To examine the process by which entitlement to pre-judgment interest is determined under the Unliquidated Damages Interest Act, OCGA § 51-12-14 UDIA, we granted the writ of certiorari to review the judgment of the Court of Appeals in Security Life Ins. Co. v. St. Paul Marine & Fire Ins. Co. , 263 Ga. App. 525 588 SE2d 319 2003. This is the eighth appellate appearance of this litigation which stemmed from an act of forgery by an agent of Security Life Insurance Company SLIC on an application for an insurance policy in 1994.1 As the surety on SLIC’s appeal bond in its efforts to contest its liability to the plaintiffs, the insureds under the policy issued pursuant to the forgery, St. Paul Fire & Marine Insurance Company SPF&M paid to the plaintiffs the amount of the most recent judgment rendered by the trial court and was substituted for them on appeal. 1. The UDIA is a statutory means by which an injured party may demand an amount of unliquidated damages from the tortfeasor prior to litigation and, should the tortfeasor decline to meet the injured party’s demand, receive damages in the form of pre-judgment interest if “the judgment is for an amount not less than the amount demanded.” OCGA § 51-12-14 a. In the decision under review, the Court of Appeals held that in this case it is the trial court’s award of compensatory damages, augmented by a 1996 award of attorney fees and by pre- and post-judgment interest on the award of attorney fees, which is the base amount from which set-offs for payments by co-tortfeasors must be subtracted in making a UDIA determination. That holding is based on the use in OCGA § 51-12-14 d of the word “verdict” as the benchmark. Having made that analysis of the statute, the Court of Appeals overruled its earlier decision in Restina v. Crawford , 205 Ga. App. 887 424 SE2d 79 1992, which required that set-offs be made against the verdict and the UDIA determination be made using the resulting judgment.
The decision in Restina considered legislative intent and the purpose of the UDIA “a coercive tool . . . encouraging a tortfeasor to make amends. . . short of litigation” and concluded “that where a judgment is less than the verdict due to setoffs for payments already received by victims from tortfeasors, OCGA § 51-12-14 should be construed to entitle a plaintiff to interest only if the amount of the post-setoff judgment is equal to or exceeds the amount of the settlement demand.” Id. at 889. In reaching that decision, Restina resolved a conflict in OCGA § 51-12-14 between one subsection which refers to “judgment” subsection a and one relied upon by the majority below which refers to “verdict” subsection d, a conflict ignored by the majority opinion below. Comparing the rationale of Restina and the rationale employed by the majority of the Court of Appeals in this case which is overly punitive and fails to reconcile the language of the statute, we conclude the rationale of Restina is more sound.
