Opinion ID: 75792
Heading Depth: 1
Heading Rank: 2

Heading: the city's appeal issues

Text: 21 After the conclusion of the trials, Blasland moved to set off against the City's counterclaim award the sum the City had recovered when it settled its previous CERCLA lawsuit against the A&E defendants, who had shipped waste to the Munisport site while it was being used as a landfill. Specifically, Blasland sought the setoff under Florida Statutes § 46.015(2), which allows for setoff in non-tort cases. (The parties agree that Florida law controls the setoff issue.) The City opposed Blasland's setoff motion on the ground that the prior settlement represented a separate recovery for a different injury than the injury the City suffered as a result of Blasland's professional negligence. As a separate recovery for a separate injury, the City argued, its A&E settlement proceeds should not be set off against its counterclaim award. The district court held a hearing and heard argument on the setoff question before issuing its order. 22 The A&E record showed that, in response to an interrogatory in that litigation, the City had included in a list of the damages it sought in that lawsuit all sums the City had paid to Blasland to implement the EPA cleanup plan, as well as the money to be paid to Secor in the future to finish the job. 5 Further, during a deposition in the present case, the City Manager explained that, in the A&E litigation, the City had sought to recover as much money on the cost of the closure and Superfund remediation at the site as we were legally entitled to under CERCLA ... and all these other acronyms that are out there.... Finally, at oral argument on the setoff motion, the City's lawyer conceded that, in the A&E suit, the City was seeking as much money as it could get from any source for all the money it was obligated to pay out. It was seeking as much as it could possibly get. 23 In ruling on the setoff motion, the district court first noted that there is no precise way for the court to determine what amount, if any, the City recovered [in prior litigation] from others for damages attributed by the jury in this case to [Blasland]. Nonetheless, the district court granted the setoff motion, concluding that the sums sought by the city in the A&E suit logically included money paid to [Blasland]. The setoff wiped out the City's entire counterclaim award, which included both the $50,000 jury award on the City's professional malpractice counterclaim, and the $64,000 jury award on its separate counterclaim that Blasland's negligent supervision had led to the contractor's illegally dumping fill in protected wetlands. 6 24 The City advances two principal arguments that the district court erred in granting Blasland's motion for setoff. In considering those arguments, we review the district court's interpretation of the state statute de novo, see Salve Regina Coll. v. Russell, 499 U.S. 225, 231, 111 S.Ct. 1217, 1221, 113 L.Ed.2d 190 (1991), and its factual determinations for clear error, see Fed.R.Civ.P. 52(a). The City's first argument against the setoff is that Blasland failed to comply with the plain language of the Florida setoff statute. The statute provides that: 25 At trial, if any person shows the court that the plaintiff ... has delivered a written release or covenant not to sue to any person in partial satisfaction of the damages sued for, the court shall set off this amount from the amount of any judgment to which the plaintiff would be otherwise entitled at the time of rendering judgment. 26 Fla. Stat. § 46.015(2). 27 The City's position is that the statute's plain language requires the party seeking a setoff to introduce a copy of the release from the prior litigation. It bases this position on the statutory limitation that a setoff is available only if any person shows the court that the plaintiff ... has delivered a written release or covenant not to sue to any person in partial satisfaction of the damages sued for.... Fla. Stat. § 46.015(2). Blasland did not introduce the settlement document from the prior litigation as evidence to support its motion for setoff. 7 According to the City, Blasland's failure to introduce the settlement documents from the A&E case violated the technical requirements of the statute, meaning that the district court's decision to grant the setoff was error. 28 However, the plain language of the statute does not contain any requirement that the party seeking a setoff introduce the written settlement into evidence. The statute merely says that a setoff is required if any person shows the court ... that there was a release delivered in a prior lawsuit. Fla Stat. § 46.015(2) (emphasis added). Introducing the release itself is one way of showing the court it exists, but not the only way; neither the statute nor Florida case law requires the introduction of the release itself. In this case, both the fact and amount of the A&E settlement were before the district court and were undisputed by the parties. This was enough to satisfy the statute's show the court requirement. 29 The City's second argument that the setoff was error is somewhat more persuasive, but not enough so. The argument is that under Florida law Blasland was not entitled to a setoff because the City's recovery against Blasland did not duplicate the City's recovery in the A&E litigation. Because the City's argument depends on the interaction of Florida setoff law and CERCLA liability law, before proceeding with our analysis we first provide some background. 