Viking Pump, Inc. v. Century Indemnity Company

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
VIKING PUMP, INC. and
WARREN PUMPS LLC,
Plaintiffs,
v. C.A. No. N10C-06-141 PRW CCLD
CENTURY INDEMNITY
COMPANY, et al.,
Defendants.
Subrnitted: February 26, 2018
Decided: May 23, 2018
MEMORAN DUM OPINION AND ORDER
Upon Warren Pumps LLC ’s Motion to Set Judgment Amounts and
Prejua'gment Interest,
DENIED.
David J. Baldwin, Esquire, Jennifer C. Wasson, Esquire, Carla M. Jones, Esquire,
Potter Anderson & Corroon LLP, Wilrnington, Delaware, Robin L. Cohen, Esquire
(pro hac vice) (argued), Keith McKenna, Esquire (pro hac vice), McKool Smith,
P.C., NeW York, NeW York, Attorneys for Warren Pumps LLC.
Kenneth J. Nachbar, Esquire, Morris, Nichols, Arsht & Tunnell LLP, Wilmington,
Delaware, Garrett B. Moritz, Esquire, Nicholas D. Mozal, Esquire, Ross Aronstarn
& Moritz LLP, Wilmington, Delaware, Tancred Schiavoni, Esquire (pro hac vice)
and Gary Svirsky, Esquire (pro hac vice) (argued), O‘Melveny & Myers LLP, NeW
York, New York; AND John D. Balaguer, Esquire, White and Williarns LLP,
Wilmington, DelaWare. Of Counsel: Brian G. FoX, Esquire (pro hac vice) and
Lawrence A. Nathanson, Esquire (pro hac vice), Siegal & Park, Mount Laurel, NeW
Jersey, Attorneys for Defendants TIG Insurance Company, f/k/a International
Insurance Company, With respect to policies numbered 5220113076 and
5220282357, and Westchester Fire Insurance Company, With respect to policy
numbered 5220489339, by operation of novation; ACE Property & Casualty
Insurance Company (f/k/a CIGNA Property & Casualty Insurance Company), as
successor-in-interest to Central National Insurance Company of Omaha, but only as
respects policies issued through Cravens, Dargan & Company, Pacific Coast
(improperly named as The Central National Insurance Company of Ornaha); and
Century Indemnity Company, as successor to CCI Insurance Company, as successor
to Insurance Company of North Arnerica and Century Indernnity Company as
successor to CIGNA Specialty Insurance Company (f/l2007 WL 1207107, at *1 (Del. Ch. Apr. 2,
2007).
2 Viking Pump, Inc. v. Century Indem. Co., 2010 WL 2989690, at *1 (Del. Ch. June 1, 2010).
3 “Excess Insurers” refers collectively to the following insurers remaining in this case: (1)
TIG Insurance Company, as successor by merger to Intemational Insurance Company, as
successor by merger to International Surplus Lines Insurance Company (“ISLIC”); (2) TIG
Insurance Company, as the successor-in-interest to International Insurance Company
(“Intemational”); (3) Century Indemnity Company (“Century”), as the successor-in-interest to the
Insurance Company of North America (“INA”); (4) Certain Underwriters at Lloyd’s, London and
London Market Insurance Companies (“London”); (5) Lexington Insurance Company
(“Lexington”); (6) OneBeacon America Insurance Company (now known as Lamorak Insurance
Company (“Lamorak”)), as successor to Commercial Union Insurance Company; and (7) Westport
Insurance Corporation (“Westport”), as successor to Puritan Insurance Company (“Puritan”).
4 In re Viking Pump, Inc., 148 A.3d 633, 641 (Del. 2016).
_1_
Court entered a Final Judgment Order in 2014 confirming the jury verdict.5 All
parties appealed, and the Delaware Supreme Court certified two questions to the
New York Court of Appeals,6 which answered those questions.7 And in the
consolidated appeal from the separate judgments by the Court of Chancery and this
Court, the Delaware Supreme Court affirmed, in part, and reversed, in part.8
Warren now returns to this Court and brings what it terms a “Motion to Set
Judgment Amounts and Prejudgment Interest,”9 a novel application, against the
remaining Excess Insurers. Warren asks the Court to set the purported or settlement
value of its outstanding claims against the Excess Insurers as “a judgment.” Warren
5 See Final Judgment Order after Trial, Viking Pump, Inc. and Warren Pumps LLC v.
Century Indem. Co., et al., C.A. No. 10C-06-141 FSS [CCLD] (Del. Super. Ct. June 9, 2014)
(hereinafter “Final Judgment Order”).
