Boston Old Colony Insurance v. Tiner Associates Inc.

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 01-30193
BOSTON OLD COLONY INSURANCE CO,
Plaintiff - Counter Defendant - Appellee-Cross Appellant,
STATE OF LOUISIANA, through the Office of Risk Management,
division of Administration, Office of the Governor;
LOUISIANA PUBLIC BROADCASTING,
Intervenor Plaintiffs-Appellees,
v.
TINER ASSOCIATES INC, Etc; ET AL,
Defendants,
HRC ARMCO INC,
Defendant - Intervenor Defendant - Cross Defendant -
Appellee,
and
STAINLESS INC,
Defendant - Intervenor Defendant - Appellee,
and
ALLIED RESOURCE MANAGEMENT OF FLORIDA INC,
Defendant - Intervenor Defendant - Cross Claimant -
Cross Defendant - Appellee,
v.
GENERAL STAR INDEMNITY CO,
Defendant - Intervenor Defendant - Cross Defendant -
Third Party Plaintiff - Counter Claimant -
Appellant-Cross-Appellee,
v.
MARINE OFFICE OF AMERICA CORPORATION; NATIONAL
UNION FIRE INS CO OF PITTSBURGH, PENNSYLVANIA,
Third Party Defendants - Appellees.
--------------------
Appeals from the United States District Court
for the Western District of Louisiana, Monroe
--------------------
April 9, 2002
Before HIGGINBOTHAM, DeMOSS, and BENAVIDES, Circuit Judges.
BENAVIDES, Circuit Judge:
This case arises from the collapse of a television
transmission tower owned by KNOE Television (“KNOE”) in Riverton,
Louisiana. Most of the claims resulting from the tower’s collapse
were resolved on summary judgment. A jury awarded over $4 million
in damages to KNOE’s first party insurer, Boston Old Colony
(“BOC”), and against General Star Indemnity Co. (“General Star”),
the excess liability insurer for Tower Network Services (“TNS”).
General Star appeals from a number of summary judgment and
evidentiary rulings of the district court. In turn, BOC cross-
appeals on two issues relating to the district court’s judgment on
the jury verdict. After a review of the relevant facts, we address
these issues in turn.
FACTUAL AND PROCEDURAL BACKGROUND
On March 20, 1997, a television transmission tower owned by
KNOE collapsed and was completely destroyed. Before the collapse,
KNOE had contracted with TNS for maintenance and repair work on the
2
tower. At the time of the collapse, a repair crew was working on
the tower, installing “diagonals,” thin metal rods which prevent
the tower from twisting. The post-accident investigation indicated
that the sole cause of the incident was the failure on the part of
the tower crew to use a temporary brace to support the tower during
the removal of the diagonals, which resulted in the tower becoming
unstable and collapsing.
TNS is a contractor specializing in the repair and maintenance
of towers. Before the collapse, TNS had contracted with HRC Armco,
Inc. (“Armco”) for administrative employee services. In turn, this
contract was assigned to Armco’s sister corporation, Allied
Resource Management of Florida (“Allied”). Thus, Allied actually
paid the tower crew and performed a number of other administrative
functions in relation to the workers.
Due to the destruction of KNOE’s tower, a new tower was built.
Before the collapse, KNOE was using the tower to broadcast its
signal. Louisiana Public Broadcasting (“LPB”) was also using the
tower pursuant to a philanthropic donation of space on the tower by
the owner of KNOE, which would expire in 2005. After the new tower
was built, KNOE leased tower space to LPB for a period of 40 years,
in exchange for a one-time payment of $1.1 million.
