[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED ________________________ U.S. COURT OF APPEALS No. 99-14166 ELEVENTH CIRCUIT AUGUST 20, 2001 ________________________ THOMAS K. KAHN CLERK D. C. Docket No. 98-00968-CV-CAM-1
SEGUROS DEL ESTADO, S.A.,
Plaintiff-Appellee,
versus
SCIENTIFIC GAMES, INC.,
Defendant-Appellant.
________________________
Appeal from the United States District Court for the Northern District of Georgia _________________________ (August 20, 2001)
Before BLACK, FAY, and COX, Circuit Judges.
BLACK, Circuit Judge: Appellant Scientific Games, Inc., appeals the district court’s denial of its
motion to dismiss, wherein Appellant asserted the applicable limitations period
expired and the doctrine of lis alibi pendens applied. Appellant also appeals the
district court’s grant of summary judgment to Appellee Seguros del Estado, S.A.
The district court effectively determined Appellant was in breach of an
indemnification agreement because Appellant did not reimburse Appellee for its
payment of $2.4 million in accordance with an obligation on a bond. Finally,
Appellant appeals an adverse judgment of approximately $7 million. This
judgment is comprised of a principal amount of $2.4 million and pre-judgment
interest at an annual rate of 38.76%.
This case involves three agreements: (1) a contract between Appellant and
Empresa Colombiana de Recursos Para la Salud, S.A. (Ecosalud), a Colombian
governmental entity, under which Appellant created and managed a national
instant lottery in Colombia (Lottery Contract); (2) a bond which was required
under the Lottery Contract, taken out by Appellant and payable by Appellee to
Ecosalud (Bond);1 and (3) an indemnification agreement which required Appellant
to reimburse Appellee for sums paid to Ecosalud and for any interest paid on such
1 While this document is entitled “Bond,” the terminology used in the documents at issue in this case is sometimes characteristic of language used in the United States where insurance policies are concerned and is sometimes characteristic of the language used where surety bonds are concerned. We note this only to explain our use of this language.
2 sums (Indemnification Agreement). On appeal, Appellant raises four arguments:
(1) in light of pending litigation in Colombia, this case should be dismissed under
principles of international comity and the lis alibi pendens doctrine; (2)
alternatively, this case should be dismissed under Colombia’s 2-year statute of
limitations governing insurance disputes; (3) the entry of summary judgment for
Appellee should be reversed due to factual issues regarding whether the Bond’s
effective date was extended, whether the Indemnification Agreement’s term
expired, whether Appellee made a valid payment under the Bond, and whether
Appellee’s settlement with Ecosalud was reasonable; and (4) the award of pre-
judgment of interest of 38.76% per annum should be vacated in favor of either an
interest amount based on Colombian pesos converted to U.S. dollars or a
requirement that Appellee provide proof of Colombian bank interest paid on U.S.
dollar transactions.
We affirm the denial of the motion to dismiss, the grant of summary
judgment, and the $2.4 million principal judgment, but we vacate the portions of
the order and the judgment related to the pre-judgment interest payment. We
remand with instructions to determine the interest rate that Colombian banks would
have applied to U.S. dollar deposits on November 1, 1994, and to recalculate the
interest due.
3 I. BACKGROUND2
On March 12, 1992, Ecosalud entered the Lottery Contract with (1)
Appellant, (2) PKI Associates, Inc., a New York corporation, and (3) Daibutsu,
Inc., a Panamanian corporation (collectively, Contractors). The Contractors
formed a Colombian operating company, Wintech de Colombia, S.A. (Wintech), to
run the lottery and thereafter assigned the Lottery Contract to Wintech. Clause 41
of the Lottery Contract required the Contractors to obtain a bond from a
Colombian insurance company in the amount of $4 million or its equivalent in
Colombian pesos. This bond was to guarantee the Contractors’ performance of
their obligations under the Lottery Contract, including the payment of any
penalties. Appellee issued to Appellant3 the Bond, whose initial term was from
March 12, 1992, to March 12, 1993. As partial consideration for the Bond,
Appellant executed the Indemnification Agreement with Appellee. This
Agreement required Appellant to “immediately reimburse” Appellee for any sums
paid to Ecosalud under the terms of the Bond and to pay interest to Appellee on
these sums “at the current banking interest rate in effect in Colombia.” An
2 This Part is drawn from the district court’s unpublished opinion. See Seguros del Estado, S.A. v. Scientific Games, Inc., No. 1:98-CV-968-CAM (N.D. Ga. Sept. 28, 1999) (order denying motion to dismiss and granting summary judgment motion). 3 While the initial policy lists only Appellant as the contractor, the policy amendments list Appellant, PKI Associates, and Daibutsu as contractors.
4 amendment to the Bond, dated May 15, 1992, provided for the automatic renewal
of the policy at the end of each period until one year after the expiration of the
Lottery Contract. Another amendment, dated March 2, 1993, extended the Bond’s
term of effectiveness through March 12, 1994.
On July 1, 1993, Ecosalud issued a Declaration of Caducity, Administrative
Resolution No. 246 (the Declaration).4 In this Declaration, Ecosalud terminated
the Lottery Contract based on a determination that the Contractors breached the
Contract.5 Furthermore, Ecosalud found the Contractors and Wintech jointly and
severally liable and proclaimed Ecosalud was owed in excess of $4 million under
the terms of the Lottery Contract. Finally, Ecosalud stated in the Declaration that
Appellee was jointly and severally liable for $4 million pursuant to the Bond. The
Bond provides that “[a] casualty shall be deemed to have occurred[,] . . . in the
event of breach of the contract, when the Administrative Resolution that declared
the caducity of the contract or the breach thereof for reasons attributable to the
contractor is final and binding . . . .” The Bond obligates Appellee, under these
4 According to Dr. Andrew Abela-Maldonado, an expert witness for Appellant, declaring caducity is a unilateral “exercise of governmental powers reserved to Ecosalud as a governmental entity” under Colombian law. 5 According to Dr. Abela, a witness for Appellant, see supra note 3, Ecosalud made this determination based in part on Wintech's failure "to deliver on its promise of monopoly status for [the instant lottery]," and, therefore, to sell the projected number of lottery tickets. Dr. Jorge Mora Sanchez, a witness for Appellee, testified only that Ecosalud "declared the termination of [the Lottery Contract] for causes imputable to [Appellant]."
5 circumstances, to pay Ecosalud within a month following a request for payment.
Appellee received notice of the Declaration on July 7, 1993, and provided
Appellant with written notice on July 12, 1993.