6 ln re Viking Pump, Inc., 146 A.3d 1046 (Del. 2015).
7 In the Matter of Viking Pump, Inc., 52 N.E.3d 1144 (N.Y. 2016).
8 In re Viking Pump, Inc., 148 A.3d 633 (Del. 2016).
9 See Pl. Warren Pumps LLC’s Mem. of Law in Supp. of its Mot. to Set J. Amounts and
Prejudgment Interest, Viking Pump, Inc. and Warren Pumps LLC v. Century Indem. C0., et al.,
C.A. No. N10C-06-141 PRW [CCLD] (Del. Super. Ct. Nov. 23, 2016) (hereinafter “Warren
Mot.”). The papers do not state if Plaintiff Viking Pump, Inc. (“Viking Pump”) joins Warren’s
Motion. The Excess Insurers stated at oral argument that Viking Pump did not join Warren’s
motion. See Mot. to Set J. Amounts and Prejudgment Interest Oral Arg. Hr’ g Tr., Viking Pump,
Inc. and Warren Pumps LLC v. Century Indem. C0., et al., C.A. No. N10C-06-141 PRW [CCLD],
at 43 :8-9 (Del. Super. Ct. Apr. 4, 2017) (“We are here on Warren’s motion_which Viking [Pump]
does not join, by the way[.]”) (hereinafter “Hr’ g Tr.”).
_2_
additionally seeks prejudgment interest pursuant to New York Civil Practice Law
and Rules § 5001(a).10
II. FACTUAL AND PROCEDURAL BACKGROUND
A. INDUsTRY BACKGROUND
Plaintiffs Warren and Viking Pump are industrial pump manufacturers whose
products contained asbestos, and who were owned, between 1968 and 1988, by
Houdaille Industries (“Houdaille”).ll Houdaille maintained commercial
comprehensive general liability insurance consisting of primary, umbrella, and
layers of excess insurance.]2 Plaintiffs each obtained their own commercial
comprehensive general liability insurance policies as well.13
Houdaille divested itself in 1985, rendering Viking Pump and Warren
separate, independent entities.14 Asbestos liability claims were made by Plaintiffs
against their own respective policies until 2005 when Liberty Mutual informed
10 N.Y. C.P.L.R. § 5001(a) (2018) (“Interest shall be recovered upon a sum awarded because
of a breach of performance of a contract, or because of an act or omission depriving or otherwise
interfering with title to, or possession or enjoyment of, property, except that in an action of an
equitable nature, interest and the rate and date from which it shall be computed shall be in the
court’s discretion.”).
11 Viking Pump, Inc. v. Century Inde)n. Co., 2013 WL 7098824, at *1 (Del. Super. Ct. Oct.
31, 2013) (hereinafter “Viking Pump 1”).
12 Id.
13 Id. at *2.
14 Id.
Warren that the last Warren-only policy had exhausted15 To shield against the
possibility of Warren draining the entirety of their shared liability insurance, Viking
Pump brought suit against Liberty Mutual seeking injunctive relief and coverage
under Houdaille’s policies.16
B. COURT oF CHANCERY 2005-2010
On June 30, 2005, Viking Pump filed its complaint against Liberty Mutual in
the Court of Chancery, and Warren joined the action.17 In its 2007 decision, the
Court of Chancery held that Houdaille’s primary and umbrella policies extended to
Plaintiffs.18 Subsequently, in 2008, Liberty Mutual and Plaintiffs “settled several
outstanding claims,” resulting in Liberty Mutual’s dismissal from the case.19
The issue then became whether Plaintiffs were “entitled to exercise the rights
of an insured under the excess policies” and whether “all sums” or “pro-rata”
allocation was appropriate, triggering “Phase ll” of the litigation.20 The Court of
15 Viking Pump I, 2013 WL 7098824, at *2.
16 Id. See also Viking Pump, Inc. v. Liberty Mutual Ins., Co., 2007 WL 1207107 (Del. Ch.
Apr. 2, 2007).