BOC, the first party insurer of KNOE, made payments to or on
behalf of KNOE of approximately $5 million for the new tower and
transmitter, business interruption losses and other expenses
related to the loss. On May 22, 1997, BOC filed a Petition for
3
Damages in Louisiana state court against TNS; TNS’s primary
liability insurer, Nautilus Ins. Co. (“Nautilus”); TNS’s excess
liability insurer, General Star; Armco; Allied; and the builder of
the tower, Stainless, Inc. (“Stainless”). BOC alleged that the
collapse was caused by the negligence of persons for whom TNS,
Armco, or Allied were responsible; or by design defects for which
Stainless was responsible. The case was removed to federal court
on the basis of diversity jurisdiction in June 1997. KNOE
intervened to recover damages and expenses not covered by the BOC
policy. The State of Louisiana also intervened to assert a claim
on behalf of LPB.
On July 19, 1999, Armco and Allied filed a cross-claim against
TNS, Nautilus, and General Star, seeking indemnity and/or
contribution. General Star filed a cross-claim against Armco and
Allied for indemnity and/or contribution and filed a third-party
complaint against their insurer, National Union Fire Ins. Co.
(“National Union”).
A number of motions for partial summary judgment and motions
in limine were filed, and all claims except those by BOC against
General Star were resolved or dismissed before trial. At trial,
the jury rendered a verdict in favor of BOC and against General
Star, and the court entered judgment in favor of BOC and against
General Star in the amount of $4,432,624 plus pre- and post-
judgment interest.
4
General Star appeals from several district court rulings on
motions for partial summary judgment and motions in limine. BOC
cross-appeals with respect to calculation of damages and interest.
DISCUSSION
I. The care, custody, or control exclusion
In March, 2000, General Star moved for partial summary
judgment in its favor on the grounds that the “care, custody, or
control” exclusion in its policy excluded coverage for the damages
sought by BOC. The district court denied General Star’s motion and
rendered summary judgment against General Star and in favor of BOC,
Armco, TNS, KNOE, and the State of Louisiana on this issue.
We review the district court’s summary judgment decision de
novo, applying the same standard on appeal that is applied by the
district court. See Pratt v. City of Houston, Texas, 247 F.3d 601,
605-606 (5th Cir. 2001). Summary judgment may be granted if there
is no genuine issue as to material fact and the moving party is
entitled to a judgment as a matter of law. See Fed. R. Civ. P. 56
(c). In determining whether summary judgment is appropriate, the
courts should view the evidence introduced and all factual
inferences from that evidence in the light most favorable to the
party opposing the motion and all reasonable doubts about the facts
should be resolved in favor of the nonmoving litigant. See
Impossible Elec. Techniques, Inc. v. Wackenhut Protective Sys.,
Inc., 669 F.2d 1026, 1031 (5th Cir. 1982).
5
The General Star insurance policy contains a “care, custody or
control exclusion,” which provides:
“This policy does not apply to property damage:
...
(c)... property in the care, custody, or control of the
Insured or property over which the Insured for any purpose is
exercising physical control.”
The parties agree that Louisiana law applies to the
interpretation of the exclusion. We apply Louisiana state law as
interpreted by the Louisiana Supreme Court; if that court has not
definitively ruled on a particular issue, we must predict how it
would decide the issue. Harken Exploration Co. v. Sphere Drake
Ins. PLC, 261 F.3d 466, 471 n.3 (5th Cir. 2001).
We find that the “care, custody, or control” exclusion does
not apply in this case. Under Louisiana law, insurance policies
are contracts, and the parties’ intent as reflected by the language
of the policy determines the extent of coverage. Reynolds v.
Select Props., Ltd., 634 So. 2d 1180, 1183 (La. 1994). Under
General Star’s interpretation of the exclusion, TNS would lose
virtually all liability insurance coverage. TNS is in the sole
business of inspecting, maintaining, and repairing towers. So to
interpret the exclusion as applying whenever TNS works on a tower
“would be an anomalous result.” Aladdin Oil Co. v. Rayburn Well
Svcs., Inc., 202 So. 2d 477, 490 (La. App. 4th Cir. 1967). “If this
was intended, the insurer should have indicated more specifically
6
its intent[.]” Id. (holding that the “care, custody or control”
exclusion did not apply to damages to an oil well where the insured
was working only on a short string of tubing in the well, because
the insured was in the business of reworking oil wells).