Pursuant to the request of Appellant and Appellee that it reconsider the
Declaration, Ecosalud confirmed the Declaration by issuing Administrative
Resolution No. 493 on October 15, 1993.6 On March 15, 1994, Appellant
challenged the Declaration and Resolution No. 493 in a Colombian administrative
court and sought temporary suspension of the Declaration during the appeal. In
May 1994, the administrative court denied the request for temporary suspension.
The appeal remains pending.
Following negotiations, Appellee reached a settlement with Ecosalud on
September 29, 1994. The settlement obligated Appellee to pay Ecosalud
$2.4 million, in lieu of the contractually mandated sum of $4 million. On
November 1, 1994, Appellee paid Ecosalud $2.4 million. The next day, Appellee
notified Appellant of this payment and demanded reimbursement pursuant to the
6 There seems to be an inconsequential discrepancy in the record, as Appellant believes Ecosalud issued Resolution No. 493 on October 3, 1993.
6 Indemnification Agreement.7 Appellant failed to reimburse Appellee, thereby
giving rise to this litigation.
On April 2, 1998, Appellee filed suit in United States District Court,
Northern District of Georgia, seeking to recover from Appellant for breach of
contract and unjust enrichment. On May 7, 1998, Appellee filed a motion for
summary judgment based on its breach of contract claim. Appellee sought a
$2.4 million reimbursement plus pre-judgment interest on that amount at the rate
specified in the Indemnification Agreement. On May 12, 1998, Appellant filed a
motion to dismiss based on the statute of limitations or, in the alternative, based on
the legal doctrines of lis alibi pendens and forum non conveniens.8
In its order dated September 28, 1999, the district court denied Appellant’s
motion to dismiss. Concluding that Georgia law governs, the court held the suit
was not barred by Georgia's 6-year statute of limitations and that lis alibi pendens
was inapplicable.9 The district court proceeded to grant Appellee’s motion for
summary judgment. In so doing, the court concluded as follows: the Bond and
7 C. Gray Bethea, Jr., Appellant’s General Counsel, testified that Appellant “was not given contemporaneous notice . . . of the private settlement entered into on September 29, 1994. We were just informed of the payment. We received a copy of the Settlement Agreement in 1995.” 8 The forum non conveniens basis is not raised on appeal. 9 The district court also denied Appellant’s motion to strike specified affidavits submitted by Appellee. This issue is not raised on appeal.
7 Indemnification Agreement were in effect when the Declaration was issued;
Resolution No. 493 rendered the Declaration “final and binding;” Appellee
properly notified Appellant; Appellee’s settlement with Ecosalud was reasonable;
and Appellant is liable to Appellee for reimbursement of the principal amount, plus
interest. The district court therefore ordered judgment for Appellee in the principal
amount of $2.4 million, plus pre-judgment interest at the annual rate of 38.76%.
The district court interpreted “the normal banking interest rate that is then in effect
in Colombia[]”10 to mean the standard rate applied to pesos, noting that Appellant
knew when it executed the Bond and Indemnification Agreement “that payment
was contemplated in United States dollars.” This appeal followed.
II. DISCUSSION
A. Motion to Dismiss
Appellant asserts its motion to dismiss should have been granted since (1)
the doctrine of lis alibi pendens applies due to related, ongoing litigation in
Colombia, and (2) a 2-year statute of limitations under Colombian law had expired
prior to the filing of this case. We affirm as to these issues.
10 There are some inconsequential differences between translations of documents submitted by the parties into the record. For example, the Indemnification Agreement submitted by Appellant refers to “the normal banking interest rate that is then in effect in Colombia,” while the Indemnification Agreement submitted by Appellee refers to “the current banking interest rate in effect in Colombia.”
8 1. International Comity and Lis Alibi Pendens
We review the district court’s decision declining to apply the principle of lis
alibi pendens for abuse of discretion. See Philadelphia Gear Corp. v. Philadelphia
Gear de Mexico, S.A., 44 F.3d 187, 191 (3d Cir. 1994); Allstate Life Ins. Co. v.
Linter Group Ltd., 994 F.2d 996, 999 (2d Cir. 1993). Lis alibi pendens is a
doctrine rooted in international comity which permits a court to refuse to exercise
jurisdiction in the face of parallel litigation that is ongoing in another country. Cf.
Hilton v. Guyot, 159 U.S. 113, 163-64, 16 S. Ct. 139, 143 (1895) (defining “comity
of nations”); Turner Entm’t Co. v. Degeto Film, 25 F.3d 1512, 1518 (11th Cir.
1994) (discussing doctrine of international abstention where foreign court has
rendered final decision on the merits, but has not issued final judgment).
Appellant argues the district court should have stayed this case in the face of
the suit challenging the Declaration which is pending before a Colombian
administrative court. See supra, Part I. Specifically, Appellant argues the
invalidation of the Declaration by the Colombian court would render Appellee’s
indemnification claim baseless, as Appellee would have no obligation to pay on the
Bond. According to Appellant, the central issue in both this case and the
Colombian case is the validity of the Declaration, and Appellee and Appellant are
9 parties to both suits and are bound by the result of both suits.11 Deciding this case,
therefore, would effectively decide the pending Colombian case and violate
principles of international comity. Appellant also argues that, if this Court affirms
the district court’s judgment and the Colombian court subsequently invalidates the
Declaration, staying this case would avoid “a meaningless cycle of round-robin
litigation” in which Appellant would have to sue Ecosalud for recovery of its
reimbursement to Appellee. Finally, Appellant maintains this Court should invoke
lis alibi pendens here as we did in a related case. See Empresa Colombiana de
Recursos Para La Salud, S.A. v. Scientific Games, Inc., No. 97-8374 (11th Cir. Jan.
27, 1998), 136 F.3d 142 (11th Cir. 1998) (table).
The issue here is whether the district court abused its discretion in declining
to invoke the doctrine of lis alibi pendens. We conclude it did not.
The application of lis alibi pendens turns on whether a court “should
exercise its jurisdiction where parallel proceedings are ongoing in a foreign
nation . . . .” Turner, 25 F.3d at 1518 (emphasis added). The threshold question,
11 Appellant’s attorney, Dr. Andrew Abela-Maldonado, testified in his sworn affidavits that Appellee was found by the Colombian court to have a “direct interest” in the pending litigation, has intervened, and is entitled to file motions, request evidence, and set forth its procedural position. The “motion” filed by Appellee is its version of the facts in the Colombian case; it is not a request for judicial action. It also includes Appellee’s acknowledgment that it has been summoned as a “joint litigant” and its statement that it “agrees with what will be proved at trial and with the judgment that resolves the dispute . . . .”
