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STATE OF MAIIVE  ,  ,  . ,. I. - SUPERIOR COLTRT CIVIL ACTION  
CUMBERLAND, ss.  
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STATE FARM FIRE & CASUALTY COMPANY,
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Plaintiff
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ORDER
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ANGELA C. HAL:EY and
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STEPHEN M. HALEY,
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Before the court is Defendants Angela and Stephen Haley's motion for summary judgment on Plaintiff State Farm Fire &Casualty Company's declaratory judgment action.
BACKGROUND
On September 29,2003, Hazel Stygles was driving on Pernham Street in Farmington, Maine, when she ran a stop sign and a red flaslung light and broadsided Angela Haley's vehcle in the driver side door. As a result of the accident, Ms. Haley suffers from serious long-term injuries.' State Farm Fire & Casualty Company ("State Farm") was Ms. Stygles' insurer. On November 18, 2003, Angela and Stephen Haley (the "Haleys") served Ms. Stygles with a Notice of Claim. On or about June 7,2005, the Haleys filed suit in the Franklin County Superior Court. Angela C. Haley and Stephen M. Haley v. Hazel Stygles, Docket No.
1Angela was diagnosed with L4-5 disc herniation. She suffers severe low back pain, numbness over the right anterior thigh, weakness in her right side, and problems with bowel control.
In and around September, 2005, Ms. Haley and Ms. Stygles reached a settlement. Ms. Haley agreed to accept a settlement of $100,000, Ms. Stygles' policy limit with State Farm. The parties did not agree, however, whether State Farm was also responsible for pre-judgment interest and costs in excess of the policy limit. Conz,equently, the parties agreed that State Farm would file this declaratory judg~nent to determine whether State Farm is also responsible for pre-judgment interest and costs in excess of its policy limit. The parties agree that if the court firtds that State Farm is responsible, the pre-judgment interest is $9,8414.70 and the costs are $149.33.
Ms. Stygles' policy states:
In addition to the limits of liability, we will pay for an insured any costs
listed below resulting from such accident:

1.
Court costs of any suit for damages that we defend.

2.
Interest on damages owed by the insured due to a judgment and accruing:

a.
After judgment, and until we pay, offer or deposit in court the amount due under ths coverage; or

b.
Before the judgment, where owed by law, and until we pay, offer or deposit in court the amount due under this coverage, but only on that part of the judgment we pay.




(Policy p. 7).
DISCUSSION
The parties agree that there are no genuine issues of material fact before the court. The only legal issue to be determined is whether State Farm is responsible for pre-judgment interest and costs above and beyond the settlement amount and policy limit of $100,000.
State Farm argues that the language of the policy requires the payment of pre-judgment interest only when litigation culminates in a judgment. Because the parties reached a settlement on the policy limit, there is no judgment from
which to apply pre-judgment interest. As such, State Farm argues that it is not
responsible for pre-judgment interest.
In response, the Haleys argue essentially that that the difference between a judgment and a settlement in this context is merely one of semantics. The policy underlying prejudgment interest is to discourage parties from delaying litigation, wluch c,an occur whether the parties go to trial or settle on the eve of trial. Were the court to hold that prejudgment interest does not apply to settlements, in effect it would be discouraging settlements by establishing lower policy limits pre-tirial and htgher policy limits post-trial. In support of their argument, the Haleys urge the court to follow the holding of the Supreme Court of Alaska ill Tucker v. United Services Automobile Association, 827 P.2d 440 (Alaska, 1992).
Under Maine law, prejudgment interest is allowed in all civil actions involving a contract that contains a provision relating to interest. 14 M.R.S.A.

Download CUMcv-06-058.pdf

Maine Law