FILED U.S. COURT OF AP P E A LS E LE V EN T HC IRC U IT APRIL9, 2007 THOMAS K. KAH

N CLERK [ DO NO T P UB L I S H] I N THE UN I TE D STATE S C OU RT OF APPE ALS F O R T H E E L E V E N T H C IR C U IT

________________________ N o. 06- 14614 N on -A rgum entC al endar

________________________ D. C. Do c k e tNo . 9 7 - 0 2 4 3 9 - CV- J LK N A T I O N A L F I R E I N S U R A N C E C O M P A N Y O F H A R T F O R D , P l ai nt i ff -C ou nt er D e f e n d a n t- A p p e lle e , v ersu s F O R T U N E C O N S T R U C T I O N C O M P A N Y , D ef endant -C ou nt er C l ai m an t -T h i rd -P arty P la in tif f - A p p e lla n t, v ersu s A R K I N C O N S T R U C T I O N C O M P A N Y , I N C ., T h i rd -P arty D e f e n d a n t.

________________________ A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f orthe S outhe r n D i s tr i c tof F l or i da

_________________________ ( A p r i l 9, 2007)2

B efo re A N D E R S O N , B A R K E T T an d P R Y O R , C i rcu i tJu d g es. P E R C U R I A M: F ortun e C on struct i on C om pany appeal s f rom a j ud gm entthe di stri ctcourt e nt e r e d a f

t e rthi s C our tr e m a nde d a pr e vi ous appe a l by F ortune . F or tune c ont e nds th a t th e d is tr ic t c o u r t f

a ile d to c o m p ly w ith th e m a n d a te o f th is C o u r t w h e n it r e f u s e d to p e r m it a p u rp o r te d c la im o f F o r tu n e to g o f

o r w a r d . F o r tu n e a ls o a s s e r ts thatthe di stri ctcourterroneou sl y c al cul at ed the prej ud gm enti nt er es tfor N at i on al F i r e I ns ur a nc e C om pa ny of H a r t f or d. W e a f

f i r m i n pa r t , va c a t e i n pa r t , a nd rem an d fo r fu rth er p ro ceed i n g s. I . B AC KG RO UN D T h i s c o n tr o v e r s y b a s e d o n d i v e r s i ty j u r i s d i c t i o n a r o s e o u to f two c ons truc t i on pr oj e c t s . N a t ’ l F i r e I ns . C o. of H a r t f or d v. F or tune C ons tr . C o. , 320 F . 3 d 1 2 6 0 , 1 2 6 3 ( 1 1 th C i r . 2 0 0 3 ) . As g e n e r a l c o n tr a c t o r , F o r tu n e e n t e r e d two se para t e s ub cont ra ct s w i th A rki n C on struct i on C om pany. Id. N at i on al F i re , as s ur e ty , i s s ue d pe r f

or m a nc e a nd pa y m e ntbonds on be ha l f of A r ki n, a s pr i nc i pa l , f

or the tw o pr oj e c t s . I d. D ur i ng c ons truc t i on, A r ki n be ga n t o e xpe r i e nc e f i na nc i a l di f

f i c ul ty . I d. T he subcon tra ct s betw ee n F ortun e a nd A rki n i ncl ud ed prov i si on s f or l i qu i dat ed d a m a g e s , w h ic h o b lig a te d A r k in to p a y f o rd e la y s in c o m p le tio n o f th e p r o je c ts .3

Id. at12 64 . F ortun e i nv ok ed these cl ause s. Id. W hen i tdefaul t ed and aband on ed the construct i on proj ec t s, A rki n o w ed $1 , 69 3, 50 0 i n d el ay dam ages on on e proj ec t a nd $93, 600 on the othe rpr oj e c t . I d. F or tune c om pl e t e d the pr oj e c t s a nd pr e s e nt e d t o N a t i ona l F i r e a n a c c ount i ng of c os t s . I d. a t1265. N a t i ona l F i r e r e s ponde d tha tthe c os t s w e r e l e s s tha n the a m ountof