10 therefore, is whether this case is parallel to the ongoing case in Colombia. See
Finova Capital Corp. v. Ryan Helicopters U.S.A., Inc., 180 F.3d 896, 898 (7th Cir.
1999). We conclude the two cases are not parallel since they involve materially
different issues, documents, and parties.
At issue in the Colombian case is the validity of the Declaration and,
therefore, whether Appellant breached the Lottery Contract and whether Ecosalud
properly invoked Clauses 42 and 43 of the Lottery Contract. These clauses provide
the bases for which Ecosalud may declare caducity and demand payment of the
penalty. By contrast, at issue in this case is whether Appellee is entitled to
reimbursement from Appellant under the terms of the Indemnification Agreement
and, by reference, the terms of the Bond. Thus, while this case has been
precipitated by Ecosalud’s issuance of the Declaration, it does not directly involve
the validity of the Declaration or the Lottery Contract.
Furthermore, the outcome of this case will not affect the outcome of the
Colombian case, as Appellant claims. This case will determine only whether the
penalty sum will be outlaid by Appellant rather than by Appellee. In other words,
if Appellee prevails, the risk of the overall transaction would be transferred from
11 Appellee to Appellant. A decision in this case would not, therefore, effectively
decide the outcome of the litigation currently pending in Colombia.12
Next, the parties are not the same. While Appellant’s expert, Dr. Andrew
Abela-Maldonado, testified in his affidavits that Appellee intervened in the
Colombian case and filed a “motion,” see supra note 9, the attorney who submitted
a filing for Appellee in the Colombian litigation, Dr. German Espinosa- Restrepo,
testified in a deposition that Appellee was not a party in the Colombian case.
Rather, Dr. Espinosa testified that Appellee, as a third party with a relationship to
the subject matter in litigation, was summoned into the action to state its position
in the suit. Dr. Espinosa testified that Appellee, in its filing with the Colombian
court, stated that “it has no relationship whatsoever with this action because its
rights that arose in the payment of the obligation will be pursued against
[Appellant] both based in the subrogation action [permitted under Colombian law]
or based on the indemnity agreement like in this case in the United States.” The
text of the filing bears out this characterization: “By virtue of the insurer’s right of
subrogation established by Article 1098 of the Colombian Commercial Code, and
12 We note that, should the Colombian court invalidate the Declaration, the court would have the option of immediately ordering Ecosalud to reimburse Appellant for its outlay. It would be feasible for the Colombian court to impose this remedy since Ecosalud and Appellant are the parties before it, and these parties should have notified the Colombian court of this Court’s affirming the district court’s judgment. This option would eliminate the need for Appellant to sue Ecosalud for reimbursement, as argued by Appellant.
12 the utilization of the counterguarantee [i.e., Indemnification Agreement] issued by
[Appellant], [Appellee] is attempting to collect at said company’s domicile
(Alpharetta – Atlanta, Georgia, USA).” Another expert for Appellee, Dr. Jorge
Mora Sanchez, similarly declared that Appellee is not a party to any litigation
between Appellant and Ecosalud in Colombia. Upon reviewing the expert legal
testimony on both sides, we conclude Appellee is not an integral party in the
pending Colombian litigation.
Finally, we draw a contrast between this case, where lis alibi pendens is not
applicable, and two cases cited by Appellant where the doctrine was applicable.
First, Empresa Colombiana de Recursos Para La Salud, S.A. v. Scientific Games,
Inc., No. 97-8374 (11th Cir. Jan. 27, 1998), and a pending Colombian case dealt
with the same issue — whether Ecosalud has the right to enforce the Executable
Document, required under Clause 27(3) of the Lottery Contract. See Empresa
Colombiana de Recursos Para La Salud, S.A. v. Scientific Games, Inc., No. 1:96-
CV-1586-FMH at 19-20 (N.D. Ga. Mar. 17, 1997) (order granting motion to
dismiss complaint and amended complaint based in part on lis alibi pendens).
These cases also directly involved the same parties — Appellant and Ecosalud.
Similarly, Posner v. Essex Ins. Co., 178 F.3d 1209 (11th Cir. 1999), and an
ongoing suit in Bermuda involved the same issue — the validity and therefore the
13 effect of homeowner insurance policies — and the same parties — a homeowner
and an insurance company. See id. at 1213. This case and the pending Colombian
case directly involve neither the same issues nor the same parties.
For the reasons stated above, we conclude the district court did not abuse its
discretion in declining to stay this case based on the doctrine of lis alibi pendens.
2. Statute of Limitations
The district court’s interpretation of foreign law is a question of law
reviewed de novo. See United States v. Gecas, 120 F.3d 1419, 1424 (11th Cir.
1997); see also Fed. R. Civ. P. 44.1 (“The court, in determining foreign law, may
consider any relevant material or source . . . whether or not submitted by a
party . . . . The court’s determination [of foreign law] shall be treated as a ruling
on a question of law.”); id. cmt. (“There is no requirement that the court give
formal notice to the parties of its intention to engage in its own research on an issue
of foreign law which has been raised by them . . . . [A]ppellate review [on a
question of foreign law] will not be narrowly confined by the ‘clearly erroneous’
standard of [Fed.] Rule [Civ. P.] 52(a).”).
Colombian law provides that general enforcement proceedings must be
brought within 10 years of the act giving rise to the cause of action. See
Colombian Civil Code § 2536. Colombian law further provides that “ordinary”
14 actions derived from an insurance contract or the provisions governing it must be
brought within 2 years from when the interested party knew or should have known
of the facts on which the action is based. See Colombian Commercial Code on
Insurance § 1081. Under Georgia law, an action for breach of contract must be
brought within 6 years of the alleged breach. See Ga. Code Ann. § 9-3-24 (1982 &
Supp. 2000).
Appellant contends the 2-year statute of limitations under Colombian law for
insurance claims applies to this action. Appellant first argues for the application of
Colombian law, generally. Appellant then cites the sworn affidavit of Dr. Abela
for the proposition that the Colombia Supreme Court of Justice held the 2-year
statute of limitations applies to all actions derived from or related to insurance
contracts. Appellant argues the 2-year limitation period covers the Indemnification
Agreement since it applies broadly to all insurance-related contracts and since
“[n]othing could be more intertwined with insurance than a claim by an insurer
against the policy holder, triggered by the payment of a claim to a third party.”
