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Lehmann v. O''Brien

Decided: November 28, 1989.


On appeal from the Superior Court, Law Division, Bergen County.

Pressler, Long and Gruccio. The opinion of the court was delivered by Long, J.A.D.


On April 25, 1980, plaintiff Seiglinde Lehmann was injured when a van driven by defendant John J. O'Brien struck her car. At the time, O'Brien was employed by defendant Leisure Time Tours (Leisure Time), which owned the van O'Brien was operating in the course of his employment. Lehmann sued defendants Leisure Time and O'Brien seeking recovery for her injuries. At the time the suit was instituted, Leisure Time was insured by Transit Casualty which defended the action. In March 1984, the case went to trial. The jury returned a verdict of $10,000 in favor of plaintiff and the trial judge ruled that she was entitled to prejudgment interest on the award.

Plaintiff's motions for additur or a new trial were denied and she appealed. In April 1986, this court affirmed. During the pendency of the appeal, Leisure Time's insurer, Transit, became insolvent and its obligations (including this one) were assumed by the New Jersey Property-Liability Insurance Guaranty Association (Association).

In April 1986, plaintiff's counsel sent a warrant to the Association's counsel (the Association continued to retain defendants' trial counsel) to satisfy the judgment for $10,000 plus interest. The Association's counsel returned the warrant unsatisfied, stating that the Association would not pay interest awards on such judgments. On May 23, 1986, plaintiff's counsel again sent the Association's counsel a warrant for satisfaction of the judgment plus interest. This time, the Association's counsel accepted the warrant and filed it with the trial judge. However, the warrant filed mistakenly provided only for the Association's payment of the $10,000 judgment amount and not for any prejudgment or post-judgement interest. To remedy this mistake, plaintiff filed a notice of motion in mid-June 1986 to

vacate the warrant, which was formally set aside by way of an order entered on July 7, 1986.

In September 1986, plaintiff proceeded by way of writ of execution against Leisure Time's property. In 1987, when plaintiff sought to levy against one of Leisure Times's buses, Leisure Time filed a motion for stay of the writ of execution. The trial judge stayed enforcement of the writ pending a hearing on the issues of pre- and post-judgment interest. Leisure Time argued that the Association was precluded by statute from paying pre- or post-judgment interest and plaintiff was statutorily barred from pursuing Leisure Time and O'Brien for that interest. In response, plaintiff's counsel contended that the pertinent statute did not prevent the Association from paying interest on plaintiff's judgment.

The trial judge determined that the Association was required to pay plaintiff both pre- and post-judgment interest and that plaintiff was barred from pursing claims directly against Leisure Time and O'Brien. The Association, on behalf of defendants, appealed from that portion of the trial judge's written order which required it to pay the interest.

In November 1987, another Superior Court judge issued an unreported opinion regarding the Association in an unrelated case which concluded that the Association was not statutorily required to pay prejudgment interest and that, instead, the plaintiffs could pursue the defendants to collect the prejudgment interest due. In light of the conflict between defendants and the Association which was perceived to exist as a result of this decision, the Association's counsel was permitted to withdraw, and new counsel was substituted for defendant Leisure Time. Leisure Time's new counsel then advised this court that it did not intend to appeal the trial judge's interest determination. As a result, the Association's position was unrepresented on appeal and the Association was granted the right of intervention. As a result, Leisure Time and the Association are

pitted against each other on this appeal which is solely focused on the question of pre- and post-judgment interest.

We turn first to the question of prejudgment interest. The New Jersey Property-Liability Insurance Guaranty Association Act (N.J.S.A. 17:30A-1 et seq.), which sets forth the rights and duties of the Association, was adopted in 1974 to protect policyholders of insurance companies which became insolvent. Railroad Roofing & Bldg. Supply Co., Inc. v. Financial Fire & Cas. Co., 85 N.J. 384, 389, 427 A.2d 66 (1981). The protection provided by the act extends to non-policyholder ...

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