NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 18 2018 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
In re: EXXON VALDEZ, Nos. 17-35227, 17-35278
NAUTILUS MARINE ENTERPRISES, INC. and M. THOMAS WATERER, D.C. No. 3:89-cv-00095-HRH
Plaintiffs-Appellants / Cross-Appellees,
v. MEMORANDUM* EXXON MOBILE CORPORATION and EXXON SHIPPING COMPANY,
Defendants-Appellees / Cross-Appellants.
Appeal from the United States District Court for the District of Alaska H. Russel Holland, District Judge, Presiding
Argued & Submitted June 11, 2018 Anchorage, Alaska
Before: THOMAS, CALLAHAN, and BEA, Circuit Judges.
Plaintiffs Nautilus Marine Enterprises, Inc. and M. Thomas Waterer
(collectively, “NME”) sued Defendants Exxon Mobil Corporation and Exxon
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. 1 Shipping Company (collectively, “Exxon”) for damages arising from the 1989
Exxon Valdez oil spill. In 2006, the parties entered into a Settlement Agreement, in
which Exxon agreed to pay an “Initial Settlement Amount,” representing the
damages incurred by NME during 1992 and 1993 as a result of the oil spill and a
portion of the interest. Because the parties disagreed as to the correct rate of
prejudgment interest, a “Supplemental Settlement Amount” (“SSA”) was to be paid
if and when the district court decided more money was owed. Since then, the parties
have been litigating, in state and federal court, issues related to the amount of
additional interest owed by Exxon on the damages.
On appeal, NME challenges the district court’s determinations that (1)
prejudgment interest accrued only through November 1, 2006, and not thereafter,
and (2) post-judgment interest accrued only after February 14, 2017, the date of the
final judgment, and not before. On cross-appeal, Exxon challenges, as contrary to
the best evidence rule, the district court’s reliance on certain testimonial evidence to
allocate the final interest award. We affirm as to NME’s appeal and as to Exxon’s
cross-appeal.
1. NME argues that the district court erred in limiting prejudgment interest to
only that accruing through November 1, 2006. Because our decision turns on the
interpretation of the Settlement Agreement, we review this claim de novo. City of
Emeryville v. Robinson, 621 F.3d 1251, 1261 (9th Cir. 2010).
2 The Settlement Agreement expressly provides for prejudgment interest only
through November 1, 2006. It says, in relevant part:
The period for which interest shall be payable on the sum [owed by Exxon for damages accrued in 1992] shall commence on July 1, 1992, and continue through November 1, 2006, or the date the Court enters judgment, whichever is earlier. The period for which interest shall be payable on the sum [owed by Exxon for damages accrued in 1993] shall commence July 1, 1993, and continue through November 1, 2006, or the date the Court enters judgment, whichever is earlier.
(Emphasis added). In other words, the agreement provides that prejudgment interest
on damages Exxon owed to NME would accrue from the date those damages were
incurred until November 1, 2006. By executing the Settlement Agreement, NME
agreed to limit its recovery of prejudgment interest to that period. Thus, the district
court did not err by failing to award NME prejudgment interest after November 1,
2006.
2. Nor did the district court err by awarding post-judgment interest only after
the court’s February 14, 2017 final judgment. Again, the Settlement Agreement
controls. It provides that: “Post-judgment interest shall accrue on any award by the
District Court of additional prejudgment interest . . . pursuant to 28 U.S.C. § 1961.”
NME argues that post-judgment interest should accrue from a 2007 judgment, which
was subsequently reversed and vacated, rather than from the 2017 judgment which
now stands. However, in determining “whether [under § 1961] interest should be
calculated from the date of a legally insufficient judgment,” the Supreme Court has
3 held that “[i]t would be counterintuitive . . . to believe that Congress intended
postjudgment interest to be calculated from [a judgment which was later reversed].”
Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827, 834, 836 (1990) (citing
FDIC v. Rocket Oil Co., 865 F.2d 1158 (10th Cir. 1989), to demonstrate that
“postjudgment interest may not be calculated from judgment that was completely
reversed”). Therefore, the district court did not err when it awarded post-judgment
interest only after the 2017 judgment.
3. The district court may have violated the best evidence rule when it
considered the testimony of NME’s counsel, Edward Weigelt, in determining how
to allocate the SSA. Because the parties are familiar with the facts from which this
particular issue arises, we do not recount them in full here. Suffice it to say that
NME began this litigation with a co-plaintiff who settled its claims to any additional
interest in 2010. After the co-plaintiff’s departure from the case, it became necessary
for the district court to determine the allocation of the SSA because the 2006
Settlement Agreement had provided that the SSA would be split between the two
plaintiffs, pursuant to “further written instructions” signed by both of them. The
Settlement Agreement also entitles Exxon to “delay payment” of the SSA, “without
any liability for penalties or further interest,” until Exxon receives such mutual
instructions. Those joint instructions have never been delivered to Exxon.
