United States District Court, D. Arizona
Amerisure Mutual Insurance Company, a Michigan company, Plaintiff,
Houston Casualty Company, a Texas company, Defendant.
G. CAMPBELL SENIOR UNITED STATES DISTRICT JUDGE.
Amerisure Mutual Insurance Company (“Amerisure”)
sued Defendant Houston Casualty Company (“HCC”),
and HCC counterclaimed. Docs. 1-1; 35. The parties
cross-moved for summary judgment, and the Court granted
Amerisure's motion on HCC's duty to indemnify,
HCC's duty to defend, and the lack of Amerisure's
duty to indemnify, and denied both motions on Amerisure's
duty to defend. Doc. 73. The parties resolved the remaining
issues in the case (Doc. 77) and filed a joint proposed form
of judgment awarding Amerisure $67, 803.10 in prejudgment
interest, from which HCC subsequently withdrew (Docs. 80,
81). The parties now dispute Amerisure's right to
pre-judgment interest in the amount sought. Docs. 83, 84. For
the following reasons, the Court will award $67, 803.10 in
prejudgment interest to Amerisure.
calculates prejudgment interest based on the state interest
rate of prime , which in this case equals 6.5% (5.5% 1 =
6.5%). Doc. 84 at 2. Amerisure applied this interest to the
$212, 814.80 it paid on behalf of the insured, Spectrum. The
last of those payments - of which HCC had knowledge - was
made on June 5, 2014. Id. 1, 789 days elapsed
between June 5, 2014 and the date of the stipulated form of
judgment. The calculated daily interest of $37.90 for 1, 789
days equals $67, 803.10. Amerisure explains the daily
interest figure as follows: “6.5% divided by 365 days
equals 0.000178082. That number times $212, 814.80 equals
interest of $37.90 per day.” Id.
contends that prejudgment interest did not begin to accrue
until the Court's summary judgment ruling on March 4,
2019, and therefore totals only $2, 728.80. Doc. 83.
courts sitting in diversity apply state law in assessing
prejudgment interest. Am. Tel. & Tel. Co. v. United
Computer Sys., 98 F.3d 1206, 1209 (9th Cir. 1996). In
Arizona, litigants are entitled to prejudgment interest on
liquidated claims. Gemstar Ltd. v. Ernst &
Young, 917 P.2d 222, 237-38 (Ariz. 1996). “A claim
is liquidated if the plaintiffs provide a basis for precisely
calculating the amounts claimed.” Port United Inc.
v. Sestus LLC, No. CV-11-00367-PHX-ROS, 2014 WL
12521331, at *2 (D. Ariz. Sept. 29, 2014) (quoting
Gemstar, 917 P.2d at 237). The amount owed must be
subject to calculation “with exactness, without
reliance upon opinion or discretion.” Scottsdale
Mem'l Health Sys. v. Maricopa County, No. 1 CA-CV
07-0150, 2010 WL 1255719, at *16 (Ariz.Ct.App. March 30,
2010) (quoting John C. Lincoln Hosp. & Health Corp.
v. Maricopa County, 96 P.3d 530, 542 (Ariz.Ct.App.
2004)). “[T]he district court has discretion to
determine the date of commencement of prejudgment
interest.” Black & Decker (U.S.), Inc. v. All
Spares, Inc., No. CV 09-2126-PHX-MHM, 2010 WL 3034887,
at *3 (D. Ariz. Aug. 3, 2010) (quoting AMHS Ins. Co. v.
Mut. Ins. Co. of Ariz., 258 F.3d 1090, 1103 (9th Cir.
argues that HCC had all of the information needed to
ascertain its liability on the date that Amerisure made its
last payment on behalf of Spectrum. Doc. 84 at 3. HCC relies
on AMHS, and argues that it could not ascertain its
liability until policy coverage was determined because
“more is required where insurance coverage for the
claim is in dispute.” Doc. 83 at 3.
AMHS, a jury had previously found that Dr. Wesley
Romberger negligently cared for his patient, Christina Beery,
in an underlying medical malpractice action. 258 F.3d at
1092. Dr. Romberger had purchased professional liability
insurance policies from Mutual Insurance Company of Arizona
(“MICA”) and Samaritan Health Systems.
Id. at 1092, 1094. From the AMHS Insurance Company
Risk Retention Group (“RRG”), Samaritan purchased
four-layer “umbrella” coverage for itself and the
multiple healthcare institutions and providers that it
insured in the first instance. Id. Samaritan
contributed 90% of the cost to defend Dr. Romberger and MICA
contributed 10%. In two lump sum payments, RRG eventually
paid Beery the more than seven million dollar judgment.
