Court Opinion

ID: 3062024
Source: CourtListenerOpinion
Date Created: 2015-10-14 07:37:46.940835+00
Date Added: 2024-06-11T11:41:18.824432
License: Public Domain

FILED
                                                       United States Court of Appeals
                                                               Tenth Circuit

                                                             August 11, 2010
                                  PUBLISH                 Elisabeth A. Shumaker
                                                              Clerk of Court
                  UNITED STATES COURT OF APPEALS

                              TENTH CIRCUIT

 NEWMONT U.S.A. LIMITED,
 formerly known as NEWMONT
 MINING CORPORATION, and
 N.I. LIMITED,

             Plaintiffs-Counter-Claim-
             Defendants-Appellants-
             Cross-Appellees,
       v.                                     Nos. 08-1347 and 08-1370
 INSURANCE COMPANY OF
 NORTH AMERICA,

             Defendant-Counter-
             Claimant-Appellee-
             Cross-Appellant.

        APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF COLORADO
                 (D.C. NO. 1:06-CV-1178-ZLW-BNB)

Mark A. Wielga, Temkin Wielga Hardt & Longenecker LLP, Denver, Colorado
(Nathan M. Longenecker and Jason B. Robinson, Temkin Wielga Hardt &
Longenecker LLP, Denver, Colorado and Robert L. Tofel and Mark A. Lopeman,
Tofel & Partners, LLP, New York, New York with him on the briefs) for
Plaintiffs-Counter-Claim-Defendants-Appellants-Cross-Appellees.

Lloyd A. Gura, Mound Cotton Wollan & Greengrass, New York, New York
(Matthew J. Lasky, Mound Cotton Wollan & Greengrass, New York, New York
and Andrew D. Ringel, Hall & Evans, Denver, Colorado with him on the briefs)
for Defendant-Counter-Claimant-Appellee-Cross Appellant.
Before TACHA, ALARCÓN *, and TYMKOVICH, Circuit Judges.

TYMKOVICH, Circuit Judge.

      In this insurance matter, Newmont U.S.A. Limited (Newmont), f/k/a

Newmont Mining Corporation, and N.I. Limited (NIL) brought suit against the

Insurance Company of North America (INA). Newmont sought a declaratory

judgment that NIL was no longer liable to INA for reinsurance arising out of

policies INA had issued to Newmont, and an injunction barring INA from

proceeding to arbitrate the companies’ disputes. The district court compelled

arbitration and the arbitration panel found in INA’s favor, awarding money

damages. The district court subsequently modified the portion of the arbitration

panel’s award concerning post-judgment interest, and entered final judgment.

      On appeal, Newmont and NIL argue the district court erred by compelling

arbitration. In a cross-appeal, INA contends the district court erred by altering

the arbitration panel’s post-judgment interest rate determination and setting the

post-judgment interest accrual date.

      Our jurisdiction arises under 28 U.S.C. § 1291. We find the district court

properly compelled arbitration. We also conclude the district court should have

applied the post-judgment interest rate set forth in the parties’ agreements and

      *
        The Honorable Arthur L. Alarcón, Senior Circuit Judge, United States
Court of Appeals for the Ninth Circuit, sitting by designation.

                                         -2-
incorrectly determined the start date for the accrual of post-judgment interest.

Accordingly, we AFFIRM in part and REVERSE in part.

                                  I. Background

      During the early 1980s, INA issued general liability policies to Newmont,

the parent corporation of NIL, 1 and certain of its subsidiaries and affiliates. INA

and NIL, in turn, entered into three successive reinsurance agreements under

which NIL committed to reinsure INA with respect to the policies INA had issued

to Newmont. The last effective date of the applicable Reinsurance Agreements

was July 18, 1985.

      For our purposes, the Reinsurance Agreements may be considered identical.