In any case, TNS did not exercise “care, custody, or control”
over the tower because the tower was only incidental to the
specific sections on which repairs were made. “[D]amaged property
or premises merely incidental or adjacent to the contracted object
upon which work is being performed by the insured is not within the
‘care, custody or control’ of the insured for purposes of the
exclusion clause in question, even though he might be permitted
access thereto during the performance of the contract.” See
Thomas W. Hooley & Sons v. Zurich General Acc. & Liability Ins.
Co., 103 So. 2d 449, 450-51 (La. 1958).1
1
Another factor that indicates lack of control is TNS’s
sharing of access to the tower with KNOE. See Borden, Inc v.
Howard Trucking Co., Inc., 454 So. 2d 1081 (La.1983) (holding that
compressor was in the care, custody, or control of the insured,
where insured was transporting compressor in truck, thus having
exclusive access to it); Hendrix Elec. Co., Inc. v. Casualty
Reciprocal Exchange, 297 So. 2d 470, 475 (La. App. 2d Cir. 1974)
(holding that an insured who was installing a circuit breaker on
a panel where other circuit breakers had already been installed
did not have care, custody, or control of the other circuit
breakers or the box in which they were contained, as he had only
temporary access and limited possession of the circuit breaker
box, but he did have control of the panel because he was “charged
by the contract and as an essential element of the work to work
directly on and with the panel.”).
7
Because TNS did not have care, custody or control of the tower
within the meaning of the exclusion in General Star’s policy, we
affirm the district court’s grant of summary judgment on this
issue.
II. Vicarious liability of Allied
On cross-motions for summary judgment filed by TNS, Nautilus,
and General Star on one hand, and Armco, Allied and National Union
on the other, the district court granted summary judgment for the
latter group, finding that Allied was not vicariously liable for
the negligence of the work crew. We review this issue de novo,
applying the same standard for summary judgment as did the district
court.
In January 1995, TNS and Armco entered a “Client Services
Agreement” (“CSA”) according to which Armco would “lease [its]
employees” to TNS in exchange for a one-time set-up fee for each
leased employee, and a percentage of the employees’ wages every
month. One of the employees would be designated as a “supervising
employee” and would be charged with implementing Armco’s policies
and procedures at the workplace. TNS was required to provide
commercial general liability insurance. The CSA was later assigned
to Allied, which performed instead of Armco.
The record indicates that the CSA was entered for the purpose
of relieving TNS of the administrative burdens involved in taking
care of its employees. Ordinarily, Allied’s clients (including
8
TNS) would recruit, find, evaluate, and hire the employees; they
would then decide whether to have the person be a leased employee
and if so, they would send the paperwork to Allied, who would deal
with group health, workers’ compensation, payroll, and other
administrative matters. Allied retained the right to refuse
employment, but employment would only be refused in narrow
circumstances, such as a positive drug test or lack of proper
immigration forms. Allied did not have the right to fire
employees, and if an issue arose as to firing, TNS would be
consulted and asked to fire the person.
The central question with regard to Allied’s liability is
whether the work crew consisted of “borrowed employees” for whom
Allied is not responsible. General Star contends that the
“borrowed employee” doctrine no longer exists in Louisiana, that
Allied and TNS were “dual employers,” and consequently that Allied
should be held vicariously liable, along with TNS, for the
negligence of the tower crew. We find that the borrowed employee
doctrine is still alive, and that it applies in this case.
Under the borrowed employee doctrine, a general employer may
be relieved of vicarious liability for an employee’s negligent
actions if the employee was “borrowed”; i.e., if at the time of the
negligent action the employee was under the control of a specific
employer, or was engaged in the specific employer’s business.
