Cox v. Kansas City Life Ins. Co.

Cox v. Kansas City Life Ins. Co.
1999 OK 57
983 P.2d 1025
70 OBJ 1955
Case Number: 91782
Decided: 06/15/1999
Mandate Issued: 07/22/1999
Supreme Court of Oklahoma

NITA CHARLENE PELTER COX and VERNA LEANN PELTER GRAYBILL, Personal Representatives of the Estate of LEORA PEARL PELTER, Deceased, Appellees,
v.
KANSAS CITY LIFE INSURANCE COMPANY, Appellant.)

APPEAL FROM THE DISTRICT COURT OF WOODS COUNTY, OKLAHOMA;
Honorale Alan R. Gottsch, Associate District Judge.

¶ 0 [983 P.2d 1026] Appellee, Kansas City Life Insurance Company, appeals from the judgment of the District Court of Woods County, Hon. Alan R. Gottsch trial judge, awarding post-judgment interest against Kansas City Life's supersedeas bond in favor of Appellees, Nita Charlene Pelter Cox and Verna Leanne Pelter Graybill, personal representatives of the Estate of Leora Pearl Pelter, Deceased. Kansas City Life and the Pelters disagree over the trial court's interpretation of the post-judgment interest statute,

TRIAL COURT JUDGMENT AFFIRMED

Gerald P. Green, Haven Tobias, Oklahoma City, Oklahoma, For Appellant.

W.C. Sellers, Jr., Sapulpa, Oklahoma, For Appellees.

WATT, Justice.

¶ 1 This is the third appeal between the parties in this matter. Appellant, Kansas City Life, moved that this Court retain this appeal on the ground that the Court had retained and decided an earlier appeal of the matter, Cox v. Kansas City Life,

FACTS AND PROCEDURAL BACKGROUND

¶ 2 The facts and procedural background of this matter are delineated in Cox v. Kansas City Life,

¶ 3 Previous to the appeal that gave rise to our earlier opinion in this matter, both parties sought and obtained a writ of mandamus from us, which directed the trial court to decide whether Kansas City Life was liable for the verdict and judgment against Stearman, which totaled $21,000,000.00.

¶ 4 On November 15, 1996 the trial court entered an "Order Pursuant to Mandamus" in which it ordered Kansas City Life to pay the $1,000,000.00 in actual damages awarded to the Pelters against Stearman, and $1,000,000.00 of the $20,000,000.00 in punitive damages awarded against Stearman, an amount totaling $2,193,599.90, including attorneys' fees, costs, and interest. In the same order the trial court ordered Kansas City Life to pay the Pelters the portion of the verdicts against it that the Court of Civil Appeals had affirmed, $550,000.00 in actual damages and $500,000.00 in punitive damages, an amount totaling $1,466,494.21, including attorneys' fees, costs, and interest through November 7, 1996.

¶ 5 Both the Pelters and Kansas City Life appealed from the trial court's November 15, 1996 order. That appeal gave rise to our opinion in Cox v. Kansas City Life,

¶ 6 The Pelters moved for judgment on Kansas City Life's supersedeas bond after we remanded the matter to the trial court in accordance with our October 7, 1997 opinion. Following a hearing on April 15, 1998, the trial court entered judgment, filed July 23, 1998, against Kansas City Life's supersedeas bond respecting post-judgment interest as follows:

Post judgment interest shall be paid from April 8, 1994 until January 1, 1998 at 6.99% then the post-judgment interest is added to

Kansas City Life then brought this appeal.

¶ 7 The parties' disagreement in this appeal arises in part from differences in their interpretation of the post-judgment interest provision of the judgment entered by the trial court and of

¶ 8 Title

¶ 9 Title

¶ 10 The 1997 amendment to § 727 changed the manner in which post-judgment interest accrues on judgments in two ways. First, under the 1997 amendment, the interest on the judgment is to be recomputed on 1 January of each year the judgment remains unpaid, whereas before the 1997 amendment the interest rate in effect when the judgment was entered remained the same regardless of how long the judgment remained unpaid. Second, accrued but unpaid interest now bears interest, whereas before the 1997 amendment only unpaid principal bore interest.

