Court Opinion

ID: 27220
Source: CourtListenerOpinion
Date Created: 2010-04-25 09:05:58+00
Date Added: 2024-06-11T14:56:58.132313
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                  FOR THE FIFTH CIRCUIT

                       No. 01-30193

BOSTON OLD COLONY INSURANCE CO,

      Plaintiff - Counter Defendant - Appellee-Cross Appellant,

STATE OF LOUISIANA, through the Office of Risk Management,
division of Administration, Office of the Governor;
LOUISIANA PUBLIC BROADCASTING,

      Intervenor Plaintiffs-Appellees,

                             v.

TINER ASSOCIATES INC, Etc; ET AL,

      Defendants,

HRC ARMCO INC,

      Defendant - Intervenor Defendant - Cross Defendant -
      Appellee,

and

STAINLESS INC,

      Defendant - Intervenor Defendant - Appellee,

and

ALLIED RESOURCE MANAGEMENT OF FLORIDA INC,

      Defendant - Intervenor Defendant - Cross Claimant -
      Cross Defendant - Appellee,

                             v.

GENERAL STAR INDEMNITY CO,

      Defendant - Intervenor Defendant - Cross Defendant -
      Third Party Plaintiff - Counter Claimant -
             Appellant-Cross-Appellee,

                                              v.

      MARINE OFFICE OF AMERICA CORPORATION; NATIONAL
      UNION FIRE INS CO OF PITTSBURGH, PENNSYLVANIA,

             Third Party Defendants - Appellees.

                       --------------------
          Appeals from the United States District Court
          for the Western District of Louisiana, Monroe
                       --------------------
                           April 9, 2002
Before HIGGINBOTHAM, DeMOSS, and BENAVIDES, Circuit Judges.

BENAVIDES, Circuit Judge:

      This     case    arises      from       the     collapse     of   a   television

transmission tower owned by KNOE Television (“KNOE”) in Riverton,

Louisiana.     Most of the claims resulting from the tower’s collapse

were resolved on summary judgment.                   A jury awarded over $4 million

in   damages    to    KNOE’s    first        party    insurer,    Boston    Old   Colony

(“BOC”), and against General Star Indemnity Co. (“General Star”),

the excess liability insurer for Tower Network Services (“TNS”).

General   Star       appeals   from      a    number     of   summary   judgment    and

evidentiary rulings of the district court.                       In turn, BOC cross-

appeals on two issues relating to the district court’s judgment on

the jury verdict.       After a review of the relevant facts, we address

these issues in turn.

                         FACTUAL   AND   PROCEDURAL BACKGROUND

      On March 20, 1997, a television transmission tower owned by

KNOE collapsed and was completely destroyed.                     Before the collapse,

KNOE had contracted with TNS for maintenance and repair work on the

                                              2
tower.    At the time of the collapse, a repair crew was working on

the tower, installing “diagonals,” thin metal rods which prevent

the tower from twisting. The post-accident investigation indicated

that the sole cause of the incident was the failure on the part of

the tower crew to use a temporary brace to support the tower during

the removal of the diagonals, which resulted in the tower becoming

unstable and collapsing.

     TNS is a contractor specializing in the repair and maintenance

of towers. Before the collapse, TNS had contracted with HRC Armco,

Inc. (“Armco”) for administrative employee services. In turn, this

contract   was   assigned     to   Armco’s   sister    corporation,   Allied

Resource Management of Florida (“Allied”).            Thus, Allied actually

paid the tower crew and performed a number of other administrative

functions in relation to the workers.

     Due to the destruction of KNOE’s tower, a new tower was built.

Before the collapse, KNOE was using the tower to broadcast its

signal.    Louisiana Public Broadcasting (“LPB”) was also using the

tower pursuant to a philanthropic donation of space on the tower by

the owner of KNOE, which would expire in 2005.          After the new tower

was built, KNOE leased tower space to LPB for a period of 40 years,

in exchange for a one-time payment of $1.1 million.

