Puerto Rico Highway & Transportation Authority v. Redondo Construction Corp. (In Re Redondo Construction Corp.), 820 F.3d 460

Background

Redondo Construction contracted with the Puerto Rico Highway & Transportation Authority (the Authority) on three construction projects and later sued for extra compensation; Redondo sought prejudgment interest (6–6.5% p.a.).
Redondo filed claims in bankruptcy; the bankruptcy court awarded damages and prejudgment interest but did not initially state the legal basis for interest.
This Court in Redondo III vacated the prejudgment-interest award and remanded for a determination of the proper legal basis and accrual periods.
On remand the bankruptcy court awarded prejudgment interest under Puerto Rico Civil Code Article 1061 (6% p.a.) from dates of substantial completion through the Authority’s final payment; the district court affirmed.
The Authority appealed, arguing Redondo forfeited its Article 1061 claim, that accrual start/end dates were wrong, and that federal law governs postjudgment interest.
The First Circuit affirmed that Redondo preserved its Article 1061 claim and start dates, but held federal law (28 U.S.C. § 1961) exclusively controls postjudgment interest and remanded to recalculate to avoid double recovery.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Redondo forfeited the Article 1061 prejudgment-interest claim	Redondo: preserved via response to Rule 59 motion and alternative theory; need not have pre-argued before judgment	Authority: Redondo raised interest under wrong vehicle and failed to develop Article 1061 pre-remand	Held: No forfeiture — Article 1061 was sufficiently preserved and developed in Rule 59 response
Whether judicial estoppel or law-of-the-case barred Article 1061 claim	Redondo: not inconsistent with earlier § 7109 argument; alternative theories compatible	Authority: earlier focus on § 7109 means Article 1061 was newly asserted and barred	Held: No estoppel; prior statements were not inconsistent and remand did not bind bankruptcy court from considering pre-remand filings
Proper start date for Article 1061 interest accrual	Redondo: accrual begins at default when Redondo fulfilled its obligations (substantial completion)	Authority: accrual should begin when Redondo filed its complaints (demand)	Held: Start dates at substantial completion (contracts are mutual obligations) are correct under Puerto Rico law
Whether Article 1061 interest may run past entry of judgment or co-exist with § 1961 postjudgment interest	Redondo: Article 1061 should apply through final payment; could coexist	Authority: Federal § 1961 exclusively governs postjudgment interest; overlap causes double recovery	Held: § 1961 exclusively controls postjudgment interest; vacated and remanded to calculate § 1961 interest and reduce Article 1061 award to avoid overlap

Key Cases Cited

In re Redondo Constr. Corp., 678 F.3d 115 (1st Cir. 2012) (prior remand addressing legal basis for prejudgment interest)
Vázquez-Filippetti v. Cooperativa de Seguros Múltiples de P.R., 723 F.3d 24 (1st Cir. 2013) (federal law governs postjudgment interest in federal suits)
In re Redondo Constr. Corp., 700 F.3d 39 (1st Cir. 2012) (postjudgment interest is mandatory under federal law)
Field v. Mans, 157 F.3d 35 (1st Cir. 1998) (prevailing party not required to advance alternate theories before adverse challenge)
Oserneck v. Ernst & Whinney, 489 U.S. 169 (1989) (prejudgment-interest motion may be treated as Rule 59(e) motion)
Freeman v. Package Mach. Co., 865 F.2d 1331 (1st Cir. 1988) (plaintiff entitled to only one full recovery)