PR Highway and Transportation v. Redondo Construction Corp.

Filing

OPINION issued by Sandra L. Lynch, Chief Appellate Judge; Bruce M. Selya, Appellate Judge and Kermit V. Lipez, Appellate Judge. Published. [11-1614]

Case: 11-1614

Document: 00116376305

Page: 1

Date Filed: 05/11/2012

Entry ID: 5640510

United States Court of Appeals
For the First Circuit
No. 11-1614
IN RE REDONDO CONSTRUCTION CORPORATION,
Debtor.
___________________
REDONDO CONSTRUCTION CORPORATION,
Claimant, Appellee,
v.
PUERTO RICO HIGHWAY AND TRANSPORTATION AUTHORITY,
Respondent, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Francisco A. Besosa, U.S. District Judge]

Before
Lynch, Chief Judge,
Selya and Lipez, Circuit Judges.

Raúl Castellanos-Malavé, with whom Development & Construction
Law Group, LLC was on brief, for appellant.
Charles A. Cuprill-Hernandez, with whom Law Offices Charles A.
Cuprill, P.S.C. was on brief, for appellee.

May 11, 2012

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SELYA, Circuit Judge.

Date Filed: 05/11/2012

Entry ID: 5640510

This appeal consolidates three

adversary proceedings that were tried in the bankruptcy court.
Each proceeding involves a discrete set of claims by the debtor, a
construction company that has fallen upon hard times, against a
government agency, the Puerto Rico Highway and Transportation
Authority (the Authority). The bankruptcy court awarded the debtor
a

total

interest.

of

nearly

$12,000,000

in

damages,

plus

prejudgment

On intermediate appeal, the district court deemed the

Authority's claims of error unpreserved and affirmed the judgment
in all respects.

After careful consideration, we find that only

one of the Authority's claims of error is forfeited. Proceeding to
the merits, we reject some of the Authority's other contentions but
vacate and remand for a recalculation of home-office overhead
damages and reconsideration of the issue of prejudgment interest.
I.

BACKGROUND
The bankruptcy court (Carlo, J.) wrote a comprehensive

rescript describing the factual background of these proceedings,
see Redondo Constr. Corp. v. P.R. Highway & Transp. Auth. (In re
Redondo Constr. Corp.) (Redondo I), 411 B.R. 89 (Bankr. D.P.R.
2009), and we assume the reader's familiarity with that exegesis.
Our factual account is correspondingly brief.
During the early 1990s, the debtor, Redondo Construction
Corporation, entered into three separate construction contracts
with the Authority. Each contract required the debtor to undertake
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work on a particular project: one project entailed the construction
of a bridge and access road (the Patillas project); another
entailed the replacement of a different bridge (the Dorado-Toa Alta
project); and the third entailed highway improvements (the Mayagüez
project).

The

Authority

spelled

out

the

design

plans,

specifications, and anticipated site conditions for each project in
the contract documents.

The documents also prescribed procedures

for implementing variances and adding extra work.
In the contract documents, the Authority retained the
right to modify the plans and specifications.

To the extent that

the Authority chose to exercise this power, however, the debtor had
the right to seek extra compensation (as long as the changes were
material).
in

the

The debtor also could lay claim to extra compensation

event

of

certain

contingencies

requiring

substantial

additional work (say, unforeseen site conditions, shortcomings in
the specifications, or other circumstances beyond its control).
Its right to such additional compensation was, of course, subject
to conditions delineated in the contract documents.
Each of the three projects encountered unanticipated
problems, including unforeseen site conditions and flawed design
plans.

The need to take corrective actions substantially delayed

completion of the projects, forced the debtor to perform extra
work, and ratcheted up the costs.

By way of example, the Mayagüez

project ran nearly three years past schedule due to necessary

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modifications and change orders requested by the Authority.
Despite the plethora of problems, however, the record contains no
evidence that the work on any of the projects was ever suspended or
that the debtor was placed on standby for any period of time.
The debtor eventually navigated this obstacle course and
completed

all

three

of

the

projects.