17 Viking Pump I, 2013 WL 7098824, at *2.
18 Id.
19 Id.
211 Viking Pump, Inc_ v. Century Indem. Co., 2014 wL 1305003, at *1 (Del. super. Ct. Feb.
28, 2014) (hereinafter “Vikz'ng Pump 11”).
Chancery held that Plaintiffs were insured under the excess policies.21 Additionally,
the Court held that “all-sums” was the appropriate allocation method,22 which in
effect tends to provide fuller coverage23 And the Court found that New York’s
injury-in-fact trigger applies.24 “Together, these rulings mean that for each asbestos
claim, all policies within the period triggered by injury are potentially liable for
damages associated with that claim.”25 After making these findings, the Court of
Chancery found that no possibility of equitable remedy survived, and transferred the
case to this Court.26
C. SUPERIOR CoURT 2010-2013
On June 11, 2010, this case was transferred to the Superior Court’s Complex
Commercial Litigation Division for “Phase 111.”27 The issues were whether Liberty
Mutual policies were properly exhausted, triggering the Excess lnsurers’
obligations, “and whether the excess policies “follow-form” to the underlying
21 Viking Pump 11, 2014 wL 1305003,@1*1.
22 Id.
23 Viking Pump 1, 2013 wL 7098824, at *3.
21 Vikingpump 11, 2014 wL1305003,at*1.
25 1a
26 Id. at *2.
27 Viking Pump I, 2013 WL 7098824, at *4.
_5_
Liberty [Mutual] policies.”28 There were “lesser-included issues permeating this
litigation, [including]: ‘loss runs,’ horizontal exhaustion, and Phase II’s rulings’
applicability.”29 Trial commenced in October 2013, under the assumption that the
excess policies would be treated as ambiguous30 The jury returned a verdict largely
favoring Plaintiffs.31
However, the Court found that “the verdict must be refined to conform to the
policies’ unambiguous meaning.”32 The Court held that the Liberty Mutual policies
were properly exhausted33 In regard to whether excess policies “follow-form,” the
Court found: “a few excess policies truly ‘follow-form,”’34 “[o]ther policies include
»35
endorsements explicitly altering the original policy language to follow-form,
“[s]everal policies contain ‘Coverage’ and ‘Conditions’ language in identical or
33 Viking Pump 1, 2013 WL 7098824, at *5.
39 Id.
30 ld. at *7.
31 Id. at *1.
33 Id. at *16.
33 Id. at *20.
34 Id_ at *24.
35 Id. See also Cnty. ofColumbia v. Cont’l Ins. Co., 83 N.Y.2d 618, 628 (N.Y. 1994). (“[l]t
is settled that in construing an endorsement to an insurance policy, the endorsement and the policy
must be read to gether, and the words of the policy remain in full force and effect except as altered
by the words of the endorsement.”)
similar format,”36 “[c]ertain London policies contain ‘assistance and cooperation’
clauses,”37 and “[a] few policies follow-form, but with ‘consent’ and ‘cooperation’
clause exceptions38
As to the lesser-included issues, the Court upheld verdicts on the following:
9
“all sums” allocation,3 and injury-in-fact.40 Additionally, the Court held that
horizontal exhaustion would apply in conformance with New York law.41
D. SUPERIOR COURT 2013-2014
After receiving the verdict, the parties filed Rule 59(e) motions and
responses.42 Warren’s motion requested supplementation of the opinion to clarify
defense obligations and address International policies that were not mentioned.43 A
motion was also filed by three Excess Insurers to obtain clarity on the application of
36 Viking Pump 1, 2013 wL 7098824, 31*25.
31 Id. at *26.
33 Id. at *27.
39 Id. at *17.
40 1a at *18.