Unfortunately, the Settlement Agreement did not contemplate the possibility of a
4 one-party settlement, so the district court was forced to come up with fair payment
instructions. See Disotell v. Stiltner, 100 P.3d 890, 896 (Alaska 2004) (quoting
Restatement (Second) of Contracts § 204 (1981)) (“When the parties to a bargain
sufficiently defined to be a contract have not agreed with respect to a term which is
essential to a determination of their rights and duties, a term which is reasonable in
the circumstances is supplied by the court.”).
Exxon argued that the court should allocate the SSA in the same way the
parties allocated the Initial Settlement Amount, because such allocation was
pursuant to the only “written instructions” ever given to Exxon by the parties. In
discrediting this argument, the district court relied on a declaration from NME’s
attorney, which asserted that the payment instructions for the Initial Settlement
Amount were “based on other business relations between [the co-plaintiffs],
including loans and joint fish processing agreements, and also a joint prosecution
agreement which included sharing the initial settlement proceeds.” The declaration
further asserted that “[t]he joint prosecution agreement and sharing obligations
between [the co-plaintiffs] were terminated shortly after the settlement.” None of
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 18 2018 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
In re: EXXON VALDEZ, Nos. 17-35227, 17-35278
NAUTILUS MARINE ENTERPRISES, INC. and M. THOMAS WATERER, D.C. No. 3:89-cv-00095-HRH
Plaintiffs-Appellants / Cross-Appellees,
v. MEMORANDUM* EXXON MOBILE CORPORATION and EXXON SHIPPING COMPANY,
Defendants-Appellees / Cross-Appellants.
Appeal from the United States District Court for the District of Alaska H. Russel Holland, District Judge, Presiding
Argued & Submitted June 11, 2018 Anchorage, Alaska
Before: THOMAS, CALLAHAN, and BEA, Circuit Judges.
Plaintiffs Nautilus Marine Enterprises, Inc. and M. Thomas Waterer
(collectively, “NME”) sued Defendants Exxon Mobil Corporation and Exxon
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. 1 Shipping Company (collectively, “Exxon”) for damages arising from the 1989
Exxon Valdez oil spill. In 2006, the parties entered into a Settlement Agreement, in
which Exxon agreed to pay an “Initial Settlement Amount,” representing the
damages incurred by NME during 1992 and 1993 as a result of the oil spill and a
portion of the interest. Because the parties disagreed as to the correct rate of
prejudgment interest, a “Supplemental Settlement Amount” (“SSA”) was to be paid
if and when the district court decided more money was owed. Since then, the parties
have been litigating, in state and federal court, issues related to the amount of
additional interest owed by Exxon on the damages.
On appeal, NME challenges the district court’s determinations that (1)
prejudgment interest accrued only through November 1, 2006, and not thereafter,
and (2) post-judgment interest accrued only after February 14, 2017, the date of the
final judgment, and not before. On cross-appeal, Exxon challenges, as contrary to
the best evidence rule, the district court’s reliance on certain testimonial evidence to
allocate the final interest award. We affirm as to NME’s appeal and as to Exxon’s
cross-appeal.
1. NME argues that the district court erred in limiting prejudgment interest to
only that accruing through November 1, 2006. Because our decision turns on the
interpretation of the Settlement Agreement, we review this claim de novo. City of
Emeryville v. Robinson, 621 F.3d 1251, 1261 (9th Cir. 2010).
2 The Settlement Agreement expressly provides for prejudgment interest only
through November 1, 2006. It says, in relevant part:
The period for which interest shall be payable on the sum [owed by Exxon for damages accrued in 1992] shall commence on July 1, 1992, and continue through November 1, 2006, or the date the Court enters judgment, whichever is earlier. The period for which interest shall be payable on the sum [owed by Exxon for damages accrued in 1993] shall commence July 1, 1993, and continue through November 1, 2006, or the date the Court enters judgment, whichever is earlier.
(Emphasis added). In other words, the agreement provides that prejudgment interest
on damages Exxon owed to NME would accrue from the date those damages were
incurred until November 1, 2006. By executing the Settlement Agreement, NME
agreed to limit its recovery of prejudgment interest to that period. Thus, the district
court did not err by failing to award NME prejudgment interest after November 1,
2006.
2. Nor did the district court err by awarding post-judgment interest only after
the court’s February 14, 2017 final judgment. Again, the Settlement Agreement
controls. It provides that: “Post-judgment interest shall accrue on any award by the
District Court of additional prejudgment interest . . . pursuant to 28 U.S.C. § 1961.”
