Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-88-02237/USCOURTS-ca10-88-02237-0/pdf.json

Parties Involved:
Bankers Life
Appellee
Ramona McNickle
Appellant

Document Text:

PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

RAMONA McNICKLE, Administratrix of the ) 

Estates of Glenn R. McNickle, Deceased, ) 

and David R. McNickle, Deceased; and ) 

RAMONA McNICKLE, individually, ) 

Plaintiffs-Appellants, 

FILED 

United States O.)urt of Appeals 

·remh Ci~~::-}i: 

OCT 3 0 1989 . 

ROBERT L I-IOECKER 

Clerk 

v. 

) 

) 

) 

) 

) 

) 

} 

} 

) 

No. 88-2237 

BANKERS LIFE AND CASUALTY COMPANY, 

a corporation, 

Defendant-Appellee. 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF OKLAHOMA 

(D.C. No. 85-226-W) 

Submitted on the briefs: 

Glen Mullins and Kenneth G. Cole of Abel, Musser, Sokolosky & 

Clark, Oklahoma City, Oklahoma, for Plaintiffs-Appellants. 

Larry E. Joplin and Richard c. Ford of Crowe & Dunlevy, Oklahoma 

City, Oklahoma, for Defendant-Appellee. 

Before McKAY, SEYMOUR, and TACHA, Circuit Judges. 

PER CURIAM. 

Appellate Case: 88-2237 Document: 01019411674 Date Filed: 10/30/1989 Page: 1 
After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); lOth Cir. R. 34.1.9. The case is therefore ordered 

submitted without oral argument. 

The plaintiffs appeal from the district court's order which 

reflected the court's denial of the "Plaintiffs' Motion for Court 

to Order Defendant to Pay Prejudgment Interest" brought pursuant 

to Fed. R. Civ. P. 60(a). We reverse the district court's 

judgment and remand the case for further proceedings. 

The defendant issued a group insurance certificate which 

covered the plaintiffs' decedents. The decedents died on 

January 9, 1981, in a helicopter crash. The defendant denied 

coverage and this litigation ensuea. 

The plaintiffs filed their complaint on January 24, 1985. 

For relief, they requested $165,000.00 (the amount of coverage 

provided by the insurance policy), attorney•s fees, interest, and 

costs. On August 28, 1985, the district court granted the 

plaintiffs' motion for summary judgment as to the issue of the 

policy's coverage of decedent David McNickle and awarded 

$15,000.00 to the plaintiffs on that claim. On March 19, 1986, 

the court decided, on stipulated facts, that decedent Glenn 

McNickle was also within the coverage of the policy. On this 

claim, the court awarded the plaintiffs $150,000.00 "with interest 

thereon as provided by law." By an order entered April 9, 1986, 

the court awarded attorney's fees to the plaintiffs in the amount 

of $7,378.00. 

2 

Appellate Case: 88-2237 Document: 01019411674 Date Filed: 10/30/1989 Page: 2 
The defendant appealed from the grant of partial summary 

judgment, the entry of judgment, and the award of attorney's fees. 

Apparently, we treated the district court's March 19, 1986, 

judgment as the final judgment for purposes of both the $15,000.00 

and $150,000.00 awards. We affirmed the district court's decision 

in an unpublished order and judgment. McNickle v. Bankers Life 

and Casualty Co., No. 86-1620, (lOth Cir. March 3, 1988). Shortly 

after the defendant had filed its notice of appeal in No. 86-1620, 

the plaintiffs filed a "Motion to Set Supersedeas Bond." The 

plaintiffs moved for a bond in the amount of $400,000.00. They 

reckoned that the present value of their judgment was $300,000.00 

because the provisions of Okla. Stat. tit. 36, S 3629(B) (supp. 

