Prevailing Party in Arbitration is Entitled to Post-Award, Prejudgment Interest Under Nevada Law


In Lagstein v. Certain Underwriters at Lloyd’s of London the Ninth Circuit held that Nevada law allows the prevailing party in arbitration proceedings to collect post-award, prejudgment interest.

After undergoing major surgery, Dr. Zev Lagstein made a claim on a disability insurance policy he had purchased from Certain Underwriters at Lloyd’s of London. Petitioner alleged that Lloyd’s failed to pay Lagstein his benefits or to timely handle the claim. Lagstein filed a lawsuit against Lloyd’s, alleging breach of contract. Lloyd’s moved to arbitrate the claim pursuant to language contained in the policy. The District Court granted the motion to compel arbitration.

The arbitration panel awarded Lagstein significant damages including $4 million in punitive damages, full policy benefits, $1.5 million for emotional distress and $350,000 in attorney fees. Lloyd’s then moved to vacate the award in the District Court, and the motion was granted. Lagstein appealed, and the Ninth Circuit reversed and remanded the motion with instructions to confirm the award. Finally, the District Court confirmed the award, but denied Lagstein’s request for post-award, prejudgment interest.

In Mausbach v. Lemke, the Supreme Court of Nevada held that a district court may not add prejudgment interest to the award in a confirmation proceeding.  However, the Supreme Court also noted that its ruling does not preclude awarding post-judgment interest, starting from the date of the entry of the award.

The Ninth Circuit interpreted Mausbach to mean that “prejudgment interest” refers to pre-award interest, which is interest on the arbitration award calculated from the date the complaint was filed. Consequently, the Ninth Circuit concluded that the Mausbach case does not preclude recovery of post-award, prejudgment interest, which is interest from the date an arbitration award is entered until the date the court confirms it.

Thus, the Ninth Circuit concluded that Lagstein was entitled to collect post-award, prejudgment interest. The case was reversed and remanded to the District Court for further proceedings.