Id. at 1092. MICA offered a maximum of $150, 000
toward the settlement, and RRG sued MICA for bad faith and
contribution. Id. On appeal, the parties disputed
several issues regarding the interpretation and interaction
of the policies, as well as the date on which prejudgment
interest began to accrue. Id. at 1103.
compute MICA's contribution, the Ninth Circuit had to
determine whether MICA and RRG were primary, excess, or
co-excess insurers of the Beery judgment. Id. at
1093. Romberger was covered by three separate RRG policies
with different terms during his care of Beery. Id.
at 1098. The court analyzed each policy and held that the
first two coverage layers were specific excess policies that
attached after the exhaustion of the underlying Samaritan
Policy. Thus, MICA was required to share any loss over $1
million on a pro rata basis with RRG's first two layers.
Id. at 1097-98. The court held that the third layer
of the RRG policy was excess of all coverage up to $10
million, including the MICA policy. Id. at 1100. The
court then had to determine which formula to use to calculate
MICA's contribution level, the “policy
limits” approach or the “maximum loss” rule
- an issue not entirely clear under Arizona law - and applied
the “policy limits” approach. Id. at
prejudgment interest, RRG had notified MICA of the amounts
paid to Beery at the time of the payments in July 1996 and
June 1997. Id. at 1103. But the district court found
this notification insufficient to allow MICA to determine its
liability with “reasonable exactness.” The Ninth
Circuit affirmed, explaining that “[u]nder the
‘policy limits' approach to prorating contribution,
MICA's liability could not be discerned without reference
to the total available insurance. RRG, therefore, was under a
duty to inform MICA of the total policy limit applicable to
the Beery judgment. RRG did not do so until September 19,
1997” when it sent MICA a complete copy of the relevant
insurance policies. Id.
argues that, like MICA, it “could not ascertain its
liability until the applicable policy coverage was
determined.” Doc. 83 at 3. But even though the disputed
issues underlying MICA's level of contribution and total
coverage liability were more complex than simply which
insurance policy applied, MICA's ability to calculate its
liability did not depend on the court's final policy
coverage determination. The Ninth Circuit instead held that
MICA could determine its liability with reasonable exactness,
and its claim was liquidated, once it had the relevant
insurance policies and knew RRG's total policy limit. In
any event, the Ninth Circuit found that the district court
did not abuse its discretion in reaching its conclusion - it
did not hold that Arizona law requires a different showing to
prove a claim is liquidated when coverage is disputed.
and HCC did not dispute the amounts at issue or whether
either policy provided only partial coverage. HCC does not
contend that it needed - or did not have - access to the
relevant insurance policies. Amerisure claimed that HCC's
policy provided total coverage, and HCC knew the precise
amount paid by Amerisure and what it would be liable to pay
if it lost. Thus, as of June 5, 2014 - the date that
Amerisure made its last payment on behalf of Spectrum - HCC
had the “basis for precisely calculating the amounts
claimed.” Port United Inc., 2014 WL 12521331,
at *2 (quoting Gemstar, 917 P.2d at 237). A
“good faith dispute over liability will not defeat a
recovery of prejudgment interest” on a liquidated
claim. Id. (quoting Fleming v. Pima County,
685 P.2d 1301, 1307-08 (Ariz. 1984)); see also In re
Weinberg, 410 B.R. 19, 38 (B.A.P. 9th Cir. 2009)
(“In short, in [Fleming and Gemstar],
the claims met the liquidation test under Arizona law because
each was ‘at all times susceptible to exact
computation, no part of the amount was subject to opinion or
discretion, [and] it could have been determined with
precision.'”); Black & Decker, 2010 WL
3034887, at *3 (claim was liquidated and prejudgment interest
accrued on the last date defendant received invoice from
plaintiff of amounts owed).
argues in the alternative that the earliest date on which
prejudgment interest began to accrue was September 29, 2014,
when Amerisure provided HCC with a notice of a subrogation
lien for a specific amount with supporting documentation.
Doc. 83 at 4. HCC asserts that prior to September 29,
“Amerisure did not disclose sufficient information to
HCC to allow it to determine the reasonable exactness of the
amount being claimed.” Id. But HCC fails to
develop this argument or cite supporting authority. HCC
identifies no new information it received on September 29
that it did not have on June 5. And HCC ...