m one y tha tha d be e n, f orva r i ous r e a s ons , pr e pa i d t o F or tune on the s ubc ontr a c t s . I d. N a t i ona l F i r e r e que s t e d tha tthe ba l a nc e s on the s ubc ontr a c t s be p a id b y F o r tu n e to N a tio n a l F ir e , a s s u b r o g e e o f A r k in . I d . F o r tu n e r e f u s e d to p a y . Id . F o rtu n e co n t en d ed th ati th ad a su p eri o r ri g h tt o th e co n tractb al an ces b ecau se N a t i ona l F i r e f

a i l e d t o pe r f

or m on the pe r f

or m a nc e bonds a nd F or tune ha d a r i ght t o of f s e ta ga i ns tthe c ontr a c tba l a nc e s c e r t a i n da m a ge s ow e d by A r ki n, i nc l udi ng the l i qui da t e d da m a ge s f orde l a y . I d. N a t i ona l F i r e f

i l e d a c om pl a i nti n f

e de r a l di s tr i c tc our t , a nd F or tune f i l e d a coun t er cl ai m and j oi ned A rki n as athi rd-par ty def endant . Id. T he di stri ctcourt gr a nt e d N a t i ona l F i r e pa r t i a l s um m a r y j udgm e nton s e ve r a l i s s ue s . I d. A ttr i a l , the d i stri ctco u rtd i rect ed j u d g m en tas a m att er o f l aw i n fav o r o f F o rtu n e ag ai n st A rki n. Id. T he j ury det erm i ned t he am ou ntof the cont ra ctbal ance s, w hi ch w er e aw ar ded t o N at i on al F i re , and t he di stri ctcourtadded p re j ud gm enti nt er es t . Id. at 1 2 6 7 . F o r tu n e ap p e a le d .4

In an op i ni on i ss ued F ebruary7, 20 03 , thi s C ou rtaf fi rm ed i n p art , re vers ed i n p art , and rem anded for further procee di ng s. Id. at12 79 . T hi s C ou rtconcl ud ed thatF ortun e had a ri gh tt o o ff se tagai nstthe cont ra ctbal ance s the l i qu i dat ed da m a ge s ow e d by A rki n, butthi s C our ta l s o c onc l ude d tha tN a t i ona l F i r e ha d a superi or ri gh tt o rec ov erce rt ai n p ay m ent s notsubj ec tt o o ff se t . T hi s C ou rtno t ed tha tthe s upe r i orc l a i m s of N a t i ona l F i r e “ m a y e xha us tthe c ontr a c tba l a nc e s . ” I d. a t 1 2 7 6 n .1 9 . T hi s C our ta l s o c onc l ude d tha tthe di s tr i c tc our tha d c a l c ul a t e d pr e j udgm e nt i nt e r e s tf orN a t i ona l F i r e be gi nni ng i n J a nua r y 1998 m or e tha n thr e e y e a r s t oo ea rl y. Id. at12 79 . T hi s C ou rtconcl ud ed thatprej ud gm enti nt er es tfor dam ages r e l a t e d t o one of

the c ons truc t i on pr oj e c t s be ga n t o a c c rue on M a r c h 19, 2001, a nd pr e j udgm e nti nt e r e s tf

orda m a ge s r e l a t e d t o the othe rpr oj e c tbe ga n t o a c c rue on M a y 1 5 , 2 0 0 1 . T h is C o u r t d id n o t a d d r e s s p o s tju d g m e n t in te r e s t. I d . T h e m a n d a te i ss ued o n A pri l 9, 20 03 , and i ncorpo ra t ed the op i ni on by re fe re nce. O n r e m a n d , th e d is tr ic t c o u r t a w a r d e d th e c o n tr a c t b a la n c e s to N a tio n a l F ir e . T he di s tr i c tc our tde t e r m i ne d, a s thi s C our tpr e di c t e d, tha tthe s upe r i orc l a i m s of N a t i ona l F i r e , nots ubj e c tt o of f s e t , e xha us t e d the c ontr a c tba l a nc e s . A l though F or tune ha d a r i ghtt o of f s e tf orthe l i qui da t e d da m a ge s ow e d by A r ki n, F or tune r e c o v e r e d n o th in g .5