Benoit v. Hunt Tool Co., 53 So. 2d 137, 140 (La. 1951). This
9
doctrine has been modified somewhat by the dual employer doctrine,
according to which both the special and general employer may be
found jointly liable for the torts of a borrowed employee, in
circumstances where the employee’s negligent acts were “done in the
pursuance of duties designated for him by his [general] employer,
in whose pay he continued and who had the sole right to discharge
him.” LeJeune v. Allstate Ins. Co., 365 So. 2d 471, 481 (La. 1978).
In addition, “where a general employer is engaged in the business
of hiring out its employees under the supervision of another
employer, the general employer remains liable for the torts of the
‘borrowed’ employees.” Morgan v. ABC Manufacturer, 710 So. 2d 1077
(La. 1998). Thus, in Morgan the Louisiana Supreme Court held that
a temporary services agency, which had the exclusive power to
recruit, hire, and fire employees and handled administrative duties
related to the employees for a specific employer, was a dual
employer and was vicariously liable for the employees’ torts. Id.
at 1084. Neither LeJeune nor Morgan abrogated the borrowed
employee doctrine; they simply limited its scope so that it would
not apply in cases where the general employer retains control over
the employee at the time of the negligent action, such that it can
be characterized as a dual employer.
Viewing all facts in the light most favorable to General Star,
the work crew was under TNS’s control at the time of the negligent
action. Thus, even if Allied is considered to be a general
10
employer of the work crew, the borrowed employee doctrine applies.
The dual employer doctrine does not apply because Allied’s
function was primarily that of dealing with paperwork related to
the employees. Given that Allied was not in the business of
providing tower repair services to companies, it cannot be said
that, as in Benoit, the work crew was performing the business of
Allied. And since the work crew was acting under the direct
supervision of TNS, and Allied did not have hiring or firing power,
it cannot be said that the work crew was under Allied’s control.
Allied is easily distinguished from the temporary services agency
in Morgan in that Allied is not in the business of loaning
employees. Thus, we affirm the district court’s grant of summary
judgment to Armco, Allied, and National Union on this point.
III. Indemnification of Armco, Allied and National Union
The district court granted a motion for summary judgment in
favor of Armco, Allied, and National Union, requiring TNS and its
insurers to defend and indemnify the first three for claims arising
out of the negligence of the tower crew, in accordance with
indemnity provisions of the CSA. The district court also dismissed
General Star’s cross-claim for contribution and/or indemnity.
General Star appeals both decisions.
As discussed previously, we review summary judgment de novo,
applying the same standard of review as the district court.
11
The CSA contained indemnity provisions requiring that TNS
indemnify Armco for “TNS’s acts, errors or omissions, including
negligent acts and statutory violations,” and requiring that Armco
indemnify TNS for its acts, errors, or omissions. General Star
argues that because Armco and Allied contractually had significant
control over the work crew, the collapse of the tower was their
fault. Thus, General Star argues, this court should apply the
Texas2 “express negligence” doctrine, which establishes that
indemnification for one’s own fault must be expressly declared in
the contract. See Ethyl Corp. v. Daniel Constr. Co., 725 S.W.2d
705 (Tex. 1987). Under that doctrine, and assuming that
Armco/Allied was at fault, TNS was not obligated to indemnify
Armco/Allied.
Because we find that Armco and Allied were not vicariously
liable for the work crew’s actions, in accordance with the
“borrowed employee” doctrine, the fault for the work crew’s acts
rests with TNS. The “express negligence” doctrine does not apply
in this context. Thus, under the CSA, TNS was required to
indemnify Armco/Allied. We affirm the district court’s grant of
summary judgment in this respect.
We also affirm the district court’s grant of summary judgment
in favor of National Union. Although National Union is not covered
by the indemnity provision in the CSA, National Union is entitled
2
The CSA provides that it is governed by Texas law.
12
to implied indemnity from TNS and its insurers. See Nassif v.
Sunrise Homes, Inc., 739 So. 2d 183, 185 (La. 1999) (“An implied
contract of indemnity arises only where the liability of the person
seeking indemnification is solely constructive or derivative and
only against one who, because of his act, has caused such
constructive liability to be imposed.”).