41 Id. at *21.
42 Viking Pump 11, 2014 wL 1305003, at *2.
43 Id.
horizontal exhaustion44 The Court additionally held that Warren was not required
to pursue horizontal exhaustion of Excess Insurers’ policies.45
In June 2014, the predecessor Superior Court judge issued a Final Order and
Judgment.46 The Final Order and Judgment stated, in relevant part:
In accordance with 10 Del. C. § 6508, the parties may seek
post-judgment relief (i) in the form of pre- and post-
judgment interest and (ii) to determine amounts owed by
any party, based on the declarations set forth in this Final
Judgment Order.47
E. DELAwARE SUPREME CoURT
The parties cross-appealed.48 After briefing and oral argument, the Supreme
Court certified two questions to the New York Court of Appeals:
l. Under New York law, is the proper method of allocation to be
used all sums or pro rata when there are non-cumulation and
prior insurance provisions?
2. Given the Court’s answer to Question #l, under New York law
and based on the policy language at issue here, when the
underlying primary and umbrella insurance in the same policy
period has been exhausted, does vertical or horizontal exhaustion
44 Viking Pump 11, 2014 wL 1305003, at *2.
43 Id. at *11.
46 See Final Judgment Order.
47 Final Judgment Order at 11 29.
48 Viking Pump, 148 A.3d at 642.
apply to determine when a policyholder may access its excess
insurance?49
The New York Court of Appeals answered:
l. All sums allocation is appropriate where there are non-
cumulation/prior insurance provisions.
2. Excess policies are triggered by vertical exhaustion of the
underlying available coverage within the same policy period.50
After the New York Court of Appeals answered the certified questions, the parties
filed supplemental submissions to our Supreme Court.
On September 12, 2016, the Supreme Court affirmed, in part, reversed, in part,
and remanded the matter. Relevant here, the Supreme Court affirmed that:
1) Warren and Viking are covered under Houdaille’s policies;51 and 2) Liberty’s
primary policies are exhausted.52
49 Viking Pump, 148 A.3d at 642. See also In re Viking Pump, lnc., 37 N.E.3d 104 (N.Y.
2015).
50 Viking Pump, 148 A.3d at 642. See also In re Viking Pump, Inc., 52 N.E.3d at 1156-57.
31 Viking Pump, 148 A.3d at 652.
52 Id. at 658. The Supreme Court affirmed and reversed several of the Superior Court’s
decisions regarding defense costs, none of which bear repeating here. See id. at 663, 665, 671,
674, 686.
F. MoTIoN To SET JUI)GMENT AMoUNTs AND PREJUDGMENT INTEREST
Based on the Supreme Court’s ruling, Warren allocated its non-reimbursed
costs to the Excess lnsurers as follows:53
Excess Insurer Allocation of Unreimbursed Costs as
of August 31, 2016
lnternational $3,937,818.92
Century $321,295.16
ISLIC $10,000,000
Westport $1,392,506.32
Lamorak $420,591.67
London/Lexington $69,146,773.03
In October 2016, Warren sent letters to the Excess lnsurers requesting
payment of the amounts listed above.54 Warren contends it included necessary
evidence supporting the costs.55 The tenor of Warren’s briefing indicated that it
expected immediate payment.
53 Warren Mot. at 18.
34 Id.
33 Id.
_10_
In response, the Excess Insurers began reviewing, processing, and paying
claims.36 ISLIC settled with Warren and Viking Pump.57 Westport paid Warren
immediately upon receiving notification that lSLIC’s policy, which sat immediately
beneath Westport, exhausted.58 Lamorak first received Warren’s tender of defense
costs and settlements associated with its policies on October 12, 2016.59 Lamorak
paid Warren, in full, on or about November 29, 2016.60 International fully paid out
Warren’s claims at some point after the Supreme Court’s ruling, as well.61
36 Excess Insurers’ Memorandum of Law in Opposition to Warren Pumps LLC’s Motion to
Set Judgment Amounts and Prejudgment lnterest, Viking Pump, Inc. and Warren Pumps LLC v.
Century Indem. Co., et al., C.A. No. N10C-06-141 PRW [CCLD], at 26-28 (Del. Super. Ct. Feb.
6, 2017) (hereinafter “Excess Insurers’ Opp.”).