Not

surprisingly,

it

submitted claims for additional amounts owed under the contracts.
These included claims for monies allegedly owed by the Authority
for services rendered by two subcontractors who toiled on the
Mayagüez project (Continental Lord, Inc. and Remodelco, Inc.).
While the claims were still unresolved, the debtor filed
for bankruptcy protection.

In the Chapter 11 proceedings, 11

U.S.C. §§ 1101-1174, the debtor served the Authority with a trio of
adversary complaints.

Each complaint concerned amounts allegedly

owed with respect to a particular project.
The complaints were tried before the bankruptcy court.
See 28 U.S.C. § 157(a).

With the consent of the parties, the court

issued a final judgment in the matters.

See Sheridan v. Michels

(In re Sheridan), 362 F.3d 96, 99-100 (1st Cir. 2004).

The court

found that each of the three projects experienced delays and cost
overruns for which the Authority was responsible.
411 B.R. at 95-113.

See Redondo I,

It concluded, among other things, that the

physical conditions at the construction sites differed materially
from those described by the Authority in the contract documents and

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that some specifications and design elements were flawed. See id.
In the end, the court awarded the debtor a total of $12,028,311.92
plus prejudgment interest at 6.5% per annum.

After the Authority

moved to alter or amend the judgment, see Fed. R. Civ. P. 59(e),
and the debtor cross-moved to correct clerical errors therein, see
Fed. R. Civ. P. 60(a), the court reduced the amount of damages by
$69,792.26 but otherwise left the judgment intact.

See Redondo

Constr. Corp. v. P.R. Highway & Transp. Auth. (In re Redondo
Constr. Corp.), 424 B.R. 29 (Bankr. D.P.R. 2010).1
The Authority sought first-tier review of the bankruptcy
court's decision in the district court.

See 28 U.S.C. § 158(a).

The district court scrutinized the Authority's assignments of
error, deemed them unpreserved, and affirmed the judgment without
any substantive analysis of the Authority's assertions.

This

timely second-tier appeal ensued.
The appeal outlines four claims of error.

First, the

Authority argues that the debtor waived any claims related to the
Mayagüez project by failing to furnish timely written notice of its
intention to seek additional recompense.

Second, it argues that

the court incorrectly awarded the debtor extended overhead damages
and, in the alternative, miscalculated those damages.

Third, it

argues that the debtor lacked standing to assert subcontractor

1

Due to Judge Carlo's retirement, Judge Lamoutte ruled on
both post-judgment motions.
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Finally, it argues that the court erred in awarding

prejudgment interest.
II.

ANALYSIS
We afford the final decision of a bankruptcy court

plenary review without formal deference to the district court's
intermediate affirmance.

Berliner v. Pappalardo (In re Sullivan),

___ F.3d ___, ___ (1st Cir. 2012) [No. 11-1830, slip. op. at 3];
City Sanitation, LLC v. Allied Waste Servs. of Mass., LLC (In re
Am.

Cartage,

Inc.),

656

F.3d

82,

87

(1st

Cir.

2011).

The

bankruptcy court's legal conclusions engender de novo review, but
its factual findings are examined only for clear error.

Donarumo

v. Furlong (In re Furlong), 660 F.3d 81, 86 (1st Cir. 2011).
A.

Forfeiture.

There is a threshold question that we must answer before
addressing the Authority's serial claims of error.

The debtor

seeks to pretermit this appeal on the ground that all of the
Authority's claims are unpreserved.
It is black-letter law that arguments not presented to
the trial court are, with rare exceptions, forfeit on appeal.

See

Dávila v. Corporación de P.R. para la Difusión Pública, 498 F.3d 9,
14 n.2 (1st Cir. 2007); United Elec., Radio & Mach. Workers of Am.
v. 163 Pleasant St. Corp., 960 F.2d 1080, 1096 (1st Cir. 1992).

