Vázquez-Filippetti v. Cooperativa De Seguros Múltiples De Puerto Rico , 723 F.3d 24 ( 2013 )

United States Court of Appeals
For the First Circuit
No. 11-1208
YOMAR VÁZQUEZ-FILIPPETTI; LUZ E. FILIPPETTI-PÉREZ;
MARLYN VÁZQUEZ-FILIPPETTI; YOHANNIE VÁZQUEZ-FILIPPETTI,
Plaintiffs, Appellants,
v.
COOPERATIVA DE SEGUROS MÚLTIPLES DE PUERTO RICO,
Defendant, Appellee,
BANCO POPULAR DE PUERTO RICO; FEDERAL INSURANCE COMPANY;
JOSÉ TORO-RODRÍGUEZ; FÉLIZ TORO-RODRÍGUEZ; CECILA PETITÓN-
GARCIA; CONJUGAL PARTNERSHIP, TORO-PETITÓN,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Daniel R. Domínguez, U.S. District Judge]
Before
Howard, Lipez and Kayatta,
Circuit Judges.
David W. Roman, with whom Jose Luis Ubarri, Ubarri & Roman,
Luis R. Mena-Ramos and Luis R. Mena-Ramos Law Offices were on
brief, for appellants.
Raymond M. Pérez Brayfield, with whom R. Pérez Brayfield Law
Offices was on brief, for appellee.
July 15, 2013
HOWARD, Circuit Judge. The plaintiffs-appellants were
awarded six million dollars in damages for injuries sustained in an
automobile accident. Defendant-appellee Cooperativa de Seguros
Múltiples de Puerto Rico ("Cooperativa") had issued an automobile
liability insurance policy that provided coverage for the accident
in the amount of $100,000. The question before us concerns the
extent of Cooperativa's responsibility for postjudgment interest.
I.
A. Procedural Background
Yomar Vázquez-Filippetti was standing on a sidewalk
withdrawing money from an ATM when José Toro-Rodríguez, driving a
1996 Mercury Grand Marquis, struck her from behind. Vázquez
sustained severe injuries as a result, including the loss of her
right leg. Toro was insured under a policy written by Cooperativa,
to a limit of $100,000 for bodily injury to any one person. The
car belonged to Toro's brother, Félix Toro-Rodríguez, who was the
named insured.
Vázquez, her mother, and two siblings brought a diversity
action in the United States District Court for the District of
Puerto Rico against the Toro brothers, Cooperativa, and the bank
that owned the ATM. The plaintiffs alleged that the bank had
negligently designed its ATM facility, and that the remaining
defendants were liable for Toro's negligent driving. A jury
returned a verdict for the plaintiffs, awarding them a total of six
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million dollars in damages. The jury apportioned seventy-five
percent of the liability to the bank and twenty-five percent to
Cooperativa and its insureds.
The district court entered judgment for the plaintiffs on
March 22, 2005. Consistent with the jury's apportionment of
liability, the bank was ordered to pay four-and-a-half million
dollars and Cooperativa and its insureds one-and-half million
dollars. The judgment was amended on August 16, 2005 to specify
that the defendants were jointly and severally liable for the full
amount of the judgment.
Cooperativa and its insureds did not appeal the judgment.
On September 29, 2005, Cooperativa paid into the court $75,000, the
remainder of its policy limit.1 The plaintiffs responded with an
"emergency motion that notice be taken of the waiver of insurance
policy limits" by Cooperativa. Before the district court reached
the merits of that motion, the bank filed an appeal of the
substantive verdict. We reversed the judgment against the bank on
sufficiency-of-the-evidence grounds. See Vázquez-Filippetti v.
Banco Popular de P.R., 504 F.3d 43 (1st Cir. 2007).
With the bank out of the picture, the plaintiffs renewed
their efforts to hold Cooperativa responsible for the full
judgment, despite its $100,000 policy limit. They argued that
1
Cooperativa had already paid $25,000 to Vázquez's father to
settle a state suit arising out of the same accident.