IV. The National Union policy
General Star argues on appeal that National Union should have
been found liable for a proportionate share of the damages awarded
to BOC, because the National Union policy covered employees of
Allied as long as they were acting within their duties.
General Star did not adequately raise this issue before the
district court. While it filed a third-party demand against
National Union demanding contribution or additional coverage for
the tower crew, General Star did not substantiate this demand; for
example, the National Union insurance policy was not even part of
the record before the district court. General Star also failed to
move for summary judgment on this issue, and did not object to the
district court’s failure to decide the issue prior to trial.
Ordinarily, this Court will not review claims raised for the first
time on appeal. Vogel v. Veneman, 276 F.3d 729, 733 (5th Cir.
2002). There is no basis for an exception in this case, as the
record below was not adequately developed on this issue. See FDIC
v. Lee, 130 F.3d 1139 (5th Cir. 1997). Thus, we decline to
13
consider General Star’s argument that the National Union policy
provided coverage for the tower crew’s negligence.
V. Restoration cost
In May 2000, the district court granted BOC’s motion in limine
to limit the evidence presented at trial to the evidence regarding
the replacement cost of the new tower, with no deduction for
depreciation. In November 2000, the district court also ruled that
all evidence relating to the pre-collapse condition of the tower
was excluded as it was irrelevant, and even if it were relevant,
the probative value was substantially outweighed by the danger of
unfair prejudice and confusion of the issues before the jury.
General Star appeals both rulings.
On appeal, this Court reviews the ruling regarding the proper
measure of damages de novo. See Salve Regina College v. Russell,
499 U.S. 225, 231, 111 S. Ct. 1217, 1221 (1991) (holding that a
district court’s determinations of state law are reviewed de novo
on appeal); Sykes v. Columbia & Greenville Railway, 117 F.3d 287,
289 (5th Cir. 1997). The district court’s decision to exclude the
evidence for lack of relevance is reviewed for abuse of discretion.
Wright v. Hartford Accident & Indemnity Company, 580 F.2d 809, 810
(5th Cir. 1978).
“When property is damaged through the legal fault of another,
the primary objective is to restore the property as nearly as
14
possible to the state it was in immediately preceding the damage.”
Coleman v. Victor, 326 So. 2d 344, 346 (La. 1976). Thus, ordinarily
“courts have considered the cost of restoration as the proper
measure of damage where the thing damaged can be adequately
repaired.” Id. at 346-47 (citation omitted).
In Roman Catholic Church of the Archdiocese of New Orleans v.
Louisiana Gas Svc. Co., 618 So. 2d 874 (La. 1993), the Louisiana
Supreme Court reversed a lower court’s determination that in a tort
case where the cost of restoration exceeded the market value of the
damaged property prior to damage, the proper measure of damages was
the cost of replacement minus depreciation. Instead, the Louisiana
Supreme Court held:
“[A]s a general rule of thumb, when a person sustains
property damage due to the fault of another, he is
entitled to recover damages including the cost of
restoration that has been or may be reasonably
incurred.... If, however, the cost of restoring the
property in its original condition is disproportionate to
the value of the property or economically wasteful,
unless there is a reason personal to the owner for
restoring the original condition or there is a reason to
believe that the plaintiff will, in fact, make the
repairs, damages are measured only by the difference
between the value of the property before and after the
harm.”
Id. at 879.
In another opinion, the Louisiana Supreme Court also noted
that “[t]he general rule of damages cited by courts for valuation
of tortiously damaged property without market value is the actual
15
or intrinsic value of the property to the owner.” Emerson v.
Empire Fire & Marine Ins. Co., 393 So. 2d 691, 693 (La. 1981).