     BOC, the first party insurer of KNOE, made payments to or on

behalf of KNOE of approximately $5 million for the new tower and

transmitter,     business    interruption    losses    and   other   expenses

related to the loss.        On May 22, 1997, BOC      filed a Petition for

                                      3
Damages    in   Louisiana   state     court    against    TNS;   TNS’s    primary

liability insurer, Nautilus Ins. Co. (“Nautilus”); TNS’s excess

liability insurer, General Star; Armco; Allied; and the builder of

the tower, Stainless, Inc. (“Stainless”).                BOC alleged that the

collapse was caused by the negligence of persons for whom TNS,

Armco, or Allied were responsible; or by design defects for which

Stainless was responsible.       The case was removed to federal court

on   the   basis    of   diversity    jurisdiction       in   June   1997.   KNOE

intervened to recover damages and expenses not covered by the BOC

policy.    The State of Louisiana also intervened to assert a claim

on behalf of LPB.

       On July 19, 1999, Armco and Allied filed a cross-claim against

TNS,    Nautilus,    and    General    Star,     seeking      indemnity    and/or

contribution.      General Star filed a cross-claim against Armco and

Allied for indemnity and/or contribution and filed a third-party

complaint against their insurer, National Union Fire Ins. Co.

(“National Union”).

       A number of motions for partial summary judgment and motions

in limine were filed, and all claims except those by BOC against

General Star were resolved or dismissed before trial.                 At trial,

the jury rendered a verdict in favor of BOC and against General

Star, and the court entered judgment in favor of BOC and against

General Star in the amount of $4,432,624 plus pre- and post-

judgment interest.

                                        4
       General Star appeals from several district court rulings on

motions for partial summary judgment and motions in limine.                      BOC

cross-appeals with respect to calculation of damages and interest.

                                     DISCUSSION

I.     The care, custody, or control exclusion

       In   March,   2000,    General    Star     moved    for   partial     summary

judgment in its favor on the grounds that the “care, custody, or

control” exclusion in its policy excluded coverage for the damages

sought by BOC. The district court denied General Star’s motion and

rendered summary judgment against General Star and in favor of BOC,

Armco, TNS, KNOE, and the State of Louisiana on this issue.

       We review the district court’s summary judgment decision de

novo, applying the same standard on appeal that is applied by the

district court.      See Pratt v. City of Houston, Texas, 247 F.3d 601,

605-606 (5th Cir. 2001).           Summary judgment may be granted if there

is no genuine issue as to material fact and the moving party is

entitled to a judgment as a matter of law.                See Fed. R. Civ. P. 56

(c).    In determining whether summary judgment is appropriate, the

courts      should   view    the   evidence     introduced       and   all   factual

inferences from that evidence in the light most favorable to the

party opposing the motion and all reasonable doubts about the facts

should be resolved in favor of the nonmoving litigant.                           See

Impossible Elec. Techniques, Inc. v. Wackenhut Protective Sys.,

Inc., 669 F.2d 1026, 1031 (5th Cir. 1982).

                                         5
     The General Star insurance policy contains a “care, custody or

control exclusion,” which provides:

     “This policy does not apply to property damage:
     ...
     (c)... property in the care, custody, or control of the
     Insured or property over which the Insured for any purpose is
     exercising physical control.”

     The   parties   agree   that   Louisiana    law   applies   to    the

interpretation of the exclusion.        We apply Louisiana state law as

interpreted by the Louisiana Supreme Court; if that court has not

definitively ruled on a particular issue, we must predict how it

would decide the issue.      Harken Exploration Co. v. Sphere Drake

Ins. PLC, 261 F.3d 466, 471 n.3 (5th Cir. 2001).

     We find that the “care, custody, or control” exclusion does

not apply in this case.      Under Louisiana law, insurance policies

are contracts, and the parties’ intent as reflected by the language

of the policy determines the extent of coverage.           Reynolds v.

Select Props., Ltd., 634 So. 2d 1180, 1183 (La. 1994).                 Under

General Star’s interpretation of the exclusion, TNS would lose

virtually all liability insurance coverage.         TNS is in the sole

business of inspecting, maintaining, and repairing towers.            So to

interpret the exclusion as applying whenever TNS works on a tower

“would be an anomalous result.”         Aladdin Oil Co. v. Rayburn Well

Svcs., Inc., 202 So. 2d 477, 490 (La. App. 4th Cir. 1967).        “If this

was intended, the insurer should have indicated more specifically

                                    6
its intent[.]”   Id. (holding that the “care, custody or control”

exclusion did not apply to damages to an oil well where the insured

was working only on a short string of tubing in the well, because

the insured was in the business of reworking oil wells).