30 We begin with Florida law. Under it, the purpose of a setoff is to prevent a party from recovering twice for the same damages. See, e.g., Kingswharf, Ltd. v. Kranz, 545 So.2d 276, 278 (Fla. 3d DCA 1989). Therefore, when a party seeks recovery for the same injury in two separate lawsuits, a defendant in the second lawsuit is entitled to a credit for any amount paid to the claimant in settlement for the injury. Baudo v. Bon Secours Hosp./Villa Maria Nursing Ctr., 684 So.2d 211, 214 (Fla. 3d DCA 1996) (quotation and citation omitted). This is true even when co-defendants are held liable for the same injury under different theories of liability. See Raben Builders, Inc. v. First Am. Bank & Trust Co., 561 So.2d 1229, 1230-31 (Fla. 4th DCA 1990). It is not true, however, when the first and second lawsuits seek recovery for different injuries altogether. See Fla. Corvette Calipers, Inc. v. Cincinnati Milacron Mktg. Co., 670 So.2d 1203, 1203 (Fla. 4th DCA 1996); Gordon v. Rosenberg, 654 So.2d 643, 645 (Fla. 4th DCA 1995). Finally, in cases in which a set off of the recovery in prior litigation is in order, the entire amount of the prior recovery must be setoff against the current award, unless the release from the prior litigation specifically allocates sums among the various claims being settled. See Dionese v. City of West Palm Beach, 500 So.2d 1347, 1351 (Fla.1987) (The only proper method of ensuring against duplicate recoveries in an undifferentiated lump sum settlement situation is to set-off the total settlement funds [from the first case] against the total jury award [in the second case].). 31 Now, some background about CERCLA liability. The City's prior lawsuit — the A&E suit — alleged a CERCLA contribution claim. CERCLA's cost recovery provisions allow a plaintiff in a contribution lawsuit to recover only costs of work that is consistent with the national contingency plan. 42 U.S.C. § 9607(a)(B); see also Redwing Carriers, Inc. v. Saraland Apts., 94 F.3d 1489, 1496 (11th Cir.1996). The national contingency plan is a series of regulations, promulgated by the [EPA], that establish the procedures and standards for government and voluntary response actions to hazardous substances.... Marriott Corp. v. Simkins Indus., 929 F.Supp. 396, 403 (S.D.Fla. 1996). Those regulations provide that a remedial action is consistent with the national contingency plan if it results in a CERCLA quality cleanup. 40 C.F.R. § 300.700(c)(3)(ii). A CERCLA-quality cleanup, in turn, is defined as a cleanup that is protective of human health and the environment ... and ... cost effective. 55 Fed.Reg. 8666, 8793 (1990). Remedial actions that are carried out in compliance with the terms of ... a consent decree entered into pursuant to ... CERCLA are presumed to be consistent with the national contingency plan. 40 C.F.R. § 300.700(c)(3)(i). 32 It is against this backdrop of Florida law and CERCLA that the City's anti-setoff argument plays out. The argument begins with the premise that, under Florida setoff law, duplication between awards exists only if what has been awarded in the present case rightfully could have been recovered in the prior litigation. Because the City's claim against the A&E defendants was a CERCLA cost-recovery claim, in that lawsuit the City was entitled to recover only the costs of work that was of CERCLA quality, which includes the requirement that the work have been cost effective. But, says the City, Blasland's work was negligently performed (the jury determined that at least some of it was), meaning that it could not have been cost effective and therefore was not CERCLA-quality. Accordingly, the City argues, it was not entitled to recover in the A&E lawsuit the monies it had paid to Blasland. This means, in turn, that the City's counterclaim award against Blasland for its non-cost effective work was necessarily an award for a different injury than the one for which the City received its A&E settlement. In the first lawsuit, against the A&E defendants, the City's injury for which the City was seeking compensation was paying for a CERCLA-quality clean up of the Munisport site. 8 In the second lawsuit, this one involving Blasland, the City's injury was the money it lost because of Blasland's breach of its contractual promise to do a CERCLA-quality cleanup job. Thus, concludes the City, because its counterclaim award against Blasland was an award for a different injury than the one for which it was compensated in the A&E suit, there was no duplication of awards and should have been no setoff. 33 The City's argument is a fine polysyllogism, with flawlessly connected episyllogisms, but its initial premise is flawed. The flawed premise is that, under Florida setoff law, duplication of awards only exists if what has been awarded in the present case rightfully could have been recovered in the prior litigation. That is not Florida law. In deciding whether what the City obtained in the A&E lawsuit duplicated its counterclaim award against Blasland in this case, it does not matter whether in the A&E lawsuit the City was entitled to recover under CERCLA the sums it had paid to Blasland. Instead, what matters is that the City sued for those sums in the A&E lawsuit, and the defendants in that lawsuit paid the City to settle it. The Florida setoff statute allows an award to be reduced by a setoff of compensation of the damages sued for, Fla. Stat. § 46.015(2), not just for damages a party was entitled to recover. Florida law does not limit the availability of a setoff to situations in which the injury compensated in the second lawsuit duplicates the injury for which the party would have been entitled to compensation in the first lawsuit had it gone to trial. In a similar vein, the Restatement (Second) of Torts provides that a prior settlement should be setoff against a second judgment for the same injury whether or not the person making the payment [in the prior suit] is [actually] liable to the injured person. Restatement (Second) of Torts § 885(3) (1977). 