Hartford Accident & Indemnity Co. v. Sequoia Ins. Co

In Hartford Accident & Indemnity Co. v. Sequoia Ins. Co. (1989) 211 Cal.App.3d 1285, an insurer settled a case involving a car accident for approximately $1.8 million. The settling insurer sued two nonsettling insurers. It obtained damages but not prejudgment interest. The prejudgment interest was awarded on appeal because "the amount of damages recoverable was 'certain, or capable of being made certain by calculation' and was 'vested' in the settling insurer on October 14, 1986, the day the settling insurer exhausted its primary policy limit and first paid out money under its umbrella policy." (Hartford, supra, 211 Cal.App.3d at p. 1307.) Assuming the settling insurer was entitled to recover damages, the only issue was how the trial court would prioritize the policies. "In this respect, the trial court had only two options. . . . This was purely a question of law since the amount of damages under either formula was readily ascertainable by mathematical calculation. Thus, the amount of damages was never 'unliquidated' or 'contingent' but rather, only the legally proper order of priority of the respective policies was uncertain. Under these circumstances, the settling insurer is entitled to prejudgment interest." (Ibid.) In Hartford Accident & Indemnity Co. v. Sequoia Ins. Co. (1989) the plaintiff-insurer who had paid sums to settle claims arising out of a motor vehicle accident sued two other insurance companies seeking a determination over which policy should be deemed primary or excess. The plaintiff recovered judgment against both defendant-insurers, but the trial court denied recovery of prejudgment interest against one of them. The Court of Appeal reversed as to denial of prejudgment interest against the second defendant. "While Hartford's right to recover damages from Transamerica, like Hartford's right to recover damages from Sequoia, was in issue, the amount of damages recoverable was 'certain, or capable of being made certain by calculation' and was 'vested' in Hartford . . . the day Hartford exhausted its primary policy limit and first paid out money under its umbrella policy. Assuming Hartford was entitled to recover damages, the only question remaining was how the trial court would prioritize the policies . . . . This was purely a question of law since the amount of damages under either formula was readily ascertainable by mathematical calculation. Thus, the amount of damages were never 'unliquidated' or 'contingent' but rather, only the legally proper order of priority of the respective policies was uncertain." (Id. at p. 1307.)