1986) entitled them to prejudgment interest on the $165,000.00 at 

the rate of fifteen percent per annum from on or near the date of 

the decedents' deaths. 1 Presumably, the additional $100,000.00 

1 Okla. Stat. tit. 36, § 3629(B) (supp. 1986) reads as follows: 

Forms of proof of loss; offer of settlement or rejection 

of claim 

B. It shall be the duty of the insurer, rece1v1ng 

a proof of loss, to submit a written offer of settlement 

or rejection of the claim to the insured within ninety 

(90) days of receipt of that proof of loss. Upon a 

judgment rendered to either party, costs and attorney 

fees shall be allowable to the prevailing party. For 

purposes of this section, the prevailing party is the 

insurer in those cases where judgment does not exceed 

written offer of settlement. In all other judgments the 

insured shall be the prevailing party. If the insured 

is the prevailing party, the court in rendering JUdgment 

shall add interest on the verdict at the rate of fifteen 

percent (15%) per year from the date the loss was 

payable pursuant to the provisions of the contract to 

the date of the verdict. This provision shall not apply 

to uninsured motorist coverage. 

(Emphasis added.) 

3 

Appellate Case: 88-2237 Document: 01019411674 Date Filed: 10/30/1989 Page: 3 
was to account for any entitlement to post-judgment interest. The 

defendant did not respond to the motion for supersedeas bond, and 

the court, on October 22, 1986, deemed the motion confessed. Soon 

thereafter, the defendant submitted a supersedeas bond in the 

amount of $400,000.00. 

On April 5, 1988, following our decision in No. 86-1620 and 

the return of the mandate to the district court, the plaintiffs 

filed their Rule 60(a) motion. The plaintiffs referred to the 

court's award of interest in the March 19, 1986, judgment and 

again cited specifically to § 3629(B) as the authority pursuant to 

which the prejudgment interest must be awarded. 

The district court denied the motion and found that it was 

impossible from the record to determine the date from which the 

defendant's liability for prejudgment interest commenced. The 

court concluded that such a "substantive, adjudicatory 

determination" could have only been appropriately determined at 

trial. The court held that the omission involved was more than a 

mere clerical error that could be remedied pursuant to Rule 60(a). 

We review a district court's ruling on a Rule 60(a) motion 

under an abuse of discretion standard. See Blanton v. Anzalone, 

813 F.2d 1574, 1577 (9th Cir. 1987). A clear example of an abuse 

of discretion is where the trial court fails even to consider 

either an applicable legal standard or the facts upon which the 

exercise of its discretionary judgment is based. See, ~, Park 

County Resource Council, Inc. v. United States Dep•t of 

4 

Appellate Case: 88-2237 Document: 01019411674 Date Filed: 10/30/1989 Page: 4 
Agriculture, 817 F.2d 609, 617 (lOth Cir. 1987); Hustler Magazine, 

Inc. v. United States Dist. Court, 790 F.2d 69, 70-71 {lOth Cir. 

1986}. 

Because jurisdiction in this case is based upon diversity of 

citizenship, state law governs matters of substance while federal 

law dictates the disposition of procedural issues. Budinich v. 

Becton Dickinson & Co., 807 F.2d 155, 158 {lOth Cir. 1986), aff'd, 

486 u.s. 196 (1988). The issue of possible entitlement. to 

prejudgment interest is governed by state law. See Casto v. 

Arkansas-Louisiana Gas Co., 562 F.2d 622, 625 {lOth Cir. 

1977)(applying Okla. Stat. tit. 12, § 727 (1971)). 

The district court erred in two ways. First, the court 

mischaracterized the plaintiffs' Rule 60(a) motion as an original 

request for prejudgment interest. Actually, the plaintiffs had 

requested relief in the form of .. interest" in their complaint. 

This original generic reference to interest encompasses all 

interest, both pre- and post-judgment. The plaintiffs further put 

the court and the defendant on notice of their specific claim to 

prejudgment interest under S 3629(B) through their supersedeas 

bond motion.2 

2 The plaintiffs claim a right to prejudgment interest under 

two other statutes as well -- Okla. Stat. tit. 36, § 4030ol(B) 

entitled Forms to establish proof of death and interest of 

claimant; interest on proceeds; payment of proceeds; time; 

exemptions and Okla. Stat. tit. 36, § 4112(A) (1981}, entitled 

Payment of proceeds; time; exemptions. These statutes are 

inapplicable. The pertinent language of both statutes is 

virtually identical and reads as foll"ows: 

An insurer shall pay the proceeds of any benefits 

under [group] life insurance policy not more than thirty 

(30) days after the insurer has received proof of death 

(continued on next page) 