NME argues that post-judgment interest should accrue from a 2007 judgment, which
was subsequently reversed and vacated, rather than from the 2017 judgment which
now stands. However, in determining “whether [under § 1961] interest should be
calculated from the date of a legally insufficient judgment,” the Supreme Court has
3 held that “[i]t would be counterintuitive . . . to believe that Congress intended
postjudgment interest to be calculated from [a judgment which was later reversed].”
Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827, 834, 836 (1990) (citing
FDIC v. Rocket Oil Co., 865 F.2d 1158 (10th Cir. 1989), to demonstrate that
“postjudgment interest may not be calculated from judgment that was completely
reversed”). Therefore, the district court did not err when it awarded post-judgment
interest only after the 2017 judgment.
3. The district court may have violated the best evidence rule when it
considered the testimony of NME’s counsel, Edward Weigelt, in determining how
to allocate the SSA. Because the parties are familiar with the facts from which this
particular issue arises, we do not recount them in full here. Suffice it to say that
NME began this litigation with a co-plaintiff who settled its claims to any additional
interest in 2010. After the co-plaintiff’s departure from the case, it became necessary
for the district court to determine the allocation of the SSA because the 2006
Settlement Agreement had provided that the SSA would be split between the two
plaintiffs, pursuant to “further written instructions” signed by both of them. The
Settlement Agreement also entitles Exxon to “delay payment” of the SSA, “without
any liability for penalties or further interest,” until Exxon receives such mutual
instructions. Those joint instructions have never been delivered to Exxon.
Unfortunately, the Settlement Agreement did not contemplate the possibility of a
4 one-party settlement, so the district court was forced to come up with fair payment
instructions. See Disotell v. Stiltner, 100 P.3d 890, 896 (Alaska 2004) (quoting
Restatement (Second) of Contracts § 204 (1981)) (“When the parties to a bargain
sufficiently defined to be a contract have not agreed with respect to a term which is
essential to a determination of their rights and duties, a term which is reasonable in
the circumstances is supplied by the court.”).
Exxon argued that the court should allocate the SSA in the same way the
parties allocated the Initial Settlement Amount, because such allocation was
pursuant to the only “written instructions” ever given to Exxon by the parties. In
discrediting this argument, the district court relied on a declaration from NME’s
attorney, which asserted that the payment instructions for the Initial Settlement
Amount were “based on other business relations between [the co-plaintiffs],
including loans and joint fish processing agreements, and also a joint prosecution
agreement which included sharing the initial settlement proceeds.” The declaration
further asserted that “[t]he joint prosecution agreement and sharing obligations
between [the co-plaintiffs] were terminated shortly after the settlement.” None of
these “business relations” or “agreements” were detailed, nor were the agreements
produced by NME. Yet the district court concluded that, “[i]n light of this evidence,
it would not be reasonable to allocate the [SSA] based on how the initial settlement
amount was allocated.” By rejecting Exxon’s argument based on the terms of
5 written agreements which were never produced, the district court may have violated
the best evidence rule. See Seiler v. Lucasfilm, Ltd., 808 F.2d 1316, 1319 (9th Cir.
1986) (quoting McCormick on Evidence (3d ed. 1984) § 230, at 704) (“[I]n proving
the terms of a writing, where the terms are material, the original writing must be
produced unless it is shown to be unavailable for some reason other than the serious
fault of the proponent.”).
Even so, we hold that the district court’s erroneous consideration of the
Weigelt declaration was harmless because such consideration did not change the
likely outcome, and thus it did not affect Exxon’s substantial rights. See 28 U.S.C.
§ 2111 (“On the hearing of any appeal . . . in any case, the court shall give judgment
after an examination of the record without regard to errors or defects which do not
affect the substantial rights of the parties.”); Fed. R. Evid. 103(1) (“A party may
claim error in a ruling to admit or exclude evidence only if the error affects a
substantial right of the party . . . .”). This is because the district court’s allocation
was justified by other evidence properly before it. For example, the Settlement
Agreement itself expressly provided that “[a]ny Supplemental Settlement Amount
shall be paid pursuant to further written instructions,” suggesting that the parties did
not intend for the distribution of the Initial Settlement Amount automatically to
guide the distribution of the SSA. And the allocation chosen by the district court
was based on (1) figures provided in the Settlement Agreement, and (2) terms of a
6 previously agreed upon “letter agreement” which provided that Exxon agreed to pay
NME its actual damages, “together with pre-judgment interest on those sums as
provided by law.” Thus, it was “reasonable in the circumstances,” Disotell, 100 P.3d
at 896, for the district court to conclude that Exxon had “agreed to pay NME
prejudgment interest on the damages that NME actually incurred.”
AFFIRMED.