57 See Tr. ID 60087152 (dismissing all claims between Warren and ISLIC); see also Tr. ID
60181290 (dismissing all claims between Viking Pump and ISLIC).
38 See Hr’ g Tr. at 62_63 (“[W]arren tendered claims to Westport for the very first time by
letter dated October 31, 2016, . . . acknowledg[ing] that the underlying [ISLIC policy] had not yet
been exhausted. Westport was, ultimately, notified that this ISLIC policy exhausted January 9111,
2017. Within two months-well, actually, in March 2017, Westport paid the entire amount and
past costs, and also additionally paid other tendered claims that were tendered in November.”).
39 Affidavit of Laura McKay, Viking Pump, Inc. and Warren Pumps LLC v. Century Indem.
Co., et al., C.A. No. N10C-06-141 PRW [CCLD], at 11 2 (Del. Super. Ct. Feb. 6, 2017) (hereinafter
“McKay Aff.”).
313 Id. 3111 5.
61 See Hr’ g Tr. at 17 (“Four of the six carriers paid in full, Your Honor. The only ones that
didn’t was [sic] London and Century.”). See also Exhibit A to Letter to the Honorable Paul R.
Wallace from Jennifer C. Wasson, Esquire, attaching chart from oral argument, dated June 7, 2017
(chart providing updated sums the insurers paid as the date of oral argument, showing International
paid out all of Warren’s sought after reimbursement).
_11_
Two other Excess lnsurers, Lexington and London, sent Warren’s tender of
800 claims (and their 700,000 pages of supporting documentation) to an Insurance
Consulting practice, Mazars LLP, for review.62 Mazars reviewed the documentation
to confirm their compliance with the Supreme Court’s ruling.63 As of February 6,
2017, Mazars had reviewed 50% of Warren’s tenders to Lexington and London,
representing approximately 70% of the alleged costs.64 On December 29, 2016,
London and Lexington paid $9,860,604.62 associated with 34 of Warren’s claims.65
Further, on February 3, 2017, London confirmed that approximately $ 14,863,450 in
additional settlement costs and $4,710,040.90 in associated defense costs for 275
claims comported with the Supreme Court’s decision, and that London and
Lexington would make their best efforts to pay those amounts by February 28,
2017.66
ln April, 2017, the Court heard oral argument Warren informed the Court
that four of the six remaining Excess Insurers had paid out their outstanding claims.
62 Affidavit of Romy F. Comiter, Viking Pump, Inc. and Warren Pumps LLC v. Century
Indem. Co., er al., C.A. No. N1oc-06-141 PRW [CCLD], 3111 3 (Del. super. ct. Feb. 6, 2017)
(hereinafter “Comiter Aff.”).
33 Id. a1114.
34 1a 3111 5.
65 McKay Aff. at 11 12.
66 Id. at 11 13. As of the date of oral argument, Lexington and London paid out approximately
$30 million for 308 claims. See Hr’g Tr. at 67.
_12_
Nonetheless, Warren argued that prejudgment interest was warranted on all sums,
paid or outstanding, due to the Excess Insurers’ alleged delay of payments. Warren
could not pinpoint a case at argument that allowed the Court to set a judgment on
sums already paid in a matter where a breach of contract was never alleged. The
Court allowed supplemental submissions for Warren to find relevant case law.
III. PARTIES’ CONTENTIONS
Warren argues the spirit of Section 5001 warrants prejudgment interest
Warren contends that although Section 5001 requires “a sum awarded because of a
breach of performance of a contract” before prejudgment interest is granted, the fact
that Warren’s complaint requested declaratory relief rather than contract damages is
not a bar to recovery.67 Rather, Warren posits, “an award of . . . prejudgment interest
is mandatory” due to the Excess lnsurers’ alleged breach of their obligations to
Warren by delaying payment.68 And even if the Excess Insurers had not been
intentionally dilatory, Warren argues, it is entitled to prejudgment interest as a matter
of right.69
The Excess Insurers counter that Section 5001 ’s plain language only permits
prejudgment interest in claims where a breach of contract is alleged; but here only a
67 Warren Mot. at 22.
33 Id.
39 see id. 3122-23.