In the present case, restoration was not economically wasteful
and its cost was not disproportionate to the value of the tower,
which was an essential piece of equipment for broadcasting. As
noted by BOC, KNOE needed to use the Riverton tower to transmit
its signal to its entire broadcasting area. Indeed, precisely
because the tower was essential for KNOE to carry on its business,
and because of the absence of a market in transmission towers, the
intrinsic value of the tower approximates the cost of restoration
rather than the market value of the tower. Finally, the tower was,
in fact, repaired. See Roman Catholic Church, 618 So. 2d at 880
(“[T]he plaintiff in the present case is clearly entitled to
recover the full cost of restoration because it has, in fact, made
the repairs by replacing the building in its original condition.”)
General Star argues that depreciation should be considered
because more than half the tower’s useful life had been expended at
the time of the collapse. Thus, General Star argues that under
BellSouth Telecomms., Inc. v. Citizens Utils. Co., 962 F. Supp. 79
(E.D.La. 1996), depreciation should be considered. However, the
property at issue in BellSouth consisted of telephone cables that
had a useful life expectancy of four to five years, and which had
been cut after two years. After the incident, the plaintiff
replaced the cables with new equipment that had a significantly
16
longer life span and greater capacity. In that context,
depreciation had to be considered because otherwise the plaintiff
would get a substantial windfall. Id. at 81. See also Roman
Catholic Church, 618 So. 2d at 880 (“[a]n award of full restoration
costs might be inequitable in a case where the damaged part was
scheduled for early replacement.”). In the present case, the
record indicates that the tower’s life span was approximately fifty
to seventy-five years. Given that the tower had such a long life
span, the fact that over half the span had been expended is not as
supportive of a claim that the plaintiff benefitted from the
tower’s collapse: unlike the plaintiff in BellSouth, KNOE would not
have been forced to replace the tower in the next two years.
But General Star argues that in the next few years KNOE would
probably be required to switch to a digital, from an analog,
signal. Because the old tower could not accommodate the necessary
equipment for the switch, General Star argues that KNOE would have
had to build a new tower or modify the old one before 2006, the
date that Congress has set for all television stations to switch
from analog to digital signals. See 47 U.S.C. §309(j)(14)(A).
However, the record indicates that KNOE was contemplating the use
of its smaller transmission tower in Monroe, Louisiana, rather than
the larger Riverton tower, to comply with the requirements of
digital transmission in the short term. And the fact that repairs
were being made to the tower shows that the tower was probably not
17
scheduled for replacement shortly thereafter. Moreover, the 2006
deadline for the switch to digital television is not set in stone.
Congress has provided that the FCC must extend the date for
switching to digital television in several circumstances. See 47
U.S.C. §309(j)(14)(B).3 Consequently, the possibility that KNOE
would have switched to a digital signal in the next few years is
insufficient to support a deduction for depreciation.
In conclusion, we find that the district court did not err in
finding that the proper measure of damages was restoration cost,
without considering depreciation. As a result, evidence of the
pre-collapse condition of the tower was irrelevant to the
calculation of damages, and the district court did not abuse its
discretion in excluding the evidence.
VI. The exclusion of evidence of LPB’s lease payments
General Star appeals from a district court ruling that
evidence regarding LPB’s post-collapse lease payments to KNOE was
3
Of particular relevance here is the requirement that the
FCC must extend the date in any market in which 15 percent or
more of the television households in the market do not have a
television receiver capable of receiving digital signals or
digital-to-analog converter technology, and do not subscribe to a
multichannel video programming distributor that carries one of
the digital television service programming channels of each of
the stations broadcasting such a channel in that market. See 47
U.S.C. §309(j)(14)(B)(iii). Because of the lack of certainty as
to whether digital television will reach market penetration of
85% in KNOE’s market, it cannot be said that KNOE would
necessarily have to switch to a digital signal by 2006.
18
inadmissible. According to General Star, such payments constituted
relevant evidence of mitigation of BOC’s damages.
