On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-3119-02.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Parrillo and Skillman.
The question presented by this appeal is whether a primary or excess insurer is liable for prejudgment interest awarded to the plaintiff in an underlying tort action.
The insured, Grinnell Haulers, had a primary insurance policy with plaintiff New Jersey Manufacturers Insurance Company (NJM), with a coverage limit of $1 million, and an excess policy with defendant National Casualty Company (NCC), which provided an additional $4 million in coverage.
In the early morning hours of February 16, 1998, a Grinnell employee sideswiped a vehicle occupied by Bernard and Gloria Brodsky, causing it to come to a rest on a shoulder of the highway facing oncoming traffic. Brodsky v. Grinnell Haulers, Inc., 181 N.J. 102, 106 (2004). The Brodskys exited their car and stood on the shoulder. Minutes later, a vehicle driven by William Horsman hit Mr. Brodsky and then the disabled car, which struck Mrs. Brodsky. Id. at 106-07. Mr. Brodsky died soon after, and Mrs. Brodsky suffered severe permanent injuries. Id. at 107.
The Brodskys filed a personal injury and wrongful death action against Grinnell and Horsman. Ibid. Horsman, who was not insured, filed for bankruptcy, and the bankruptcy court discharged Horsman from any debt arising from the accident. Ibid.
At the first trial of the case, conducted in December 2001, the only issues were the apportionment of fault between Grinnell and Horsman and the extent of the Brodskys' damages. Brodsky, supra, 181 N.J. at 107. The jury found Grinnell sixty percent negligent and Horsman forty percent negligent, and awarded the Brodskys $1,640,000 in damages, plus prejudgment interest, for a total judgment of $1,945,533.17. Ibid.
On appeal, we concluded that the trial court erred in giving an ultimate outcome instruction. Brodsky v. Grinnell Haulers, Inc., 362 N.J. Super. 256, 266-74 (App. Div. 2003). However, we concluded that the jury's damages award had not been excessive and thus there was no need for a retrial on the issue of damages. Id. at 278-84. Therefore, we reversed and remanded for a new trial solely on the apportionment of liability between Grinnell and Horsman. The Supreme Court affirmed this decision. Brodsky, supra, 181 N.J. at 128.
In December 2004, the trial on remand took place, which resulted in the same apportionment of liability as the first trial: Grinnell was again found sixty percent negligent and Horsman was again found forty percent negligent. Thus, a judgment in the amount of $1,640,000 was entered against Grinnell, plus $580,322.07 of prejudgment interest.
NJM paid its $1 million policy limit and NCC paid the remaining $640,000 of the damages award. In addition, the carriers entered into an agreement in December 2004, which is discussed later in this opinion, to equally divide responsibility for payment of the $580,322.07 in prejudgment interest on a temporary basis, reserving the right to litigate their obligation for payment of that interest.
NJM brought this action seeking a determination that NCC was obligated to pay the full amount of the interest awarded to the Brodskys. NCC filed a counterclaim seeking a determination that NJM was responsible for payment of the interest.
The trial court initially decided the case on NJM's motion for summary judgment, determining that NJM was only responsible for its $1 million policy limit and that NCC was responsible for the entire judgment above this ...