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declaratory judgment was sought.70 When no damages are awarded on which to
impose prejudgment interest, the Excess Insurers contend, Section 5001 cannot
apply. Further, the Excess Insurers argue, Warren’s request to set a judgment
amount after trial is merely an attempt to circumvent Warren’s earlier failure when
it tried to amend its complaint to include a breach-of-contract claim.71
IV. DISCUSSION
Warren first requests this Court set judgment pursuant to 10 Del. C. § 6508.
Under § 6508, “[f]urther relief based on a declaratory judgment or decree may be
granted whenever necessary or proper.”72 While 10 Del. C. § 6508 provides a
procedural mechanism via which this Court might award certain relief post-trial, the
recovery of prejudgment interest is a matter of substantive law.73 And the parties
agree that New York substantive law governs this dispute74
70 Excess lnsurers’ Opp. at 10.
71 Excess lnsurers’ Opp. at 24.
13 DEL. coDE ANN. 111. 10, § 6508 (2018).
73 Cooper v. Ross & Roberts, Inc., 505 A.2d 1305, 1307 (Del. Super. Ct. 1986) (“The recovery
of prejudgment interest in Delaware is a matter of substantive law.”).
74 See Hr’g Tr. at 20 (“The parties agree, Your Honor, it is a substantive issue, and it is under
New York law.”).
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A. TEN DEL. C. § 6508 DoEs NoT PERMIT THE AwARD oF DAMAGES WITHoUT
A FACT FINDER’s DETERMINATION
Warren argues that under 10 Del. C. § 6508, this Court has the discretion to
set a judgment in this action in the amount Warren believes it is entitled from the
Excess Insurers_even though no court or jury has rendered a verdict or other
judgment in that amount.75
Warren’s cited case law does not support its argument that § 6508 grants this
Court the authority to set damages without a fact finder’s determination of the
appropriate amount. For instance, in Olson Bros. Inc. v. Englehart,76 the Court did
not enter the amount sought by the plaintiffs as a judgment, but instead granted the
plaintiffs leave to amend their answer to file a counterclaim seeking monetary
damages.77 The Olson Bros. holding suggests that a fact finder would still have to
make an “ascertainment of damages” on the amended prayer for relief.78
Warren then turns to Clernente v. Greyhound Corp.79 ln Clemente, the Court
observed, “[t]here would be no reason for the Legislature to have included [10 Del.
75 Warren Mot. at 8.
13 245 A.2d 166 (Del. 1968).
11 Id. at 169.
13 Id.
79 Hr’g Tr. at 41 (citing Clernente v. Greyhoand Corp., 155 A.2d 316 (Del. Super. Ct. 1959)).
_15_
C. § 6508] unless it had contemplated the possibility that damages for past breach or
otherwise might be obtained when it was required for the purpose of settling the
entire controversy between the parties.”80 But Clemente holds only that a complaint
may seek combined relief, and “generally the relief prayed in the complaint will not
control the ultimate relief that may be warranted.”81 Clemente does not suggest the
Court has the ability to “set damages” not specifically awarded by a fact finder’s
verdict or judgment through an adversarial process.
Sallivan v. Local Union 1 726 of AFSCME, /lFL-C10,32 also cited at oral
argument,83 helps no more. ln Sullivan, the trial court expressly awarded damages
in conjunction with declaratory relief.84 Here, the Court merely identified the Excess
lnsurers’s obligations to pay under the policies and suggested that the parties could
seek post-judgment relief “(i) in the form of pre- and post-judgment interest and (ii)
to determine amounts owed by any party, based on the declarations set forth in this
Final Judgment Order.”85 Warren does not seek any determination here on the
33 Clememe, 155 A.2d at 323.
31 Id.
33 464 A.2d 899, 903 (Del. 1983).
33 Hr’g Tr. at 41.
34 Sullzvan, 464 A.2d at 901, 903.
85 Final Judgment Order at 11 29.
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amount owed; rather, it asks the Court to adopt the amount of the claims it has
tendered to the Excess Insurers many of which were paid expeditiously upon
tender.36 According to Sullz°van, this would not be a proper application of 10 Del. C.