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Cooperativa had waived its policy limit by failing to raise the
issue in a specific and timely manner. The district court rejected
that contention as being belied by the record. The plaintiffs
appealed the ruling, and we affirmed. See Vázquez-Filippetti v.
Cooperativa de Seguros Múltiples, No. 08-2431 (1st Cir., Dec. 21,
2009).
In the meantime, the district court amended the judgment,
holding the Toro brothers and Cooperativa liable for the six
million dollars in damages.2 After losing the battle to set aside
the policy limit, the plaintiffs sought to compel Cooperativa to
pay postjudgment interest on the full six-million-dollar judgment.
The court denied the motion on the grounds that it was untimely,
and that the policy did not provide coverage for postjudgment
interest. This order is the subject of the instant appeal.
2
This most recent amended judgment provides that the Toro
brothers and Cooperativa are "jointly and severally liable to
Plaintiffs for the full amount of the Judgement." The judgment was
entered three days after the district court denied the plaintiffs'
motion to set aside Cooperativa's policy limit. To the extent that
the judgment can be read to suggest that the plaintiffs could
nonetheless collect the full judgment from Cooperativa, an argument
that the plaintiffs do not make, for aught that the record
discloses, this is a clerical error subject to correction at any
time pursuant to Fed. R. Civ. P. 60(a). See Bowen Inv., Inc. v.
Carneiro Donuts, Inc., 490 F.3d 27, 29 (1st Cir. 2007) ("A motion
under [Rule 60(a)] is appropriate where . . . the judgment failed
to reflect the court's intention.") (internal quotation marks
omitted).
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B. Cooperativa's Policy
The relevant terms and conditions of Cooperativa's policy
are as follows.3 The policy's "Part A--Civil Liability Coverage"
contains two relevant sections. The first section, titled
"Insurance Agreement," obligates Cooperativa to:
pay the damages for "bodily harm" or "property damages"
for any "insured" that is legitimately liable as a result
of the automobile accident. The damages include the pre-
sentence interest that is ordered against the
"insured"[.] [W]e will payout or defend, as we deem
appropriate, any claim or legal complaint that requests
the payment of these damages. In addition to our
liability limit, we will pay all the defense costs in
which we may incur. Our duty to payout or defend ends
when our liability limit has been exhausted regarding
this coverage.
The following section--"Supplementary Payments"--provides in
pertinent part:
In addition to our liability limits, we will pay . . . on
the "insured's" behalf . . . . [t]he interests accrued
after having issued a ruling in any judicial claim we
defend. Our duty of paying interests ends when we offer
to pay the corresponding part of the ruling that does not
exceed our liability limit for that coverage.
The term "liability limits" is defined in Part A as
"[t]he liability limit that appears in the Statements for this
coverage[, which] is our maximum liability limit for all the
resulting damages of any automobile accident." "Liability limits"
3
Written in Spanish, the policy is identified as PAP-1193983.
We rely on the certified English translation provided by the
parties.
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for bodily injury are listed in the "Statements" section as
$100,000 for each person and $300,000 for each accident.
II.
The plaintiffs challenge the district court's
determination that Cooperativa is not responsible for paying
postjudgment interest. They argue that, under the policy and the
laws of Puerto Rico, Cooperativa is liable for postjudgment
interest on the six-million-dollar judgment from the date of the
entry of the original judgment until it pays such interest in
full.4 In response, Cooperativa maintains that the plaintiffs
forfeited any entitlement to postjudgment interest by failing to
request it in a timely manner. Whether the plaintiffs are entitled
to postjudgment interest presents a legal issue that we review de
novo. See Radford Trust v. First Unum Life Ins. Co. of Am., 491
F.3d 21, 24 (1st Cir. 2007).