Appellant submitted at oral argument that the fact that the Indemnification
Agreement and the Bond were written on two separate pieces of paper should not
control, since the Indemnification Agreement could have been included as a clause
in the Bond contract. According to Appellant, the 2-year statute of limitations bars
15 Appellee’s claim since Appellee’s payment to Ecosalud, which occurred on
November 1, 1994, is the latest possible event giving rise to the suit, and the suit
was filed on April 2, 1998, more than 2 years later.
Appellee claims Georgia law and its 6-year limitations period apply. Under
this theory, Appellee’s suit is not barred.13 The district court agreed with
Appellee’s point of view, concluding Georgia’s 6-year statute of limitations
applies.
We begin with the question of whether the 2-year or the 10-year Colombian
statute of limitations would apply to this case, assuming arguendo that Colombian
law applies. Dependent as we are on legal experts to determine which of the
Colombian statutes of limitation apply, see generally Eastern Airlines, Inc. v.
Floyd, 499 U.S. 530, 539-40, 111 S. Ct. 1489, 1495-96 (1991), we observe a
“battle of the experts” in the record. Dr. Abela takes the position that the 2-year
statute of limitations applies broadly to all insurance-related suits. Furthermore, he
asserts that this case is insurance-related since it involves an insurance company
suing its insured for reimbursement under an indemnification agreement. Dr.
Abela therefore concludes the 2-year statute of limitations applies to this case.
13 Similarly, under Colombia’s 10-year statute of limitations for general enforcement proceedings, Appellee’s suit would not be barred.
16 According to Dr. Abela, the Colombia Supreme Court of Justice “held that Section
1081 of the Colombian Commercial Code on Insurance [including the 2-year
statute of limitations] applies to all actions that had their support in an insurance
contract, whether seeking the satisfaction of the right, or right related to the
insurance contract or related to its enforcement or seeking clarification or
recognition of the insurance contract.” Furthermore, the Supreme Court of Justice
“made special note of the independence and special application of [the 2-year
statute of limitations] to the prescription of all actions derived from insurance
contracts.” Dr. Abela cites another decision of the Colombia Supreme Court of
Justice which, he testifies, specifies that insurance companies, such as Appellee,
are entities that derive rights from insurance contracts under § 1081. According to
Dr. Abela, since the 2-year statute of limitations applies to actions “derived or
related to insurance,” Appellee’s claim is barred.
By contrast, Dr. Espinosa takes the position that the 10-year statute of
limitations applies. In his view, the Indemnification Agreement is not an insurance
contract, should be treated as a general contract, and is therefore governed by
§ 2536 of the Colombian Civil Code. In his sworn deposition, Dr. Espinosa
explains the Indemnification Agreement is not an insurance contract since it was
not issued by an insurance company and does not include an obligation to
17 compensate if a loss is suffered. According to Dr. Espinosa, the Indemnification
Agreement is a private contract whose reference to the Bond in no way subjects it
to the Insurance Code. In fact, Dr. Espinosa explains the Indemnification
Agreement cannot be governed by the Insurance Code since insurance contracts are
governed exclusively by the Insurance Code and cannot be modified by a private
contract. The Indemnification Agreement, as a private contract, is therefore by
definition outside the scope of the Insurance Code. In his deposition, Dr. Espinosa
expressly disagrees with Dr. Abela’s opinion.
Based on our review of this conflicting expert testimony in the record, we
conclude the 10-year statute of limitations would apply to this case, assuming
arguendo that Colombian law governs. We view the Indemnification Agreement
as separate and distinct from the Bond. We conclude that the reimbursement claim
under the Indemnification Agreement is not intertwined with the insurance claim
under the Bond.14 We decline to consider the possibility that the Indemnification
Agreement could have been integrated with the Bond contract. Further, we view
the Indemnification Agreement as a generic reimbursement contract that happens
to be precipitated by the execution of a separate insurance contract, the Bond. The
14 We assume arguendo, as asserted by Appellant, that the Bond is characterized as an insurance claim under Colombian law.
18 Indemnification Agreement lacks the elements that characterize an insurance
contract, such as issuance of a policy by an insurance company to an insured party,
an insured party’s obligation to pay a premium, and an insurance company’s
obligation to compensate for a covered loss. We understand the clause, “actions
derived from an insurance contract or the provisions governing it,” to mean
litigation arising from a relationship founded on an agreement that bears the
foregoing, traditional makings of an insurance contract. Colombian Commercial
Code on Insurance § 1081. To say that litigation premised on a contract where the
insured is obligated to reimburse an insurance company — the opposite of the
conventional insurance relationship — is covered by § 1081 of the Insurance Code
would be to assign to this statute too attenuated an interpretation.15
15 We note our review — or attempted review — of decisions of the Colombia Supreme Court of Justice cited by Dr. Abela. The case cited by Dr. Abela in ¶ 30 of his affidavit, dated May 8, 1998, and included in the record in English translation, discusses against whom and under what circumstances the 2-year ordinary and 5-year extraordinary statutes of limitation run pursuant to § 1081 of the Insurance Code. See Statute of Limitations in Insurance Contracts, Colombia Supreme Court of Justice, Civil Section, Dr. Jose Maria Esguerra-Samper, Justice in Charge (July 4, 1977). In the course of this discussion, the court explains that the event that triggers the limitations period “is not and cannot be anything other than the loss, which is defined in Article 1072 as ‘the realization of the insured risk,’ i.e., the occurrence of the future or uncertain act the occurrence of which gives rise to the insurer’s obligation to indemnify and correspondingly to the insured or beneficiary’s right to receive the indemnification . . . .” Id. at 1. In stating that a loss giving rise to an insurance claim is the only event that can trigger the 2- year limitations period, the Colombia Supreme Court of Justice strongly implies that § 1081 applies solely to conventional insurance contracts and policies, and not to those merely precipitated by or related to insurance contracts, like the Indemnification Agreement. The case cited by Dr. Abela in ¶ 25 of his affidavit dated May 8, 1998, see Contracto de Seguro, Prescripcion de Acciones, Colombia Supreme Court of Justice, Civil Section, Dr. Alberto Ospina-Botero, Justice in Charge (Mar. 4, 1989), seems not to have been submitted into
19 We therefore conclude the Colombian 10-year statute of limitations, rather
than the 2-year statute of limitations, would apply to this case, on the assumption
that Colombian law governs this case. Based on this conclusion, we need not reach
the question of whether Colombian or Georgia law applies. This case is not barred
under either Colombia’s 10-year limitation period or Georgia’s 6-year limitation
period.
