Farms P'ship v. Audubon Ins. Co.


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Docket Number: 2009-CT-00903-SCT
Linked Case(s): 2009-CA-00903-COA ; 2009-CA-00903-COA ; 2009-CT-00903-SCT

Supreme Court: Opinion Link
Opinion Date: 01-05-2012
Opinion Author: Waller, C.J.
Holding: Court of Appeals affirmed; Circuit court reversed and remanded.

Additional Case Information: Topic: Insurance - Breach of contract - Prejudgment interest - Section 75-17-7
Judge(s) Concurring: Carlson and Dickinson, P.JJ., Randolph, Lamar, Kitchens, Chandler and Pierce, JJ.
Non Participating Judge(s): King, J.
Procedural History: Summary Judgment
Nature of the Case: CIVIL - INSURANCE
Writ of Certiorari: Granted
Appealed from Court of Appeals

Trial Court: Date of Trial Judgment: 04-30-2009
Appealed from: Coahoma County Circuit Court
Judge: Kenneth L. Thomas
Disposition: SUMMARY JUDGMENT GRANTED IN FAVOR OF AUDUBON INSURANCE
Case Number: 14-CI-02-0062

Note: The judgment of the Court of Appeals is Affirmed. The judgment of the Circuit Court of Coahoma County is Reversed and Remanded. The Supreme Court reversed the Court of Appeals holding that prevailing parties in breach of contract suits may seek interest from the date of breach.

  Party Name: Attorney Name:   Brief(s) Available:
Appellant: Arcadia Farms Partnership




DAVID D. O’DONNELL SIDNEY RAY HILL, III



 

Appellee: Audubon Insurance Company MICHAEL O. GWIN LOUIS B. LANOUX  

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Topic: Insurance - Breach of contract - Prejudgment interest - Section 75-17-7

Summary of the Facts: A fire destroyed a cotton-picking machine owned by Arcadia Farms Partnership. Though insurance coverage initially was denied, Audubon Insurance Company eventually paid Arcadia $100,000 for the loss. Arcadia then filed suit against Audubon, asserting that Audubon’s failure to submit prompt payment constituted a bad faith breach of the policy terms. Audubon filed a motion for summary judgment, arguing that since Arcadia had been paid on its claim prior to filing suit, Arcadia’s only potential form of compensatory damages would be prejudgment interest. Yet, according to Audubon, section 75-17-7 prohibits Arcadia from recovering prejudgment interest prior to the filing of the complaint. Moreover, Audubon argued that Arcadia had not specifically requested prejudgment interest in its complaint. The trial court granted summary judgment for Audubon and denied Arcadia’s motion for reconsideration or, in the alternative, motion to amend its complaint to plead specifically for prejudgment interest. The Court of Appeals held that summary judgment was improper. It held that Arcadia could seek prejudgment interest from the date of breach, prior to the filing of the complaint, and that the trial court had abused its discretion in denying Arcadia’s motion to amend. The Supreme Court granted certiorari.

Summary of Opinion Analysis: Arcadia argues that if Audubon is found to have violated the contract, i.e., that it wrongfully delayed payment, then Arcadia should be able to seek prejudgment interest from the date of the breach of the contract. Audubon argues that section 75-17-7 prohibits prejudgment interest prior to the filing of the complaint unless the contract specifies an interest rate, which is not the case here. As a general rule, in actions for a breach of contract of insurance, when the amount which the insured is entitled to under the contract is withheld after payment is due, interest on such amount can be allowed as damages. For interest to be allowed, the amount due must have been liquidated when the claim was originally made, or the denial of the claim must have been frivolous or in bad faith. Even if the claims are liquidated, interest may be denied where there is a bona fide dispute as to the amount of damages as well as the responsibility for the liability therefor. Section 75-17-7 governs prejudgment interest. In this case, the insurance contract does not provide a rate of interest. The issue is whether, in such cases, the second sentence of section 75-17-7 prevents prejudgment interest from accruing prior to the filing of the complaint. If a judgment is based upon a contract, section 75-17-7's prohibition of prejudgment interest prior to the complaint does not apply. In contract cases, therefore, section 75-17-7 does not prohibit a party from seeking prejudgment interest prior to the filing of the complaint. To the extent that the case of Am. Fire Prot., Inc. v. Lewis, 653 So. 2d 1387, 1392 (Miss. 1995) interpreted section 75-17-7 as precluding prejudgment interest prior to the filing of the complaint in contract cases, it is overruled. Thus, the judgment of the Court of Appeals reversing the trial court’s grant of summary judgment in favor of Audubon is affirmed.


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