Several provisions of the Agreements are relevant to our analysis of whether and

when arbitration may be compelled. Article X of the Reinsurance Agreements

provides: “As a condition precedent to any right of action hereunder, any dispute

arising out of this Agreement shall be submitted to the decision of a board of

arbitration . . . .” Aplt. App. at 22. And, Article XIII of the Reinsurance

Agreements states: “Either party will pay to the other an interest charge at the

monthly rate of . . . 1.5%[] on any amount that is not paid within the time

required by this Agreement, said charge to commence at the time any such

      1
       At all times relevant to this case, Newmont was the parent corporation and
owner of 100 percent of the stock in NIL.

                                         -3-
payment is required by this Agreement.” Id. at 23. Pennsylvania law governs the

Reinsurance Agreements.

      In the early 1980s, the State of Colorado brought claims against two of

Newmont’s subsidiaries, the Idarado Mining Company and the Resurrection

Mining Company. In response, Newmont filed a declaratory judgment action

against INA in state court, seeking defense coverage and indemnity from INA

under the general liability policies.

      In 1997, INA and Newmont entered into a Settlement Agreement relating to

the general liability policies. The Recitals section of the agreement states “this

settlement resolves all claims of Newmont for insurance coverage for Idarado

Environmental Claims” and “this settlement resolves only Newmont’s claims

arising from the Idarado mining site and does not settle or resolve Newmont’s, or

any other entity’s, claims arising from the Resurrection mining site or any other

site . . . .” Id. at 141S42. The 1997 Settlement Agreement also provides:

      INA . . . release[s] [NIL] from all claims . . . relating to the Declaratory
      Judgment Action . . . , which claims arise from any . . . reinsurance
      contract with [NIL]. The foregoing to the contrary notwithstanding,
      this release shall not apply to (I) claims by INA against [NIL] for
      reinsurance coverage . . . , which claims are based on alleged
      occurrences at the California Gulch Mining Site [(i.e., the Resurrection
      Site)] or any other site other than the Idarado Mining Site . . . .

Id. at 147S48.

      In 2002, INA and Newmont entered into another Settlement Agreement.

The Recitals section of that agreement states “this settlement resolves all claims

                                          -4-
of Newmont for insurance coverage for Resurrection Environmental Claims” and

“the [p]arties intend hereby to compromise, settle and finally resolve their

disputes concerning the alleged application of the [general liability] [p]olicies to

the Resurrection Environmental Claims . . . .” Id. at 160. The 2002 Settlement

Agreement also provides:

      INA . . . release[s] [NIL] . . . from all claims . . . relating to the
      Declaratory Judgment Action . . . , which arise . . . from any . . .
      reinsurance contract . . . of [NIL].

              The foregoing to the contrary notwithstanding, this release shall
      not apply to (I) claims by INA against [NIL] for reinsurance coverage
      . . . , on account of alleged occurrences at any site other than the
      California Gulch Mining Site or the Idarado Mining Site . . . . 2

Id. at 165S66.

      Neither Settlement Agreement contains an arbitration provision. Both,

however, contain merger clauses. And, both are to be construed according to

Colorado law.

      In 2000, BHP Copper, Inc., a former Newmont subsidiary, sued INA in

state court, seeking coverage under the general liability policies for

environmental liabilities at BHP’s Pinal Creek Site (the BHP Litigation). INA

drew upon a letter of credit from NIL in 2002 to reimburse itself for

approximately $439,000 in costs it allegedly incurred defending the BHP

Litigation. INA maintained it was due the money under the Reinsurance

      2
       The Resurrection Environmental Claims relate to the California Gulch
Mining Site.

                                          -5-
Agreements. In 2005, INA asserted another claim under the Reinsurance

Agreements in the amount of approximately $517,000 for additional costs

allegedly incurred defending the BHP Litigation. Newmont and NIL challenged

INA’s draw on the letter of credit and claim for additional reimbursement.