To begin, the plaintiffs tell us that the laws of Puerto
Rico require Cooperativa to pay postjudgment interest. Yet it is
well established that federal law governs the entitlement to
postjudgment interest in any federal civil suit, including a
diversity suit such as the instant action. Tobin v. Liberty Mut.
Ins. Co., 553 F.3d 121, 146 (1st Cir. 2009); Cummings v. Standard
Register Co., 265 F.3d 56, 68 (1st Cir. 2001). Section 1961(a) of
the Judicial Code entitles the prevailing party in federal court to
4
To date, Cooperativa has not paid any postjudgment interest.
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postjudgment interest "from the date of the entry of the judgment"
at the rate fixed in the statute. 28 U.S.C. § 1961(a). The
statute aims to "compensate the successful plaintiff for being
deprived of compensation for the loss from the time between the
ascertainment of the damage and the payment by the defendant."
Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827, 835-36
(1990) (internal quotation marks omitted). Because postjudgment
interest "follows as a legal incident from the statute providing
for it," Waggoner v. R. McGray, Inc., 743 F.2d 643, 644 (9th Cir.
1984) (internal quotation marks omitted), the court has no
discretion to deny it.5
The district court denied the plaintiffs' request for
postjudgment interest as untimely. The court agreed with
Cooperativa that Local Rule 7.1(b) required the plaintiffs to
request postjudgment interest within ten days of Cooperativa's
deposit of the policy limit. Because they did not seek interest
until June 2010, nearly five years after Cooperativa deposited the
funds, the court held that the plaintiffs waived any entitlement
thereto. We disagree. The cited rule relates to the timeliness of
an objection to a motion by the opposing party, and says nothing
5
Given the mandatory terms of Section 1961, the plaintiffs'
failure to cite the federal statute does not result in a forfeiture
of the statutory entitlement. See Bell, Boyd & Lloyd v. Tapy, 896
F.2d 1101, 1104 (7th Cir. 1990).
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about the time frame for a successful party to request postjudgment
interest.
Not surprisingly, Cooperativa cites no authority for the
proposition that postjudgment interest is waived absent a timely
objection to a deposit of funds. Requiring the plaintiffs to take
affirmative steps to preserve their right to postjudgment interest,
when such interest runs automatically by operation of law, makes
little sense in the circumstances of this case. Indeed, the
prevailing plaintiff is entitled to postjudgment interest
regardless of whether the judgment provides for its payment, United
States v. Michael Schiavone & Sons, Inc., 450 F.2d 875, 876 (1st
Cir. 1971), and even if the plaintiff fails to appeal its omission,
Tinsley v. Sea-Land Corp., 979 F.2d 1382, 1383-84 (9th Cir. 1992).
That the plaintiffs here waited until the extent of Cooperativa's
liability on the judgment became clear does not preclude them from
collecting any postjudgment interest due.
To determine the extent of Cooperativa's liability for
postjudgment interest, we turn to the language of the policy. We
interpret the policy in accordance with the laws of Puerto Rico.
Velez-Gomez v. SMA Life Assurance Co., 8 F.3d 873, 875 (1st Cir.
1993). Article 11.250 of the Puerto Rico Insurance Code provides
that "[e]very insurance contract shall be construed according to
the entirety of its terms and conditions as set forth in the
policy." P.R. Laws Ann. tit. 26, § 1125. Absent an ambiguity, we
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must interpret the insurance contract according to its "plain
meaning, as a whole, and in harmony with the general purposes of
the policy." Jewelers Mut. Ins. Co. v. N. Barquet, Inc., 410 F.3d
2, 16 (1st Cir. 2005). "If the wording of the contract is explicit
and its language is clear, its terms and conditions are binding on
the parties." Nieves v. Intercontinental Life Ins. Co. of P.R.,
964 F.2d 60, 63 (1st Cir. 1992).
The "Supplementary Payments" provision in Part A of
Cooperativa's policy says that, "[in] addition to [the] liability
limits," Cooperativa is responsible for "interests accrued after
having issued a ruling in any judicial claim we defend." This type
of provision is referred to as a "standard interest clause." See
Fratus v. Republic W. Ins. Co., 147 F.3d 25, 28 (1st Cir. 1998).6
A clear majority of the courts, including the Supreme Court of
Puerto Rico, interpret a standard interest clause as obligating
insurers to pay postjudgment interest on the entire amount of the
judgment against an insured, even though the policy limit may cover
only a portion of the judgment. Id. at 28-29; see Roldán Medina v.
