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Malone v. Maddox2/25/2003
I.
The material facts pertaining to the issues on this appeal are not in dispute. On February 18, 2000, at about 11:15 p.m., the policyholder and the uninsured motorist were involved in a two-vehicle accident in Chattanooga. At the time of this nighttime, head-on collision, the uninsured motorist was driving on the wrong side of the road, at an excessive rate of speed, without headlights, and while under the influence of an intoxicant. As a result of the accident, the policyholder sustained serious personal injuries.
The policyholder sued the uninsured motorist, seeking to recover compensatory damages for the injuries and damages proximately caused by the uninsured motorist's negligence. She caused process to be served on the UM carrier. The UM carrier filed an answer and defended in its own name. The jury returned a verdict against the uninsured motorist for $200,000. The trial court entered judgment against the UM carrier for $50,000.
Following the entry of the trial court's judgment on the jury's verdict, the policyholder moved the trial court, pursuant to the provisions of Tenn. Code Ann. § 47-14-123 (2001), for an award of prejudgment interest against the UM carrier "on the $50,000 policy amount from the date of the injury to the date of the payment of the judgment into court." The trial court denied the motion. In its order denying the requested relief, the trial court opined as follows:
After careful deliberation, the Court concludes that the language of the automobile liability insurance policy pertaining to the limit of liability for uninsured/underinsured motorist coverage prohibits any award of pre-judgment interest that would exceed the limit of liability applicable to the policy. However, were it not for the policy language and the limit of liability, the Court would find that it is equitable that Harleysville pay pre-judgment interest for a period of one year prior to the date of the judgment on the amount of its liability of $50,000 in this case at the rate of ten percent (10%) per annum, an amount equal to $5,000.
II.
The policyholder makes several arguments in support of her contention that the trial court erred in refusing to award prejudgment interest. First, she argues that an award of prejudgment interest on a damage award against a UM carrier is an add-on, separate and distinct from, and in addition to, the basic judgment against the UM carrier based upon the negligence of the uninsured motorist. While conceding, as she must, that the jury's award of $200,000 extrapolates to an award against the UM carrier of $50,000 - the amount of the UM carrier's limit of liability in this case - she argues that the nature of the statutory "creature" known as prejudgment interest is such as to render it not subject to the contractual limitation of $50,000.
In support of her first argument, the policyholder relies on the case of Goff v. Permanent General Assurance Corp., C/A No. 03A01-9405-CV-00185, 1994 WL 585771 (Tenn. Ct. App. E.S., filed October 19, 1994). In Goff, we were presented squarely with the question of whether a judgment against a UM carrier for the full amount of its coverage was subject to postjudgment interest under Tenn. Code Ann. § 47-14-121 (2001), even though such an award would obviously cause the total amount due from the UM carrier to exceed the stated limit of UM coverage in the policy. Id. at *2. We held that postjudgment interest was mandated by the statute and that all judgments were subject to it. Id. We concluded that the UM carrier in that case, i.e., PGAC, was liable for postjudgment interest on top of the "maxed-out" judgment of $25,000:
Tenn. Code Ann. § 47
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