Northwest Airlines, Inc. v. Professional Aircraft Line Service
Filing
86
MEMORANDUM OPINION AND ORDER granting in part and denying in part creditor Northwest Airlines, Inc.'s 70 Motion to Alter/Amend/Correct Judgment (Written Opinion). Signed by Judge John R. Tunheim on December 4, 2013. (DML)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
NORTHWEST AIRLINES, INC., Creditor,
Civil No. 11-368 (JRT/TNL)
Plaintiff,
v.
PROFESSIONAL AIRCRAFT LINE
SERVICE, Debtor,
Defendant,
MEMORANDUM OPINION
AND ORDER ON
PLAINTIFF’S MOTION TO
CORRECT OR AMEND
JUDGMENT
v.
WESTCHESTER FIRE INSURANCE
COMPANY,
Garnishee.
Brian W. Thomson, Aleava Rael Sayre, Jeffrey A. Ehrich, and Steven P.
Zabel, LEONARD STREET AND DEINARD, PA, 150 South Fifth
Street, Suite 2300, Minneapolis, MN 55402, for plaintiff.
Erin Fury Parkinson, MCGLINCHEY STAFFORD, PLLC, 601 Poydras
Street, Twelfth Floor, New Orleans, LA 70130; and Robert W. Vaccaro
and Timothy R. Schupp, GASKINS, BENNETT, BIRRELL, SCHUPP,
LLP, 333 South Seventh Street, Suite 2900, Minneapolis, MN 55402 for
garnishee.
Northwest Airlines, Inc. (“NWA”) secured a default judgment in Minnesota state
court against defendant Professional Aircraft Line Service (“PALS”), an aircraft
maintenance company, after PALS negligently handled an NWA aircraft. NWA now
brings this garnishment action against garnishee Westchester Fire Insurance Company
(“Westchester”), seeking to recover proceeds from an insurance policy that Westchester
issued to PALS.
27
On March 25, 2013, the Court granted summary judgment in favor of NWA,
finding that the compulsory insurance doctrine allowed NWA to recover the proceeds of
Westchester’s insurance policy, despite PALS’ failure to notify Westchester of the
underlying negligence claim. (Mem. Op. & Order, Mar. 25, 2013, Docket No. 68.)
Although the March 25 order entered judgment in NWA’s favor, it did not specify an
amount of damages. (See id. at 21.) NWA now brings a motion under Federal Rule of
Civil Procedure 60(a), requesting that the Court correct or amend the judgment to reflect
an award of damages in the amount of $5,066,806.57, which includes postjudgment
interest on the state court default judgment, plus prejudgment interest in NWA’s favor.
Because the March 25 entry of judgment was incomplete in failing to include a damages
award, the Court will grant NWA’s motion to amend. The Court will, however, reduce
NWA’s damages request in light of the insurance policy’s prohibition on the recovery of
postjudgment interest.
BACKGROUND1
I.
THE UNDERLYING ACCIDENT
On February 6, 2002, PALS’ employees, while moving one of NWA’s airplanes,
caused a collision that resulted in more than $10 million in damages. (Sixth Aff. of
Steven P. Zabel, Ex. 4 ¶¶ 3-13, Mar. 29, 2013, Docket No. 73.) At the time of the
1
The Court recites the background only to the extent necessary to rule on the instant
motion. A more complete recitation of the facts can be found in the Court’s previous orders. See
Nw. Airlines, Inc. v. Prof’l Aircraft Line Serv., Civ. No. 11-368, 2013 WL 1197482 (D. Minn.
Mar. 25, 2013); Nw. Airlines, Inc. v. Prof’l Aircraft Line Serv., Civ. No. 11-368, 2011 WL
2837677 (D. Minn. July 18, 2011)
-2-
accident PALS was insured by Westchester under a liability policy (“the Policy”) with a
$5 million coverage limit per occurrence. (First Aff. of Robert W. Vaccaro, Ex. B at 3,
Feb. 22, 2011, Docket No. 5.) The Policy provides that no person or organization has a
right to sue under the Policy unless PALS notifies Westchester as soon as practicable of
any occurrence which may result in a claim. (Id., Ex. B at 19-20.) PALS failed to notify
Westchester of the incident. (Id., Ex. D.)