We

proceed to test, claim by claim, the incidence of forfeiture in
this case.
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We begin with the Authority's claim that the debtor
lacked standing to include the work of certain subcontractors in
its accounting.
standing

claim

Although the Authority made a different lack-ofin

the

bankruptcy

proceeding,

the

record

unmistakably reveals that the particular claim that it now advances
was raised for the first time before the district court; it was not
raised in any shape or form before the bankruptcy court.

It is,

therefore, not preserved.
This conclusion is easily illustrated.

The lack-of-

standing argument pressed by the Authority on appeal relies on the
doctrine enunciated in Severin v. United States, 99 Ct. Cl. 435
(Ct. Cl. 1943). Under the Severin doctrine, a contractor is barred
from bringing claims on behalf of a subcontractor if the owner can
prove that the contractor is not liable to the subcontractor for
the specified amounts.

See Scott Timber Co. v. United States, 97

Fed. Cl. 685, 695 (Fed. Cl. 2011).

The Authority never made a

Severin-based argument in the bankruptcy court.
In
suggests

an

that

attempt
it

has

to
not

confess

and

forfeited

avoid,

its

the

challenge

Authority
to

the

subcontractor-based damages because the challenge is purely legal
in nature (see Appellant's Br. at 3).
out of hand.

We reject this suggestion

Law-based arguments, like fact-based arguments,

normally must be raised in the trial court, and (with possible
exceptions

not

relevant

here)

failure

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to

do

so

results

in

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See, e.g., Martinez v. Colon, 54 F.3d 980, 987 (1st

Cir. 1995) (stating that legal theories not raised before trial
court are subject to forfeiture).
To the extent that the Authority invites us to overlook
the forfeiture of its Severin argument to avoid "a miscarriage of
justice," Appellant's Br. at 4, we decline its invitation.

"[T]he

Severin doctrine is an affirmative defense that must be raised by
[the] defendant."

Northrop Grumman Computing Sys., Inc. v. United

States, 99 Fed. Cl. 651, 659 (Fed. Cl. 2011).

Our precedent is

clear that a trial court normally commits no error — let alone
plain error — when it fails to consider sua sponte an affirmative
defense not seasonably raised at trial.

See, e.g., Dimarco-Zappa

v. Cabanillas, 238 F.3d 25, 35 (1st Cir. 2001); Amcel Corp. v.
Int'l Exec. Sales, Inc., 170 F.3d 32, 35 (1st Cir. 1999).
We

do

not

agree

with

the

debtor

Authority's other claims are unpreserved.

that

any

of

the

First, the Authority

timely raised before the bankruptcy court its argument that the
debtor had sacrificed any entitlement to extra compensation for the
Mayagüez project by failing to meet the contract's written notice
requirement.

The Authority advanced this claim in its pre-trial

memorandum and reiterated it in its post-trial brief.2

Similarly,

the Authority's post-trial brief argued at length that the debtor

2

The bankruptcy court directed the parties to file post-trial
briefs in lieu of closing arguments.
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had not proven an entitlement to extended overhead damages.

The

fact that the Authority did not raise this issue prior to trial is
beside the point; litigants are not expected to be clairvoyant, and
the Authority could not have known prior to the close of testimony
that the debtor would fail to prove an element of its asserted
damages.
This leaves the issue of prejudgment interest.

We think

that the Authority preserved this issue by spelling out its
position in its motion to alter or amend the judgment.

While

arguments presented for the first time in a Rule 59(e) motion
ordinarily are deemed forfeited, see CMM Cable Rep, Inc. v. Ocean
Coast Props., Inc., 97 F.3d 1504, 1526 (1st Cir. 1996), the grant
or denial of prejudgment interest is an exception to this general
rule.

Indeed, we regularly have recognized that Rule 59(e) is an

appropriate

vehicle

prejudgment interest.

for

the

resolution

of

disputes

about

See, e.g., Bos. Gas Co. v. Century Indem.