5 

Appellate Case: 88-2237 Document: 01019411674 Date Filed: 10/30/1989 Page: 5 
The second erro~ involved the court's finding that no date 

certain could be-determined from the trial record from which the 

defendant's liability for prejudgment interest could be deemed to 

have begun. Section 3629(B) establishes the interest period, 

(continued from previous page)· 

of the insured. If the proceeds are not paid within 

this period, the insurer shall pay interest on the 

proceeds, at a rate which is not less than the current 

rate of interest on death proceeds on deposit with the 

insurer, from the date of death of the insured to the 

date when the proceeds are paid. Payment shall be 

deemed to have been made on the date a check, draft or 

other valid instrument which is equivalent to payment 

was placed in the u. s. mails in a properly addressed, 

postpaid envelope; or, if not so posted, on the date of 

delivery of such instrument to the beneficiary. 

Bracketed word included in § 4112(A) -- otherwise same text as 

§ 403P.l(B). 

Section 4030.l(B) clearly is not relevant to this case as it 

is found within Article 40 of the Oklahoma Insurance Code, which 

does not control in matters concerning group life insurance 

contracts. See Okla. Stat. tit. 36, § 4001. Section 4112(A) does 

govern the payment of proceeds on group insurance policies. 

Although §§ 4112(A) and 3629(B) can be literally read as directing 

payment of separate forms of interest under the same 

circumstances, we conclude that such a construction is improper. 

The two statutes impose different interest obligations on an 

insurer for late payment. It is unreasonable to penalize an 

insurer twice in this manner for the same conduct. The 

distinction between the statutes is that § 4112(A} does not 

contemplate the protracted pursuit of litigation that § 3629(B) 

does. The interest assessment of § 4ll2(A) is less severe than 

that imposed by § 3629(B), reflecting the relative degree of 

inconvenience or hardship to the insured. When statutes on the 

same subject are conflicting, they must be construed to give force 

and effect to each, as it will not be presumed that the 

legislature intended by the enactment of the later statute to 

repeal the earlier statute, unless it has done so in express 

terms. Beavin v. State ex rel. Dep•t of Public Safety, 662 P.2d 

299, 302 (Okla. 1983). The court should endeavor to resolve the 

conflicts between statutes by reasonably construing them so that 

they appear harmonious and logical. See id. We think our 

construction of these statutes satisfactorily resolves their 

conflict. 

6 

Appellate Case: 88-2237 Document: 01019411674 Date Filed: 10/30/1989 Page: 6 
"from the date the loss was payable pursuant to the p.rovisions of 

the contract to the date of the verdict." The important issue in 

this case is whether the date on which the loss was payable can be 

discovered and, if so, what was that date. This date may be 

determined from a joint reading of the "Stipulated Facts" filed on 

September 12, 1985, and a copy of the insurance policy. Both 

these documents were before the district court prior to its 

judgment. The parties stipulated that "plaintiff properly and 

timely filed!! claim with Bankers Life." See Stipulated Facts, p. 

5 (emphasis added). From the section of the policy entitled 

"Notice and Proof of Claim" we learn that the plaintiffs had 

ninety days after the date of the loss -- January 9, 1981 -- to 

furnish affirmative proof of loss to the defendant. Thus, the 

parties stipulated that the plaintiffs did file their proof of 

claim, at the latest, ninety days following the 

accident -- April 9, 1981. The policy states within the section 

entitled "Payment of Claim" that 11 payment will be made immediately 

upon receipt of due proof." Hence, April 9, 1981, is the date 

from which the loss was payable within the meaning of§ 3629(B). 

Rule 60(a) provides as follows: 

Relief From Judgment or Order 

(a) Clerical mistakes 

Clerical mistakes in judgments, orders or other 

parts of the record and errors therein ar1s1ng from 

oversight or omission may be corrected by the court at 

any time of its own initiative or on the motion of any 

party and after such notice, if any, as the court 

orders. During the pendency of an appeal, such mistakes 

may be so corrected before the appeal is docketed in the 

appellate court, and thereafter while the appeal is 

pending may be so corrected with leave of the appellate 

court. 

7 

Appellate Case: 88-2237 Document: 01019411674 Date Filed: 10/30/1989 Page: 7 
Rule 60(a) may be relied on to correct what is erroneous 

because the thing spoken, written, or recorded is not what the 

person intended to speak, write, or record. Allied Materials 

Corp. v. Superior Prods. Co., 620 F.2d 224, 226 (lOth Cir. 1980). 