II.
STATE COURT LITIGATION
On October 1, 2004, NWA served PALS with a summons and complaint in
Minnesota state court, seeking to recover damages NWA incurred as a result of the
airplane accident. (Sixth Zabel Aff., Ex. 4 ¶ 14.) On November 15, 2004, NWA and its
insurer, Global Aerospace, Inc. (“Global”), notified Westchester’s claims handler of the
lawsuit and demanded that Westchester tender the $5 million limit of the Policy. (First
Aff. of Steven P. Zabel, Ex. 13, Feb. 28, 2011, Docket No. 9.) On November 24, 2004,
Westchester’s claims handler notified PALS that Westchester was denying coverage
under the Policy due to PALS’ failure to provide notice of the claims and cooperate under
the terms of the Policy. (First Vaccaro Aff., Ex. D.)
After PALS failed to respond to the state court summons and complaint, NWA
moved for default judgment. (Sixth Zabel Aff., Ex. 4 ¶¶ 15, 17.) The state court granted
NWA’s motion on January 10, 2005, awarding $7,295,967 in property damage and
$3,312,706 for damages attributed to loss of use of the airplane. (Id., Ex. 4 ¶¶ 23-24.)
-3-
The state court judgment was docketed on February 2, 2005, in the amount of
$10,635,412.67. (First Zabel Aff., Ex. 15.)
NWA claims that it later recovered $6,545,966.35 from Global, which it contends
should be subtracted from the state court judgment to determine the amount of damages
for which Westchester is responsible. (See Sixth Zabel Aff., Ex. 5; Mem. in Supp. of
Mot. for Summ. J. at 28-29, July 30, 2012, Docket No. 50.)2
III.
NEVADA LITIGATION
In November 2005 counsel for PALS made a demand against Westchester for a
full policy limit defense relating to NWA’s default judgment against PALS.
(First
Vaccaro Aff., Ex. G at 3.) On December 1, 2005, Westchester commenced an action in
the United States District Court for the District of Nevada, seeking a declaration that it
had no obligation to provide insurance coverage to PALS for the accident. (Id.) NWA
intervened in the action. (Id., Ex. G. at 4.)
PALS failed to appear in the Nevada litigation, and the court ultimately granted
Westchester’s motion for summary judgment with respect to PALS. Westchester Fire
Ins. Co. v. Mendez, Civ. No. 05-1417, 2010 WL 2694960, at *8 (D. Nev. July 1, 2010).
2
NWA claims, and Westchester does not dispute, that NWA received $6,545,966.35
from Global. The document relied on for this proposition states that “The actual amount of the
loss sustained by Northwest Airlines, was $7,295,966.35[.] The final amount claimed of
[Global] under the terms of the above Policy of insurance by reason of said loss is $535,702.35
(Net of $6,010,264.00 submitted via a Proof of Loss dated 7 January 2003, and the $750,000
deductible)[.]” (Sixth Zabel Aff., Ex. 5.) Although it is unclear from this document what
amount NWA actually recovered from Global, in the absence of any argument of the parties to
the contrary, the Court will proceed with the $6,545,966.35 figure supplied by NWA.
-4-
The court held that “[PALS] violated the Policy’s notice and cooperation provisions and
Westchester therefore has no duty to defend or indemnify [PALS].” Id. at *8. The court
also declined to rule on NWA’s argument that it was entitled to the Policy’s proceeds
under the compulsory insurance doctrine even if PALS breached the Policy by failing to
give notice to Westchester, finding that the argument exceeded the scope of NWA’s
intervention. Id. at *5-*6. The court explained:
NWA’s interest in this litigation, as defined by NWA’s pleading, is to
protect any proceeds Westchester may owe to [PALS]. Had [PALS]
decided to participate in this case, [it] could not have benefitted from the
compulsory insurance doctrine. The compulsory insurance doctrine is
designed to protect injured third parties, not the insured. The compulsory
insurance doctrine . . . is a direct claim that NWA theoretically could bring
against Westchester, but it has nothing to do with whether Westchester
owes any duty to [PALS].
