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-