F ac ed w i th a fut i l e r i gh tof se t off, F ortun e a ss ert ed thati thad al so pres ent ed a n a f f i r m a t i ve c l a i m a ga i ns tN a t i ona l F i r e f orthe l i qui da t e d da m a ge s ow e d by A rki n, no tm er el y ari gh tof se t off a gai nstthe cont ra ctbal ance s. F ortun e a rgued tha tthi s C our tr e c ogni z e d tha tF or tune ha d a s s e r t e d a n a f f i r m a t i ve c l a i m , a nd F or tune a r gue d tha tthe m a nda t e rul e r e qui r e d the di s tr i c tc our tt o c ons i de rthe af fi rm at i ve cl ai m . T he di stri ctcourtdi sa gree d. Itre as on ed thatno such a f f i r m a t i ve c l a i m ha d be e n a s s e r t e d by F or tune a nd c onc l ude d tha ta ny m e nt i on of the cl ai m by thi s C ou rt“ appear[ ed] t o b e di ct a. ” T he di stri ctcourtre ca l cul at ed prej ud gm enti nt er es tfr om the dat es i dent i fi ed by thi s C our t , butthe di s tr i c tc our tf a i l e d t o i de nt i f

y the da t e on w hi c h pr e

j udgm e nt i nt e r e s tc e a s e d t o a c c rue . T he di s tr i c tc our tdi d notdi s c l os e i t s c a l c ul a t i ons or p r o v id e a n y f

u r th e rd e ta il, a n d it d id n o t m e n tio n p o s tju d g m e n t in te r e s t.

I I . STA N D A R D O F R EVI EW W e r evi ew de no vo the appl i ca t i on of the l aw of the ca se do ctri ne, A l ph am ed, Inc. v. B . B raun M ed. , Inc. , 36 7 F . 3d 12 80 , 12 85 (11t h C i r. 20 04 ), w h ic h in c lu d e s th e m a n d a te ru le , P ia m b in o v . B a ile y , 7 5 7 F .2 d 1 1 1 2 , 1 1 2 0 ( 1 1 th C i r. 19 85 ). W e a l so re vi ew de no vo the ca l cul at i on of prej ud gm enti nt er es t , w hen thatca l cul at i on depend s on the construct i on of st at e l aw . S E B S . A . v. S un beam C orp. , 47 6 F . 3d 13 17 , 13 19 (11t h C i r. 20 07 ).6 I I I . DI S CUS S I ON F ortun e pre se nt s tw o argum ent s. F i rs t , F ortun e c on t ends thatthe di stri ct courtfa i l ed t o com pl y w i th the m andat e of thi s C ou rtw hen i tre fuse d t o con si der the al l eged aff

i rm at i ve cl ai m of F ortun e a gai nstN at i on al F i re for l i qu i dat ed dam ages for del ay ow ed by A rki n. S ec on d, F ortun e a ss ert s thatthe di stri ctcourt e r r one ous l y c a l c ul a t e d pr e j udgm e nti nt e r e s t . W e a ddr e s s e a c h i s s ue i n tur n. A . T he D istri ct

C ou rt D i d N otV i olat e the M

an da t e R ul e. In the previ ou s opi ni on of thi s C ou rt , F ortun e pre vai l ed on i t s a ss ert i on that i thad a ri gh tt o o ff

se tagai nstthe cont ra ctbal ance s the l i qu i dat ed dam ages ow ed by A rki n, bu tw hen t he superi or cl ai m of N at i on al F i re exhaust ed the cont ra ct b a la n c e s , th e r ig h t o f

s e to f f g a v e F o r tu n e n o r e c o v e r y . F a c e d w ith th e f u tility o f its r ig h t o f s e to f f , F o r tu n e n o w a tte m p ts to c h a n g e c o u r s e . F o r tu n e c o n te n d s th a t it ha s , f r om the be gi nni ng, pr e s e nt e d a n a f f i r m a t i ve c l a i m a ga i ns tN a t i ona l F i r e f or the l i qui da t e d da m a ge s ow e d by A r ki n, notm e r e l y a r i ghtof s e t of f a ga i ns tthe c o n tr a c t b a la n c e s . T o c om pe l the di s tr i c tc our tt o pe r m i tthe c ha nge i n c our s e , F or tune r e l i e s on the m andat e rul e. F ortun e a ss ert s that , i n the fol l ow i ng se nt ence , thi s C ou rt r e c ogni z e d tha tF or tune ha d a s s e r t e d the a f f i r m a t i ve c l a i m : “ F or tune f i l e d a coun t er cl ai m agai nstN at i on al F i re for f ai l ure t o p er form un der the performance7