¶ 11 On April 14, 1998 Kansas City Life paid $1,468,234.13 to the Pelters, which the parties agree represented payment of the judgment in full, including interest, through November 15, 1996. The dispute between the parties arises because (1) the trial court's judgment against Kansas City Life's supersedeas bond following the April 15, 1998 hearing, filed July 23, 1998, assessed the part of the post-judgment interest that accrued from and after January 1, 1998 in accordance with the 1997 amendments to

¶ 12 The trial court determined that interest would be allowed on the principle amount of the judgment only at the statutory rate of 6.99 percent for the year 1994 from the date of the verdict, April 8, 1994, through December 31, 1997. The trial court then applied the 1998 statutory interest rate, 9.22 percent, to both the principle and the accrued interest on the judgment, effective January 1, 1998. Thus, the amount of post-judgment interest owed under the trial court's judgment was $130,308.23 through April 15, 1888, with interest to accrue thereafter on both principle and interest in accordance with the 1997 amendment to

¶ 13 Kansas City Life appeals on the ground that post-judgment interest should [983 P.2d 1028] not be allowed after November 15, 1996 because the trial court held on that date that, as a matter of law, Kansas City Life's bond "is subject to liability" and that "execution shall issue and collection is allowed." Kansas City Life also contends that equity should be invoked to prevent the Pelters from collecting interest after November 15, 1996 because the Pelters failed to levy execution on the judgment rendered by the trial court against Kansas City Life. For the reasons discussed below we find that the trial court correctly applied

¶ 14 ISSUES

I. Was post-judgment interest limited to the rate set by law by the statute in force when the judgment was entered in 1994, 6.99 percent, so that the Pelters are not entitled to the benefit of either compound interest or a fluctuating rate of interest as a matter of law?

II. Are the Pelters prohibited from recovering interest after November 15, 1996 because of either operation of law or on equitable principles?

We answer "no" to each question.

DISCUSSION

I.

POST-JUDGMENT INTEREST WAS NOT LIMITED TO THE RATE SET BY LAW, 6.99 PERCENT, BY THE VERSION OF

¶ 15 Kansas City Life argues that the rate of interest in effect when the judgment against it was entered, 6.99 percent, may not be altered. For this proposition Kansas City Life relies on the following language in Timmons v. Royal Globe Insurance Co.,

. . . No term of a judgment may be affected by after-enacted legislation. To hold otherwise would undermine the constitutionally-shielded concept of an "accrued" or "vested" right in the adjudicated obligation. After-passed enactments can neither destroy nor alter that right. . . .

[Footnote omitted.]

¶ 16 Timmons v. Royal Globe Insurance Co. does not support Kansas City Life's claim that the trial court erred. The trial court's judgment entered on May 12, 1994 provided that post-judgment interest should accrue "from April 8, 1994, at the annual statutory rate which begins at 6.99 percent per annum for 1994. . . ." [Emphasis added.] It is thus clear that the trial court intended that interest not be necessarily limited to 6.99 percent but was to be governed by the terms of

¶ 17 There is another reason why Timmons does not apply to this appeal. Here the trial court applied the new interest rate only prospectively after the passage of the 1997 amendments to

¶ 18 Kansas City Life also claims that the trial court's decision to change the interest rate from 6.99 percent in accordance with the 1997 amendments to

II.

THE PELTERS ARE NOT PROHIBITED FROM RECOVERING INTEREST AFTER NOVEMBER 15, 1996 BECAUSE OF EITHER OPERATION OF LAW OR ON EQUITABLE PRINCIPLES.

¶ 19 Kansas City Life contends that the Pelters are not entitled to any post-judgment interest after November 15, 1996 because the trial court ruled on that date that Kansas City Life's bond "is subject to liability" and that "execution shall issue and collection is allowed. Kansas City Life's contention is unconvincing because the November 15, 1996 order ordered Kansas City Life to pay the Pelters an additional amount totaling $1,000,000.00 in actual damages and $1,000,000.00 of the $20,000,000.00 in punitive damages that the jury had awarded against Kansas City Life's agent, Stearman. Both parties appealed from the November 15, 1996 judgment, Kansas City Life on the ground that it was not liable for any part of the Stearman verdict and the Pelters on the ground that Kansas City Life should have to pay the entire $21,000,000.00 of the Stearman verdict.

¶ 20 Generally, "a party who voluntarily accepts benefits of a judgment waives the right to appeal." Teel v. Public Service Co. of Oklahoma,

¶ 21 Kansas City Life also contends that allowing the Pelters interest would be inequitable under the circumstances of this case. We disagree. There is nothing inequitable about allowing the Pelters interest here. Had Kansas City Life been seriously enough concerned about the interest accruing on the judgment against it, it would only have had to make a tender after November 15, 1996 of the amount of the judgment and accrued interest owed and expressly left open the question of its liability on the Stearman verdict. Kansas City Life did not do so.

