A multi-office team of US litigators recently secured a complete summary judgment win for two Lloyd's syndicates (Underwriters) in the US District Court for the Northern District of Georgia, Atlanta Division.
At issue was whether or not the plaintiff, the Federal Deposit Insurance Corporation (FDIC), the receiver for Omni National Bank, was entitled to recover more than US$3 million in statutory, pre- and post-judgment interest from Underwriters.
Omni National Bank was placed into receivership in 2009, and a number of lawsuits ensued. The FDIC filed an action against certain of the bank's directors and officers, and Underwriters filed a coverage action regarding the D&O policy Underwriters had issued to the holding company that owned the bank.
The FDIC settled its claims against three of the bank's directors and officers in exchange for entry of stipulated judgments in the amount of US$10 million (jointly and severally). The FDIC then stepped into those individuals' shoes for purposes of the coverage action, seeking to recover the US$10 million stipulated amount. The court in the coverage action concluded the D&O policy covered the stipulated judgments.
Following Underwriters' payment of the US$10 million, the FDIC-R brought another, separate action in which it sought payment of more than US$3 million in statutory interest on the US$10 million under Georgia state law, O.C.G.A. § 7-4-15.
Neither the FDIC nor the assigning directors and officers had ever demanded the Georgia statutory interest while their claims were pending against Underwriters. As such, Underwriters argued that any right the FDIC might have had to the statutory interest had long been defaulted.
Judge Timothy C. Batten agreed, ruling in our client's favor that the FDIC cannot recover the US$3 million in statutory interest because the FDIC did not seek the interest until after the main issues in the case had been resolved.
Batten wrote in the order, "A party may not recover interest under the statute unless it has expressly demanded the interest before entry of a final judgment as to the principal amount due … This is because the party opposing the award of interest is entitled to an opportunity to contest it before judgment."