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Lloyd’s of London underwriters must pay $3 million more in prejudgment interest in addition to the $10 million it has already paid under a directors and officers liability insurance policy issued to an Atlanta bank that was taken over by the Federal Deposit Insurance Corp., a federal appeals court said Friday, in overturning a lower court and issuing its second ruling in the case.
Lloyd’s underwriters sold the D&O policy to Omni National Bank in 2008, according to the first, January 2018 ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in the case, which is now titled Federal Deposit Insurance Corp., as receiver from Omni National Bank v. Certain Underwriters at Lloyd’s of London.
The bank engaged in “unsound lending practices,” which led to its closure in March 2009 and the FDIC becoming its receiver. The FDIC filed suit against Lloyd’s seeking its D&O policy’s $10 million limit.
The U.S. District Court ruled in the FDIC favor and was affirmed by the 11th Circuit. Lloyd’s paid the $10 million after the Supreme Court denied certiorari for its appeal from the declaratory judgment in the case, as well as $115,000 of post-judgment interest, but refused to pay $3,004,287.67 in prejudgment interest, according to Friday’s ruling.
The FDIC filed suit again against Lloyd’s in U.S. District Court in Atlanta, seeking the prejudgment interest. The court ruled in Lloyd’s favor, stating the interest was “untimely” under Georgia law because the FDIC made its demand after the declaratory judgment was entered and liability determined.
It was overturned by a unanimous three-judge appeals court panel. The FDIC “argues that demands for prejudgment interest are timely under Georgia law so long as they are made before the entry of a coercive final judgment, which declaratory judgments are not. We agree,” the panel said, in overturning the lower court.
The case was remanded to the lower court to determine when prejudgment interest began to run.
The FDIC said in a statement that it does not comment on litigation, while Lloyd’s attorneys did not respond to a request for comment.