b o n d s a n d f

a ilu r e to m a k e th e r e q u ir e d p a y m e n ts u n d e rth e p a y m e n t b o n d s w ith r e s pe c tt o pa y m e nt s f

orD a vi s - B a c on A c tvi ol a t i ons , e l e c tr i c a l ove r a ge s , a nd the l i qui da t e d de l a y da m a ge s . ” F or tune c ont e nds tha tthe m a nda t e rul e r e qui r e d the d is tr ic t c o u r t to c o n s id e rth e m e r its o f th e a lle g e d a f

f ir m a tiv e c la im . N a t i ona l F i r e a s s e r t s , a nd the di s tr i c tc our tc onc l ude d, tha ta ny r e f e r e nc e by thi s C ou rtt o an aff

i rm at i ve cl ai m agai nstN at i on al F i re for the l i qu i dat ed dam ages ow ed by A rki n w as di ct a. N at i on al F i re al so cont ends, and t he di stri ctcourt concl ud ed, thatthi s C ou rt“ expres s[ ed] no op i ni on ” a s t o w hether N at i on al F i re w as resp o n si b l e fo r th e l i q u i d at ed d am ag es o w ed b y A rk i n . S ee N at ’ l F i re In s. C o ., 3 2 0 F .3 d a t 1 2 6 0 . U nd erthe m andat e rul e, “ a tri al court , ‘ up on re ce i vi ng the m andat e of a n appel l at e c ou rt , m ay no tal t er , am end, or exam i ne the m andat e, or gi ve any f urther re l i ef or re vi ew , bu tm ustent eran order i n stri ctcom pl i ance w i th the m andat e. ’ ” T r a ns a m e r i c a L e a s i ng, I nc . v. I ns t . of L ondon U nde r w r i t e r s , 430 F . 3d 1326, 1331 ( 1 1 th C ir . 2 0 0 5 ) ( q u o tin g P ia m b in o , 7 5 7 F .2 d a t 1 1 1 9 ) . T h e d is tr ic t c o u r t “‘is bound t o f

ol l ow the appe l l a t e c our t ’ s hol di ngs , both e xpr e s s e d a nd i m pl i e d. ’ ” I d. ( quot i ng P i a m bi no, 757 F . 2d a t1119) . T he rul e “ onl y appl i e s i f ourpr i oropi ni on de t e r m i ne d [ the i s s ue ] , e xpl i c i t l y orby ne c e s s a r y i m pl i c a t i on. ” I d. a t1332. A l though N a t i ona l F i r e a nd the di s tr i c tc our tha ve m i s i nt e rpr e t e d our8

s ta te m e n t a b o u t “e x p r e s s [ in g ] n o o p in io n ,” b e c a u s e th a t s ta te m e n t r e la te d to w hether N at i on al F i re i t se l f ow ed l i qu i dat ed del ay dam ages for i t s a l l eged breac h of c ontr a c t , w e othe r w i s e a gr e e w i th N a t i ona l F i r e a nd the di s tr i c tc our t . T he pr e vi ous opi ni on of

thi s C our tdi d nothol d tha tF or tune ha d a s s e r t e d a n a f f i r m a t i ve c l a i m a ga i ns tN a t i ona l F i r e f orthe l i qui da t e d da m a ge s ow e d by A r ki n. T he s e n t e n c e r e l i e d u p o n b y Fo r tu n e d o e s n o tr e f e r e n c e s u c h a n a f

f i rma t i v e c l a i m, m uch l es s hol d thatF ortun e a ss er t ed the cl ai m . E ven i f the op i ni on had ref er ence d an af fi rm at i ve cl ai m , the re fe re nce w ou l d b e di ct a bec ause i tw ou l d n othave been