     In any case, TNS did not exercise “care, custody, or control”

over the tower because the tower was only incidental to the

specific sections on which repairs were made.   “[D]amaged property

or premises merely incidental or adjacent to the contracted object

upon which work is being performed by the insured is not within the

‘care, custody or control’ of the insured for purposes of the

exclusion clause in question, even though he might be permitted

access thereto during the performance of the contract.”        See

Thomas W. Hooley & Sons v. Zurich General Acc. & Liability Ins.

Co., 103 So. 2d 449, 450-51 (La. 1958).1

     1
     Another factor that indicates lack of control is TNS’s
sharing of access to the tower with KNOE. See Borden, Inc v.
Howard Trucking Co., Inc., 454 So. 2d 1081 (La.1983) (holding that
compressor was in the care, custody, or control of the insured,
where insured was transporting compressor in truck, thus having
exclusive access to it); Hendrix Elec. Co., Inc. v. Casualty
Reciprocal Exchange, 297 So. 2d 470, 475 (La. App. 2d Cir. 1974)
(holding that an insured who was installing a circuit breaker on
a panel where other circuit breakers had already been installed
did not have care, custody, or control of the other circuit
breakers or the box in which they were contained, as he had only
temporary access and limited possession of the circuit breaker
box, but he did have control of the panel because he was “charged
by the contract and as an essential element of the work to work
directly on and with the panel.”).

                                7
      Because TNS did not have care, custody or control of the tower

within the meaning of the exclusion in General Star’s policy, we

affirm the district court’s grant of summary judgment on this

issue.

II.   Vicarious liability of Allied

      On cross-motions for summary judgment filed by TNS, Nautilus,

and General Star on one hand, and Armco, Allied and National Union

on the other, the district court granted summary judgment for the

latter group, finding that Allied was not vicariously liable for

the negligence of the work crew.      We review this issue de novo,

applying the same standard for summary judgment as did the district

court.

      In January 1995, TNS and Armco entered a “Client Services

Agreement” (“CSA”) according to which Armco would “lease [its]

employees” to TNS in exchange for a one-time set-up fee for each

leased employee, and a percentage of the employees’ wages every

month.   One of the employees would be designated as a “supervising

employee” and would be charged with implementing Armco’s policies

and procedures at the workplace.       TNS was required to provide

commercial general liability insurance. The CSA was later assigned

to Allied, which performed instead of Armco.

      The record indicates that the CSA was entered for the purpose

of relieving TNS of the administrative burdens involved in taking

care of its employees.    Ordinarily, Allied’s clients (including

                                 8
TNS) would recruit, find, evaluate, and hire the employees; they

would then decide whether to have the person be a leased employee

and if so, they would send the paperwork to Allied, who would deal

with   group   health,    workers’    compensation,         payroll,   and       other

administrative matters.         Allied retained the right to refuse

employment,     but    employment    would    only    be    refused    in    narrow

circumstances, such as a positive drug test or lack of proper

immigration     forms.      Allied   did     not   have     the    right    to    fire

employees, and if an issue arose as to firing, TNS would be

consulted and asked to fire the person.

       The central question with regard to Allied’s liability is

whether the work crew consisted of “borrowed employees” for whom

Allied   is    not    responsible.     General       Star   contends       that    the

“borrowed employee” doctrine no longer exists in Louisiana, that

Allied and TNS were “dual employers,” and consequently that Allied

should   be    held   vicariously    liable,       along    with   TNS,     for   the

negligence of the tower crew.         We find that the borrowed employee

doctrine is still alive, and that it applies in this case.

       Under the borrowed employee doctrine, a general employer may

be relieved of vicarious liability for an employee’s negligent

actions if the employee was “borrowed”; i.e., if at the time of the

negligent action the employee was under the control of a specific

employer, or was engaged in the specific employer’s business.