We affirm the district court’s ruling. Although the payments
may have mitigated KNOE’s uninsured loss, they do not reduce BOC’s
recovery against General Star, given that BOC’s payments to KNOE
applied only to its insured losses. In effect, although the BOC
policy provided a limited amount of coverage for losses incurred
due to the suspension of business operations as a direct result of
the collapse of the tower, it did not cover KNOE’s permanent
business losses. And it was the latter set of losses that was
mitigated through renegotiation of the lease to LPB. BOC did not
benefit from the LPB payments and was not entitled to do so. Thus,
the LPB lease payments were not relevant to the assessment of BOC’s
damages and were properly excluded.
VII. The salvage proceeds
BOC appeals a district court ruling that General Star was
entitled to have $118,918.00 deducted from the jury verdict. That
amount reflected the value of the salvage proceeds that KNOE was
able to obtain after the collapse of the tower. We affirm the
district court’s ruling. BOC’s insurance policy issued to KNOE
provided that “[a]ny recovery or salvage on a ‘loss’ will accrue
entirely to [BOC’s] benefit until the sum paid by us has been made
up.” Thus, BOC was entitled to collect that amount from KNOE; its
19
failure to collect salvage proceeds should not be made up for by
General Star.
BOC argues that the district court erred because General Star
had been credited with the value of the salvage proceeds twice
before. First, BOC contends that the salvage proceeds were
considered in the settlement of KNOE’s uninsured claim against
Nautilus, so BOC did not benefit from the salvage proceeds. This
argument is insubstantial: the fact that the salvage proceeds may
have been considered in KNOE’s settlement with Nautilus does not
mean that General Star received a credit for them, and the fact
that BOC did not receive the benefit of the salvage proceeds is
simply the result of BOC’s failure to deduct the value of salvaged
items from its payment to KNOE.
Second, BOC argues that General Star was already credited for
the salvage proceeds by the jury. As a general rule, this Court
does not question jury verdicts, but it will do so in limited
circumstances, such as where the verdict appears to be the result
of a juror compromise. See Yarbrough v. Sturm, Ruger & Co., 964
F.2d 376, 380 (5th Cir. 1992) (“[W]e do not favor questioning
verdicts.”); Thezan v. Mar. Overseas Corp., 708 F.2d 175, 180 (5th
Cir. 1983) (“It is a cardinal principal [sic] of jurisprudence that
we are not allowed to speculate as to the thought processes of the
jury.”). In the present case, there is no allegation of juror
misconduct or of a compromise verdict that would justify
20
speculation about the basis for the verdict. This is particularly
true where the district court, which is more familiar with the
circumstances of the trial, did not find that the jury had already
reduced BOC’s award by the value of the salvaged items.
We affirm the district court’s deduction of the value of
salvage items from BOC’s award.
VIII. Compounding Interest
In its final judgment, the district court ordered that
judgment be entered in favor of BOC and against General Star “in
the amount of $4,432,624.00 with pre-judgment interest from the
date of judicial demand, May 23, 1997, as set forth in La. R.S.
13:4202 and 13:4203, and post-judgment interest as set forth in 28
U.S.C. 1961, together with all costs of these proceedings.” BOC
appeals, arguing that the district court erred in failing to
compound the state pre-judgment interest by the federal post-
judgment interest.
Under 28 U.S.C. § 1961(a), in diversity cases, post-judgment
interest is calculated at the federal rate, while pre-judgment
interest is calculated under state law. See Nissho-Iwai Co. v.
Occidental Crude Sales, 848 F.2d 613 (5th Cir. 1988). Applying
this provision, this circuit has required that post-judgment
interest at the federal rate be assessed against the pre-judgment
interest. See Fuchs v. Lifetime Doors, Inc., 939 F.2d 1275, 1280
(5th Cir. 1991). To the extent that the district court failed to
21
compound the pre-judgment interest by the post-judgment interest,
it erred, and is directed to correct the error by compounding the
interest.
CONCLUSION
The district court’s rulings on summary judgment and motions
in limine are AFFIRMED, with directions that the state pre-judgment
interest be compounded by the federal post-judgment interest.
22