34 If a plaintiff seeks damages for an injury in a lawsuit, settles that suit, and then attempts to recover for the same injury in a second lawsuit, under Florida law the settlement amount from the first lawsuit should be set off against any award in the second one regardless of what the result in the first lawsuit would have been if it had been litigated to conclusion on the merits. A contrary rule requiring the second court to decide whether the party who recovered the money in the first lawsuit was entitled to it, would undermine some of the advantages of the settlement. It would force the second court to decide the very issues the parties in the first case chose to settle rather than litigate to conclusion. The correct approach under Florida law, in deciding whether awards are duplicative and therefore subject to setoff, is to determine whether any injury alleged in the first lawsuit is duplicated by the injury for which an award has been won in the second lawsuit. 35 Employing this approach, the district court found that the damages the City had sought in the A&E suit did overlap with its counterclaim award in this lawsuit. We agree. In the A&E lawsuit, the City included in its list of the damages it was seeking both the sums it had paid to Blasland and the sums it would have to pay Secor to fix Blasland's errors and finish the job. By the time the City compiled that list of damages, it knew of the deficiencies in Blasland's work, which is why it had fired Blasland and hired Secor, and it still included in its CERCLA claim against the A&E defendants the sums it had paid to Blasland. The City therefore was alleging in the A&E lawsuit that it could recover under CERCLA the money it had paid Blasland, and the statements of the City's representatives in both the A&E lawsuit and this one confirm that was the City's position. When, in this lawsuit, the City was awarded on its counterclaim sums it had paid to Blasland, that award covered some of the same loss for which it had sought recovery in the first lawsuit. Blasland therefore was entitled to a setoff of the settlement the City had recovered in the A&E lawsuit. 9
36 After the verdicts, Blasland filed a motion to tax prejudgment interest, which the court granted over the City's opposition. The City contends that the district court should not have awarded any prejudgment interest to Blasland, or in the alternative, that it awarded too much. 37 Under Florida law, which the parties agree applies, the general rule in contract cases is that the prevailing party receives prejudgment interest on its award, and that is so even if the losing party is the State or one of its subdivisions. See Broward County v. Finlayson, 555 So.2d 1211, 1213 (Fla.1990); see also Public Health Trust of Dade County v. State, 629 So.2d 189, 190 (Fla. 3d DCA 1993); City of Cooper City v. PCH Corp., 496 So.2d 843, 847 (Fla. 4th DCA 1986); Broward County v. Sattler, 400 So.2d 1031, 1032-33 (Fla. 4th DCA 1981). 38 When a court is deciding whether to award prejudgment interest, however, the law is not absolute and may depend on equitable considerations. Finlayson, 555 So.2d at 1213; see also State v. Family Bank of Hallandale, 623 So.2d 474, 479 (Fla.1993). One such consideration is that `[i]n choosing between innocent victims... it would not be equitable to put the burden of paying interest on the public.' Hallandale, 623 So.2d at 479 (quoting Flack v. Graham, 461 So.2d 82, 84 (Fla. 1984)). Another consideration is that it is inequitable to allow an award of prejudgment interest when the delay between injury and judgment is the fault of the prevailing party. Id. at 480. An additional one is that it is inequitable to award prejudgment interest to a party who could have, but failed to, mitigate its damages. Id. The weight of equitable considerations may foreclose any award of prejudgment interest at all, see id. at 480; Flack, 461 So.2d at 84, or may simply warrant a reduction in the amount to be awarded, see Finlayson, 555 So.2d at 1213-14 (restricting the time for computing prejudgment interest to the time since demand for payment was first made, and citing other cases that had done the same). 39 The decision whether to refuse or reduce prejudgment interest, that is, how to balance the equities, is within the trial court's sound discretion. Accordingly, we review the decision to grant prejudgment interest only for an abuse of that discretion. Cf. Parker Towing Co. v. Yazoo River Towing, Inc., 794 F.2d 591, 594 (11th Cir.1986) (stating, in an admiralty case, that the district court's decision whether equitable factors warrant not awarding prejudgment interest is reviewed by this court for abuse of discretion). When a district court has discretion, there are usually a range of choices it may make and still be affirmed; there is not only one right choice for the court to make. See In re Rasbury, 24 F.3d 159, 168 (11th Cir.1994). Accordingly, in determining whether a district court has abused its discretion, we sometimes will affirm even though, had the case been ours to decide in the first instance, we would have reached a different result than the district court. Id. (pointing out [t]hat is how an abuse of discretion standard differs from a de novo standard of review.). 