Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-97-05075/USCOURTS-caDC-97-05075-0/pdf.json

Parties Involved:
Insurance Company of North America
Appellant
United States of America
Appellee

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 20, 1997 Decided December 23, 1997 

No. 97-5075

UNITED STATES OF AMERICA, ON BEHALF OF ITS AGENCY,

THE DEPARTMENT OF LABOR,

APPELLEE

v.

INSURANCE COMPANY OF NORTH AMERICA,

APPELLANT

Appeal from the United States District Court 

for the District of Columbia 

(No. 93cv02660)

Richard A. Bunn argued the cause and filed the briefs for 

appellant.

John G. Interrante, Attorney, United States Department of 

Justice, argued the cause for appellee, with whom Frank W. 

Hunger, Assistant Attorney General, Mary Lou Leary, UnitUSCA Case #97-5075 Document #317976 Filed: 12/23/1997 Page 1 of 13
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ed States Attorney, and J. Christopher Kohn, Attorney, United States Department of Justice, were on the brief.

Before: WALD, WILLIAMS and RANDOLPH, Circuit Judges.

Opinion for the Court filed by Circuit Judge WALD.

WALD, Circuit Judge: Kaiser Steel Corporation ("Kaiser"), 

a coal mine operator, obtained a number of indemnity bonds 

in order to fulfill its self-insurance responsibilities under the 

Black Lung Benefits Act ("the Act"), 30 U.S.C. §§ 901-945 

(1994), which imposes liability on mine operators for payment 

of benefits to miners who have developed pneumoconiosis 

("black lung"). One of the bonds, issued in 1982 and canceled 

in 1984, named Insurance Company of North America 

("INA") as the surety. When Kaiser filed for bankruptcy in 

1987, INA, as Kaiser's surety, was obligated to pay covered 

claims under the bond, a fact INA has never challenged. 

What has remained in dispute, however, is how to determine 

the claims for which INA is liable. In its first appearance 

before this court, United States v. Insurance Co. of N. Am.,

83 F.3d 1507 (D.C. Cir. 1996) [hereinafter INA I] held that, 

according to the bond's language, INA was liable only for 

those claims that accrued during the bond period, rejecting 

the district court's conclusion that INA was liable for all 

claims outstanding during the bond period. The case now 

makes a return appearance, as INA claims that the district 

court on remand incorrectly interpreted our mandate by 

requiring that a miner's last year of employment with Kaiserrather than his first year of employmentfall within the 

bond period in order for the claim to accrue during that 

period. We hold that our previous opinion did not address 

the issue of which year should be considered to mark the 

accrual point, so to the extent that the district court believed 

it was compelled by our opinion to choose a miner's last year 

of employment, it did so in error.1 We therefore vacate its 

judgment and order and remand to the district court for it to 

__________

1 Because our conclusion necessarily implies that INA's appeal 

was not frivolous, we deny the government's motion for sanctions.

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decide, with additional evidence if necessary, the trigger year 

intended by the parties to the bond agreement.

I. BACKGROUND

Under the Act, coal miners who have become totally disabled due to black lung that arises at least in part out of their 

coal mine employment and certain surviving dependents of 

miners whose death was due to black lung are entitled to 

monthly benefits. As of January 1, 1974, claims for benefits 

must be filed pursuant to the applicable state workers' compensation law if that law has been deemed by the Secretary 

of Labor to provide adequate coverage for black lung. 30 

U.S.C. § 931 (1994); 20 C.F.R. § 722.101 (1997). Where no 

approved state workers' compensation statute exists, claims 

are filed with the Secretary of Labor and are paid by 

responsible coal mine operators. 30 U.S.C. § 932(b) (1994); 

20 C.F.R. § 725.1(d) (1997). An operator is considered a 

"responsible operator" under the Department of Labor's regulations if it is the operator "with which the miner had the 

most recent periods of cumulative employment of not less 

than 1 year." 20 C.F.R. § 725.493(a)(1) (1997). This regulation ensures that only one mine operator is responsible for 

the payment of a particular miner's benefits.2

The Act requires that each operator secure the payment of 

benefits for which it is liable in advance, either by qualifying 

as a self-insurer pursuant to 20 C.F.R. §§ 726.101 et seq. or 

by obtaining outside insurance. 30 U.S.C. § 933(a) (1994); 20 

C.F.R. § 725.494 (1997). A mine operator that self-insures 

must acquire either an indemnity bond or negotiable securities in an amount sufficient to discharge its liability under the 