“ ne c e s s a r y t o de c i di ng the c a s e the n be f or e us . ” U ni t e d S t a t e s v. E gge r s dor f , 126 F .3 d 1 3 1 8 , 1 3 2 2 n .4 ( 1 1 th C ir . 1 9 9 7 ) . T h e d is tr ic t c o u r t w a s f r e e to c o n c lu d e , a s it di d, tha tF or tune ha d ne ve ra s s e r t e d a n a f f i r m a t i ve c l a i m a ga i ns tN a t i ona l F i r e f or the del ay dam ages ow ed by A rki n and , i n fac t , had “ consi st ent l y a ss ert ed thr oughoutthe unde r l y i ng l i t i ga t i on tha ti tw a s notpur s ui ng s uc h a n a f f i r m a t i ve cl ai m . ” T o th e e x te n t F o r tu n e a ls o a r g u e s , in d e p e n d e n t o f its r e lia n c e o n th e m a n d a te ru le , th a t th e d is tr ic t c o u r t e r r o n e o u s ly c o n c lu d e d th a t F o r tu n e d id n o t a s s e r t a cl ai m for r el i ef

se para t e f

rom a r i gh tof se t off, the ar gu m entfa i l s. W hen N at i on al F ir e s ta te d b e f

o r e th e d is tr ic t c o u r t th a t “F o r tu n e h a s c o n tin u e d to a s s e r t in th is litig a tio n th a t N a tio n a l F ir e is liab le f o rA r k in ’s liq u id a te d d e la y d a m a g e s ,”9

F ortun e r es po nd ed by cl ar i fy i ng the i ss ue as a r i gh tof se t off onl y. In a bri ef fi l ed be f or e the di s tr i c tc our t , F or tune c l e a r l y de s c r i be d the i s s ue onl y a s a r i ghtof se t off: N A T I O N A L F I R E h a s a tte m p te d to c o n f u s e th e is s u e s b e f

o r e th is C ou rtby ra i si ng the qu es t i on of the as se ss m entof l i qu i dat ed dam ages a ga i ns t[ N a t i ona l F i r e ] f orthe br e a c h of

[ A r ki n] . T hi s i s notthe que s t i on w hi c h w i l l be f a c e d by the C our t . T he r e a l i s s ue i s the ap p r o p r ia te n e s s o f

th e a s s e s s m e n t o f

liq u id a te d d a m a g e s p u r s u a n t to th e t erm s o f th e su b co n tract s ag ai n stth e A R K IN co n tractb al an ces. E v e n th o u g h N a tio n a l F ir e q u o te d th is s ta te m e n t in its r e s p o n s e b r ie f in th is ap p e a l, F o r tu n e m a d e n o a tte m p t in its r e p ly b r ie f to e x p la in o rr e f

u te th e s ta te m e n t. F ortun e pl ai nl y c ho se t o p ursue onl y the ri gh tof se t off a nd m ay no tno w , fa ce d w i th the f

ut i l i ty of tha tr i ght , a tt e m ptt o r e c a s ta nd r e vi s e the r e c or d. B . W e R em a n d

to th e D istri ct

C o u rt f o r R eca lcu la t i o n o

f P rej u d g m en t In t erest . F or tune c ont e nds tha tthe di s tr i c tc our te r r one ous l y r e c a l c ul a t e d pr e j udgm e nt i nt e r e s t . F or tune a r gue s tha tpr e j udgm e nti nt e r e s tc e a s e d t o a c c rue on the da t e of the or i gi na l f

i na l j udgm e nt , J ul y 24, 2001. N a t i ona l F i r e c ount e r s tha tpr e j udgm e nt i nt e r e s tc e a s e d t o a c c rue on the da t e of the j udgm e nte nt e r e d a f t e rr e m a nd, J ul y 24, 2 0 0 6 . W e a gr e e w i th N a t i ona l F i r e . I n thi s di ve r s i ty c a s e , F l or i da l a w gove r ns the aw ar d o f pre

j ud gm enti nt er es t . S ee S E B , 47 6 F . 3d at13 20 . W e r ec ent l y e xp l ai ned tha t , unde rF l or i da l a w , “ pr e j udgm e nti nt e r e s ta c c rue s unt i l the da t e of the10

ju d g m e n t a f

te rw h ic h p o s tju d g m e n t in te r e s t b e g in s to a c c ru e .” I d . a t 1 3 2 1 . T h e c o r r e s p o n d in g q u e s tio n is w h e n p o s tju d g m e n t in te r e s t b e g a n to a c c ru e . F e de r a l R ul e of