      In 2006, INA demanded, under Article X of the Reinsurance Agreements,

the parties’ dispute over reimbursement be arbitrated. Newmont and NIL

responded by filing an action in state court, which was subsequently removed to

federal district court, seeking a declaratory judgment that the Settlement

Agreements released NIL from reinsurance liability with respect to the BHP

Litigation, an injunction barring INA from proceeding to arbitration, and money

damages. 3 The district court compelled arbitration. 4

      The arbitration panel issued a final award on December 21, 2007, finding

for INA and against NIL in all material respects. The panel found in INA’s favor

with regard to reimbursement under the Reinsurance Agreements and, based on

      3
        We note that, based on the terms of the 1997 and 2002 Settlement
Agreements, Newmont has standing as the promisee to enforce those agreements
on behalf of NIL, the third-party beneficiary of those agreements. See In re
Kaplan, 143 F.3d 807, 813 (3d Cir. 1998) (noting that both a promisee and the
third-party beneficiary may sue to enforce a contract); Cody Park Prop. Owners’
Ass’n, Inc. v. Harder, --- P.3d ---, 2009 WL 4070874 at *3 (Colo. App. 2009)
(“The intent to benefit a third party need not be expressly referred to in the
agreement, but must be apparent from the terms of the agreement or the
surrounding circumstances.”).
      4
       The district court stayed Newmont and NIL’s action pending the
completion of arbitration.

                                         -6-
Article XIII of the Reinsurance Agreements, provided for pre- and post-judgment

interest at the rate of 1.5 percent per month.

      The district court entered final judgment on September 19, 2008, nunc pro

tunc June 5, 2008. Citing 9 U.S.C. § 11(b), the district court modified the

arbitration panel’s award with respect to post-judgment interest, ordering that the

post-judgment interest rate be set in accordance with 28 U.S.C. § 1961, rather

than at the contract amount of 1.5 percent per month. In this instance, § 1961

provided a lower interest rate than the contract. The district court also ordered

that post-judgment interest begin to accrue after June 5, 2008.

      Newmont and NIL appeal the district court’s decision to compel arbitration,

arguing that the Settlement Agreements released NIL from reinsurance and

arbitration obligations existing under the Reinsurance Agreements. INA appeals

the district court’s rulings setting the post-judgment interest rate in accordance

with § 1961 and establishing June 5, 2008 as the post-judgment interest accrual

date. INA contends the interest rate the arbitration award provided should be

applied and that the accrual date should be the date judgment was entered,

September 19, 2008.

                                   II. Discussion

      The district court’s granting of a motion to compel arbitration is reviewed

de novo, see Riley Mfg. Co. v. Anchor Glass Container Corp., 157 F.3d 775, 779

(10th Cir. 1998), as is the district court’s interpretation and application of § 1961,

                                          -7-
see Soc’y of Lloyd’s v. Reinhart, 402 F.3d 982, 1003 (10th Cir. 2005). “In

reviewing [the] district court’s confirmation of an arbitration award, we review

factual findings for clear error and legal determinations de novo.” DMA Int’l,

Inc. v. Qwest Commc’ns Int’l, Inc., 585 F.3d 1341, 1344 (10th Cir. 2009). With

respect to the factual averments made in Newmont and NIL’s complaint, because

the district court rendered its decision on the pleadings, we must accept them as

true for purposes of this appeal. See Riley, 157 F.3d at 779.

      A. Arbitration

      Newmont and NIL first challenge the district court’s decision to compel

arbitration. They contend the district court improperly determined the

reimbursement issue is within the scope of the arbitration clause contained in the

Reinsurance Agreements and that the clause survived the expiration of those

contracts and the entry into force of the Settlement Agreements. We disagree.