Act. 20 C.F.R. § 726.101 (1997). If a responsible operator 

or its surety does not make timely payments, or if no opera-

__________

2 To be precise, a finding that an operator is a "responsible 

operator" creates a rebuttable presumption that a miner's black 

lung arose out of his employment with that operator. The operator 

is therefore liable for payment of benefits to that miner unless it 

successfully rebuts that presumption. 20 C.F.R. § 725.494(a)(6) 

(1997).

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tor is liable for payment, benefits are paid from the Black 

Lung Disability Trust Fund ("the Fund"), which is financed 

by a tax on most types of coal and for which the Secretary of 

the Treasury, the Secretary of Labor, and the Secretary of 

Health and Human Services are trustees. 30 U.S.C. § 934 

(1994); 26 U.S.C. § 9501 (1994); 20 C.F.R. § 725.1(g) (1997). 

A responsible operator is then liable to the federal government for repayment to the Fund of any expenditures attributable to that operator. 30 U.S.C. § 934; 20 C.F.R. § 725.603 

(1997).

In 1973 the Department of Labor ("the Department") 

authorized Kaiser to act as a self-insured coal mine operator. 

To fulfill its obligations under section 726.101, Kaiser obtained two indemnity bonds from INA, one in the amount of 

$684,750 (effective November 2, 1973) and one in the amount 

of $3,304,000 (effective May 1, 1982, and canceled on May 20, 

1984) ("the 1982 bond"). Kaiser filed for bankruptcy in 

February 1987 and stopped paying benefits to its miners. In 

June 1987, the Secretary of Labor wrote to INA, requesting 

that INA, as Kaiser's surety, make arrangements for payment under the 1982 bond for claims filed from July 1, 1973, 

to May 20, 1984. Relying on the language of the bond, which 

defined INA's liability as that "which attaches to or is accrued 

by" Kaiser during the bond period, INA declined to pay all 

but two claims, asserting that the remainder of the claims 

accrued before 1982. The Department arranged for payment 

of the outstanding claims from the Fund and continued to 

request payment from INA. When its efforts proved unsuccessful, the Department filed suit in the district court on 

December 30, 1993.

Both parties moved for summary judgment as to the scope 

of INA's liability.3 The district court entered judgment 

against INA on October 12, 1994, agreeing with the govern-

__________

3

INA also moved for summary judgment on the ground that the 

government's claim was barred by the statute of limitations in 28 

U.S.C. § 2415(a) (1994). That assertion was rejected both by the 

district court and by this court on appeal, see INA I, 83 F.3d at 

1510-11, and thus is no longer an issue in this case.

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ment that language in the bond that rendered INA liable for 

all of Kaiser's "present, past, and potential liability" under the 

Act created a broad scope of liability "for all Kaiser's obligations existing as of the effective date and continuing until 

the termination of the bond." United States v. Insurance Co. 

of N. Am., 881 F. Supp. 1, 5 (D.D.C. 1994).4It therefore held 

INA liable for all past and future claims arising from employment with Kaiser on or before May 20, 1984, and subsequently directed the government to file a proposed judgment 

stating the amount for which INA would be liable.

On December 9, 1994, the government moved for leave to 

file, in support of its proposed judgment, a declaration by 

Scott D. Valentine ("Valentine"), a computer specialist with 

the Department who had reviewed the Department's records 

and calculated the amount due from INA. INA objected to 

the Valentine declaration, asserting that Valentine had not 

previously been identified as a witness and that the information upon which the declaration was based had not been 

disclosed during discovery. INA asked that its objections be 

sustained or, in the alternative, that it be granted 20 days in 

which to verify the accuracy of Valentine's calculations. The 

district court granted both the government's motion for leave 

to file the declaration and INA's request for review time on 

January 17, 1995, and on March 24, 1995, it entered judgment 

against INA in the amount of $659,871.80, plus interest, and 

ordered INA liable for payment of all future benefits arising 

from employment with Kaiser on or before May 20, 1984, 

capped by the penal sum of the bond.