Benoit v. Hunt Tool Co., 53 So. 2d 137, 140 (La. 1951).                            This

                                       9
doctrine has been modified somewhat by the dual employer doctrine,

according to which both the special and general employer may be

found jointly liable for the torts of a borrowed employee, in

circumstances where the employee’s negligent acts were “done in the

pursuance of duties designated for him by his [general] employer,

in whose pay he continued and who had the sole right to discharge

him.” LeJeune v. Allstate Ins. Co., 365 So. 2d 471, 481 (La. 1978).

In addition, “where a general employer is engaged in the business

of hiring out its employees under the supervision of another

employer, the general employer remains liable for the torts of the

‘borrowed’ employees.”     Morgan v. ABC Manufacturer, 710 So. 2d 1077

(La. 1998).    Thus, in Morgan the Louisiana Supreme Court held that

a temporary services agency, which had the exclusive power to

recruit, hire, and fire employees and handled administrative duties

related to the employees for a specific employer, was a dual

employer and was vicariously liable for the employees’ torts.           Id.

at   1084.    Neither   LeJeune   nor    Morgan   abrogated   the   borrowed

employee doctrine; they simply limited its scope so that it would

not apply in cases where the general employer retains control over

the employee at the time of the negligent action, such that it can

be characterized as a dual employer.

      Viewing all facts in the light most favorable to General Star,

the work crew was under TNS’s control at the time of the negligent

action.      Thus, even if Allied is considered to be a general

                                    10
employer of the work crew, the borrowed employee doctrine applies.

The   dual   employer   doctrine    does    not   apply   because   Allied’s

function was primarily that of dealing with paperwork related to

the employees.     Given that Allied was not in the business of

providing tower repair services to companies, it cannot be said

that, as in Benoit, the work crew was performing the business of

Allied.      And since the work crew was acting under the direct

supervision of TNS, and Allied did not have hiring or firing power,

it cannot be said that the work crew was under Allied’s control.

Allied is easily distinguished from the temporary services agency

in Morgan in that Allied is not in the business of loaning

employees.    Thus, we affirm the district court’s grant of summary

judgment to Armco, Allied, and National Union on this point.

III. Indemnification of Armco, Allied and National Union

      The district court granted a motion for summary judgment in

favor of Armco, Allied, and National Union, requiring TNS and its

insurers to defend and indemnify the first three for claims arising

out of the negligence of the tower crew, in accordance with

indemnity provisions of the CSA. The district court also dismissed

General Star’s    cross-claim      for    contribution    and/or   indemnity.

General Star appeals both decisions.

      As discussed previously, we review summary judgment de novo,

applying the same standard of review as the district court.

                                     11
      The CSA contained indemnity provisions requiring that TNS

indemnify Armco for “TNS’s acts, errors or omissions, including

negligent acts and statutory violations,” and requiring that Armco

indemnify TNS for its acts, errors, or omissions.                General Star

argues that because Armco and Allied contractually had significant

control over the work crew, the collapse of the tower was their

fault.     Thus, General Star argues, this court should apply the

Texas2    “express    negligence”      doctrine,   which    establishes      that

indemnification for one’s own fault must be expressly declared in

the contract.      See Ethyl Corp. v. Daniel Constr. Co., 725 S.W.2d
705   (Tex.     1987).       Under   that    doctrine,    and   assuming     that

Armco/Allied was at fault, TNS was not obligated to indemnify

Armco/Allied.

      Because we find that Armco and Allied were not vicariously

liable    for   the   work    crew’s   actions,    in    accordance   with   the

“borrowed employee” doctrine, the fault for the work crew’s acts

rests with TNS.       The “express negligence” doctrine does not apply

in this context.         Thus, under the CSA, TNS was required to

indemnify Armco/Allied.         We affirm the district court’s grant of

summary judgment in this respect.

      We also affirm the district court’s grant of summary judgment

in favor of National Union. Although National Union is not covered

by the indemnity provision in the CSA, National Union is entitled

      2
       The CSA provides that it is governed by Texas law.

                                        12
to implied indemnity from TNS and its insurers.                    See Nassif v.