§ 6508: the Sallivan court found that the trial court “erred in awarding damages
without a further fact hearing.”87
In short, none of the authorities Warren cites support the notion that a court
may just “set a judgment amount” absent a judge or jury’s specific finding on
damages lnstead, Warren’s citations affirm that some determination of damages is
necessary_not merely a finding of an obligation to pay_for the Court to deem it a
monetary judgment.
B. WARREN’s NovEL APPLICATIoN oF SECTIoN 5001 FINDs No SUPPoRT IN
CAsE LAw
Absent an award of monetary breach-of-contract damages, Warren cannot
recover prejudgment interest under New York law. And no court has awarded
Section 5001 prejudgment interest under similar circumstances
New York Civil Practice Law and Rules Section 5001 holds that “[i]nterest
shall be recovered upon a sum awarded because of a breach of performance of a
contract[.]”88 By requesting the Court set judgment under 10 Del. C.§ 6508, Warren
86 See Warren Mot. at 18.
31 sullivan 464 A.2d at 903.
33 N.Y. C.P.L.R. 5001(a) (2018).
_17_
hopes to meet Section 5001 ’s threshold of a “sum awarded” for “breach of
performance” and recover prejudgment interest. The Excess Insurers contend that
Warren’s proposed application of Section 5001 contradicts the plain language of the
statute and finds no support in New York law.
New York’s Court of Appeals has stated that Section 5001 “is intended to
indemnify successiial plaintiffs ‘for the nonpayment of what is due to them[,]’ and
is not meant to punish defendants for delaying the final resolution of the litigation.”89
The Court has further defined prejudgment interest as “the cost of having the use of
another person’s money for a specified period.”90
Warren fails to cite to a single case where a court, applying New York law,
set a judgment amount on which to apply CPLR 5001 where the plaintiff did not
bring suit for money damages for breach of a contract. Several of Warren’s
authorities stand for the proposition that where a plaintiff brings suit on a breach of
contract, but the principal is paid prior to the award of judgment, Section 5001 may
be applied to the delinquent payment.91 No cited case suggests that Section 5001
39 Love v. sm¢e, 583 N.E.2d 1296 (N.Y. 1991) (intemal citation omitted).
90 Aarecchione v. N. Y. State Div. ofHuman Rights, 77l N.E.2d 231, 234 (N.Y. 2002) (quoting
Love, 583 N.E.2d at 1296).
31 see TIG Ins. Co. v. Newmom Minmg Corp., 2005 wL 2446234, at *1 (s.D.N.Y. oct 4,
2005) (noting, in a breach of contract suit where the principal was ultimately paid before judgment,
that “[e]ven if no sum is awarded, for example, because the defendant paid the principal amount
prior to trial, a plaintiff may still claim prejudgment interest if it reserved its right to interest”); In
re Hoffman, 712 N.Y.S.2d 165, 166 (N.Y. App. Div. 2000) (holding that, where the underlying
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may be applied where the underlying suit requests declaratory relief rather than
monetary damages Nor has any cited case suggested that amounts agreed upon and
paid post-declaratory judgment may be retroactively declared “damages” for the
purposes of awarding prejudgment interest under Section 5001.
Courts interpreting Section 5001 have instead consistently found that breach-
of-contract damages are a necessary prerequisite for allowing prejudgment interest.
Take Royal [ndem. Co. v. Providence Washington Ins. Co.92 There, the federal
district court found that a contribution claim for monetary damages between two
insurers was tantamount to a contract action.93 In Royal Indem., one insurer sued a
fellow insurer for its failure to defend and indemnify the parties’ common Insured.94
The Insured was awarded almost $500,000 in an underlying pharmaceutical claim.95
Royal Indemnity sought, was awarded, and received, specific monetary contribution
from a fellow insurer. And so, the court found Section 5001 was triggered and
suit was “essentially in the nature of breach of contract,” “the respondents’ tender of [late contract]
payment after the commencement of litigation did not defeat the petitioner’s statutory rights under
CPLR 5001 because she accepted the tender without prejudice to her claim for interest”).
92 966 F. Supp. 149 (N.D.N.Y. 1997).