      Our cases hold unless the parties to an agreement “clearly and

unmistakably” provide otherwise, “the question of arbitrability—whether a

contract creates a duty for the parties to arbitrate the particular grievance—is

undeniably an issue for judicial determination.” Id. (internal punctuation

omitted). Here, we cannot conclude INA and Newmont clearly and unmistakably

provided that an arbitration panel, rather than a court, decide issues of

arbitrability relating to the Reinsurance Agreements. The agreements are

completely silent on the issue. Given the lack of contractual guidance, we look to

                                         -8-
the district court to handle the question of whether the parties’ dispute concerning

the BHP Litigation is arbitrable.

      Second, in deciding if a dispute is arbitrable, a court must initially

determine whether the arbitration provision is broad or narrow. See Cummings v.

FedEx Ground Package Sys., Inc., 404 F.3d 1258, 1261 (10th Cir. 2005). “Where

the arbitration clause is broad, there arises a presumption of arbitrability and

arbitration of even a collateral matter will be ordered if the claim alleged

implicates issues of contract construction or the parties’ rights and obligations

under it.” Id. (internal quotation marks omitted). Looking to the plain language

of the arbitration provision contained in the Reinsurance Agreements, including

its use of the phrase “arising out of,” we have little trouble determining that it is a

broad provision. 5 We find therefore the arbitration provision pertaining to the

Reinsurance Agreements covers the parties’ dispute. In reaching this conclusion,

we bear in mind that “any doubts concerning the scope of arbitrable issues should

be resolved in favor of arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury

Const. Corp., 460 U.S. 1, 24S25 (1983).

      5
        Generally, when an arbitration provision provides for any dispute “arising
out of” a particular contract, the provision is construed broadly to suggest that a
given dispute is arbitrable. Miron v. BDO Seidman, LLP, 342 F. Supp. 2d 324,
330 (E.D. Pa. 2004) (addressing an agreement in accordance with the Federal
Arbitration Act and Pennsylvania law); see also Williams v. Imhoff, 203 F.3d 758,
765S66 (10th Cir. 2000) (“[W]e believe [the phrase, ‘arising out of,’] must be
broadly construed to mean ‘originating from,’ ‘growing out of,’ or ‘flowing
from.’”).

                                           -9-
      Third, an arbitration clause in a contract is presumed to survive the

expiration of that contract. This presumption might be overridden given some

express or clearly implied evidence that the parties intended to override that

presumption, or the relevant dispute cannot be said to have arisen under the

previous contract. See Riley, 157 F.3d at 781. A dispute “arises under” a

previous contract if it involves rights that to some degree vested or accrued

during the life of the contract and merely ripened after expiration, or relates to

events that occurred at least in part while the contract was still in effect. See id.

      Here, the Settlement Agreements do not evidence the parties’ express or

clearly implied intent to repudiate post-expiration arbitrability. An examination

of the Settlement Agreements in their entirety reveals that they were intended to

resolve claims relating to the Idarado and Resurrection sites only—claims

concerning reinsurance coverage for the BHP Litigation were not released. 6 Also,

there can be no doubt that the parties’ dispute over the BHP Litigation “arose

      6
        Under Colorado law, in determining the meaning of a contract, courts
must analyze the entire instrument and not view provisions or phrases in isolation.
See Level 3 Commc’ns, LLC v. Liebert Corp., 535 F.3d 1146, 1154 (10th Cir.
2008). “Recitals . . . cannot extend contractual stipulations, [but] they may have
material influence on the construction of the instrument . . . .” Engineered Data
Prods., Inc. v. Nova Office Furniture, Inc., 849 F. Supp. 1412, 1417 (D. Colo.
1994) (discussing Colorado law). Also, “while every relevant provision must be
considered and given effect, a more specific provision controls the effect of
general provisions.” Level 3, 535 F.3d at 1154 (internal quotation marks
omitted). Further, absent indication by the parties to the contrary, a contract’s
language must be construed in accordance with the plain meaning of the words
used. See id.

                                         -10-
under” the Reinsurance Agreements. The BHP Litigation dispute concerns rights

that vested and events that took place, at least in part, while the Reinsurance

Agreements were in effect.