B. Motion for Summary Judgment
We review de novo the district court’s grant of summary judgment, applying
the same standard as the district court. We view all evidence and factual inferences
reasonably drawn from the evidence in the light most favorable to the non-moving
party, here, Appellant. See St. Charles Foods, Inc. v. America’s Favorite Chicken
Co., 198 F.3d 815, 819 (11th Cir. 1999). “Summary judgment is appropriate when
there are no genuine issues of material fact and the movant is entitled to judgment
as a matter of law.” McCaleb v. A.O. Smith Corp., 200 F.3d 747, 750 (11th Cir.
2000) (citing Fed. R. Civ. P. 56(c)).
Appellant argues this case presents several issues of fact which preclude the
entry of summary judgment. The purported issues of fact are as follows: (1)
the record. More significantly, it has not been submitted into the record in English translation. We are therefore unable to consider this case.
20 whether the term of the Bond was renewed and, therefore, in effect when the
Declaration of Caducity was issued; (2) whether the Indemnification Agreement
was in effect when the Declaration was issued; (3) whether Appellee was obligated
to pay under the terms of the Bond; and (4) whether Appellee’s settlement with
Ecosalud was reasonable as a matter of law. We address each asserted issue of fact
and conclude no issue of material fact has been raised. We affirm the grant of
summary judgment and the principal judgment in the amount of $2.4 million.
1. Renewal of Bond
Appellant argues that Appellee renewed the term of the Bond without
authorization from Appellant, thereby unilaterally increasing the scope of the risk
Appellant faced under the Indemnification Agreement. Appellant also claims
Appellee sought additional security from Appellant as a condition to renewing the
Bond. Appellant argues this unilateral risk increase and demand for additional
security preclude Appellee’s claim that Appellee had an obligation to renew the
Bond automatically. Appellant next cites Ecosalud’s apparent threat to cancel the
Lottery Contract as evidence that the Bond was not meant to renew automatically.
According to Appellant, the Bond could have been renewed since Appellant did
not supply additional security and did not pay a premium for the Bond. It follows
21 that there is at least a question of fact as to whether the Bond was in effect when
the Declaration was issued.
Appellee argues both parties agreed to an amendment to the Bond, dated
May 15, 1992, under which the Bond automatically renewed every year that the
Lottery Contract remained in effect, as well as the year following the contract’s
expiration. According to Appellee, this amendment brought the Bond into
compliance with Clause 41(a) of the Lottery Contract. Appellee explains that
Wintech, the entity created by Appellant and two other companies to implement
the Lottery Contract, paid the premium for the renewed Bond. Since performance
of the Lottery Contract required the maintenance of the Bond, Wintech had the
contractual obligation, and thus express authority from Appellant, to pay for the
Bond’s renewal. Appellee contends Appellant’s allegations that Appellee sought
additional security and that Ecosalud threatened to cancel the Lottery Contract are
irrelevant in light of the express contractual provisions. According to Appellee, no
terms beyond those in the amendment were added to the Bond, and it was properly
renewed in accordance with its existing terms.
We agree with Appellee that there is no factual question as to whether the
Bond was renewed. We have reviewed the affidavit of C. Gray Bethea, Jr.,
Appellant’s General Counsel, wherein Mr. Bethea declared under oath that
22 Wintech sought to have Appellant sign a blank promissory note as a condition to
obtaining a new Bond and that Appellee, through Wintech, sought other assurances
from Appellant that it would issue security to Appellee. Mr. Bethea declared,
“[Appellant] did not agree to renew or replace the security for the Guarantee Bond,
nor did [Appellant] pay the premium for the new bond.” We have also reviewed a
letter from Wintech to Appellant which mentions Ecosalud’s alleged statement that
it would cancel the Lottery Contract if the Bond was not renewed shortly.
Parol evidence such as that described above, however, cannot be considered
in the face of an unambiguous, written guaranty agreement. See Rizk v. Jones, 251
S.E.2d 360, 361 (Ga. Ct. App. 1978) (“The cases are legion that a complete and
unambiguous instrument cannot be varied or contradicted by reliance upon
inconsistent parol statements.”) (internal quotation marks and citations omitted),
aff'd, 255 S.E.2d 19 (Ga. 1979); Health Serv. Ctrs. v. Boddy, 359 S.E.2d 659, 661
(Ga. 1987) (“Where the terms of a written contract are clear and unambiguous, the
court will look to the contract alone to the find the intention of the parties.”);
American Viking Contractors, Inc. v. Scribner Equip. Co., 745 F.2d 1365, 1371
(11th Cir. 1984) (applying Georgia law); see also In re Stratford of Texas, Inc.,
635 F.2d 365, 368 (11th Cir. 1981) (“Ordinarily, we should glean the contract’s
meaning without resorting to extrinsic evidence in accordance with the principle
23 that the language of an agreement, unless ambiguous, best represents the intention
of the parties.”).16 Since the text of the amendment whereby Appellee promised to
renew the Bond automatically is unambiguous, we decline to consider Mr.
Bethea’s affidavit and Wintech’s letter to Appellant.17 This amendment, dated
May 15, 1992, provides, “[Appellee] promises to automatically renew this policy at
the end of each period until the end of the term of effectiveness of [the Lottery
Contract], entered into with Ecosalud, S.A. and one year more, including the
extensions thereof. The taker [Wintech] promises to pay the respective premiums.”
This amendment unambiguously obligated Appellant and Appellee to renew the
Bond automatically every year until the expiration of the Lottery Contract, plus
one year. The Lottery Contract was to remain in effect through June 12, 1997,
under Clauses 2 and 68 of the Contract. In fact, the record shows the parties
complied with this amendment by agreeing to another amendment, dated March 2,
1993, by which they extended the Bond for another year, from March 12, 1993,
16 The parol evidence rule is a substantive rule of law to which the Erie doctrine applies. See, e.g., MCC-Marble Ceramic Center, Inc. v. Ceramica Nuova d’Agostino, S.p.A., 144 F.3d 1384, 1388-89 (11th Cir. 1998); Conway v. Chem. Leaman Tank Lines, Inc., 540 F.2d 837, 839 (5th Cir. 1976); Schewe v. Bentsen, 424 F.2d 60, 62 (5th Cir. 1970). This Court has not been advised of any contrary legal doctrine in Colombia which would apply in this case. 17 In any case, we note Mr. Bethea’s affidavit discusses only Appellee’s seeking to effect changes in the terms of the Bond; it does not refer to any actual changes to these terms. Additionally, we fail to see the significance of Ecosalud’s apparent belief that the Bond would not be automatically renewed, as Ecosalud is not a party to the Bond.
