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A matter of interest

A matter of interest

A matter of interest
April 29
12:36 2022

INSURANCE-RELATEDCOURTCASES

Digested from case reports published online

COURT DECISIONS

A matter of interest

Noranda Aluminum Holding Corporation once operated an aluminum smelter in Missouri, but shut it down after two serious accidents. Thirteen different insurers had issued Noranda all-risks policies that covered the accidents, but the parties disagreed about whether Noranda was also covered for certain business interruption losses. In October 2019, after a jury trial, the superior court found that the insurers owed Noranda about $28 million and entered judgment for that amount.

After the affirmance, the superior court awarded Noranda its costs of suit. The judgment apportioned liability among Noranda’s 13 insurers and awarded pre-judgment interest. Noranda and the insurers then conferred to negotiate the applicable rate of post-judgment interest. They could not agree, so Noranda asked the superior court to set the rate at 7.5%.

In their superior court filings, Noranda and the insurers both adopted the “legal rate” calculation set out in a state statute: 5% plus the relevant Federal Reserve discount rate. Noranda maintained that the applicable Federal Reserve discount rate was that in effect on the date judgment was entered: in this case 2.5%, which, when added to the statutory baseline of 5%, would generate a legal rate of 7.5%. The insurers countered that the correct discount rate was 1%—the rate in effect when liability arose—for a legal rate of 6%. The difference in these rates was worth about $430,000.

The superior court held a hearing on Noranda’s motion on December 2, 2020. The court found for the insurers and awarded Noranda post-judgment interest at 6%. Noranda appealed.

On appeal, Noranda argued that the plain language of the state statute required that post-judgment interest be awarded at the prevailing legal rate on the date of judgment.

The insurers raised two counterarguments. First, they said that the relevant section of the statute did not directly control this case because the statute’s text and legislative history limited its application to loans. Second, the insurers argued that the superior court’s calculation of post-judgment interest was consistent with 40 years of precedent in that court, which they urged the supreme court not to disturb.

The court stated that “[t]he fact that the parties disagree about the meaning of a statute does not create ambiguity.”

In the court’s view, the plain, un-ambiguous meaning of the relevant section of the statute supported Noranda’s position. The superior court was required to award Noranda post-judgment interest at 7.5% because that was the legal rate in effect on the date judgment was entered. “The insurers’ arguments to the contrary cannot overcome this explicit statutory command.”

Noranda Aluminum Holding Corporation v. XL Insurance America et al.—Supreme Court of the State of Delaware—December 16, 2021—No. N17C-01-152.

 

 

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Jim Brooks

Jim Brooks

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