Serra, 5 P.R. Offic. Trans. 705 (P.R. 1976).
6
The district court's docket entry denying the plaintiffs'
motion for postjudgment interest incorrectly stated that "the
policy at issue did not have a 'standard interest clause.'" The
court referred to a concession to that effect by the plaintiffs,
who apparently maintain that view of the policy on appeal. Their
brief makes no reference to the "Supplementary Payments" provision.
Nonetheless, in evaluating the plaintiffs' claim to postjudgment
interest, we cannot ignore the policy's plain language.
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The plain terms of the policy leave no doubt that
Cooperativa obligated itself to pay postjudgment interest on the
entire judgment against its insureds, notwithstanding the policy
limit. Cooperativa's insureds are liable for the full six-million-
dollar judgment.7 Accordingly, Cooperativa is responsible for
postjudgment interest on six million dollars.
That leaves us to determine the duration of Cooperativa's
obligation to pay postjudgment interest. Under section 1961,
postjudgment interest ordinarily begins to accrue as of the date of
the original entry of judgment. Cordero v. De Jesus-Mendez, 922
F.2d 11, 17 (1st Cir. 1990). Cooperativa deposited the policy
limit in September 2005, approximately five months after the entry
of the original judgment. According to the policy, Cooperativa's
"duty of paying interests ends when we offer to pay the
corresponding part of the ruling that does not exceed our liability
limit for that coverage." This plainly tells us that Cooperativa
must pay postjudgment interest for the five-month period before it
deposited the policy limit.8
7
Although the original judgment obligated the insureds to pay
one-and-a-half million dollars in damages, the judgment was
corrected to indicate that all the defendants bore joint and
several liability for the six-million-dollar judgment. When we
reversed the judgment against the bank, the insureds remained
liable for the full judgment.
8
Cooperativa argues that it is not liable for postjudgment
interest for the five-month period because the original judgment
was deficient, as there is no indication that the clerk obtained
the court's approval before entering the judgment, in violation of
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The plaintiffs argue that the deposit of the policy limit
was insufficient to stop the clock on the accrual of postjudgment
interest because Cooperativa failed to pay interest accrued as of
the date of deposit. As Cooperativa has yet to pay postjudgment
interest, the argument goes, interest on the full judgment
continues to accrue against it. The clear and unambiguous terms of
the policy preclude the plaintiffs' argument.
To terminate its obligation for postjudgment interest,
Cooperativa had to offer to pay the part of the judgment owed under
its "liability limit for that coverage." Plainly, "that coverage"
is "Part A--Civil Liability Coverage." The term "liability limit"
cannot include postjudgment interest, because postjudgment interest
is a "supplemental" obligation under Part A of the policy, "[i]n
addition to [the] liability limits."
As the surrounding provisions make clear, "liability
limit" refers to the applicable policy limit for damages.
Cooperativa's chief obligation under Part A is to pay damages for
bodily injury or property damage until its "liability limit has
been exhausted regarding this coverage." The term "liability
Fed. R. Civ. P. 58. Cooperativa makes this argument for the first
time on appeal, and thus we need not consider it. See McCoy v.
Mass. Inst. of Tech., 950 F.2d 13, 22 (1st Cir. 1991) ("It is
hornbook law that theories not raised squarely in the district
court cannot be surfaced for the first time on appeal."). Although
we may affirm the district court's judgment on any basis apparent
from the record, the record is at worst ambiguous. We decline to
assume irregularity under such circumstances.