Sunrise Homes, Inc., 739 So. 2d 183, 185 (La. 1999) (“An implied

contract of indemnity arises only where the liability of the person

seeking indemnification is solely constructive or derivative and

only   against   one    who,   because    of   his    act,   has    caused   such

constructive liability to be imposed.”).

IV.    The National Union policy

       General Star argues on appeal that National Union should have

been found liable for a proportionate share of the damages awarded

to BOC, because the National Union policy covered employees of

Allied as long as they were acting within their duties.

       General Star did not adequately raise this issue before the

district court.        While it filed a third-party demand against

National Union demanding contribution or additional coverage for

the tower crew, General Star did not substantiate this demand; for

example, the National Union insurance policy was not even part of

the record before the district court.          General Star also failed to

move for summary judgment on this issue, and did not object to the

district court’s failure to decide the issue prior to trial.

Ordinarily, this Court will not review claims raised for the first

time on appeal.        Vogel v. Veneman, 276 F.3d 729, 733 (5th Cir.

2002).    There is no basis for an exception in this case, as the

record below was not adequately developed on this issue.                See FDIC

v. Lee, 130 F.3d 1139 (5th Cir. 1997).                 Thus, we decline to

                                     13
consider General Star’s argument that the National Union policy

provided coverage for the tower crew’s negligence.

V.   Restoration cost

     In May 2000, the district court granted BOC’s motion in limine

to limit the evidence presented at trial to the evidence regarding

the replacement cost of the new tower, with no deduction for

depreciation. In November 2000, the district court also ruled that

all evidence relating to the pre-collapse condition of the tower

was excluded as it was irrelevant, and even if it were relevant,

the probative value was substantially outweighed by the danger of

unfair prejudice and confusion of the issues before the jury.

General Star appeals both rulings.

     On appeal, this Court reviews the ruling regarding the proper

measure of damages de novo.    See Salve Regina College v. Russell,

499 U.S. 225, 231,     111 S. Ct. 1217, 1221 (1991) (holding that a

district court’s determinations of state law are reviewed de novo

on appeal); Sykes v. Columbia & Greenville Railway, 117 F.3d 287,

289 (5th Cir. 1997).    The district court’s decision to exclude the

evidence for lack of relevance is reviewed for abuse of discretion.

Wright v. Hartford Accident & Indemnity Company, 580 F.2d 809, 810

(5th Cir. 1978).

     “When property is damaged through the legal fault of another,

the primary objective is to restore the property as nearly as

                                  14
possible to the state it was in immediately preceding the damage.”

Coleman v. Victor, 326 So. 2d 344, 346 (La. 1976).        Thus, ordinarily

“courts have considered the cost of restoration as the proper

measure of    damage   where   the   thing   damaged   can   be   adequately

repaired.”    Id. at 346-47 (citation omitted).

     In Roman Catholic Church of the Archdiocese of New Orleans v.

Louisiana Gas Svc. Co., 618 So. 2d 874 (La. 1993), the Louisiana

Supreme Court reversed a lower court’s determination that in a tort

case where the cost of restoration exceeded the market value of the

damaged property prior to damage, the proper measure of damages was

the cost of replacement minus depreciation. Instead, the Louisiana

Supreme Court held:

      “[A]s a general rule of thumb, when a person sustains
     property damage due to the fault of another, he is
     entitled to recover damages including the cost of
     restoration that has been or may be reasonably
     incurred....   If, however, the cost of restoring the
     property in its original condition is disproportionate to
     the value of the property or economically wasteful,
     unless there is a reason personal to the owner for
     restoring the original condition or there is a reason to
     believe that the plaintiff will, in fact, make the
     repairs, damages are measured only by the difference
     between the value of the property before and after the
     harm.”

Id. at 879.

     In another opinion, the Louisiana Supreme Court also noted

that “[t]he general rule of damages cited by courts for valuation

of tortiously damaged property without market value is the actual

                                     15
or intrinsic value of the property to the owner.”        Emerson v.

Empire Fire & Marine Ins. Co., 393 So. 2d 691, 693 (La. 1981).