INA appealed the district court's judgment, arguing that 

the district court had misinterpreted the bond language and 

thus incorrectly broadened the scope of its liability to include 

__________

4 The only coverage issue before the district court was the scope 

of the 1982 bond; although the second count of the government's 

complaint sought reimbursement under the 1973 bond, the government moved for, and was granted, summary judgment only as to 

the 1982 bond. 881 F. Supp. at 1 n.1.

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claims in existence before the bond period began.5 We 

rejected the district court's interpretation, holding that because the parties intended that the bond impose on INA "only 

liability accruing after the bond's effective date," INA would 

be liable only for claims for which Kaiser became the "responsible operator" under 20 C.F.R. § 725.493 between May 1, 

1982, and May 20, 1984, the date the bond was canceled, "by 

virtue of an employee's completion of one full year of employment with Kaiser during that period." INA I, 83 F.3d at 

1512-13. We therefore reversed the district court's holding 

as to liability and remanded for reassessment of damages in 

accordance with our opinion.

On remand, the government moved for entry of judgment 

in the amount of $350,604.49, which represented the amounts 

due on claims related to three miners, each of whom had 

concluded his employment with Kaiser in 1983.6In support 

of this motion, the government submitted a new declaration 

from Valentine, which, like the first declaration, described 

how the amount due had been calculated; this amount included payments made from the Fund while the case had been on 

appeal. INA opposed the government's motion, arguing that 

the limitation in our opinionthe requirement of "an employee's completion of one full year of employment with Kaiser 

during [the bond] period"restricted INA's liability to those 

claims filed by miners whose first year of employment with 

Kaiser was completed during the bond period, not the last 

year of employment, as the government contended. INA also 

renewed its objections to Valentine's declaration, asserting 

that it contained hearsay in its references to the Department's computer databases, that INA had not had the oppor-

__________

5

INA did not raise any challenge to the Valentine declaration on 

appeal, although the declaration was listed as a subject of appeal in 

INA's Statement of Issues to Be Raised.

6 The three claimants were Lucas S. Marez, whose last employment date was September 6, 1983; Arthur R. Mena, whose last 

employment date was January 14, 1983; and Ida Miller, widow of 

Leroy F. Miller, whose last employment date was June 24, 1983.

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tunity to depose Valentine, and that it contained inadmissible 

legal conclusions regarding INA's liability.

On January 22, 1997, the district court entered judgment in 

favor of the government in the amount of $350,604.49, plus 

interest, and ordered INA to pay any future benefits that 

became due to individuals whose last mining employment of 

at least one year was with Kaiser and ended during the bond 

period. It rejected INA's argument that its liability was 

determined by a miner's first year of employment as "contrary to the plain text of the regulations, counter to the Court 

of Appeals' decision, and entirely without merit," United 

States v. Insurance Co. of N. Am., No. 93-2660, slip op. at 3-4 

(D.D.C. Jan. 22, 1997), and declined to entertain INA's challenge to the Valentine declaration because INA had not 

raised the issue on appeal. INA now appeals a second time.

II. ANALYSIS

Because both parties have framed the debate as one regarding the interpretation of our previous opinion, the primary question before us is whether that opinion dictated the 

conclusion reached by the district court. As we have previously noted, the "mandate rule," an application of the "law of 

the case" doctrine, states that a district court is bound by the 

mandate of a federal appellate court and generally may not 

reconsider issues decided on a previous appeal. See, e.g., 

Maggard v. O'Connell, 703 F.2d 1284, 1289 (D.C. Cir. 1983);

City of Cleveland, Ohio v. Federal Power Comm'n, 561 F.2d 

344, 348 (D.C. Cir. 1977). Unlike the doctrine of res judicata,

however, the "law of the case" doctrine does not seek to 

sweep under its coverage all possible issues arising out of the 

facts of the case. See City of Cleveland, 561 F.2d at 348. 