Id. at *6.
IV.
SUMMARY JUDGMENT MOTIONS
On December 16, 2010, NWA filed a garnishment action against PALS and
Westchester in Minnesota state court, seeking to satisfy the default judgment against
PALS with the proceeds of the Policy. (Notice of Removal, Ex. A, Part 1 at 2, Feb. 15,
2011, Docket No. 1.) Westchester removed the action to federal court, and the Court
granted NWA’s motion for leave to initiate an ancillary garnishment proceeding, join
Westchester as a party, and file a supplemental complaint against Westchester. Nw.
Airlines, Inc. v. Prof’l Aircraft Line Serv., Civ. No. 11-368, 2011 WL 2837677 (D. Minn.
July 18, 2011).
-5-
In July 2012, NWA and Westchester both moved for summary judgment on the
issue of whether NWA was entitled to receive the proceeds of the Policy in satisfaction of
the state court judgment, even though PALS itself had no right to indemnity under the
Policy. (NWA’s Mot. for Summ. J., July 30, 2012, Docket No. 48; Westchester’s Mot.
for Summ. J., July 31, 2012, Docket No. 54.)
On March 25, 2013, the Court granted NWA’s motion for summary judgment,
finding that NWA was entitled to the proceeds of the Policy through application of the
compulsory insurance doctrine, which provides that “‘[t]he insurer on a compulsory
insurance liability policy may be held liable to one injured by the insured notwithstanding
the fact that the insured himself has lost his rights under the policy by failure to comply
with its terms and conditions.’” Nw. Airlines, Inc. v. Prof’l Aircraft Line Serv., Civ. No.
11-368, 2013 WL 1197482, at *5 (D. Minn. Mar. 25, 2013) (quoting Nimeth v. Felling,
165 N.W.2d 237, 239 (Minn. 1969)). The Court also agreed with NWA that the Nevada
litigation had no res judicata effect upon these proceedings because the Nevada court’s
holding that Westchester owed no duty to defend or indemnify PALS in no way
“delineated the rights between NWA and Westchester.” Id. at *8. Finally, of relevance
to the present motion, the Court concluded that NWA effectively served Westchester
with the summons and complaint for this garnishment action on December 21, 2010. Id.
at *9.
The Court subsequently entered judgment in NWA’s favor, (J., Mar. 26, 2013,
Docket No. 69), but omitted the amount of damages to which NWA was entitled in both
its March 25 order and the March 26 judgment. NWA now moves to correct that
-6-
judgment. NWA seeks correction of the March 26 judgment to bring it into compliance
with NWA’s request for damages and interest made in its summary judgment
submissions. (Mem. in Supp. of Mot. for Summ. J. at 28-29; Sixth Zabel Aff., Ex. 6.)
ANALYSIS
I.
SCOPE OF RULE 60(a)
Federal Rule of Civil Procedure 60 provides that “[t]he court may correct a
clerical mistake or a mistake arising from oversight or omission whenever one is found in
a judgment, order, or other part of the record.” Fed. R. Civ. P. 60(a). 3 The judgment
entered on March 26, 2013, entered final judgment as to all claims.
Although it
purported to be a final judgment, the judgment failed to include a ruling on damages. See
Maristuen v. Nat’l States Ins. Co., 57 F.3d 673, 678 (8th Cir. 1995) (“A judgment
awarding damages but not deciding the amount of the damages or finding liability but not
fixing the extent of the liability is not a final decision within the meaning of [28 U.S.C.]
§ 1291.”). This entry of final judgment without specifying the amount of damages
3
Rule 60(a) also provides that after an appeal has been docketed in the appellate court,
the district court may only correct mistakes “with the appellate court’s leave.” Fed. R. Civ. P.
