523 B.R. 339
D.P.R.2014Background
- RCC filed Chapter 11 in the Bankruptcy Court; PRHTA was a defendant in three adversary proceedings for unpaid public works compensation.
- Bankruptcy Court ruled in RCC’s favor in 2009, ordering nearly $12,000,000 plus prejudgment interest at 6.5% from substantial completion.
- PRHTA appealed; the First Circuit partially affirmed in 2012 and remanded for recalculation of extended overhead damages and prejudgment interest issues.
- On remand, the Bankruptcy Court recalculated extended overhead and held prejudgment interest appropriate at 6% under article 1061, from substantial completion dates to final payment.
- PRHTA challenged waiver, start date, and end date of prejudgment interest; the district court reviews de novo on issues of law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Waiver of article 1061 prejudgment interest | RCC preserved rights via Rule 59(e) filings and prior pleadings. | PRHTA contends RCC waived rights by not raising 1061 earlier. | RCC did not waive under Rule 59(e) exception; 1061 applies. |
| Starting date for prejudgment interest under article 1061 | Substantial completion triggers right to interest. | Interest should begin when principal becomes due. | Interest accrues from substantial completion dates per Master Concrete. |
| Ending date of prejudgment interest | Interest continues until payment of principal to indemnify default losses. | Federal post-judgment interest applies after judgment date; avoid double charging. | Prejudgment interest ends on payment date; separate from post-judgment interest. |
Key Cases Cited
- In re Redondo Constr. Corp., 678 F.3d 115 (1st Cir.2012) (waiver/Rule 59(e) exception for prejudgment interest raised on appeal)
- Redondo Constr. Corp. v. P.R. Highway & Transp. Auth. (In re Redondo Constr. Corp.), 505 B.R. 388 (Bankr.D.P.R.2014) (remand on extended overhead, 1061 basis, and accrual periods)
- Master Concrete v. Comp. de Fomento Recreativo, 152 D.P.R. 616 (D.P.R.2000) (substantial completion triggers payment of balance; automatic effects)
- Piovanetti v. Vivaldi, 80 D.P.R. 108 (1957) (6% legal interest after default absent agreement)
- Rivera v. Crescioni, 77 D.P.R. 47 (1954) (California-like rule cited on interest as indemnity)
- CMM Cable Reps., Inc. v. Ocean Coast Props., Inc., 97 F.3d 1504 (1st Cir.1996) (Rule 59(e) motions for prejudgment interest contexts)
- Crowe v. Bolduc, 365 F.3d 86 (1st Cir.2004) (Rule 59(e) relevance to prejudgment interest challenges)
- Lassman v. Keefe (In re Keefe), 401 B.R. 520 (1st Cir. BAP 2009) (postjudgment interest under 28 U.S.C. § 1961 governs bankruptcy judgments)