ALLSTATE INDEMNITY COMPANY, Appellant, v. Rita COLLIER, Appellee, 983 S.W.2d 342

OPINION CAMPBELL, Justice. Rita Collier suffered injuries from an automobile collision caused by the negligence of the driver of the other car. Collier settled with the other driver’s insurance carrier for less than policy limits, then sought recovery from Allstate under the underinsured motorist provisions of her own insurance policy. A jury determined Collier’s damages to which the court added prejudgment interest. The trial court then reduced Collier’s recovery of damages and interest by the limits of the tortfeasor’s insurance policy and rendered judgment for the reduced amount. See Tex.

Ins.Code Ann. art. 5.06 — 1(5) (Vernon 1981). Allstate claims the court erred: (1) in failing to render a take-nothing judgment; and (2) by awarding “prejudgment interest on the full amount of the jury award without reference to the settlement with the third party tortfeasor.” FACTUAL BACKGROUND The collision occurred in the State of Florida on March 14, 1994. With Allstate’s consent, Collier settled with the negligent driver and her insurance carrier for $75,000, although the negligent driver’s policy limit was $100,000.

She then sought recovery from Allstate under the underinsured motorist provisions of her own policy. A jury found that Collier suffered actual damages of $93,-702.50. Under the provisions of the former

article 5069 — 1.05,

section 6(a), the court calculated prejudgment interest based on an accrual date beginning 180 days after Allstate received written notice of Collier’s claim. See Act of June 3, 1987, 70th Leg.,1st C.S., ch. 3, § 1, 1987 Tex. Gen. Laws 51, 51 (repealed 1997) (current version at Tex. Rev.Civ. Stat. Ann. art. 5069 — 1E.104 (Vernon Supp.1999)) (hereinafter, “Tex.Rev.Civ. Stat. Ann. art. 5069 — 1.05, § 6(a)”). The court calculated that Collier is entitled to $26,286.08 prejudgment interest. The court added the $26,286.08 to the damages awarded for a total of $119,988.58.

The court then reduced this amount by the $100,000 recoverable under the tortfeasor’s policy and rendered judgment for Collier for $19,988.58. PERTINENT LAW

Article 5.06 — 1(5) of the Insurance Code provides that an insured shall be paid: all sums which he shall be legally entitled to recover as damages from owners or operators of underinsured motor vehicles because of bodily injury or property damage in an amount up to the limit specified in the policy, reduced by the amount recovered or recoverable from the insurer of the underinsured motor vehicle. Tex. Ins.Code Ann. art. 5.06 — 1(5) (emphasis added).

As stated by the Legislature, the purpose of underinsured motorist coverage is “the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of ... under-insured motor vehicles.” Id. art. 5.06 — 1(1); Stracener v. United Servs. Auto. Ass’n, 777 S.W.2d 378, 382 (Tex.1989). A. Prejudgment Interest Under current Texas law a plaintiff in a personal injury action is entitled to recover actual damages as well as prejudgment interest on those damages. Tex.Rev.Civ. Stat. Ann. art. 5069 — 1.05, § 6(a). Before the enactment of

article 5069 — 1.05,

section 6, the equitable principles announced in Cavnar v. Quality Control Parking, Inc. permitted a personal injury plaintiff to recover prejudgment interest. 696 S.W.2d 549, 553 (Tex.1985). An action to recover damages under an underinsured motorist provision is not a personal injury case. Rather, it is a suit on the insurance contract to recover unascertainable damages. Mid-Century Ins. Co. v. Kidd, 974 S.W.2d 848, 850 n. 9 (Tex.App. — El Paso 1998, pet. filed). Thus, a plaintiff is legally entitled to recover prejudgment interest under the equitable principles of Cavnar rather than

article 5069 — 1.05. See Perry Roofing Co. v. Olcott, 744 S.W.2d 929, 930-31 (Tex.1988). The Cavnar Court held that a prevailing plaintiff could recover prejudgment interest, compounded daily, which began to accrue six months after the date of the occurrence giving rise to the cause of action at the rate provided by

article 5069— 1.05,

section 2. Cavnar, 696 S.W.2d at 555. The Supreme Court recently modified Cav-nar to conform the common law rule for prejudgment interest with the statutory scheme. See Johnson & Higgins v. Kenneco Energy, Inc., 962 S.W.2d 507, 533 (Tex.1998). That Court: (1) changed the accrual date for prejudgment interest to the earlier of 180 days after the date the defendant receives written notice of the claim or the date suit is filed; and (2) held that prejudgment interest shall be computed as simple interest. Id. at 531-32.

The Johnson & Higgins rule “applies to all cases in which judgment is rendered on or after December 11, 1997, and to all other cases currently in the judicial process in which the issue has been preserved.” Id. at 533. The parties in this case dispute whether the court calculated prejudgment interest in a proper manner. Thus, Johnson & Hig gins applies because the parties have preserved the issue of prejudgment interest for our review. Id. B. Settlement Credits

Article 5.06 — 1(5) provides the manner in which the insurer receives credit for any recovery from the underinsured tortfea-sor’s insurance company. The statutory set-off operates to reduce the total judgment (including prejudgment interest) by the amount recovered or recoverable from the insurer of the underinsured motor vehicle. Tex. Ins.Code Ann. art. 5.06 — 1(5) (“underin-sured motorist coverage shall provide for payment to the insured of all sums which he shall be legally entitled to recover as damages ... reduced by the amount recovered or recoverable from the insurer of the under-insured motor vehicle”).

Allstate would require the trial court to give it credit for Collier’s actual recovery in calculating prejudgment interest and the total amount recoverable under the tortfeasor’s policy in determining the amount for which it is ultimately liable. However, the statute clearly limits Allstate’s offset to either the amount recovered or the amount recoverable. Id. APPLICATION The court determined the total damages Collier is entitled to recover to be $119,988.58 then reduced this amount by the $100,000 recoverable under the tortfeasor’s insurance policy. Although the court erred by using

article 5069 — 1.05 to calculate prejudgment interest, it reached the correct result because the common law and the statutory bases for calculating prejudgment interest are now identical. See Johnson & Higgins, 962 S.W.2d at 533. Thus, no reversible error is shown. See Dale v. Finance America Corp., 929 S.W.2d 495, 498 (Tex.App.—Fort Worth 1996, writ denied). We affirm the judgment. VANCE, J., dissenting.