Name of Assigned Judge Robert M. Dow, Jr. Sitting Judge if Other or Magistrate Judge than Assigned Judge
For the reasons stated below, Defendant's request for prejudgment interest is granted and Defendant's bill of costs [228-2] is allowed in part and disallowed in part. The Court concludes that Defendant is entitled to $19,764.99 in prejudgment interest. Final judgment is entered in favor of Defendant Life Insurance Company of North America and against National Production Workers Union Insurance Trust in the amount of $95,059.99, which consists of $75,295.00 in unpaid premiums and $19,764.99 in prejudgment interest. Defendant also is awarded $1,661.75 in costs.
O[ For further details see text below.] Docketing to mail notices.
This action stems from a September 2003 agreement between Plaintiff, National Production Workers Union Insurance Trust ("the Trust"), and Defendant, Life Insurance Company of America ("LINA"), for the purchase of two group insurance policies. On March 29, 2010, the Court issued a Memorandum Opinion and Order  granting summary judgment for LINA. LINA also requested interest and costs but did not identify what it contends to be the appropriate interest rate. The Court gave the parties additional time to brief LINA's request for interest and costs prior to the issuance of a final judgment. The Court now has received LINA's supplemental briefs and the Trust's opposition and issues the following ruling.
The calculation of the amount of prejudgment interest is left to the discretion of the court. See Fritcher v. Health Care Service Corp., 301 F.3d 811, 820 (7th Cir. 2002). LINA argues that it is entitled to recover prejudgment interest at a market rate, supporting its argument with cases arising under various federal statutes. However, the Court agrees with the Trust that, in a diversity case like this one, where the Court applied general principles of contract law to resolve this case, the Court looks to state law to determine the availability of and the rules for computing prejudgment interest. In re Oil Spill by Amoco Cadiz, 954 F.2d 1279, 1331 (7th Cir. 1992). Indeed, as the Court advised the parties in the summary judgment ruling, whether the Court "treat[s] this as a federal-question ERISA matter or a contract case grounded in diversity is irrelevant" because the Court's jurisdiction is not in question and -- as the parties agree -- principles of Illinois contract law apply. Steele, 507 F.3d at 596. Therefore, the Court will proceed to the interest calculation under Illinois law.
The Illinois Interest Act provides:
[c]reditors shall be allowed to receive at the rate of five (5) per centum per annum for all moneys after they become due on any bond, bill, promissory note, or other instrument of writing; on money lent or advanced for the use of another; on money due on the settlement of account from the day of liquidating accounts between the parties and ascertaining the balance; on money received to the use of another and retained without the owner's knowledge; and on money withheld by an unreasonable and vexatious delay of payment.
815 ILCS 205/2. Under Illinois law, "an insurance policy is a written instrument covered by [the Illinois Interest Act]." J.R. Couch v. State Farm Ins. Co., 666 N.E.2d 24, 27 (1996); see also Twenhafel v. State Auto Prop. & Cas. Ins. Co., 581 F.3d 625, 631 (7th Cir. 2009). Prejudgment interest is appropriate where the sum due or damages are "liquidated or subject to an easy determination by calculation or computation." J.R. Couch, 666 N.E.2d at 17. "Absent some type of bad, vexatious, or unreasonable conduct prejudgment interest should be awarded at the statutory rate of 5% on written instruments." Platinum Tech., Inc. v. Fed. Ins. Co., 282 F.3d 927, 934 (7th Cir. 2002). The Trust has not alleged the type of conduct -- "bad, vexatious, or unreasonable" -- that overcomes a party's entitlement to an award of prejudgment interest. Id.
The Trust owes LINA $75,295.00 in unpaid premiums for August and September 2004; however, to simply the computation, LINA proposed that the Court use January 1, 2005, as the starting date. Adopting that date, LINA is entitled to recover prejudgment interest on $75,295.00 from January 1, 2005, through March 29, 2010 (the date of the Court's order granting summary judgment), at the rate of 5% per annum (0.417% per month). The total to be awarded is $19,764.99.
LINA seeks costs totaling $2,928.86. The Trust has filed an objection to the bill of costs. The Trust does not contest the sums claimed for court reporting and transcription expenses, but it contends that the amounts sought ...