Illinois Appellate Court Rules Pre-Appraisal Award Interest Is Not Recoverable Under Illinois Law in Foran Glennon Case

Foran Glennon shareholders Matthew Ponzi and Thomas Orlando and partner Brian Devilling recently secured victory for their insurance client, Greater New York Mutual Insurance Company (GNY), in an appeal concerning whether interest can accrue on an appraisal award under Illinois law.

The policyholder, Galena at Wildspring Condominium Association, claimed a July 2017 storm inflicted property damage on their complex to which GNY performed an investigation and found initial damages of more than $730,000. In October 2017, GNY issued an actual cash value payment exceeding $527,000, however, Galena claimed that the damages surpassed $5 million and demanded an appraisal.

In February 2021, following both parties’ agreement to submit the dispute to appraisal, the appraisal panel issued:

  • An actual cash value award of $1.7 million
  • A replacement cost value award of $2.6 million

Galena filed a motion for summary judgment seeking a ruling that pre-judgment interest accrued from the date of loss, rather than the date of payment of the appraisal award.

The trial court rejected Galena’s bid for prejudgment interest accruing as of February 2018 because the association’s loss “was not readily ascertainable and, in fact, was not ascertained at all until February of 2021.” Galena appealed; however, the appellate court found no abuse of discretion, affirming the lower court’s decision.

The court noted the vast disparity between what Galena claimed and what it was ultimately awarded by the panel as evidence that the amount of its loss was not readily ascertainable at an earlier date. The court also pointed out that by paying the balance due of the appraisal award within 30 days as the policy required, GNY was complying with the policy, rather than breaching it. This decision stands in sharp contrast to recent decisions out of the State of Minnesota holding that insurers are obligated to pay pre-award interest.

This outcome is an important step to protecting insurers in Illinois from the wave of appraisal related interest claims that have occurred in Minnesota. Now, under Illinois law at least, pre-award interest cannot be claimed on an appraisal award if the insurer timely pays the amount due under the award, and there is a disparity between that which was claimed and the award.

Read more about this case in Law360 (subscription required).

Matt concentrates his practice in insurance coverage and commercial litigation, specifically in the analysis and litigation of commercial property, liability and reinsurance claims. Clients trust his extensive trial experience at both the federal and state level when faced with challenging litigation matters.

Focusing his practice in insurance and appellate law in both insurance and non-insurance disputes, Tom has experience representing both appellants and appellees in several state and federal courts nationwide. He is well-seasoned in a range of insurance coverage disputes, including property and liability coverage and litigation matters involving commercial and personal insurance.

Brian’s practice is focused in first-party property insurance disputes, general civil defense litigation and commercial litigation. Brian has handled matters across the country on matters involving insurance coverage, medical malpractice, medical devices, employment, product liability and construction.