Co., 529 F.3d 8, 21 (1st Cir. 2008); Crowe v. Bolduc, 365 F.3d 86,
92-93 (1st Cir. 2004). This practice makes sense; elsewise parties
would be required to put the cart before the horse and argue about
prejudgment interest before the underlying issues of liability and
damages have been resolved.
Having answered the threshold question, we turn now to
the merits of the Authority's preserved claims of error.

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B.

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Notice.

The Authority argues that the debtor waived its right to
additional remuneration for the Mayagüez project.
Authority

invokes

the

so-called

Blue

Book

In support, the
—

the

standard

specifications for road and bridge construction that the parties
acknowledge are incorporated in all of the contracts sub judice.
Section 105.17 of the Blue Book states in relevant part:
a. When the Contractor deems that extra
compensation is due him for work or materials
not clearly covered in the contract or not
ordered by the [Authority's resident] Engineer
as extra work, . . . the Contractor shall
notify the [resident] Engineer in writing of
his intention to make claim for such extra
compensation within one working day after he
begins the work on which he bases the claim.
If such notification is not given, and the
[resident] Engineer is not afforded proper
facilities by the Contractor for keeping
strict account of actual cost as required,
then the Contractor hereby agrees to waive any
claim for such extra compensation.
With respect to the Mayagüez project, the Authority insists that
the debtor submitted no written claims for additional compensation
until approximately six-and-a-half years after completion of the
work.
The bankruptcy court apparently agreed that the debtor
had neglected to provide the written notice described in the Blue
Book.

The court found, however, that the Authority had received

timely actual notice: the debtor had informed the Authority both of
the incipient problems and of its intention to seek additional

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compensation in a prolonged series of daily conversations and
weekly meetings.
111.

See, e.g., Redondo I, 411 B.R. at 95, 99-103,

The court also found that the Authority had issued work

orders and/or change orders authorizing the further work.
e.g., id. at 97, 100, 102.
supported by the record.
we must honor them.

See,

These factual findings are fully

Because they are not clearly erroneous,

See United States v. Lugo Guerrero, 524 F.3d

5, 11 n.1 (1st Cir. 2008); Boroff v. Tully (In re Tully), 818 F.2d
106, 108 (1st Cir. 1987).
The bankruptcy court's factual findings eviscerate the
Authority's notice defense.

The better rule — and therefore the

rule that we think the Puerto Rico Supreme Court would adopt — is
that strict conformity with a contract's written notice provision
is not required as long as the counterparty receives substantially
the same information through timely actual notice and suffers no
prejudice from the non-conformity.

See 1 Richard K. Allen &

Stanley A. Martin, Construction Law Handbook 780 (2d ed. 2009);
see, e.g., Brechan Enters., Inc. v. United States, 12 Cl. Ct. 545,
550 (Cl. Ct. 1987) (explaining that, in a construction contract
case, "[t]he requirement of a writing has been waived where the
Government in fact has knowledge of the conditions and difficulties
encountered by the contractor and where no prejudice was shown to
have resulted from lack of timely written notice"); Aetna Cas. &
Sur. Co. v. Murphy, 538 A.2d 219, 223 (Conn. 1988); Iskalo Electric

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Tower LLC v. Stantec Consulting Servs., Inc., 916 N.Y.S.2d 373, 375
(N.Y. App. Div. 2010); Bloom Twp. High Sch. v. Ill. Commerce
Comm'n, 722 N.E.2d 676, 689 (Ill. App. Ct. 1999); cf. Indus. Equip.
Corp. v. Builders Ins. Co., 8 P.R. Offic. Trans. 296, 305 (P.R.
1979) ("If the notice of default is served untimely upon the
surety, or in a manner different to that agreed upon, it is
considered a substantial compliance with the condition agreed upon,
and does not release the surety unless it has been economically
prejudiced.").
In the case at hand, the bankruptcy court determined that
the Authority had received timely actual notice of the emergent
problems, the debtor's willingness to do extra work to cure them,
and the debtor's intent to seek additional remuneration therefor.
The Authority has not shown that it was in any way prejudiced by
its receipt of oral, as opposed to written, notice.3
we

hold

that

the

debtor's

substantial

Accordingly,

compliance

with

the

contractual notice requirements neutralizes its failure to comply
literally with those requirements.