Rather, the scope of the "law of the case" doctrine is limited 

to issues that were decided either explicitly or by necessary 

implication"[t]he mere fact that [an issue] could have been 

decided is not sufficient to foreclose the issue on remand." 

Maggard, 703 F.2d at 1289. We therefore look to our previUSCA Case #97-5075 Document #317976 Filed: 12/23/1997 Page 7 of 13
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ous opinion 7to determine whether the district court unnecessarily restricted its ability to determine how INA's liability 

should be calculated.

At issue before us on the first appeal in this case was a 

narrow question regarding the scope of INA's liability: 

whether INA was liable for all claims outstanding during the 

bond period or only for those claims arising during the bond 

period. The government had claimed, and the district court 

had agreed, that the bond's "broad" language and references 

to "present, past, and potential liability" led to the conclusion 

that INA would be liable for any claim that was outstanding 

between 1982 and 1984, even if the condition that made INA 

liable for that claimthat Kaiser had become the "responsible operator"had been fulfilled before the first day of the 

bond period. We disagreed, holding that such an interpretation would "virtually delete[ ]" the penultimate sentence of 

the second clause of the bond, which defined INA's liability as 

that "which attaches to or is accrued by [Kaiser] in or for the 

period during which this bond is in force." INA I, 83 F.3d at 

1511. Recalling the " 'cardinal principle of contract construction: that a document should be read to give effect to all its 

provisions and to render them consistent with each other,' " 

id. (quoting Mastrobuono v. Shearson Lehman Hutton, Inc.,

115 S. Ct. 1212, 1219 (1995)), we concluded that the parties to 

the bond intended to impose on INA "only liability accruing 

after the bond's effective date," id. at 1512. Because liability 

under the Act is assigned only to the operator with which a 

miner was most recently employed for at least one year, see

20 C.F.R. § 725.493(a)(1), we held that INA was liable under 

the 1982 bond only for claims in which the miner had completed at least one year's employment with Kaiser during the 

bond period (between May 1, 1982, and May 20, 1984). INA 

I, 83 F.3d at 1513. Our holding was thus intended simply to 

narrow the broad scope of liability imposed by the district 

__________

7 As we have previously noted, it is entirely appropriateand, in 

most cases in this circuit, necessaryto consult the opinion to 

interpret the mandate. See, e.g., City of Cleveland, 561 F.2d at 347 

n.25.

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court and to require that there be a temporal connection 

between a claimant's employment with Kaiser and the bond 

period.

The district court on remand, however, read this holding 

more broadly, believing it not only to require such a temporal 

connection but also to define how that connection should be 

determined. The parties now before us commit the same 

error, each contending that our opinion dictates the year of 

employment that fulfills the one-year requirement and each 

mustering various regulatory language and policy rationales 

in its favor. But these arguments are misdirected: As we 

have noted above, a careful reading of the opinion reveals 

that the issue was not decided, nor was any resolution necessarily implied by our holding. Simply put, we did not decide 

which year of employment the parties to the bond intended to 

trigger INA's liability.

If the answer to this question were clear from the language 

of the bond, it would be incumbent upon us to decide it on 

this appeal. The indemnity bond at issue in this case is a 

contract between the principal (here, Kaiser) and the surety 

(INA) in favor of an obligee (the U.S. government); as with 

any contract, if its terms are unambiguous on their face, 

interpretation is considered a question of law appropriately 

resolved by this court. See, e.g., NRM Corp. v. Hercules, 

Inc., 758 F.2d 676, 682 (D.C. Cir. 1985).8 Where, however, a 

__________

8 Subject matter jurisdiction in this case was obtained under, 

inter alia, 28 U.S.C. § 1352 (1994), which mandates original jurisdiction in the district courts, concurrent with state courts, "of any 

action on a bond executed under any law of the United States, 

except matters within the jurisdiction of the Court of International 

Trade under section 1582 of this title." Because "[t]here is no 

federal legislative standard for bonds 'executed under any law of 

the United States,' " Skirlick v. Fidelity & Deposit Co. of Md., 852 

F.2d 1376, 1377 (D.C. Cir. 1988) (internal quotation marks omitted), 

state law provides the applicable rules of contract interpretation 

and construction. The record before us does not indicate where the 

bond was executed, although the bond itself reflects that Kaiser is 

located in California and that INA is incorporated in Pennsylvania. 