¶ 22 In a letter dated August 2, 1996, Kansas City Life offered to pay the entire amount of the portion of the jury's verdict against it that had been affirmed on appeal, plus attorneys' fees and interest, $1,445,619.24, "in exchange for a complete release and satisfaction of judgment and release of all claims of any kind against Kansas City Life by your clients." The Pelters' counsel, W.C. "Bill" Sellers, responded to Kansas City Life's settlement offer in a letter dated August 7, 1996, which stated. "We appreciate your offer of settlement at $21,445,619.24 for a full release and satisfaction of the judgment."

¶ 23 The Pelters then levied execution on Kansas City Life's supersedeas bond, including the entire $20,000,000.00 amount of the punitive damages judgment against Stearman. The trial court quashed the Pelters' execution in response to Kansas City Life's motion.

¶ 24 [983 P.2d 1030] It was the hearing following the quashing of the Pelter's execution on Kansas City Life's bond that gave rise to the trial court's order of November 15, 1996, which rendered judgment for the Pelters on the Kansas City Life judgment in the amount of 1,466,494.21. The trial court also rendered judgment against Kansas City Life on the Stearman judgment in the total amount of $2,193,599.90, which judgment we later reversed in Cox v. Kansas City Life,

¶ 25 The conduct of the parties' counsel makes clear the level of hostility and misunderstanding between them. Kansas City Life clearly had no intention of paying the portion of the verdict the jury had awarded against Kansas City Life without, at the same time, obtaining a release of liability on the Stearman verdict. Further, it seems likely that had the Pelters levied execution on Kansas City Life's bond for only the amount of Kansas City Life's liability, Kansas City Life would have claimed that the Pelters' had waived their right to appeal the Stearman portion of the judgment. Indeed, for the Pelters' counsel to have levied execution on the Pelters' judgment against Kansas City Life would have been foolhardy. Consequently, we are unwilling to hold that the Pelters decision not to seek judgment on Kansas City Life's bond for the portion of the judgment entered against Kansas City Life deprived the Pelters of their right to interest that accrued after November 15, 1996.

¶ 26 Kansas City Life admits that there is no Oklahoma authority directly in point, but relies on Overbeek v. Heimbecker, 101 F.3d 1225 (7

¶ 27 There was never any serious question in Overbeek that the insurance carrier could be liable for any more that its policy limits. Here, however, the question of Kansas City Life's liability on the Stearman verdict was open until October 7, 1997, when we decided the matter in Cox v. Kansas City Life,

CONCLUSION

¶ 28 The trial court correctly applied

TRIAL COURT JUDGMENT AFFIRMED.

¶ 29 SUMMERS, C.J., HARGRAVE, V.C.J., HODGES, LAVENDER, OPALA, WILSON, and WATT, JJ. - concur.

¶ 30 SIMMS, J. - concurs in part, dissents in part.

¶ 31 KAUGER, J. - recused.

FOOTNOTES

1 In relevant part, § 727.C, as amended in 1997, provides:

. . . Beginning on the first day of January of the next succeeding calendar year until the end of that calendar year, or until the judgment is paid, whichever first occurs, the judgment, together with the postjudgment interest previously accrued, shall bear interest at the rate in effect for judgments rendered during such calendar year as certified by the Administrative Director of the Courts pursuant to subsection I of this section. For each succeeding calendar year, or part of a calendar year, during which a judgment remains unpaid, the judgment, together with postjudgment interest previously accrued, shall bear interest at the rate in effect for judgments rendered during such calendar year as certified by the Administrative Director of the Courts pursuant to subsection I of this section. A separate computation using the interest rate in effect for judgments as provided by subsection I of this section shall be made for each calendar year, or part of a calendar year, during which the judgment remains unpaid in order to determine the total amount of interest for which the judgment debtor is liable. The postjudgment interest rate for each calendar year, or part of a calendar year, a judgment remains unpaid shall be multiplied by the original amount of the judgment, including any prejudgment interest, together with postjudgment interest previously accrued. Interest shall accrue on a judgment in the manner prescribed by this subsection until the judgment is satisfied or released.