Under this same reasoning,

there was no waiver of the subcontractor-based claims because the

3

The bankruptcy court found that the Authority, without
protest of any kind, authorized the performance of extra work.
This finding strongly supports a conclusion that the Authority was
not prejudiced. Cf. S. Leo Harmonay, Inc. v. Binks Mfg. Co., 597
F. Supp. 1014, 1032 (S.D.N.Y. 1984) ("[W]hen a party knowingly
receives and accepts the benefits of extra work outside the scope
of a construction contract orally directed by himself and his
agents, such conduct constitutes a waiver of the [written-notice]
requirement.").
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bankruptcy court supportably determined that the Authority had
timely actual notice of those claims as well.

See Redondo I, 411

B.R. at 100, 102-03.
C.

Extended Overhead Damages.

The Authority next asseverates that the bankruptcy court
erroneously awarded the debtor extended overhead damages for the
three projects.4 Extended overhead damages compensate a contractor
for unabsorbed home-office expenses that accrue during a delay
caused by the owner.

See Interstate Gen. Gov't Contractors, Inc.

v. West, 12 F.3d 1053, 1060 (Fed. Cir. 1993); K-Con Bldg. Sys.,
Inc. v. United States, 97 Fed. Cl. 41, 54 (Fed. Cl. 2011).

The

rationale underlying this species of damages is straightforward:
when completion of a project is delayed, the contractor continues
to incur home-office costs during the delay period, and extended
overhead damages offset those costs when the delay is caused by the
owner.

See Kanag'Iq Constr. Co. v. United States, 51 Fed. Cl. 38,

48 (Fed. Cl. 2001).
There are at least two methods of calculating extended
overhead damages.

When a project's completion is delayed due to

necessary but unanticipated work for which the contractor is
entitled to compensation, extended overhead is usually calculated

4

The Authority challenges only the award of home-office
overhead, not the award of job-site overhead. Consequently, all
references herein to extended overhead damages should be read as
referring exclusively to home-office overhead.
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as a percentage of the direct costs of the additional work.

See

C.B.C. Enters., Inc. v. United States, 978 F.2d 669, 675 (Fed. Cir.
1992).

This percentage-of-direct-costs approach comports with

standard practice in the construction industry under which a
contractor normally charges an owner a percentage of a project's
direct costs to cover its overhead.

See id. at 670; Aniero

Concrete Co. v. N.Y.C. Constr. Auth., 308 F. Supp. 2d 164, 209
(S.D.N.Y. 2003); Glen M. Darbyshire, Note, Home Office Overhead as
Damages for Construction Delays, 17 Ga. L. Rev. 761, 761 (1983).
Withal, there are frequently project delays that do not
arise from a need to perform extra (compensable) work.

In such an

instance, the percentage-of-direct-costs approach is untenable.
For example, if an owner causes a total work stoppage, there will
be no additional direct costs (after all, no work will be ongoing),
yet

home-office

Applying

the

overhead

expenses

will

percentage-of-direct-costs

continue

to

approach

accrue.
in

those

circumstances would, therefore, deny the contractor any overhead
damages for the delay period.

See Altmayer v. Johnson, 79 F.3d

1129, 1133 (Fed. Cir. 1996).

To safeguard against this obvious

inequity, courts confronted with such a situation have used the
Eichleay formula to compute the magnitude of extended overhead
damages. See George Hyman Constr. Co. v. Wash. Metro. Area Transit
Auth., 816 F.2d 753, 759 (D.C. Cir. 1987); Eichleay Corp., ASBCA
No. 5183, 60-2 BCA ¶ 2688, 1960 WL 538 (1960).

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for multiplying the average daily overhead costs allocable to a
project by the number of days that the project is delayed.