60(a). NWA’s motion to alter or correct the judgment was filed slightly earlier on the same day
that Westchester filed its notice of appeal to the Eighth Circuit. (Mot. to Alter/Amend/Correct J.,
Mar. 29, 2013, Docket No. 70; Notice of Appeal to Eighth Circuit, Mar. 29, 2013, Docket
No. 76.) The Clerk of Court for the Eighth Circuit filed a letter with the Court noting the
presence of a pending postjudgment motion, and indicating that “[a] notice of appeal filed after
entry of judgment but before disposition of the post-judgment motion is ineffective until the
entry of the order disposing of the last outstanding motion.” (Letter, Apr. 4, 2013, Docket No.
79.) The letter further explained that the Eighth Circuit would establish the appropriate appellate
briefing schedule only “[u]pon receipt of the ruling disposing of the last outstanding motion.”
(Id.)
-7-
qualifies as a “mistake arising from oversight or omission” for purposes of Rule 60(a).
See Chavez v. Balesh, 704 F.2d 774, 776-77 (5th Cir. 1983) (holding that Rule 60(a) is
properly used to correct the district court’s inadvertent omission of a liquidated damages
award); see also Paddington Partners v. Bouchard, 34 F.3d 1132, 1140 (2d Cir. 1994)
(explaining that a Rule 60(a) may be used to correct the absence of an award of
prejudgment interest, where the failure to award interest was not a reflection of the
court’s intent). Therefore, the Court concludes that correction of the March 26 judgment
under Rule 60(a) is appropriate.
II.
AMOUNT OF DAMAGE
NWA contends that it is entitled to recover damages in the amount of $4,062,706.
NWA claims that this amount represents the difference between the $10,635,412.67 state
court judgment and the $6,545,966.35 that NWA received from Global. (Mem. in Supp.
of Mot. to Alter/Amend/Correct J. at 3, Mar. 29, 2013, Docket No. 72.) The difference
between the amount of the state court judgment and the amount NWA received from
Global is actually $4,089,446.32.4
Westchester correctly identified the amount of
4
It appears that in calculating the difference between the state court judgment and the
amount received from Global, NWA may have used the amount of damages recited in the state
court order ($10,608,673) as opposed to the damages reflected in the notice of docketing of the
state court judgment ($10,635,412.67). (Compare Sixth Zabel Aff., Ex. 4 ¶¶ 23-24, with First
Zabel Aff., Ex. 15.) In a phone conference prior to the filing of this Order, both NWA and
Westchester agreed that $10,635,412.67 was the correct amount of the state court judgment.
Accordingly, the Court has made its damages calculations based on the notice of docketing of the
state court judgment, rather than the amount of damages recited in the state court order granting
NWA’s motion for default.
-8-
damages sought as $4,089,446.32, and does not dispute that NWA is entitled to that
amount representing the unpaid balance of the state court judgment. (Mem. in Opp. to
Mot. to Alter/Amend/Correct J. at 2-3, Apr. 12, 2013, Docket No. 80.)
Because
$4,089,446.32 represents the amount of the state court default judgment against PALS
that NWA has not yet collected, the Court finds that NWA is entitled to recover that
amount in damages from Westchester.
III.
POSTJUDGMENT INTEREST
NWA also requests postjudgment interest, pursuant to Minn. Stat. § 549.09 on the
$4,089,446.32 state court judgment running from February 2, 2005 (the date the state
court judgment was docketed) until December 21, 2010.5 Westchester argues that the
Policy prevents NWA from recovering any postjudgment interest, because Westchester
did not defend PALS in the state court action.
The plain language of the Policy indicates that Westchester is only responsible for
paying postjudgment interest with respect to judgments that arise out of claims or suits
that Westchester defends. With respect to damages, the Policy provides that Westchester
will pay “those sums that the insured becomes legally obligated to pay as damages
because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” (First
Vaccaro Aff., Ex. B at 6.) The Policy also requires Westchester to “pay those sums that
5
Postjudgment interest on federal judgments is a procedural matter governed by federal
law. Swope v. Siegel-Robert, Inc., 243 F.3d 486, 497 (8th Cir. 2001). Although NWA seeks
postjudgment interest in federal court, the interest it requests relates to a state court judgment.