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limit" is defined in Part A as Cooperativa's "maximum liability
limit for all the resulting damages of any automobile accident," as
provided in the Statements. "Liability limits" for bodily injury
are listed in the Statements as $100,000 per person and $300,000
per accident. Included in the damages is prejudgment interest. By
contrast, postjudgment interest is not part of the damages but a
separate and independent obligation. By definition, it is a
"supplementary" payment "[i]n addition to [the] liability limits."
To conclude, then, that Cooperativa had to pay accrued
postjudgment interest to satisfy payment for the "liability limit"
would eviscerate the plain language of the policy. The payment of
the policy limit was sufficient under the policy to terminate
Cooperativa's obligation to pay postjudgment interest accruing
after the date of the deposit.9 Other courts interpreting nearly
identical policy language have come to the same conclusion. E.g.,
Cox v. Peerless Ins. Co., 774 F. Supp. 83, 87 (D. Conn. 1991);
White v. Auto Club Inter-Ins. Exch., 984 S.W.2d 156, 158-59 (Mo.
Ct. App. 1998).10
9
Of course, postjudgment interest accrued after Cooperativa's
deposit of the policy limit remains the obligation of Cooperativa's
insureds.
10
A previous version of the standard interest clause provided
that the insurer's duty to pay postjudgment interest continued
"until the company has paid, tendered or deposited in court, such
part of such judgment as does not exceed the limit of the company's
liability thereon." Allegheny Airlines, Inc. v. Forth Corp., 663
F.2d 751, 755 (7th Cir. 1981) (internal quotation marks omitted).
Courts interpreting that provision were split as to whether the
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In sum, Cooperativa is responsible for postjudgment
interest for the period between March 22, 2005, the date of the
entry of the original judgment, and September 29, 2005, the date of
the deposit of the policy limit, at the rate provided in section
1961. Under the plain terms of the policy, once Cooperativa paid
the policy limit into the court, representing the portion of the
judgment owed under the policy, its duty to pay additional
postjudgment interest abated even though it had not paid interest
accrued to that point.
III.
For the aforementioned reasons, we reverse the denial of
the plaintiffs' request for postjudgment interest and remand for
further proceedings not inconsistent with this opinion.
insurer had to pay accrued postjudgment interest in addition to the
policy limit in order to stop further accrual of interest. Compare
id. at 755, 756, S. Gen. Ins. Co. v. Ross, 489 S.E.2d 53, 56-57
(Ga. Ct. App. 1997), and Levin v. State Farm Mut. Auto. Ins. Co.,
510 S.W.2d 455, 458-59 (Mo. 1974), with Sec. Ins. Co. of Hartford
v. Houser, 552 P.2d 308, 311 (Colo. 1976), River Valley Cartage Co.
v. Hawkeye-Sec. Ins. Co., 161 N.E.2d 101, 104 (Ill. 1959), and
Glenn v. Fleming, 799 P.2d 79, 88 (Kan. 1990). Those courts
holding that the insurer's obligation for postjudgment interest
continued until postjudgment interest was paid relied heavily on
the ambiguity in the word "thereon" and the requirements of a valid
"tender" under common law. See Houser, 552 P.2d at 311; River
Valley Cartage Co., 161 N.E.2d at 104; Glenn, 799 P.2d at 88.
Neither of those two words are present in the clause before us.
Although some courts have held that the previous version does not
meaningfully differ from the instant clause, they provided no
analysis. See Sours v. Russell, 967 P.2d 348, 354 (Kan. Ct. App.
1998); Tex. Farmers Ins. Co. v. Miller, No. 03-97-00233-CV, 1997 WL
746027, at *4 (Tex. App. Dec. 4, 1997) (unpublished). We are
unpersuaded that their view is correct.
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