See

C.B.C. Enters., 978 F.2d at 673.
In the case at hand, the bankruptcy court employed
Eichleay to calculate the debtor's extended overhead damages.
Redondo I, 411 B.R. at 95, 108.

See

But the court mixed apples and

oranges; it used Eichleay across the board even though it found
that at least some of the project delays were attributable to extra
work for which the debtor was compensated.
97, 104-05.

See, e.g., id. at 95,

For those delays, extended overhead should have been

awarded as a percentage of the direct costs associated with the
projects' change orders and extra work orders. See C.B.C. Enters.,
978 F.2d at 675 ("[I]t is inappropriate to use the Eichleay formula
to calculate home office overhead for contract extensions because
adequate

compensation

for

overhead

expenses

may

usually

be

calculated more precisely using a fixed percentage formula.").
The bankruptcy court gave no reason for eschewing the
conventional percentage-of-direct-costs calculation as a measure of
overhead damages in those instances, and no compelling reason is
apparent on the face of the record.

Without more precise findings

or a better explanation, this portion of the awarded damages cannot
be

allowed

to

stand.

Accordingly,

we

vacate

the

awards

of

Eichleay-based overhead damages and remand to permit recalculation
of those awards using the percentage-of-direct-costs method where

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applicable

and

using

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Eichleay

Date Filed: 05/11/2012

only

in

connection

Entry ID: 5640510

with

work

stoppages or delays (if any) of the type described above.
The direct costs, of course, are a matter of proof.

The

applicable percentage should be that used in connection with the
original

contracts

(presumably

specified

in

the

contract

documents).
We add a caveat.

It is unclear from the record whether

all of the project delays were the result of paid extra work.

On

remand, the bankruptcy court is free to determine whether the
debtor sustained uncompensated periods of delay and, if so, whether
Eichleay

damages

are

appropriate

for

any

such

periods.

In

resolving this issue, the court should address the Authority's
argument that Federal Circuit precedent bars Eichleay damages here
because work on the three projects was never fully suspended.5

See

P.J. Dick Inc. v. Principi, 324 F.3d 1364, 1371 (Fed. Cir. 2003).
D.

Prejudgment Interest.

In its post-trial brief, the debtor sought prejudgment
interest on the basis that 41 U.S.C. § 7109(a)(1) applies to this
case because each of the three projects was partially financed by
federal funds.

In the alternative, it contended that prejudgment

5

In this appeal, both parties have argued the case in terms
of Federal Circuit precedent, and we think that it is fair to hold
them to that choice. This court has not independently addressed
either the proper scope of Eichleay or any possible questions about
its treatment by the Federal Circuit.
We leave those areas of
inquiry open.
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interest was appropriate under Puerto Rico Rule of Civil Procedure
44.3(b) because the Authority had acted "rashly" in the course of
the litigation.

See P.R. Laws Ann. tit. 32, app. III, R. 44.3(b).

The bankruptcy court, without elaborating its reasoning, awarded
prejudgment interest on all damages at the rate of 6.5% per annum.
When state-law claims (such as the contract claims at
issue

here)

are

adjudicated

by

a

federal

court,

interest is normally a matter of state law.6

prejudgment

See Freeman v.

Package Mach. Co., 865 F.2d 1331, 1345 (1st Cir. 1988).
involves

disputes

between

parties

based

contracts executed and performed there.

in

Puerto

This case
Rico

over

Those disputes were

litigated in Puerto Rico, and the contracts at issue contain Puerto
Rico choice-of-law provisions.

We must therefore look to the law

of Puerto Rico for the substantive rules of decision anent this
contract case (and thus for the rule of decision concerning
prejudgment interest).

See Crowe, 365 F.3d at 90.

Of course, the parties were free under Puerto Rico law to
adopt a particular measure of prejudgment interest.