Consequently, the Court considers NWA’s request for postjudgment interest under Minnesota
law.
-9-
the insured becomes legally obligated to pay as damages because of physical injury to
‘aircraft’ to which this insurance applies.” (Id., Ex. B at 12.) Separate from damages, the
Policy addresses the payment of postjudgment interest, providing that “with respect to
any claim or suit [Westchester] defend[s]” Westchester will pay “[a]ll interest on the full
amount of any judgment that accrues after the entry of the judgment and before
[Westchester has] paid, offered to pay, or deposited in court the part of the judgment that
is within the applicable limit of insurance.” (Id., Ex. B at 14.)
The state court action between NWA and PALS was not a suit in which the Policy
would require Westchester to pay postjudgment interest. Westchester did not defend
PALS in the state court proceeding, and the Nevada court specifically concluded that
Westchester did not owe any duty to indemnify or defend PALS because PALS failed to
follow the notification procedures in the Policy. Westchester Fire Ins. Co., 2010 WL
2694960 at *8. Accordingly, under the terms of the Policy, Westchester cannot be
compelled to pay postjudgment interest for the state court default judgment entered
against PALS.
NWA argues that because the Court applied the compulsory insurance doctrine to
allow NWA to recover the Policy’s proceeds it must also adopt the legal fiction that
Westchester would have had a duty to defend and an accompanying duty to pay
postjudgment interest on the state court judgment, had PALS complied with the notice
requirements of the Policy.
But there is a distinction between application of the
compulsory insurance doctrine to allow NWA to obtain the Policy’s proceeds and
Westchester’s duty to defend PALS. The compulsory insurance doctrine is a narrow
- 10 -
exception to the general rule that “‘[t]he attaching creditor cannot compel the garnishee
to perform his contract with the principal debtor in a manner otherwise than as provided
by the contract.’” Poor Richards, Inc. v. Chas. Olson & Sons & Wheel Serv. Co., 380
N.W.2d 225, 228 (Minn. Ct. App. 1986) (quoting Bacon v. Felthous, 115 N.W. 205, 207
(Minn. 1908)); see also Royal Indem. Co. v. Olmstead, 193 F.2d 451, 453 (9th Cir. 1952).
Under the doctrine, the insurer may be liable to an injured party “notwithstanding the fact
that the insured himself has lost his rights under the policy by failure to comply with its
terms and conditions.”
Nimeth v. Felling, 165 N.W.2d 237, 239 (Minn. 1969).
Therefore, the compulsory insurance doctrine relates only to the rights of the injured third
party, and has no bearing on the insurer’s obligation to its insured.
Consequently,
application of the compulsory insurance doctrine by the Court did not impose an
obligation upon Westchester as to PALS such that Westchester could be compelled to
pay postjudgment interest on the state court judgment NWA obtained against PALS.
Instead, the judgment obtained by NWA against Westchester in this action is unrelated to
Westchester’s obligation to PALS in the state court action.
This distinction between application of the compulsory insurance doctrine to allow
NWA to obtain the Policy’s proceeds and Westchester’s duty to defend PALS was made
clear by the Nevada court when it stated that “[t]he compulsory insurance doctrine . . . is
a direct claim that NWA theoretically could bring against Westchester, but it has nothing
to do with whether Westchester owes any duty to [PALS].” Westchester Fire Ins. Co.,
2010 WL 2694960 at *6. The Court reiterated this reasoning, in finding that the Nevada
court judgment had no res judicata effect in the present garnishment action. See Nw.
- 11 -
Airlines, Inc., 2013 WL 1197482 at *7-*8. The payment of postjudgment interest on the
Policy is an obligation specifically tied to Westchester’s duty to defend.
Because
Westchester had no duty to, and did not, defend PALS in the underlying state court
action, the Court will decline to award postjudgment interest on the state court judgment.6
Even in the absence of the Policy language providing that Westchester is
responsible for postjudgment interest only with respect to claims or suits it defends, the
Court would conclude that postjudgment interest is inappropriate, because Westchester
was not a party to the state court judgment, and had no obligation to pay a portion of that
judgment until this Court’s March 25 summary judgment ruling.