     In the present case, restoration was not economically wasteful

and its cost was not disproportionate to the value of the tower,

which was an essential piece of equipment for broadcasting.      As

noted by BOC, KNOE needed to use the Riverton tower to transmit

its signal to its entire broadcasting area.       Indeed, precisely

because the tower was essential for KNOE to carry on its business,

and because of the absence of a market in transmission towers, the

intrinsic value of the tower approximates the cost of restoration

rather than the market value of the tower.   Finally, the tower was,

in fact, repaired.   See Roman Catholic Church, 618 So. 2d at 880

(“[T]he plaintiff in the present case is clearly entitled to

recover the full cost of restoration because it has, in fact, made

the repairs by replacing the building in its original condition.”)

     General Star argues that depreciation should be considered

because more than half the tower’s useful life had been expended at

the time of the collapse.   Thus, General Star argues that under

BellSouth Telecomms., Inc. v. Citizens Utils. Co., 962 F. Supp. 79

(E.D.La. 1996), depreciation should be considered.     However, the

property at issue in BellSouth consisted of telephone cables that

had a useful life expectancy of four to five years, and which had

been cut after two years.     After the incident, the plaintiff

replaced the cables with new equipment that had a significantly

                                16
longer    life   span   and    greater    capacity.   In   that   context,

depreciation had to be considered because otherwise         the plaintiff

would get a substantial windfall.            Id. at 81.    See also Roman

Catholic Church, 618 So. 2d at 880 (“[a]n award of full restoration

costs might be inequitable in a case where the damaged part was

scheduled for early replacement.”).            In the present case, the

record indicates that the tower’s life span was approximately fifty

to seventy-five years.        Given that the tower had such a long life

span, the fact that over half the span had been expended is not as

supportive of a claim that the plaintiff benefitted from the

tower’s collapse: unlike the plaintiff in BellSouth, KNOE would not

have been forced to replace the tower in the next two years.

     But General Star argues that in the next few years KNOE would

probably be required to switch to a digital, from an analog,

signal.   Because the old tower could not accommodate the necessary

equipment for the switch, General Star argues that KNOE would have

had to build a new tower or modify the old one before 2006, the

date that Congress has set for all television stations to switch

from analog to digital signals.            See 47 U.S.C. §309(j)(14)(A).

However, the record indicates that KNOE was contemplating the use

of its smaller transmission tower in Monroe, Louisiana, rather than

the larger Riverton tower, to comply with the requirements of

digital transmission in the short term.         And the fact that repairs

were being made to the tower shows that the tower was probably not

                                     17
scheduled for replacement shortly thereafter.           Moreover, the 2006

deadline for the switch to digital television is not set in stone.

Congress has provided that the FCC must extend the date for

switching to digital television in several circumstances.            See 47

U.S.C. §309(j)(14)(B).3     Consequently, the possibility that KNOE

would have switched to a digital signal in the next few years is

insufficient to support a deduction for depreciation.

      In conclusion, we find that the district court did not err in

finding that the proper measure of damages was restoration cost,

without considering depreciation.            As a result, evidence of the

pre-collapse    condition   of   the     tower   was    irrelevant   to    the

calculation of damages, and the district court did not abuse its

discretion in excluding the evidence.

VI.   The exclusion of evidence of LPB’s lease payments

      General   Star   appeals   from    a   district   court   ruling    that

evidence regarding LPB’s post-collapse lease payments to KNOE was

      3
     Of particular relevance here is the requirement that the
FCC must extend the date in any market in which 15 percent or
more of the television households in the market do not have a
television receiver capable of receiving digital signals or
digital-to-analog converter technology, and do not subscribe to a
multichannel video programming distributor that carries one of
the digital television service programming channels of each of
the stations broadcasting such a channel in that market. See 47
U.S.C. §309(j)(14)(B)(iii). Because of the lack of certainty as
to whether digital television will reach market penetration of
85% in KNOE’s market, it cannot be said that KNOE would
necessarily have to switch to a digital signal by 2006.

                                    18
inadmissible. According to General Star, such payments constituted

relevant evidence of mitigation of BOC’s damages.