24 through March 12, 1994. Under the express terms of these amendments, the Bond
was in effect when the Declaration of Caducity was issued on July 1, 1993.
Moreover, the amendment obligating the automatic renewal of the Bond was
expressly agreed to in compliance with Clause 41(a) of the Lottery Contract. This
clause provides, “This bond shall remain in effect for the entire term of this
Agreement, including any extensions thereof, and for one additional year.” As
noted above, the Lottery Contract was to be effective through June 12, 1997.
Appellant’s apparent belief that the Bond need not have been renewed is therefore
questionable under the express terms of the Lottery Contract to which Appellant
was a party.
As to Appellant’s question of how the Bond was renewed, Appellant
concedes that “[t]he evidence suggests, but does not confirm, that Wintech paid the
premium for the Bond . . . .” We agree that Wintech paid the premium, since
Appellant, PKI Associates, and Daibutsu, Inc., the companies that formed Wintech,
are listed as the contractors on the Bond amendment that extended the Bond
through March 12, 1994.
Appellant argues, however, that Wintech was not a party to the Bond and
was not insured by it. This argument appears to be based on the fact that only
Appellant is listed as the contractor for the Bond policy dated March 12, 1992, and
25 effective from that date to March 12, 1993. However, this policy had expired
when the Declaration of Caducity was issued on July 1, 1993. At that time, the
effective policy was the amendment extending the Bond through March 12, 1994,
and Appellant, PKI, and Daibutsu are all listed as contractors on this document.
Furthermore, Clause 41 of the Lottery Contract required Appellant, PKI, and
Daibutsu to furnish a Bond which was required to remain effective through June
12, 1998. We conclude that the Bond was properly renewed, and there is no
question of material fact as to whether the Bond was in effect when the Declaration
of Caducity was issued.
2. Effectiveness of Indemnification Agreement
Appellant argues the Indemnification Agreement had a term of one year, and
the absence of an automatic renewal provision in the Agreement should be
construed to limit the Agreement to this term. Appellant claims it never consented
to an extension of the Agreement, and nothing on the face of the Agreement would
permit Appellee to extend the term of the Agreement unilaterally. According to
Appellant, it is therefore questionable whether the Indemnification Agreement was
in effect when the Declaration of Caducity was issued.
26 Appellee argues the express language of the Indemnification Agreement ties
its term of effectiveness to that of the Bond. The extension of the term of the Bond
therefore extended the term of the Indemnification Agreement.
We agree with Appellee. The Indemnification Agreement provides, “The
validity of this document shall be broad, and it shall remain in effect for a term
equal to that of the bonds issued by [Appellee].” The Bond was extended through
March 12, 1994, and Appellee was obligated to automatically renew it on an
annual basis through June 12, 1998. See supra Part II.B.1. According to its
express language, the Indemnification Agreement was likewise extended through
March 12, 1994, and subject to automatic renewal. The Indemnification
Agreement was therefore in effect when Ecosalud issued the Declaration of
Caducity.18
18 Appellant argues that reaching this conclusion would require us to improperly “revise or supplement an agreement under the guise of contract construction.” Sosebee v. McCrimmon, 492 S.E.2d 584, 586 (Ga. Ct. App. 1997). In Sosebee, the contract expressly mentions one specific situation, while the case involves a wholly different situation about which the contract is silent. Id. Here, by contrast, the Indemnification Agreement broadly states its term of effectiveness, without excluding any specific circumstances.
As discussed above, see Part II.B.1, parol evidence cannot to be considered in the face of an unambiguous, written agreement. See Rizk, 251 S.E.2d at 361; Health Serv., 359 S.E.2d at 661; American Viking, 745 F.2d at 1371; see also Stratford, 635 F.2d at 368. We therefore do not address the testimony of Dr. Abela in his third affidavit that the term of the Indemnification Agreement “would be equal to the term of the Guarantee Bond issued by [Appellee], that is one year.” Neither do we consider Mr. Bethea’s affidavit testimony that “[a]t no time did I ever think that the Indemnity Agreement extended beyond the one-year term of the Guarantee Bond.”
27 3. Obligation to Pay Under the Bond
The Indemnification Agreement requires Appellant “to immediately
reimburse [Appellee] for any sums that it pays to . . . ECOSALUD, in accordance
with the terms of . . . [the Bond] as indemnification for losses and any other
expenses or costs derived from said Performance Bonds.” The Bond requires
Appellee to pay Ecosalud when an issued Declaration of Caducity becomes “final
and binding.” The question, therefore, is whether the Declaration of Caducity is
“final and binding,” thereby obligating Appellee to pay Ecosalud under the terms
of the Bond and, in turn, obligating Appellant to reimburse Appellee under the
terms of the Indemnification Agreement. As discussed above, see Part I, Ecosalud
issued a Declaration of Caducity, Resolution No. 246, on July 1, 1993, and
affirmed this Declaration with Resolution No. 493, on October 15, 1993.
Appellant first argues the Declaration of Caducity cannot be final since it is
subject to the outcome of a pending administrative proceeding initiated by
Appellant and Wintech in Colombia. Second, Appellant argues the Declaration
was not final and Appellee did not have an obligation to pay Ecosalud $4 million
since Appellee’s property was never subject to imminent foreclosure. Specifically,
Ecosalud never took formal action to seize or foreclose upon Appellee’s property.
Even were Appellee’s property subject to seizure, Ecosalud would have had to
28 initiate a foreclosure proceeding in the Colombian Special Courts and obtain an
administrative order. Appellant believes that, during this process, Appellee would
have had the opportunity to defend against foreclosure by posting a bond or a
deposit in court. Appellant also contends Appellee could have sought a stay of any
potential enforcement of the Declaration.
Appellee argues that, at the time it made payment to Ecosalud, the
Declaration of Caducity was final and subject to execution. Appellee had the right,
under Colombian law, to appeal the Declaration and, in fact, initiated such an
appeal. According to Appellee, the Declaration became final and subject to
execution when Ecosalud confirmed the Declaration by issuing Resolution No.
493. Appellee contends the pending litigation challenging the Declaration does not
affect the Declaration’s finality. In Appellee's view, only the entry of a stay would
do so, and the Colombian administrative judge declined to issue a stay in this case.
