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8th Circuit OKs post-judgment bid for prejudgment premium interest

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Premium-financing company IPFS sued workers’ comp insurer Continental Indemnity for a refund. REUTERS/Dinuka Liyanawatte

  • Premium-financier IPFS defends win against CNI

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(Reuters) - The 8th U.S. Circuit Court of Appeals on Tuesday used a dispute over unearned-premium refunds to join the 1st Circuit in holding that a request for prejudgment interest can be made for the first time after the judgment is entered.

The decision affirms an award of prejudgment interest to premium-financing company IPFS of New York, represented by Lathrop, which sued workers’ compensation insurer Continental Indemnity (CNI) for a refund after a policy IPFS had financed was canceled.

A federal judge in Omaha granted IPFS’ motion for summary judgment and ordered a $480,000 refund last year but declined to consider prejudgment interest because IPFS had failed to raise the issue in its initial brief.

However, the judge later granted IPFS’ motion to alter or amend the judgment, known as a Rule 59(e) motion, and awarded IPFS $42,000 in prejudgment interest.

CNI, represented by DLA Piper, appealed the interest award. It argued that Rule 59(e) cannot be used for issues that were not properly raised before judgment.

The 8th Circuit rejected CNI’s “bright-line rule.”

Under a 1989 Supreme Court decision, Rule 59(e) is “a proper procedural vehicle” to seek prejudgment interest, and many lower courts follow the 1st Circuit’s 2012 decision that a 59(e) motion can raise prejudgment-interest issues “for the first time,” the 8th Circuit said.

CNI’s reliance on ostensibly contrary Federal Circuit and 7th Circuit decisions was “misplaced,” since they merely affirmed that a judge has discretion to deny a 59(e) motion that raises novel issues, the panel said.

“Whether to grant (IPFS’) motion was within the district court’s discretion, and it did not abuse that discretion in doing so,” the 8th Circuit concluded.

The case is Continental Indemnity Co v. IPFS of New York, 8th U.S. Circuit Court of Appeals, No. 20-2282.

For Continental Indemnity: Shand Stephens of DLA Piper

For IPFS: Michael Abrams of Lathrop GPM

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