Section 5.15 Prejudgment Interest

• Library: Insurance Practice 2015

Section 408.040.2, RSMo 2000, allows prejudgment interest on tort claims, but only if a demand is made in strict compliance with its dictates. Under the Shelter policy, that interest is paid in addition to the stated limits of liability coverage. Thus, careful note must be made of when the interest entitlement began because the policy “limits” may then begin to expand. It should be noted that this statutory procedure is one of only two ways prejudgment interest may be recovered on a tort theory. The second scenario requires that the tortious conduct confer a benefit on the tortfeasor. See Pediatric Assocs. v. Charles L. Crane Agency Co., 21 S.W.3d 884 (Mo. App. E.D. 2000). That sort of conduct will not likely be covered by an auto policy.

The statutory requirement of sending the demand by certified mail is mandatory. Emery v. Wal-Mart Stores, Inc., 976 S.W.2d 439 (Mo. banc 1998). That case overruled a contrary holding in Larabee v. Washington, 793 S.W.2d 357 (Mo. App. W.D. 1990). Section 408.040.2 allows the demand to be sent to the “party, parties or their representatives.” It has been held that an insurance company is such a “representative.” Harrison v. Purdy Bros. Trucking Co., 312 F.3d 346 (8^th Cir. 2002). Even though the 60-day period is not spelled out in the letter, interest is triggered if the offer was left open for that period of time. Emery. The 60-day open offer period must be unconditional. Any condition that negates the demand in less than 60 days will render the offer ineffective as a prejudgment interest trigger. Boehm v. Reed, 14 S.W.3d 149 (Mo. App. W.D. 2000).

Interest only abates for 60 days after the demand regardless of the number of offers that are made within that period. Larabee, 793 S.W.2d 357. Filing suit during the 60-day period does not change the operation of the statute. Larabee; Emery, 976 S.W.2d 439. In calculation of prejudgment interest, the only relevant inquiry is whether the demand was properly made and the settlement concluded within 60 days. Responses (even to accept the offer to settle) are of no relevance. Hurst v. Jenkins, 908 S.W.2d 783 (Mo. App. W.D. 1995).

Prejudgment interest does not have to be specifically requested in a pleading, but the following cases would seem to require some “general prayer” or “trial by consent” (unobjected-to evidence warranting it). Call v. Heard, 925 S.W.2d 840 (Mo. banc 1996); Brown v. Donham, 900 S.W.2d 630 (Mo. banc 1995); Pilley v. K-Mart Corp., 849 S.W.2d 293 (Mo. App. S.D...