Based on our review of the expert testimony in the record, we agree with
Appellee. In support of Appellee's position, Dr. Ramon del Villar, a legal expert
for Appellee, declared:
When Resolution 0246 was affirmed by Resolution 0493, it became[] firm, final and subject to execution by itself. . . . This possibility of execution . . . was not stayed because those resolutions were being challenged in an administrative tribunal. . . . I consider that once the administrative ruling became final, [Appellee] had to pay the amount agreed on the policy . . . . After the Tribunal denied the temporary
29 stay, [Appellee] was under an even greater pressure to pay Ecosalud to prevent execution and therefore attachment of its property.
Dr. Carlos Betancur Jaramillo, another legal expert for Appellee, similarly testified
that Resolution No. 493 rendered the Declaration final and executable. In his
words, “As soon as the Resolution No. 246 was made final by a decision of
[Resolution No.] 493, the act acquired executory right and it could be used to
execute the debtors.” Dr. Betancur explained that Resolution No. 246 was not final
and enforceable prior to the issuance of Resolution No. 493. Dr. Jorge Mora
Sanchez likewise averred that as a result of the issuance of Resolution No. 493,
Resolution No. 246 “became final and subject to execution. . . . [Therefore,] the
assets of [Appellee] . . . were subject to levy and seizure if [Appellee] did not pay
the US$ 4,000,000.”
Appellant relies heavily on the testimony of Dr. Abela to support its position
that the Declaration was not final when Appellee made payment to Ecosalud.
Nowhere, however, did Dr. Abela state that Resolution No. 246 was not final
subsequent to the issuance of Resolution No. 493. Dr. Abela testified that an
“administrative act could be subject to a judicial challenge before the competent
administrative courts, which will, ultimately, decide on its validity.” In addition,
Dr. Abela explained, “[T]hese administrative acts are bound to the final outcome of
said litigation [challenging the validity of the Declaration of Caducity], which is
30 still in process.” Although Dr. Abela testified that, subsequent to Ecosalud’s
dismissal of Appellee’s challenge to the Declaration, the administrative courts can
determine whether the Declaration is valid, he did not claim that such a judicial
challenge renders the Declaration not final. We therefore deem Dr. Abela’s
testimony consistent with our conclusion that Resolution No. 493 rendered the
Declaration “final and binding,” albeit subject to the outcome of the pending
litigation. We conclude there is no factual issue as to whether Appellee was
obligated to pay Ecosalud under the terms of the Bond.19
4. Reasonableness of Settlement
Appellant argues a factual question persists as to whether Appellee’s
settlement with Ecosalud for payment of $2.4 million was reasonable, since
negotiations were allegedly conducted without Appellant’s notification or
participation. Appellant claims it was notified of the settlement only after the
negotiations concluded.
19 We determine Appellant misses the point in arguing the Declaration was not final because Appellee’s property was not subject to imminent foreclosure and, in any event, Appellee would have had various opportunities to resist such foreclosure. Once the Declaration became final and enforceable upon the issuance of Resolution No. 493, Appellee was obligated to Ecosalud for $4 million, regardless of the steps Ecosalud took to enforce this payment and regardless of the optional recourses available to Appellee. Appellee owed Appellant no duty to delay meeting its obligation to Ecosalud. In any case, Appellee did initiate a challenge to the Declaration. In the mean time, Appellee acted properly and responsibly in meeting its obligation to Ecosalud pursuant to the Declaration of Caducity.
31 Appellee argues it was obligated to pay Ecosalud $4 million upon the
issuance of Resolution No. 493, and its negotiated settlement with Ecosalud was an
effort to mitigate its damages. Appellee maintains that, absent the settlement, it
would be seeking a reimbursement of $4 million, not $2.4 million. Appellee
believes this reduction in liability to be reasonable, as it benefits both Appellee and
Appellant. Appellee explains that, after the Declaration was issued, it notified
Appellant that Appellee’s property was subject to attachment. Furthermore, after
Resolution No. 493 was issued, Appellee notified Appellant that the obligation was
payable.20
We agree with Appellee that the settlement was reasonable. Appellant cites
the rule that “an indemnitee, after giving the indemnitor notice and an opportunity
to defend, could settle a lawsuit and claim indemnity upon a showing that the
decision to settle was reasonable.” Southern Ry. v. Georgia Kraft Co., 823 F.2d
478, 480 (11th Cir. 1987). This rule does not apply here. This principle governs
only where there is a lawsuit filed by a third party against an indemnitee, and the
indemnitee settles with the third party and demands payment from the indemnitor.
See id. In other words, the rule applies only where a claim has been filed against
20 We note that Appellant does not acknowledge Appellee’s notification subsequent to the issuance of Resolution No. 493, nor does Appellee mention its post-settlement demand for reimbursement from Appellant.
32 the indemnitee, but no final judgment has been entered against the indemnitee. In
such situations, as in Southern Railway, absent the settlement, there would be no
current obligation to pay the third party and thus no current indemnification
obligation. The indemnitee, therefore, must show the reasonableness of the
settlement to guard against the possibility that the indemnitee could increase the
obligation of the indemnitor for the benefit of the indemnitee.21
Here, by contrast, a final and executable obligation to pay Ecosalud
$4 million was imposed on Appellee, the indemnitee. See supra Part II.B.3. Due
to Appellee's obligation to pay, Appellant was obligated to indemnify Appellee for
the full $4 million Appellee expended. We conclude that Appellee’s settlement
with Ecosalud, which reduced Appellee's obligation to Ecosalud from $4 million to
$2.4 million, was inherently reasonable with respect to Appellant, since this
reduction in Appellee's obligation reduced, in turn, Appellant's obligation to
Appellee from $4 million to $2.4 million. The key here is that, absent the
settlement, Appellant would have been obligated to Appellee in the amount of $4
million. Under these circumstances, Appellee need not make an explicit showing
of reasonableness. Appellee also was not obligated to notify Appellant that
21 For example, the indemnitee could settle a case that would likely have been won on the merits in order to avoid the disturbance and expense of litigation.
33 settlement negotiations had begun or to accept Appellant’s input in the settlement
process, as was required in Southern Railway.22
C. Interest Judgment
Contract interpretation without resort to parol evidence is a question of law
reviewed de novo. See Luckie v. Smith Barney, Harris Upham & Co., 999 F.2d
509, 512 (11th Cir. 1993); Stratford, 635 F.2d at 368. Based on its interpretation
of the interest provision in the Indemnification Agreement, the district court
ordered Appellant to pay interest on the $2.4 million principal judgment at an
annual rate of 38.76%, which was the Colombian bank interest rate for pesos on
November 1, 1994, the date of Appellee’s payment to Ecosalud.