Because both these jurisdictionsas well as the District of Columbiahold that unambiguous contract provisions are enforced acUSCA Case #97-5075 Document #317976 Filed: 12/23/1997 Page 9 of 13
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contract provision is ambiguous, extrinsic evidence may be 

necessary to ascertain the mutual intent of the parties and 

thus resolve the ambiguity, and its admission is within the 

province of the district court. See, e.g., America First Inv. 

Corp. v. Goland, 925 F.2d 1518, 1522 (D.C. Cir. 1991).

We thus return to the bond provision we examined in the 

first appeal to determine if there is an unambiguous reference 

to the year of employment that should serve as the trigger of 

liability, keeping in mind that a contract provision is ambiguous "if it is reasonably susceptible of different constructions, 

but it is not ambiguous merely because the parties later 

disagree on its meaning." Bennett Enters., Inc. v. Domino's 

Pizza, Inc., 45 F.3d 493, 497 (D.C. Cir. 1995) (citation omitted). The only portion of the bond which could be said to 

define the trigger of liability is the last sentence of the second 

clause, which reads: "For purposes of this clause liability 

shall be construed to attach or be accrued by the Principal for 

such periods and in such manner as is determined by the 

Secretary of Labor pursuant to said Act of 1969 and the 

applicable regulations duly promulgated thereunder." Joint 

Appendix ("J.A.") 12. Thus, we can conclude, at a minimum, 

that the parties unambiguously intended that the trigger for 

Kaiser'sand thus INA'sliability would be determined either by the Act itself or by regulation.9

__________

cording to their terms, compare Paylor v. Hartford Ins. Co., 640 

A.2d 1234, 1235 (Pa. 1994) with AIU Ins. Co. v. Superior Court, 799 

P.2d 1253, 1264 (Cal. 1990) and Skirlick, 852 F.2d at 1378, we need 

not decide which state's law would apply in this case.

9 We are mindful of the fact that the bond states that liability 

attaches "as is determined by the Secretary of Labor pursuant to 

said Act of 1969 and the applicable regulations duly promulgated 

thereunder," J.A. 12 (emphasis added), language that could support 

an interpretation that discretion to determine liability is wholly 

vested with the Secretary of Labor. Nevertheless, we are confident, given that the bond refers to a determination "pursuant to" 

the Act and the regulations, that the parties did not intend that the 

Secretary's discretion would be unfettered. Except for rejecting an 

interpretation vesting total discretion in the Secretary, we take no 

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When a contract incorporates a regulation by reference, 

that regulation becomes a part of the contract for the indicated purposes as if the words of that regulation were set out in 

full in the contract. See, e.g., Washington Metro. Area 

Transit Auth. v. Mergentime Corp., 626 F.2d 959, 962 n.3 

(D.C. Cir. 1980); Maryland-National Capital Park & Planning Comm'n v. Lynn, 514 F.2d 829, 833 (D.C. Cir. 1975). 

Therefore, the bond's reference to "applicable regulations" as 

the standard that determines when liability attaches necessarily incorporates 20 C.F.R. § 725.493(a)(1), the regulation 

that defines when an operator becomes a "responsible operator" and thus becomes liable for paying miners' claims.10 If 

we then read the bond as if the language of section 

725.493(a)(1) were included in full, it becomes apparent that 

the bond is ambiguous as to when liability is deemed to 

accruethe requirement that Kaiser be the operator "with 

which the miner had the most recent periods of cumulative 

employment of not less than 1 year" admits of either reading 

the parties urge upon us on appeal. As INA argues, the 

language could be interpreted to impose liability after a 

miner's first year of employment with Kaiser: If Kaiser is 

that miner's most recent employer, liability is triggered as 

soon as one year of employment has been completed. But, as 

the government argues, the language could just as easily 

refer to a miner's last year of employment with Kaiser, given 

that the regulation's focus is on the employment most recent 

in time. Given this ambiguity, it would be inappropriate for 

us to determine the intention of the parties on the basis of the 

record as it now stands.11 We therefore remand this case 

__________

position on the circumstances, if any, under which a Departmental 

interpretation of the regulations would be entitled to deference.