      The arbitration provision in the Reinsurance Agreements encompasses the

parties’ dispute concerning the BHP Litigation and neither the Reinsurance

Agreements’ expiration nor the Settlement Agreements extinguish arbitrability.

Accordingly, the district court did not err in compelling arbitration.

      B. Post-Judgment Interest Rate

      INA contends the district court erred by altering the post-judgment interest

rate provided in the arbitration panel’s final award. The district court replaced

the post-judgment interest rate the arbitration panel established with the rate set

forth in § 1961. In doing so, the district court modified the arbitration panel’s

award pursuant to § 11(b) on the understanding that it could modify the

arbitration award where the arbitration panel awarded upon matters not submitted

for arbitration. See 9 U.S.C. § 11(b). INA argues the district court’s alteration of

the arbitration award based on § 11(b) was in error because the arbitration panel

had the authority to decide the post-judgment interest issue. We agree.

      As discussed above, a broad arbitration clause gives rise to the presumption

of arbitrability and arbitration of a collateral matter will be ordered if it

implicates issues of contract construction or the parties’ contractual rights and

obligations. See Cummings, 404 F.3d at 1261. Doubts about the arbitrability of

                                          -11-
an issue should to be resolved in favor of arbitration. See Mem’l Hosp., 460 U.S.

at 25. In addition, we are reminded that, “[o]nce an arbitration award is entered,

the finality of arbitration weighs heavily in its favor and cannot be upset except

under exceptional circumstances.” DMA, 585 F.3d at 1344 (internal quotation

marks omitted); see also LB&B Assocs., Inc. v. Int’l Bhd. of Elec. Workers, Local

No. 113, 461 F.3d 1195, 1197 (10th Cir. 2006) (“Whether the arbitrator’s reading

of the agreement was strained or even seriously flawed is irrelevant. As long as

the arbitrator is even arguably construing . . . the contract and acting within the

scope of his authority, that a court is convinced he committed serious error does

not suffice to overturn his decision.”) (internal quotation marks, alterations, and

citation omitted).

      Here, as we have already determined, the arbitration provision contained in

the Reinsurance Agreements is a broad provision. Also, because parties may set

their own rate of post-judgment interest through contract, see Westinghouse

Credit Corp. v. D’Urso, 371 F.3d 96, 101 (2d Cir. 2004) (cited favorably in

Reinhart, 402 F.3d at 1004), determining the rate of post-judgment interest to be

applied to the money damages the arbitration panel awarded implicates Article

XIII of the Reinsurance Agreements. Article XIII provides for an interest rate of

1.5 percent per month on any amount due under the Reinsurance Agreements. See

3 T HOMAS H. O EHMKE , C OMMERCIAL A RBITRATION § 124:2 (2010) (“Parties may

‘contract out’ of statutory interest rates if their agreement expresses the parties’

                                         -12-
intent to deviate from a post-judgment interest rate set by statute. Arbitrators

must honor an agreement as to the amount of interest on an award . . . .”). And

nothing in the Reinsurance Agreements purports to limit the arbitration panel’s

authority to decide post-judgment interest issues. 7 Accordingly, we find that the

matter of post-judgment interest was properly before the arbitration panel. See

United Steelworkers of Am. v. Enter. Wheel & Car Corp., 363 U.S. 593, 599

(1960) (“It is the arbitrator’s construction which was bargained for . . . .”); see

also Tanoma Mining Co. v. Local Union No. 1269, United Mine Workers of Am.,

896 F.2d 745, 747 (3d Cir. 1990) (“[Because] the parties have bargained for the

arbitrator’s decision, it is the arbitrator’s view of the facts and of the meaning of

the contract that they have agreed to accept.”) (internal quotation marks omitted).

