Second Department Affirms that Offering Rather than Tendering Commercial Auto Policy Limit Does Not Terminate the Insurer's Obligation to Pay Post-Judgment Interest

COMMERCIAL AUTO – PAYMENT OF POST-JUDGMENT INTEREST – "OFFER" VS. "TENDER"
Lancer Ins. Co. v. Sunrise Removal, Inc.
(2nd Dept., decided 11/30/2010)

What's the difference between an "offer" and a "tender"?  About $105,000 extra in this case.

Robyn Schiffer sued Sunrise Removal and its employee for personal injuries she sustained in an accident with a Sunrise Removal truck.  At the time of the accident, Lancer insured the truck with a liability coverage limit of $100,000.  Prior to trial of the Schiffer action, counsel for Sunrise Removal offered the $100,000 policy limit to settle the matter. Schiffer rejected the offer and the case went to trial, resulting in a jury verdict for Schiffer in the amount of $776,858.05.  Judgment was entered on September 5, 2007.  A subsequent appeal by Sunrise resulted in an affirmance.

Sometime in 2009, Lancer commenced this declaratory judgment action for a declaration that it had no obligation to pay interest above its liability limit of $100,000, an order permitting it to deposit the policy liability limit into court, and a declaration that it was released from liability.  Schiffer answered and asserted a counterclaim seeking a declaration that Lancer was obligated to pay interest on the full amount of the judgment in addition to its $100,000 policy limit.  Both parties moved for summary judgment.

Nassau County Supreme Court (Angela G. Iannacci, J.) granted summary judgment to Schiffer and Lancer appealed.  In AFFIRMING that aspect of the order appealed from which granted Schiffer's motion for summary judgment, the Second Department, Appellate Division, held:

Contrary to the plaintiff's contention, the statement of its attorney at the trial of the underlying personal injury action that "the policy was offered" was insufficient to terminate its obligation to pay interest on the ensuing judgment in that action.  Construing the plaintiff's unambiguous policy provision regarding the payment of interest in accordance with the plain and ordinary meaning of its language (see White v Continental Cas. Co., 9 NY3d 264, 267), it is clear that the subject provision contemplates the existence of a judgment before the plaintiff's obligation to pay interest could be terminated by the payment of, offer to pay, or depositing in court of, its share of that judgment.  Accordingly, the subject policy did not provide a mechanism for the extinguishment of the plaintiff's obligation to pay interest before the existence of a final judgment in the action.  In any event, the statement of the plaintiff's attorney did not satisfy the requirements of a valid and unconditional tender under the governing insurance regulation (see 11 NYCRR 60-1.1[b]; Doviak v Lowe's Home Ctrs., Inc., 63 AD3d 1348, 1356; Levit v Allstate Ins. Co., 308 AD2d 475, 476-477; Michaels v United States Tennis Assn., 295 AD2d 222; Jamaica Sav. Bank v Sutton, 42 AD2d 856, 857).

Lancer had also argued that if any post-judgment interest were owed, it should be limited to interest on the policy's $100,000 policy limit, rather than on the entire $776,858.05 judgment.  In rejecting that argument, as well, the Second Department noted, as had the trial court, that the Lancer policy language was more generous to the insured than what the regulation required:

The Supreme Court properly determined that the plaintiff's policy obligation to pay interest was more generous than the obligation imposed by the applicable regulation, and that the plaintiff was, therefore, obligated to pay interest on the full amount of the underlying judgment rather than on the amount of its policy limit (see e.g. Levit v Allstate Ins. Co., 308 AD2d 475).

So to terminate an insurer's obligation to pay post-judgment interest under an auto liability policy in New York, tender, don't offer, the policy limit after there actually is a money judgment in place.  And read and adhere to the policy language on the measure of post-judgment interest owed.