The purpose of
postjudgment interest is “to compensate a plaintiff ‘for the loss of the use of money to
which plaintiff has been entitled since the time the verdict was rendered.’” Staab v.
Diocese of St. Cloud, 830 N.W.2d 40, 47 (Minn. Ct. App. 2013) (emphasis added)
(quoting McCormack v. Hankscraft Co., 161 N.W.2d 523, 524 (Minn. 1968)). Generally
interest is available “‘only if damages are ‘readily ascertainable’ and liability issues are
determined.’” Id. (quoting Bilotta by Cutting v. Kelley Co., 358 N.W.2d 679, 681 (Minn.
6
Additionally, the Court notes that it would be inappropriate to award postjudgment
interest in contradiction of the clear language of the policy based on only a partial reconstruction
of events that NWA hypothesizes might have occurred if PALS had notified Westchester of the
state court action in compliance with the Policy. Had PALS actually notified Westchester of the
lawsuit triggering a duty to defend, it is possible to imagine numerous events that may have
occurred and impacted an interest payment. For example, if PALS had timely notified
Westchester of the state court action and Westchester had defended PALS in that action, it seems
likely that the 2005 state court judgment would have been paid by Westchester long ago, rather
than allowing interest to accrue for five years. At the very least, Westchester would have had
notice that it was required to pay that judgment, and made an informed choice between paying
the judgment at that time or allowing postjudgment interest to accrue at the rate of ten percent.
- 12 -
Ct. App. 1984)). In Staab, for example, a jury had awarded fifty-percent of the fault to
Richard Staab, who was not a party to the litigation, and fifty-percent to the diocese. The
court found the plaintiff was not entitled to interest on the entire amount of the judgment
from the time of the verdict, explaining:
Because the district court had no jurisdiction to render Richard Staab’s
obligation of the jury verdict legally enforceable, [plaintiff] was not entitled
to that portion of the verdict – and the diocese was not liable to pay it – at
the time the jury returned a verdict.
It was not until [plaintiff] moved the court for reallocation and the district
court made a finding of uncollectibility that the diocese was legally
required to pay Richard Staab’s portion of the jury verdict. Thus, interest
did not begin to accrue until [plaintiff] became entitled to the use of the
money upon the district court’s order for reallocation.
Id. at 47 (internal citation omitted). Similarly, here Westchester had no obligation to pay
the default state court judgment entered against PALS until this Court determined that
NWA had a right to the proceeds of the Policy independent of PALS. The Minnesota
Supreme Court found, in the context of a stipulated judgment, that interest did not accrue
against the insurer prior to the garnishment proceedings because:
[p]laintiff’s stipulated judgment was not conclusive on the insurer until the
insurer had an opportunity to litigate the issues of whether it was bound by
the judgment. It was not until the garnishment proceeding . . . that a
judicial determination was made that [the insurer] was liable for $50,000 on
the stipulated judgment.
Miller v. Shugart, 316 N.W.2d 729, 736 (Minn. 1982) (footnote omitted). Allowing
plaintiffs to recover postjudgment interest in this situation, where plaintiffs must pursue
additional litigation to collect funds from non-parties to the original litigation, would
create an incentive for plaintiffs to delay commencing an action to recover the judgment.
- 13 -
Plaintiffs could choose to delay bringing the recovery action, allowing interest at the rate
of ten percent to accrue for long periods of time before the entity ultimately required to
pay is aware that it will be held responsible for the judgment. 7 Because Westchester had
no liability for the state court judgment until the Court granted summary judgment in
NWA’s favor in this federal litigation, the Court will decline to award postjudgment
interest on the state court judgment.
IV.
PREJUDGMENT INTEREST
NWA also requests prejudgment interest under Minn. Stat. § 549.09, running from
December 21, 2010, the commencement of this lawsuit, until March 26, 2013, when the
Court entered judgment.
