Baxley v. Nationwide Mut. Ins. Co

In Baxley v. Nationwide Mut. Ins. Co., 334 N.C. 1, 430 S.E.2d 895 (1993), our Supreme Court was presented the question "whether the Underinsured Motorist carrier, Nationwide, was obligated to pay prejudgment interest up to its policy limits." Id. at 6, 430 S.E.2d at 898. In analyzing the issue, the Court reviewed the language of the policy. The contractual language that supports our holding is Nationwide's promise to pay, up to its UIM policy limit, damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of: Bodily injury sustained by a covered person and caused by an accident; and Property damage caused by an accident. In interpreting this language we must determine what "damages" the insured is "legally entitled to recover" from the tort-feasor because of bodily injury. Id. at 6-7, 430 S.E.2d at 899. The Court went on to reason "the insured is legally entitled to recover the total amount of money that the judgment says she is entitled to recover from the tort-feasor. In Baxley, the judgment awarded the insured . . . compensatory damages and prejudgment interest . . . ." Id. at 7, 430 S.E.2d at 899. Ultimately, the Court held as follows: The UIM carrier has agreed to pay the insured the "damages" she is legally entitled to recover from the tort-feasor as a result of bodily injury. Plaintiff is entitled to recover the prejudgment interest from the tort-feasor but is unable to do so since the tort-feasor is underinsured. Thus, the UIM carrier must step in to pay the insured these damages up to its policy limits. Id. at 7, 430 S.E.2d at 899. This Court has interpreted Baxley to mean that in the absence of a policy exclusion, prejudgment interest is anticipated to constitute a portion of plaintiff's compensatory damage award. See Austin v. Midgett, 159 N.C. App. 416, 419, 583 S.E.2d 405, 408 (2003); accord Ledford v. Nationwide Mut. Ins. Co., 118 N.C. App. 44, 50, 453 S.E.2d 866, 869 (1995) ("Unless the policy of insurance provides to the contrary, prejudgment interest constitutes a portion of a plaintiff's damage award."). Our Supreme Court has also stated that under N.C. Gen. Stat. 24-5(b), our General Assembly provides for post-judgment interest on judgments for money damages generally. See Custom Molders, Inc. v. American Yard Prods., Inc., 342 N.C. 133, 138, 463 S.E.2d 199, 202 (1995).