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BURKE v. PRUDENTIAL INSURANCE COMPANY OF AMERICA
July 7, 2004.
BRENDA BURKE, Plaintiff,
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant.
The opinion of the court was delivered by: JOHN GRADY, Senior District Judge
The court has considered the memoranda of the parties and makes
the following rulings on Plaintiff's Petition for Prejudgment
Interest and Attorneys Fees and Costs.
The case is governed by Gorenstein Enterprises, Inc. v.
Quality Care-USA, Inc., 874 Fd.2d 431, 436 (7th Cir. 1989),
where the Court stated:
For the future, we suggest that district judges use
the prime rate for fixing prejudgment interest where
there is no statutory interest rate. That is a
readily ascertainable figure which provides a
reasonable although rough estimate of the interest
rate necessary to compensate plaintiffs not only for
the loss of the use of their money but also for the
risk of default.
While the court's "suggestion" of the prime rate was not intended
as a "straitjacket" for district judges, id. at 437, the only
reason the court mentioned for not applying the prime rate would
be a concern that it might not be high enough to account for the
risk of default "in deciding what a compensatory rate of interest
would be." Id. at 436. In this case, there is no indication
that the Prudential Insurance Company of America would be likely
to default in the payment of the judgment. The prime rate seems
appropriate in the circumstances, and plaintiff's suggestion that
we apply the 9% rate provided for in the Illinois Insurance Code
for overdue insurance payments has no logic to recommend it over
the language of the Seventh Circuit in Gorenstein. Prejudgment
interest will be awarded at the prime rate.
Here, we agree with plaintiff, whose memorandum lays out in
accurate detail just why there was no "solid basis" for the
defendant's position in the case. It is true that we did express
uncertainty as to whether there was any job plaintiff could
perform notwithstanding her disability. We found the question to
be close, but in reviewing the discussion of it in the transcript
of our decision, we note that all of the evidence pertaining to
it had been produced by plaintiff. Nothing had been produced by
defendant, and, as plaintiff points out, the issue was never
relied upon as a basis for denying payment. Defendant did not
raise it until just before trial. It appears to have been an
afterthought, and defendant made no attempt to develop it at
trial. In any event, the court resolved the issue against the
defendant and, proceeding to the real issue in the case, found
the evidence to be overwhelming that defendant had no basis for refusing payment on
the basis of the psychiatric exclusion in the policy. Indeed, as
plaintiff points out, defendant made no real effort to prove the
applicability of the exclusion either in preparation for trial or
at trial. It conducted no discovery and offered only the
deposition of Dr. Winkler, whose conclusory opinions we found
Accordingly, the court finds that plaintiff is entitled to her
reasonable attorneys' fees and costs. The parties are directed to
confer pursuant to Local Rule 54.3 and attempt to agree on the
amount. If agreement cannot be reached, then plaintiff shall file
a fee petition, in accordance with the Rule, by August 6, 2004,
and defendant may respond by August 20, 2004.
In the meantime, in order to permit post-judgment interest to
begin accruing, the parties may prepare a judgment order for the
amount of benefits and prejudgment interest calculated according
to the prime rates applicable at the various relevant times. The
order may be presented when ready. It will be entered with a
reservation of jurisdiction over the question of fees and costs.
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