(Trial Court Correctly Denied Prejudgment Interest on Arbitration Award for Policy Limits in Ins. Code, § 11580.2, Subd. (F), Underinsured Motorist (UIM) Arbitration Because Total Amount of Damages Was Not Certain or Capable of Being Made Certain When Insured Made Offer to Compromise Under Section 998, Absent Evidence That Insurer Knew Damages Exceeded Policy Limits When It Rejected Offer)
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The plaintiff had prevailed in a UIM arbitration against respondent
In denying the plaintiff's request for prejudgment interest, the trial court concluded that the amount of the plaintiff's policy limits claim for excess UIM benefits was not certain or capable of being made certain and this uncertainty was not fixed by the plaintiff's section 998 policy limits offer: "While the Court understands the cost-shifting purposes of [Code of Civil Procedure section] 998, the fact that [Glassman] prevailed above her998 offer at arbitration does not equate to recovery of prejudgment interest pursuant to [s]ection 3287(a)."
In affirming, the
The Uninsured Motorist Act, and specifically Insurance Code section 11580.2, does not address the availability of prejudgment interest in UIM proceedings, whether expressly allowing or disallowing it. And while the cost-shifting provisions of Code of Civil Procedure section 998 do apply to UIM proceedings, such proceedings are not subject to section 3291, under which prejudgment interest is treated as a recoverable cost as a consequence of a prevailing section 998 offer in a personal injury action. The obligation to pay costs under section 998 does not arise in a UIM proceeding from the insurance policy, and thus is not limited by it, but instead from section 998 itself, which imposes an obligation to pay costs "arising out of [a party's] behavior as a litigant." As section 998 does not address prejudgment interest—not a cost under section 3287(a) but an element of damages—the obligation rooted in section 998 to pay costs that arise out of a party's "behavior as a litigant" does not extend to prejudgment interest claimed under section 3287(a).
Section 3287(a) allows prejudgment interest when the plaintiff "is entitled to recover damages certain, or capable of being made certain by calculation." Cal. Civ. Code § 3287. The Court of Appeal rejected as lacking a legal basis the claim that section 3287(a) and Code of Civil Procedure section 998 can be read, separately or together, to provide that a successful section 998 offer sufficiently liquidates a claim for damages and establishes their certainty in a UIM proceeding for purposes of mandating an award of prejudgment interest as under section 3287(a). Neither statute provides for this, nor references the other. Their respective subject matter and purposes are different. The Court thus found no authority to support the claim, particularly to the extent the argument would displace existing law on assessing the certainty of damages for purposes of mandatory prejudgment interest under 3287(a).
First, there is no express statutory language in either section 3287(a) or Code of Civil Procedure section 998 to suggest that these two provisions operate at all in tandem, in UIM proceedings or otherwise. Second,the purpose of Code of Civil Procedure section 998's cost-shifting features is purely to promote the legislative policy of encouraging settlement. Unrelated to this policy, section 3287(a) is a means to compensate a plaintiff for lost use of funds with prejudgment interest when damages were ascertainable to a defendant with sufficient certainty. In this, prejudgmentinterest under section 3287(a) is a component of damages; it is not a cost, nor is it treated as such or similarly as an obligation "arising out of [a party's] behavior as a litigant."
Since the arbitration award did not award or specify the plaintiff's damages and because the plaintiff herself acknowledged the evidentiary "void" by seeking to introduce new evidence into the appellate record, prejudgment interest was improper. The Court saw no evidence in the record that
Finally, the Court did not address the plaintiff's theory that Section 3287(a) entitled her to prejudgment interest irrespective of section 998, concluding that by never expressly articulating a request for prejudgment interest in the trial court under section 3287(a) from the date of the final arbitration award, even as an alternative theory, Glassman has forfeited the claim, which in any event involves more than a simple calculation from undisputed factual information contained within the properly delineated record.
The Court thus affirmed.
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