Rule 60(a) may not be used to change something that was 

deliberately done, Security Mut. Casualty Co. v. Century Casualty 

Co., 621 F.2d 1062, 1065 (lOth Cir. 1980), even though it was 

later discovered to be wrong. Allied Materials, 620 F.2d at 226. 

A correction under Rule 60(a) should require no additional proof. 

See, ~, Trujillo v. Longhorn Mfg. Co., 694 F.2d 221, 226 (lOth 

Cir. 1982). 

The award of prejudgment interest, whether discretionary or 

mandatory, by a federal court is an act which serves to remedy the 

injury giving rise to the underlying action and in that sense is 

part of the merits of the court's decision. Osterneck v. Ernst & 

Whinney, 109 S. Ct. 987, 992 n.3 (1989). A post-judgment motion 

for prejudgment interest should 

Fed. R. App. P. 59(e). Id. at 991-92. 

be brought pursuant to 

A Rule 60(a) motion may 

not be used to alter the rate of prejudgment interest because that 

would call into question the substantive correctness of the 

judgment rather than remedy a clerical error or omission. See 

Dalton v. First Interstate Bank, 863 F.2d 702,. 704 (lOth Cir. 

1988); accord, Elias v. Ford Motor Co., 734 F.2d 463, 466 (1st 

Cir9 1984). 

The district court, by the terms 

judgment, intended to award interest 

8 

of its March 19, 1986, 

as provided by law. The 

Appellate Case: 88-2237 Document: 01019411674 Date Filed: 10/30/1989 Page: 8 
pertinent law here, § 3629(B), requires .the award of prejudgment 

interest.· By their Rule 60(a} motion, the plaintiffs essentially 

requested the court to insert the omitted particulars of the 

prejudgment interest award. This was neither an original 

post-judgment request for prejudgment interest nor a request that 

the amount due to them be changed in any way. Rule 60(a) 

specifically addresses the problem of omissions in judgments. If 

a court's judgment states that interest is to be ''according to 

law" but the rate is not specified, the court may specify, in 

response to a Rule 60(a) motion, the appropriate rate at any time. 

See United States v. Griffin, 782 F.2d 1393, 1396 (7th Cir. 

1986)(citing United States v. Kenner, 455 F.2d 1, 5-6 (7th Cir. 

1972)). 

We conclude that the district court's misapprehension of the 

record and its consequent failure to apply the applicable state 

interest statute constitutes an abuse of discretion. 

The judgment of the United States District Court for the 

Western District of Oklahoma is REVERSED, and the case is REMANDED 

for the calculation and award of prejudgment interest from the 

defendant to the plaintiffs~ Fifteen percent simple interest per 

year will be assessed on the $165,000.00 judgment. 

9 

Appellate Case: 88-2237 Document: 01019411674 Date Filed: 10/30/1989 Page: 9 
PUBLISH 

FILED 

United States Courc of Appeals 

Tench Cir~ui: 

UNITED STATES COURT OF APPEALS OCT ~ll 1989 

ROBERT L HOECKER 

Clerk 

ERIC E. CHANDLER and 

PEGGY K. CHANDLER, 

Plaintiffs-Appellees, 

v. 

UNITED STATES OF AMERICA, 

Defendant-Appellant. 

Submitted on the briefs: 

TENTH CIRCUIT 

88-2402 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

On Appeal From The 

United States District Court 

For The District Of Utah 

(D.C. No. 86-C-llOSS) 

Williams. Rose, Jr., Assistant Attorney General, James I. K. ~napp, Acting Assistant Attorney General, Gary R. Allen, Jonathan 

S. Cohen and Nancy G. Morgan, Attorneys, Tax Division, Department 

of Justice, Washington,.D.C., and Brent D. Ward, United States 

Attorney, Salt Lake City, Utah, of counsel, for DefendantAppellant. 

Eric E. Chandler and Peggy K. Chandler, Centerville, Utah, pro se. 

Before MOORE, SETH and BRORBY, Circuit Judges. 

PER CURIAM. 

Appellate Case: 88-2237 Document: 01019411674 Date Filed: 10/30/1989 Page: 10