Appellant argues that applying the 38.76% rate to dollars, rather than to
pesos, grants Appellee a windfall. Appellant maintains the judgment day rule,
which governs obligations in foreign countries and in foreign currencies, should
apply, as the transaction occurred in Colombia, and Ecosalud recognized the
receipt of funds in pesos. Under this approach, the district court would have
applied the 38.76% interest rate to the pesos equivalent of $2.4 million and then
converted the sum of principal plus interest into dollars as of the date of judgment.
22 We need not address Appellant’s arguments that the Colombian Attorney General’s failure to approve the settlement supports the unreasonableness of the settlement and that there is no evidence in the record regarding Appellee’s alleged liquidity problems.
34 The effective interest rate would then be 4.22%. Alternatively, if Appellee is
correct that Appellant was obligated to pay in U.S. dollars, Appellant argues a
dollar transaction should carry a different interest rate than a peso transaction. The
interest judgment should, therefore, be set aside due to Appellee’s failure to prove
the Colombian bank interest rate on dollar transactions.
Appellee argues the district court’s application of the 38.76% rate to dollars
should be affirmed. Appellee contends the payment should be considered in terms
of dollars and the judgment day rule should not apply. Appellee points out, inter
alia, the Indemnification Agreement references sums paid under the Bond which
states the insured amount as “US$ 4,000,000,” and Ecosalud’s official receipt
references a check for 1.00626 billion pesos exchanged for $1.2 million, and two
checks for $300,000 and $900,000, respectively. Appellee next argues the interest
rate unambiguously set forth in the Bond is 38.76% — the Colombian banking
interest rate on November 1, 1994. Appellee contends the application of any other
rate would rewrite the Bond contract.
We hold the district court erred in applying a 38.76% annual interest rate to
the $2.4 million principal judgment. We reach the following conclusions: (1) the
Bond and the Indemnification Agreement contemplated payment in U.S. dollars,
and (2) the applicable interest rate is therefore that which Colombian banks would
35 have applied to U.S. dollar deposits on November 1, 1994. Our conclusions are
grounded wholly in the language of the Bond and the Indemnification Agreement.
First, we conclude these contracts require Appellant to reimburse Appellee
in U.S. dollars. The Indemnification Agreement provides, “[Appellant] agrees to
immediately reimburse [Appellee] for any sums that it pays to [Ecosalud] in
accordance with the terms of . . . the ‘Performance Bonds’ . . . .” Every Bond
policy issued sets forth “US$4,000,000” as the “Insured Amount” or the “Present
Insured Amount.” The express terms of these agreements therefore show the
payable amount in U.S. dollars. In light of this express language, we attach no
significance to the disputed intent of the parties, which is allegedly manifested in
Ecosalud’s written receipt and Appellee’s checks. See Rizk, 251 S.E.2d at 361;
Health Serv., 359 S.E.2d at 661; American Viking, 745 F.2d at 1371; see also
Stratford, 635 F.2d at 368. Given our conclusion that reimbursement was required
in dollars, we decline to apply the judgment day rule, as urged by Appellant.
Second, the Indemnification Agreement provides, “The sums paid by
[Appellee] to ECOSALUD in accordance with the Performance Bonds shall accrue
interest at the current banking interest rate in effect in Colombia.” The “current
banking interest rate in effect in Colombia” may be different for peso deposits than
it is for U.S. dollar deposits. There is no valid reason that the “current banking
36 interest rate” must denote one numerical rate for all deposits, regardless of
currency. The most straightforward way to understand “current banking interest
rate” is the interest rate a Colombian bank would apply, as a matter of course, to a
deposit of any given currency. From this record, we do not know the interest rate a
Colombian bank would apply to U.S. dollar deposits.23 We therefore remand for
the district court to make this factual determination.24 We hold the district court
should apply the interest rate that a Colombian bank would have applied to a U.S.
dollar deposit on November 1, 1994. In so holding, we do not rewrite the Bond
agreement; to the contrary, we fulfill its plain meaning.
III. CONCLUSION
As an initial matter, we affirm the district court’s denial of Appellants’
motion to dismiss. We conclude the district court did not abuse its discretion in
declining to stay this case based on the principle of lis alibi pendens. Additionally,
23 Appellee relies on testimony by Dr. Jorge Mora Sanchez in which he states, "The normal banking interest rate in effect on 1 November 1994 in Colombia was 38.76 percent per annum." Since the Indemnification Agreement is not ambiguous, we need not address this parol evidence. See Rizk, 251 S.E.2d at 361; Health Serv., 359 S.E.2d at 661; American Viking, 745 F.2d at 1371; see also Stratford, 635 F.2d at 368. Furthermore, we do not accept the premise underlying Dr. Sanchez's statement — that the 38.76% interest rate for pesos automatically applies to U.S. dollars as well. 24 It would make sense that Colombian banks do not apply the same interest rate to peso deposits as to dollar deposits, and that Colombian banks take into account the dollar-peso exchange rate in determining the interest rate applied to U.S. dollar deposits. Nevertheless, we make no assumptions here and remand to the district court to make these factual findings.
37 we conclude this case is not barred by the statute of limitations, regardless of
whether Colombian or Georgia law governs. If Colombian law governs, the 10-
year statute of limitations for general enforcement proceedings would apply. If
Georgia law governs, the 6-year limitation period for contracts would apply.
Either way, this suit is not time barred.
Reaching the merits, we affirm the district court’s grant of summary
judgment and its award of a principal judgment in the amount of $2.4 million. We
conclude Appellant failed to raise an issue of material fact. Specifically, we
determine the following: (1) the Bond was renewed; (2) the Bond and the
Indemnification Agreement were in effect when the Declaration of Caducity was
issued; (3) Appellee was obligated to pay under the Bond; and (4) Appellee’s
settlement with Ecosalud was reasonable.
Finally, we conclude the district court erred in applying an annual, pre-
judgment interest rate of 38.76%. We therefore vacate the penultimate paragraph
of Part III of the district court's order dated September 28, 1999, the final 12 words
of Part III of the order, the order’s direction to enter judgment for interest at an
annual rate of 38.76%, and the judgment's award of interest at this rate.
Furthermore, we remand for the district court to determine the interest rate
Colombian banks would have ordinarily applied to a deposit of U.S. dollars on
38 November 1, 1994, and to recalculate the interest judgment against Appellant
according to this rate.
AFFIRMED IN PART, VACATED IN PART, AND REMANDED WITH
INSTRUCTIONS.