10 The current version of 20 C.F.R. § 725.493 was promulgated on 

August 18, 1978, and so was in existence when the bond at issue in 

this case went into effect. See 43 Fed. Reg. 36,771, 36,804 (1978).

11 The canon of construction known as contra proferentumthat 

ambiguities in an insurance contract should be construed against 

the insurer who drafted the contract, see, e.g., Revere Copper &

Brass, Inc. v. Overseas Private Inv. Corp., 628 F.2d 81, 82 (D.C. 

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once again to the district court to determine, with the admission of extrinsic evidence, if necessary, whether the parties to 

the bond intended that the first year of employment or the 

last year of employment be the trigger of liability and to 

reassess damages in accordance with that determination.

Our decision to remand once again is entirely consistent 

with our action in the first appeal, in which we resolved the 

interpretation issue before us at that time. There, the provisions we were required to reconcilethe reference to "present, past, and potential liability" and the reference to liability 

as that which "attaches to or is accrued by" Kaiser during the 

bond periodwere each unambiguous on their face with 

respect to the conflicting claims then presented. Our task, 

appropriately undertaken under the rules of contract interpretation, was to harmonize these provisions into a consistent 

whole. Here, by contrast, we are faced with a single provision, the meaning of which cannot be unlocked with the 

interpretive keys we, as an appellate court, possess. It would 

be appropriate for us to resolve this ambiguity only if "the 

proper resolution was so obvious on the basis of the record 

that a remand on that issue would [be] 'unduly wasteful of 

judicial resources.' " Maggard, 703 F.2d at 1290 (quoting 

Independent Bankers Ass'n of Am. v. Heimann, 613 F.2d 

1164, 1167 (D.C. Cir. 1979)). Given the absence of evidence in 

the bond itself and in the record concerning the proper 

interpretation of the bond's liability provision, the solution 

here can hardly be said to be that obvious.

__________

Cir. 1980)is not a sufficient ground by itself for rejecting the 

government's interpretation of the bond language. First, while it is 

true that the 1982 bond is merely the government's Form CM-922, 

which bears the heading "U.S. Department of Labor," the government is neither Kaiser's insurer nor a signatory to the bond; at 

most, it is a third-party obligee entitled to enforce the agreement 

between Kaiser and INA. Second, and more important, contra 

proferentum is traditionally used only in "cases of doubt ... 

[where] other factors are not decisive." RESTATEMENT (SECOND) OF 

CONTRACTS § 206 cmt. a (1979). Only after the district court has 

had the opportunity to consider the parties' intent in the first 

instance, therefore, would resort to this canon be appropriate.

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III. CONCLUSION

We vacate the district court's judgment and order and 

remand to allow the district court to determine the parties' 

intent with respect to the year of employment that triggers 

Kaiser'sand therefore INA'sliability for claims under the 

Act.12

It is so ordered.

__________

12 Because the district court on remand is permitted to admit 

extrinsic evidence to aid it in resolving the bond's ambiguity, INA 

should be permitted to challenge the new Valentine declaration 

submitted by the government in support of its claim. Although we 

stated in Crocker v. Piedmont Aviation, Inc., 49 F.3d 735 (D.C. Cir. 

1995), that, pursuant to the "law of the case" doctrine and its 

subsidiary waiver principle, "appellate courts are precluded from 

revisiting not just prior appellate decisions but also those prior 

rulings of the trial court that could have been but were not 

challenged on an earlier appeal," id. at 739 (emphases in original), 

we also noted that the doctrine "is a prudential rule rather than a 

jurisdictional one," motivated by a "practical concern for judicial 

economy," id. at 739-40. Given that the second Valentine declaration involves a new set of calculationsand, depending on the 

district court's resolution of the bond's ambiguity, there may yet be 

a third declarationand given that the district court will likely be 

presented with additional evidence on remand, we find no reason to 

bar INA's challenge.

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