      Neither § 1961 nor caselaw directs a different conclusion. An agreement to

apply a post-judgment interest rate other than that § 1961 specifies is enforceable

so long as the parties indicate their intent to override the statute using “clear,

unambiguous and unequivocal language.” Reinhart, 402 F.3d at 1004. The

parties’ intent is a quintessential fact question, and we see no reason why an

arbitration panel with authority to decide a contractual dispute cannot also

      7
         We also note the fact that the parties made arguments before the
arbitration panel concerning Article XIII and the post-judgment interest issue
further supports our conclusion the arbitration panel was authorized to address the
issue. See, e.g., Carpenter Local No. 1027, Mill Cabinet-Indus. Div. v. Lee
Lumber and Bldg. Material Corp., 2 F.3d 796, 799 (7th Cir. 1993) (“[T]he
agreement to arbitrate a particular issue may be implied from the parties’ conduct,
including their actual litigation of that issue.”).

                                         -13-
determine whether the contract in question includes language clearly,

unambiguously, and unequivocally stating the parties’ intent to bypass § 1961.

See Ansari v. Qwest Commc’ns Corp., 414 F.3d 1214, 1220 (10th Cir. 2005)

(quoting Ormsbee Dev. Co. v. Grace, 668 F.2d 1140, 1146 (10th Cir.1982), for

the proposition that, when parties agree to submit a dispute to arbitration, it is

presumed that the arbitrator is authorized to determine all issues of law and fact

necessary to resolve the dispute). “While [§ 1961] employs mandatory

language, . . . this is aimed mainly at precluding district courts from exercising

discretion over the rate of interest or adopting an interest rate set by arbitrators,

not at limiting the ability of private parties to set their own rates through

contract.” See D’Urso, 371 F.3d at 101. Consistent with § 1961, an arbitration

panel may not establish a post-judgment interest rate itself, but it may determine

whether the parties have sufficiently contracted for their own rate and, if they

have, indicate that rate should be applied.

      Because the post-judgment interest issue was arbitrable under the

Reinsurance Agreements, the arbitration panel had the authority to determine the

issue. The district court therefore erred by modifying the final award based on

§ 11(b).

                                          -14-
      C. Interest Accrual Date

      The last issue involves the applicable date interest begins accruing. INA

contends the district court erred by fixing June 5, 2008 as the date after which

post-judgment interest should begin to accrue. We agree. In this case, § 1961

mandates a post-judgment interest accrual date of September 19, 2008.

      Section 1961 provides the statutorily determined post-judgment interest rate

goes into effect on the date of the entry of judgment. See 28 U.S.C. § 1961

(“Such interest shall be calculated from the date of the entry of the

judgment . . . .”). Judgment is entered when the district court files a separate

document in accordance with Rule 58 of the Federal Rules of Civil Procedure.

See Youngs v. Am. Nutrition, Inc., 537 F.3d 1135, 1146 (10th Cir. 2008); see also

Hull v. United States, 971 F.2d 1499, 1507S09 (10th Cir. 1992) (holding the

district court’s nunc pro tunc order establishing an earlier date as the relevant

judgment date for purposes of § 1961 was invalid because the district court had

not satisfied Rule 58 prior to issuing its nunc pro tunc order). Here, judgment

was not entered in accordance with Rule 58 until September 19, 2008.

Consequently, the district court’s Judgment, dated September 19, 2008, nunc pro

tunc June 5, 2008, did not establish June 5, 2008 as the date of the entry of

judgment for purposes of § 1961.

      The district court thus erred in identifying June 5, 2008 as the post-

judgment interest accrual date. The district court should have identified

                                         -15-
September 19, 2008—the date on which a valid judgment was entered—as the

date of accrual.

                                   III. Conclusion

        For the foregoing reasons, we find the district court rightly compelled

arbitration, but erred by modifying the post-judgment interest rate and in setting

the post-judgment interest accrual date. We AFFIRM in part and REVERSE in

part.

                                         -16-