A ppe l l a t e P r oc e dur e 37 gove r ns the a w a r d of pos t j udgm e nt i n t e r e s tb y a d i s tr i c tc o u r ta f t e ra n ap p e a l . I d . a t1 3 1 9 . Un d e rR u l e 3 7 ( b ) , wh e n we r e m a n d to m o d if

y th e a m o u n t o f

p r e ju d g m e n t in te r e s t a n d a r e s ile n t in th e m a n d a te a b o u t p o s tju d g m e n t in te r e s t, th e d is tr ic t c o u r t o n r e m a n d h a s n o c h o ic e b u t to b e g in p o s tju d g m e n t in te r e s t w ith e n try o f th e p o s tr e m a n d ju d g m e n t. I d . a t 1 3 1 9 - 2 0 . B e c a us e w e di d notpr ovi de i ns truc t i ons i n ourm a nda t e oropi ni on r e ga r di ng pos t j udgm e nti nt e r e s t , pos t

j udgm e nti nt e r e s tbe ga n t o a c c rue on the da t e of the j u d g m e n ta f

t e rr e m a n d , J u l y 2 4 , 2 0 0 6 , a n d p r e j u d g m e n ti n t e r e s t , u n d e rF l o r i d a l a w, c e a s e d to a c c ru e o n th e s a m e d a te . T he di stri ctcourtnei ther e xp l ai ned i t s c al cul at i on of i nt er es tno r i dent i fi ed the da t e on w hi c h pr e

j udgm e nti nt e r e s tc e a s e d a c c rui ng, butboth pa r t i e s c ont e nd thatthe di stri ctcourterre d i n i t s c al cul at i on . In the l i gh tof ou r r ec entop i ni on that c le a r ly r e s o lv e s th is is s u e , w e r e m a n d to th e d is tr ic t c o u r t to r e c a lc u la te pr e j udgm e nti nt e r e s t . W e va c a t e the j udgm e ntof the di s tr i c tc our tt o the e xt e nt th a t it a d d r e s s e s p r e

ju d g m e n t in te r e s t a n d in s tru c t th e c o u r t to c a lc u la te p r e ju d g m e n t in te r e s t a n d a w a r d p o s tju d g m e n t in te r e s t c o n s is te n t w ith th is o p in io n . P r e j udgm e nti nt e r e s tc e a s e d t o a c c rue on the da t e of the j udgm e nta f

t e rr e m a nd,11

J ul y 24, 2006, a f

t e rw hi c h pos t

j udgm e nti nt e r e s tbe ga n t o a c c rue . T ha tthe j udgm e ntof

the di s tr i c tc our tdi d nota ddr e s s pos t j udgm e nti nt e r e s ti s of

no c o n s e q u e n c e . S e e C h r is tia n v . J o s e p h , 1 5 F .3 d 2 9 6 , 2 9 8 ( 3 d C ir . 1 9 9 3 ) ( “[ P ]o s tj ud gm enti nt er es t[und erthe fe dera l st atut e] . . . ac cru[es ] . . . re gardl es s of w hether th e d is tr ic t c o u r t o r d e rp r o v id e d f o rp o s t- ju d g m e n t in te r e s t p a y m e n ts .” ) . I V . CONCL US I ON T h e j u d g m en to f th e d i stri ctco u rti s A FFI R M ED i n pa r ta nd VA C A TED to the ext entthati taddres se d p re j ud gm enti nt er es tfor N at i on al F i re . W e RE MAND w i th i nstruct i on s t o cal cul at e pre j ud gm enti nt er es tbegi nn i ng on the dat es i dent i fi ed in o u rp r e v io u s o p in io n , s e e N a t’l F ir e I n s ., 3 2 0 F .3 d a t 1 2 7 9 , a n d e n d in g o n J u ly 24 , 20 06 , and t o aw ar d p ost j ud gm enti nt er es tbegi nn i ng on thatsa m e dat e.