       We affirm the district court’s ruling.   Although the payments

may have mitigated KNOE’s uninsured loss, they do not reduce BOC’s

recovery against General Star, given that BOC’s payments to KNOE

applied only to its insured losses.     In effect, although the BOC

policy provided a limited amount of coverage for losses incurred

due to the suspension of business operations as a direct result of

the collapse of the tower, it did not cover KNOE’s permanent

business losses.    And it was the latter set of losses that was

mitigated through renegotiation of the lease to LPB.     BOC did not

benefit from the LPB payments and was not entitled to do so.   Thus,

the LPB lease payments were not relevant to the assessment of BOC’s

damages and were properly excluded.

VII. The salvage proceeds

       BOC appeals a district court ruling that General Star was

entitled to have $118,918.00 deducted from the jury verdict.    That

amount reflected the value of the salvage proceeds that KNOE was

able to obtain after the collapse of the tower.        We affirm the

district court’s ruling.     BOC’s insurance policy issued to KNOE

provided that “[a]ny recovery or salvage on a ‘loss’ will accrue

entirely to [BOC’s] benefit until the sum paid by us has been made

up.”   Thus, BOC was entitled to collect that amount from KNOE; its

                                 19
failure to collect salvage proceeds should not be made up for by

General Star.

     BOC argues that the district court erred because General Star

had been credited with the value of the salvage proceeds twice

before.      First,   BOC   contends   that   the     salvage   proceeds   were

considered in the settlement of KNOE’s uninsured claim against

Nautilus, so BOC did not benefit from the salvage proceeds.                This

argument is insubstantial: the fact that the salvage proceeds may

have been considered in KNOE’s settlement with Nautilus does not

mean that General Star received a credit for them, and the fact

that BOC did not receive the benefit of the salvage proceeds is

simply the result of BOC’s failure to deduct the value of salvaged

items from its payment to KNOE.

     Second, BOC argues that General Star was already credited for

the salvage proceeds by the jury.           As a general rule, this Court

does not question jury verdicts, but it will do so in limited

circumstances, such as where the verdict appears to be the result

of a juror compromise.       See Yarbrough v. Sturm, Ruger & Co., 964
F.2d 376, 380 (5th Cir. 1992) (“[W]e do not favor questioning

verdicts.”); Thezan v. Mar. Overseas Corp., 708 F.2d 175, 180 (5th

Cir. 1983) (“It is a cardinal principal [sic] of jurisprudence that

we are not allowed to speculate as to the thought processes of the

jury.”).     In the present case, there is no allegation of juror

misconduct    or   of   a   compromise      verdict     that    would   justify

                                       20
speculation about the basis for the verdict.           This is particularly

true where the district court, which is more familiar with the

circumstances of the trial, did not find that the jury had already

reduced BOC’s award by the value of the salvaged items.

       We affirm the district court’s deduction of the value of

salvage items from BOC’s award.

VIII.    Compounding Interest

       In   its   final   judgment,   the   district   court   ordered   that

judgment be entered in favor of BOC and against General Star “in

the amount of $4,432,624.00 with pre-judgment interest from the

date of judicial demand, May 23, 1997, as set forth in La. R.S.

13:4202 and 13:4203, and post-judgment interest as set forth in 28

U.S.C. 1961, together with all costs of these proceedings.”               BOC

appeals, arguing that the district court erred in failing to

compound the state pre-judgment interest by the federal post-

judgment interest.

       Under 28 U.S.C. § 1961(a), in diversity cases, post-judgment

interest is calculated at the federal rate, while pre-judgment

interest is calculated under state law. See Nissho-Iwai Co. v.

Occidental Crude Sales, 848 F.2d 613 (5th Cir. 1988).               Applying

this    provision,   this   circuit   has   required    that   post-judgment

interest at the federal rate be assessed against the pre-judgment

interest.     See Fuchs v. Lifetime Doors, Inc., 939 F.2d 1275, 1280

(5th Cir. 1991).      To the extent that the district court failed to

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compound the pre-judgment interest by the post-judgment interest,

it erred, and is directed to correct the error by compounding the

interest.

                             CONCLUSION

     The district court’s rulings on summary judgment and motions

in limine are AFFIRMED, with directions that the state pre-judgment

interest be compounded by the federal post-judgment interest.

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