40 The City argues that, in deciding to award prejudgment interest to Blasland, the district court erroneously ignored, or failed to properly weigh, four equitable factors that point in the City's favor. The City says those four factors are that: 1) the City paid substantial sums to Blasland under the contract and only withheld final payment due to inadequate invoicing by Blasland; 2) the City promptly paid the jury award after the district court ruled on the CERCLA claims; 3) Florida law disfavors placing the burden of paying interest on taxpayers; and 4) the City had a well-founded claim that Blasland had committed malpractice. 41 As to the four equitable factors the City invokes, the first and second are make-weights. It does not matter that the City paid Blasland a lot of money if it paid less than it owed. 10 And the City should not get bonus points for promptly paying the judgment against it, which is no more than it was legally required to do. As to the third factor — the public policy that in choosing between innocent victims taxpayers should not bear the burden of paying interest, see Flack, 461 So.2d at 84 — that factor does not apply here. The City was not an innocent victim, because it breached the contract. That distinguishes this case from Hallandale, where the court emphasized that the party seeking to recover prejudgment interest against the State did not have a contract with the State. Hallandale, 623 So.2d at 479. In this case, of course, the City and Blasland did have a contract. Indeed, the dispute between them is primarily a breach of contract disagreement of the sort for which, as the district court noted, interest is nothing more than compensation for loss. Generally, in breach of contract cases the time value of money calls for awarding prejudgment interest. 42 That leaves the City's fourth, and most persuasive, equitable factor, which is that it had a well-founded malpractice claim against Blasland. While the city was not an innocent party, Blasland was not entirely innocent either; the jury found it guilty of professional malpractice. It is true that professional malpractice is not the same as a failure to mitigate damages or unwarranted procedural delay, which are two of the equitable factors recognized in Hallandale, 623 So.2d at 480. However, it is somewhat like them because those two factors focus on the fault of the victim in either creating the damages or causing delay in recovering them. Blasland's professional malpractice in performing some of its work under the contract played a role in precipitating the City's breach and in prolonging the City's refusal to pay for the work that was properly done. For that reason the delay in Blasland's getting the money it should have was partially Blasland's own fault. 43 Considering all of four factors together with the circumstances of this case, if we were deciding the matter initially we might deny prejudgment interest to Blasland altogether. Or we might not. That is not, however, the question before us. Instead, the question is whether the district court's decision not to deny prejudgment interest altogether is within the range of legitimate choices open to that court given the applicable law and the circumstances of this case. See Rasbury, 24 F.3d at 168. We conclude that it is. 44 We turn now to the different question of whether the district court abused its discretion in not reducing the amount of prejudgment interest. The City argues the sum on which the court awarded prejudgment interest should have been reduced by the amount the City was awarded on its counterclaim against Blasland for professional malpractice, an award that was wiped out by the setoff caused by payments from a different group of defendants in another case. The district court noted this argument of the City's was not unpersuasive, particularly because [Blasland] fortuitously escaped the consequences of its own negligence by virtue of the setoff. The court nonetheless concluded that prejudgment interest should rise and fall with the award itself, and so taxed interest on Blasland's entire award. 45 We agree with the district court that the City's argument on this point is strong. It is inequitable for Blasland to have its liability for botching a job fortuitously erased because of a setoff, and then demand interest on the portion of its judgment that would have been negated by an award against it but for the serendipitous setoff. Florida allows a court to take such equities into account, and neither the district court nor Blasland has suggested any good reason why Blasland should receive what amounts to interest on the damages its own negligence caused. 46 If the purpose of prejudgment interest is to provide the prevailing party with the time value of the money it should have had at the time it was wronged — to restore the party to an unwronged position — the only money that Blasland equitably should have had since the time it was wronged was the value of the award to it minus the value of the City's counterclaim award against it. Blasland is equitably entitled to prejudgment interest only on the net wrong it suffered, not the gross wrong. Setoff law dictates that Blasland recover the full amount of its award, but the law relating to prejudgment interest cares more for equitable considerations and does not require that Blasland's good fortune regarding the setoff be increased by prejudgment interest on the amount of the setoff. Blasland is not entitled to a windfall on its windfall. 47 Although awarding prejudgment interest to Blasland was within the legitimate range of choices open to the district court, awarding prejudgment interest for the full amount of the award was not. The maximum amount on which prejudgment interest should have been awarded is the portion of Blasland's award it would have recovered if the City's counterclaim had been subtracted from that award instead of being erased by the setoff. We will remand so that the district court can adjust the figures accordingly.