Singler v. Zurich American Ins. Co., No. 2014AP391 (Wis. Ct. App. Sept. 16, 2014) involves Zurich’s eve-of-trial settlement of an automobile liability claim for $1.9 million. Zurich’s attorney told the plaintiff’s attorney that it would take “at least a month to get the check authorized out of Australia[.]” The settlement did not specify any time for payment. Forty or so days after the settlement had been reached the plaintiff’s attorney moved for a court order seeking 12% interest on the settlement after the 30th day.

It seems to me that there were some complexities in getting the settlement payment sorted out. The insured’s driver’s employer was an Australian corporation and there was a $2 million SIR. Zurich’s counsel explained it like this: “So, therefore, they have to tender what is left of the first 2 million and subtract defense costs as well as the settlement in a companion case.... And then the XL carrier who has the insurance after that has to determine how much they’re going to pay.”

Nonetheless, the court granted the motion and awarded 12% interest beginning thirty days after the settlement. The court felt that, under the circumstances – with a settlement seemingly on the horizon and Zurich being in the business of paying losses -- Zurich should have “set the wheels in motion” and been able to issue a check in a week.

The Wisconsin appeals court held that interest was owed – albeit only 5% annually and not 12% based on certain statutory considerations. But, more importantly, the court agreed with the concept that interest was owed on an unpaid settlement after the 30th day: “The parties agree that their settlement agreement did not contain any time limit for payment. They also agree that, when a contract does not contain a time limit for performance, a reasonable time is implied.”

The court concluded that, based on the following considerations, it was not clearly erroneous that it was reasonable for Zurich to expect to pay the settlement within 30 days: “At the time of settlement, Singler’s case had been pending for an extended period of time; Zurich had previously made settlement offers of $1.5 million and $1.75 million; The parties did not settle until the eve of trial; consequently, as of the settlement date, Zurich would have known that, in a relatively short time, the jury could award damages in the range of Zurich’s previous settlement offers; Zurich had been involved in the trial and settlement of a companion case; and Zurich was in the business of covering losses.”