See P.R. Laws

Ann. tit. 31, § 3372 ("The contracting parties may make the
agreement and establish the clauses and conditions which they may
deem advisable, provided they are not in contravention of law,

6

For this purpose, Puerto Rico is the functional equivalent
of a state. See, e.g., Fajardo Shopping Ctr., S.E. v. Sun Alliance
Ins. Co. of P.R., Inc., 167 F.3d 1, 14 (1st Cir. 1999).
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morals, or public order.").

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But we find no evidence that they did

so.
The debtor resists this conclusion.

In marshaling its

resistance, it points to paragraph 107.05 of the Blue Book, which
states:
When the United States government participates
in the cost of the work covered by the
contract, the work shall be under the
supervision of the Authority but subject to
the inspection of the appropriate Federal
agency and in accordance with the applicable
Federal statutes and rules and regulations
made pursuant thereto.
The debtor suggests that this language manifests the parties'
shared intent to incorporate into their contracts the same rule of
prejudgment interest that applies to contracts in which the federal
government is a party.

See 41 U.S.C. § 7109(a)(1).

This is too much of a stretch.

Section 7109(a)(1)

applies only in instances in which the federal government itself is
a party.

See id. § 7102(a).

The federal government was not a

party to any of the contracts at issue here, and paragraph 107.05
cannot reasonably be read to bring those contracts within the reach
of the federal statute.
The language upon which the debtor relies requires it to
ensure that its work complies with federal construction standards
and regulations.

There is no hint of any intent to incorporate a

federal prejudgment interest statute that, by its terms, applies
only to the federal government.

Where, as here, "the terms of a

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Case: 11-1614

Document: 00116376305

Page: 19

Date Filed: 05/11/2012

Entry ID: 5640510

contract are clear and leave no doubt as to the intentions of the
contracting parties, the literal sense of its stipulations shall be
observed."

P.R. Laws Ann. tit. 31, § 3471.
This brings us back to Puerto Rico prejudgment interest

rules.

Before the bankruptcy court, the debtor urged in the

alternative that it was entitled to prejudgment interest under Rule
44.3(b) of the Puerto Rico Rules of Civil Procedure. But this rule
is plainly inapposite and could not have provided a basis for the
bankruptcy court's award of prejudgment interest: by its terms,
Rule 44.3(b) does not apply when the defendant is either the
Commonwealth of Puerto Rico or one of its agencies.
At oral argument in this court and in a post-argument
letter submitted pursuant to Federal Rule of Appellate Procedure
28(j), the debtor for the first time proposed two other possible
bases for prejudgment interest.
§§ 3025, 4591.

See P.R. Laws Ann. tit. 31,

Neither of these statutes mentions prejudgment

interest as such.

Moreover, neither of them was cited to the

bankruptcy court, and the debtor has offered no plausible reason to
believe that the court awarded prejudgment interest under their
aegis.
The upshot is that uncertainty surrounds the debtor's
putative entitlement to prejudgment interest, the source (if any)
of that entitlement, the rate of interest (if any) that should be
used, and the proper prejudgment period.

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Consequently, we have no

Case: 11-1614

Document: 00116376305

Page: 20

Date Filed: 05/11/2012

Entry ID: 5640510

principled choice but to remand this case to the district court
with instructions to vacate the award of prejudgment interest and
return the case to the bankruptcy court for a determination of
whether prejudgment interest is appropriate and, if so, at what
rate and for what periods.

We take no view as to the outcome of

this further inquiry.
III.

CONCLUSION
We need go no further.7

For the reasons elucidated

above, we affirm the judgment in all respects save for (i) the
calculation of extended overhead damages and (ii) the award of
prejudgment interest; vacate the district court's judgment to the
extent necessary to allow for resolution of these items; and remand
for further proceedings consistent with this opinion.

One-half

costs shall be taxed in favor of the debtor.

So Ordered.

7

The Authority, which took a shotgun approach to this appeal,
has made a number of other claims. Without exception, these claims
are unaccompanied by any developed argumentation. Consequently, we
deem them abandoned. See United States v. Zannino, 895 F.2d 1, 17
(1st Cir. 1990).
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