33 Id. at 150-51.
94 Id. at 150.
95 See id. See also Varda, Inc. v. Ins. Co. ofN. Am., 45 F.3d 634, 636 (2d Cir. 1995) (affirming
a prejudgment interest award in a breach of contract claim where a jury awarded breach of contract
damages).
_19_
interest could be applied to the sum awarded as part of the court’s judgment that
determined both the obligation and damage amount.
But here, Warren did not seek monetary damages in its complaint Warren
sought declaratory relief, i.e., a declaration of the contours of the Excess Insurers’
obligation to pay. Warren’s additional cited cases suffer the same defect: it cannot
cite to a single instance where a court premised its prejudgment award on a similar
action for declaratory relief without proving specific monetary damages at trial.96
Too, a holding awarding prejudgment interest without an underlying breach
of contract damages award would run contrary to the plain language of Section 5001 :
an award of interest requires the award of a sum “becaase of a breach of performance
of a contract.” Recently, facing a similar request for entry of judgment and
prejudgment interest under Section 5001 in TIAA-CREF Individual & Institational
Servz``ces, LLC v. Illinois National Insurance Company, this Court noted that “the
purposes served by prejudgment interest in other cases do not give the Court license
to . . . ignore the fact [Section 5001] requires that the Court award a sum for breach
96 See Cont’l Cas. Co. v. Ernployers Ins. Co. of Wasuau, 865 N.Y.S.2d 855, 862 (Sup. Ct.
N.Y. Cnty. 2008), rev ’d, Cont’l Cas. Co. v. Employers Ins. Co. of Wausau, 923 N.Y.S.2d 538
(N.Y. App. Div. 2011) (in which plaintiffs sought declaratory relief in the form of the Court’s
determination of “the appropriate reimbursement with interest on some or all defense costs
incurred by [plaintiffs] on certain claims,” and received prejudgment interest on that
reimbursement amount); Aurecchione v. N.Y. State Div. of Human Rights, 771 N.E.2d at 233
(awarding prejudgment interest at the Court’s discretion under a human rights statute, not Section
5001).
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of performance.”97 Further, the Court found it significant that “[w]hile a sum
awarded for anticipatory breach is a sum awarded for breach of performance of a
contract under Section 5001(a), TlAA-CREF never asked this Court to award it
summary judgment on its anticipatory breach claim, and TlAA-CREF never
requested that the jury render a verdict on its anticipatory breach claim.”98
Here, Warren sought and received declaratory relief in its action against the
Excess Insurers.99 Armed with the judgment it had received, i.e., a declaration of
obligations, Warren tendered a number of indemnity and defense claims to the
Excess Insurers. Warren now asks the Court to set the amount of those just-tendered
and resolved insurance claims, unverified by any fact finder, as a “judgment” in this
case for the purpose of recovering prejudgment interest. Case law does not support,
nor can the Court divine from its plain language, Warren’s peculiar interpretation of
Section 5001. Warren’s Motion for prejudgment interest is DENIED.
V. CONCLUSION
Because Warren’s complaint sought declaratory relief, rather than breach-of-
contract monetary damages, it now asks the Court to enter a damage “judgment”
97 TIAA-CREFIndividual & Institutional Servs., LLC v. Ill. Nat ’l Ins. Co., 2017 WL 5197860,
at *8 (Del. Super. Ct. Oct. 23, 2017).
33 Id. at *8.
99 Compl. at 1111 56-79 (seeking declaratory judgment, on four causes of action, determining
the extent of the Excess Insurers’ obligations to Plaintiffs).
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against the Excess Insurers in the amount of its claims tendered under the excess
insurance policies that seem to have been or are being promptly paid upon tender.
Such a request finds footing neither in 10 Del. C. § 6508’s procedures nor in
substantive New York law. Absent a determination of damages at trial or other
dispositive proceeding, the Court cannot appoint the post-verdict settlement amounts
sought by Warren and paid by the Excess Insurers as a “judgment” for the purpose
of awarding prejudgment interest
Accordingly, Warren’s Motion to set monetary judgments against the Excess
Insurance and then grant pre-judgment interest on such contrivances is DENIED.
<~- ._
IT IS SO ORDERED. /%¢) -\..
MJ
Paul R. Wallace, Judge
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