Opinion ID: 161333
Heading Depth: 3
Heading Rank: 4

Heading: Simplicity of Breach of Contract Claim

Text: Accusing the Lathams’ lawyers of overworking the case, First Marine claims that the relative simplicity of the underlying breach of contract claim renders the fee award unreasonable. Whether we could ever agree that any breach of contract case is as simple as First Marine believes this one to be is beside the point. Our earlier conclusion to accept the district court’s finding that the pursuit of the bad faith claim by the Lathams was not inappropriate requires that we reject First Marine’s contention. We are similarly guided by our determination that the district court did not err in awarding at least some fees to the Lathams for their efforts to hold FMFS liable as a additional defendant. E. Constitutionality of Prejudgment Interest Statute First Marine next turns its gaze to the constitutionality of the statute under which the district court granted prejudgment interest to the Lathams. First Marine maintains that the statute, Okla. Stat. Ann. tit. 36, § 3629(B), violates the Equal Protection Clause of the Fourteenth Amendment. That statute requires an insurer to submit a written offer of settlement or rejection of the claim to the insured within ninety days of receiving proof of the loss. In the event the insured refuses the offer and litigation ensues, the statute states that attorneys’ fees shall be awarded to the prevailing party. The statute declares that the insured is the prevailing party, as here, when the judgment -9- exceeds the initial offer of settlement. First Marine challenges the next provision of the statute: 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. Id. First Marine argues this provision is unconstitutional because it imposes what the company says is a excessive rate of interest upon only one industry, the insurance industry. According to First Marine, the constitution prevents the legislature from targeting a single industry in this manner. First Marine did not raise its constitutional challenge in its Rule 68 offer of judgment. Nor did it mention any such objection during the course of the parties’ correspondence clarifying and defining the precise terms of the offer. And finally, the company did not signal its disagreement with the court’s entry of judgment, which it “approved as to form and content” and which provided for prejudgment interest under § 3629. Appellant’s App., Vol. I at 195, 207-08; Vol. II at 280-81. It was not until two months after judgment had entered, during the hearing on attorneys’ fees, that First Marine first mentioned on the record its “continuing objection to the constitutionality of 3629.” Id. at 390. The order later signed by the district court granting attorneys’ fees and interest to the Lathams reflects First Marine’s “objection to the constitutionality” of the statute, as well as the -10- Lathams’ contention that First Marine has waived any such objection. Id. at 285. A handwritten note in the margin indicates that “the court finds for plaintiff and against defendant on this claim.” Id. We are tempted to agree with the Lathams, as well as the district court, that First Marine has waived its constitutional challenge to the statute. We question whether objecting to a final judgment nearly two months after judgment has entered adequately preserves the objection for appeal. But because we can easily resolve the merits of what is a pure question of law, we will excuse any possible waiver committed by First Marine. See Petrini v. Howard , 918 F.2d 1482, 1483 n.4 (10th Cir. 1990) (exercising discretion to hear issues for the first time on appeal, in part because proper resolution of the issue was beyond doubt). Ordinary economic and commercial regulations are subject only to rational basis scrutiny under the Equal Protection Clause. FCC v. Beach Communications, Inc. , 508 U.S. 307, 313-14 (1993). The Supreme Court has admonished that rational-basis review in equal protection analysis “is not a license for courts to judge the wisdom, fairness, or logic of legislative choices.” Id. at 313. Rather, a statute survives rational-basis scrutiny “if there is a rational relationship between the disparity of treatment and some legitimate governmental purpose.” Heller v. Doe , 509 U.S. 312, 320 (1993). Moreover, under rational basis review, the legislature need not actually articulate the legitimate purpose or -11- rationale that supports the classification at issue. Instead, a statute “must be upheld against equal protection challenge if there is any reasonably conceivable state of facts that could provide a rational basis for the classification.” Id. (quotation omitted). Under this deferential standard of review, we have no difficulty in concluding that § 3629 is constitutional. Among others, one possible rational basis for the statute is Oklahoma’s presumed desire to encourage prompt and efficient settlement of insurance claims. The legislature may have felt that the insurance industry needed the threat of a high rate of prejudgment interest to encourage the settlement of claims. Perhaps, as First Marine would no doubt point out, the insurance industry is not solely responsible for any delay (perceived or actual) in the settlement of claims; perhaps policy-holders and their lawyers are to blame. This may be so, but we have never stated that a policy aimed at correcting a social ill need solve the entire problem in one fell swoop; in many cases it may be more prudent and efficacious to address social problems one step at a time, so that each step may be reviewed and adapted as necessary. See Williamson v. Lee Optical of Okla., Inc. , 348 U.S. 483, 489 (1955) (“[T]he reform may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind.”). -12- F. Postjudgment Interest Finally, First Marine argues that the district court erred in calculating postjudgment interest. The court awarded postjudgment interest under a rate provided by state law. First Marine claims the court should have employed the lower federal rate, which is found at 28 U.S.C. § 1961. The Lathams do not disagree. See Everaard v. Hartford Accident & Indem. Co. , 842 F.2d 1186, 1193 (10th Cir. 1988) (holding that in diversity cases the federal rate governs). Instead, they maintain that First Marine has not preserved the issue on appeal, pressing the same argument they raised with respect to the claimed waiver of the prejudgment interest issue, namely that First Marine “approved” a judgment that said postjudgment interest would be calculated according to the state rate. Denying that it waived the issue, First Marine claims the parties could not agree on a final judgment and for that reason the district court held a brief hearing to iron out the differences; but at the hearing, according to First Marine, the district court refused to hear any argument. We are dismayed at the prospect of having to decide yet another fact-intensive waiver dispute between the parties, especially in light of our limited role in reviewing an appeal from a attorneys’ fee award. The parties plainly have ignored our admonition that a “request for attorney’s fees should not result in a second major litigation.” Homeward Bound, Inc. v. Hissom Mem’l -13- Ctr. , 963 F.2d 1352, 1360 (10th Cir. 1992) (quotation omitted). We are particularly troubled by First Marine’s role in failing to resolve this dispute by agreement. Before any appeal was filed, counsel for the Lathams offered to correct the postjudgment interest rate, substituting the proper federal rate in place of the erroneous state rate. For reasons that escape us, counsel for First Marine declined, choosing instead to burden this court with an issue that could easily have been addressed below. Despite our disapproval of counsel’s conduct, we conclude that even if First Marine did not preserve its objection to the rate of postjudgment interest, the manifest injustice exception to the general waiver rule nonetheless compels us to address the issue on appeal. See Doelle v. Mountain States Tel. & Tel. , 872 F.2d 942, 944 n.4 (10th Cir. 1989). Adhering to our clear precedent, we reiterate that the federal rate of postjudgment interest governs diversity cases, and thus we reverse the district court in this regard. However, in light of counsel’s refusal to resolve the issue by agreement, costs attendant this appeal will be assessed to First Marine. Counsel should work with his adversary as a professional and be cognizant of this court’s caseload. -14- We REMAND this appeal to the district court to correct the rate of postjudgment interest. In all other respects, the judgment of the United States District Court for the Northern District of Oklahoma is AFFIRMED. Entered for the Court Robert H. Henry