Low, Ball & Lynch’s

WEEKLY LAW RESUME

November 11, 2004 Issue   By: Raymond Coates

Civil Procedure - Prejudgment Interest - Malicious Prosecution

George F. Hillenbrand, Inc. v. Insurance Company of North America

Court of Appeal, Third District

(October 29, 2025)

Civil Code section 3291 authorizes prejudgment interest on personal injury judgments if the defendant fails to accept an offer to compromise and the judgment exceeds the amount of the compromise offer.  This case decided the issue of whether prejudgment interest can be awarded where the nature of the action is malicious prosecution of a declaratory relief coverage action.

We previously reported on this case.  A jury found that Aetna Insurance Company maliciously prosecuted two declaratory relief lawsuits against George F. Hillenbrand and his company, George F. Hillenbrand, Inc.  The jury awarded compensatory and punitive damages.  Prior to trial, Hillenbrand had made a C.C.P. section 998 offer to compromise his claim.  The offer had been rejected by the insurer, and the judgment was more than the offer.  Hillenbrand and Hillenbrand, Inc., filed post-trial motions for prejudgment interest.  The trial court denied the motion.

The Court of Appeal affirmed.  It noted that section 3291 of the Civil Code authorizes the recovery of prejudgment interest in actions for personal injury.  The Hillenbrands contended that their case was in the nature of damages for personal injury.  The Court stated that the determinative factor was the nature of the right sued upon.

The California Supreme Court has previously held that an insurance bad faith action is one seeking the recovery of a property right, not personal injury.  This is true even though incidental mental distress may accompany the loss.

The Court of Appeal stated this case was similar to a bad faith action.  In this action, an insurer refused to provide benefits promised in the policy.  The insurer sued the Hillenbrands for declaratory relief to avoid the duty to defend and indemnify.  Instead of a bad faith claim, the Hillenbrands filed an action for malicious prosecution following their success in the underlying declaratory relief action.  In that case, damages were given for emotional distress.

The Court concluded the action was not one for personal injury.  The essence of the action was related to the protracted insurance dispute.  It arose out of their insurance policy and concerned a property interest.  The malicious prosecution action was brought to recover financial damages.  Such losses, even when accompanied by emotional distress, are not subject to the prejudgment interest provisions.  The Court therefore affirmed the trial court ruling.

COMMENT

This case emphasizes that Civil Code section 3291, which authorizes the recovery of prejudgment interest in personal injury actions, is not applicable to actions for bad faith or for malicious prosecution actions, such as this one, based upon the prosecution of a declaratory relief action.  The Court refused to expand this provision beyond the scope of the statute. 

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