In diversity cases, Minnesota law applies to the issue of
prejudgment interest. See Schwan’s Sales Enters., Inc. v. SIG Pack, Inc., 476 F.3d 594,
597 (8th Cir. 2007). Minnesota Statutes § 549.09 provides that “preverdict, preaward, or
prereport interest on pecuniary damages shall be computed [in the amount of ten percent
per year] from the time of the commencement of the action . . . or the time of a written
notice of claim, whichever occurs first.” Minn. Stat. § 549.09(b), (c)(2). Prejudgment
interest is intended “to compensate the plaintiff for the loss of use of his money, and, by
7
Furthermore, NWA’s request for postjudgment interest appears to be at odds with the
purpose of postjudgment interest. Postjudgment interest is intended to compensate a plaintiff for
the period of time during which plaintiff was entitled to, but did not have possession of, the
damages awarded. As such, postjudgment interest typically runs until the time the judgment has
been paid. Here, however, NWA asked for postjudgment interest running from the entry of the
state court judgment, until commencement of the federal court action, even though at the time of
the federal action the state court judgment remained unpaid. NWA has cited no authority for the
proposition that postjudgment interest can run against an insurance company that appropriately
refused to defend a state court action then cease once a garnishment proceeding has begun.
- 14 -
implication, to deprive the defendant of any gain resulting from the use of money
rightfully belonging to the plaintiff” as well as “to promote settlement.” Burniece v. Ill.
Farmers Ins. Co., 398 N.W.2d 542, 544 (Minn. 1987).
Westchester argues that it is not required to pay prejudgment interest under a
portion of the Policy providing that Westchester will pay “prejudgment interest awarded
against the insured on the part of the judgment Westchester pays” only “with respect to
any claim or suit [Westchester] defend[s].” (Id., Ex. B at 14.) The Policy does not shield
Westchester from an obligation to pay prejudgment interest in this case for two reasons.
First, the present garnishment action is a suit that Westchester is defending. Second, any
prejudgment interest this Court awards with respect to the present garnishment action is
not against PALS, the insured, but is instead awarded against Westchester itself.
Therefore, the Policy’s limitations on the assessment of prejudgment interest are
inapplicable.
Instead, the Court finds that prejudgment interest running from the
commencement of this garnishment action is appropriate under Minnesota law. The
Minnesota Supreme Court has held, in the context of stipulated judgments, that “[t]he
stipulated judgment sought to be enforced under the garnishee’s indemnity policy does
. . . represent pecuniary damages, and, consequently, it seems to us this is the kind of
action where prejudgment interest applies from the time of the commencement of the
garnishment action to entry of the garnishment judgment.” Alton M. Johnson Co. v.
M.A.I. Co., 463 N.W.2d 277, 280 (Minn. 1990); see also Buysse v. Baumann-Furrie &
Co., 498 N.W.2d 289, 292-93 (Minn. Ct. App. 1993). Accordingly, the Court will order
- 15 -
Westchester to pay prejudgment interest on NWA’s damage award from December 21,
2010 through March 26, 2013.
ORDER
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
HEREBY
ORDERED
that
Creditor
Northwest
Airlines,
Inc.’s
Motion
to
Alter/Amend/Correct Judgment [Docket No. 70] is GRANTED in part and DENIED in
part as follows:
1.
The March 26, 2013 Judgment [Docket No. 69] is amended to include the
order that Creditor Northwest Airlines, Inc. is entitled to payment from Garnishee
Westchester Fire Insurance Company in the amount of $4,089,446.32, plus prejudgment
interest at the 10% rate set forth in Minn. Stat. § 549.09(c)(2), from December 21, 2010
through March 26, 2013.
2.
Creditor Northwest Airlines, Inc.’s request for postjudgment interest on the
February 2, 2005 state court judgment is DENIED.
LET JUDGMENT BE ENTERED ACCORDINGLY.
DATED: December 4, 2013
at Minneapolis, Minnesota.
____s/
____
JOHN R. TUNHEIM
United States District Judge
- 16 -
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?