USCA1 Opinion

UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT
____________________
No. 93-2115
No. 93-2116
IN RE SAN JUAN DUPONT PLAZA HOTEL FIRE LITIGATION.
__________
WILLIAM LYON and HOLDERS CAPITAL CORPORATION,
Appellants, Cross-Claimants, and Cross-Defendants,
v.
PACIFIC EMPLOYERS INSURANCE COMPANY
and FIRST STATE INSURANCE COMPANY,
Appellees, Cross-Defendants, and Cross-Claimants.
____________________
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Raymond L. Acosta, U.S. District Judge]
___________________
____________________
Before
Boudin, Circuit Judge,
_____________
Bownes, Senior Circuit Judge,
____________________
and Stahl, Circuit Judge.
_____________
____________________

Maureen E. Mahoney and Theodore A. Pianko with whom Milton

___________________
___________________
_______
Miller, Michael Bruce Abelson, Max L. Gillam, Latham & Watki

______ _______________________
______________
________________
Etienne Totti Del Valle, Dominguez & Totti and Sidley & Austin were
_______________________ _________________
_______________
joint briefs for William Lyon and Holders Capital Corporation.
Ralph W. Dau with whom Peter B. Ackerman, O'Melveny & Mye
_____________
___________________ ________________
Raul E. Gonzalez-Diaz, A.J. Bennazar-Zequeira and Gonzalez & Benna
______________________ ______________________
________________
were on brief for Pacific Employers Insurance Company.
Homer L. Marlow with whom Marlow, Connell, Valerius, Abrams, L
________________
____________________________________
& Adler was on brief for First State Insurance Company.
_______
____________________
January 27, 1995
____________________

BOUDIN, Circuit Judge.

_____________

These two

appeals stem from the

third and final phase of the San Juan Dupont Plaza Hotel fire
litigation1
William

Lyon and

challenge the
excess

and

concern

coverage.

Appellants

Capital

Corporation

("Holders")

Holders

district

liability

insurance

court's determination

policies

Insurance Company ("PEIC") and

issued

by

that

Pacific

certain
Employers

First State Insurance Company

("FSIC") to

Lyon

and others

fire-related obligations.

do not

cover the

appellants'

We affirm the district court.

I.

Lyon is a principal shareholder and director of Holders,

a holding company that

invested in various hotels, including

the

Plaza.

ill-fated

Dupont

In

phase

of

the

fire

litigation, the fire victims sued Holders and Lyon as well as

the hotel and other defendants affiliated with it.
concerned liability
services to

the

claims

hotel, and

liability of insurers.)

against suppliers
phase

III sought

(Phase II

of goods
to

and

allocate

Hoping to establish Lyon's personal

____________________
1See In re Two Appeals Arising Out of San Juan Dupont
___ __________________________________________________
Plaza Hotel Fire Litig., 994 F.2d 956 (1st Cir. 1993); In re
_______________________
_____
San Juan Dupont Plaza Hotel Fire Litig., 989 F.2d 36 (1st
_________________________________________
Cir. 1993); In re Nineteen Appeals Arising Out of San Juan
________________________________________________
Dupont Plaza Hotel Fire Litig., 982 F.2d 603 (1st Cir. 1992);
______________________________
In re San Juan Dupont Plaza Hotel Fire Litig., 958 F.2d 361
______________________________________________
(1st Cir. 1992) (table); In re San Juan Dupont Plaza Hotel
___________________________________
Fire Litig., 907 F.2d 4 (1st Cir. 1990); In re San Juan
____________
________________
Dupont Plaza Hotel Fire Litig., 888 F.2d 940 (1st Cir. 1989);
______________________________
In re San Juan Dupont Plaza Hotel Fire Litig., 859 F.2d 1007
_____________________________________________
(1st Cir. 1988); In re Recticel Foam, 859 F.2d 1000 (1st Cir.
___________________
1988).
-2-2-

liability (and so

to reach his

victims sought in

phase I to pierce Holders'

and

to

prove

controlled

that

by

the

personal fortune), the

hotel

was

corporate veil

actually

de facto partnership
_________

of

fire

managed

Holders'

and
three

shareholders, Brian Corbell, William Eberle and Lyon (the socalled "Holders partnership").
In May

1989, after

eight weeks

of trial, Holders

and

Lyon, along with the other phase I defendants, entered into a

multimillion
victims.

dollar

settlement

agreement

Under the agreement, Lyon

from his various

policy

respectively,
Lyon

if

limits to
subject to

it was

policies did not

affect the

the

Lyon,

PEIC and

$3 million

their right

later determined

in

cover the hotel fire.

victim's

settlement fund.

Appeals, 982 F.2d at 606.

_______

fire

was to seek contribution

insurers, which included PEIC and

fund his portion of the settlement.

their

with

FSIC both paid

and

to seek

$2 million,
repayment by

phase III
Phase III
See
___

FSIC, to

that their
does not

In re Nineteen
_______________

The insurance policies

at issue

here were

part of

an

excess coverage plan for the William Lyon Company, a southern

California residential

building and development

well as numerous other listed

Lyon himself.
and

affiliated insureds, including

Within the excess coverage framework, the PEIC

FSIC policies

coverage;

company, as

provided

first-level

second- and

excess

third-level excess

coverage

was

provided

by

-3-3-

National

Union

himself,

no

Fire Insurance

entity

connected

Company.
to

Other than

the

Dupont

Plaza

Lyon
was

expressly listed as an insured.

In phase III
filed

of the litigation,

claims in the district

FSIC were responsible to

Holders and Lyon

court to affirm

both

that PEIC and

provide coverage for the fire.

To

this

end appellants needed a theory that would not only show

that

the

explain

policies
how Lyon

extended
or Holders

under the policies; after

to Lyon
could be

or

Holders

but also

liable for

the fire

all, the hotel was not

insured by

PEIC or

FSIC; and in

view of

the settlement, no

court had

ever

held Lyon or Holders liable for the fire.

Accordingly,

Lyon

and

by

victims

Holders adopted

the

position taken

the fire

in phase I of the litigation, i.e., that Holders was

____

merely a corporate shell and that Lyon had operated the hotel
through the alleged Holders partnership.
On this theory, Holders
the PEIC policy based
clause (they

and Lyon claimed coverage under

on a so-called "omnibus" clause;

argued) extended coverage to

this

any entity (here,

Holders and the Holders partnership) in which a named insured

(here, Lyon) had
for insurance.

management responsibility or responsibility

Lyon claimed coverage for

FSIC policy based on a

argued

himself under the

"joint venture endorsement," which he

explicitly covered

his

involvement in

the

alleged

-4-4-

Holders partnership.

Both

policy provisions are

set forth

below.
On December 7, 1992,
judgment
covered
court

for

PEIC

and

Holders' or
held

ambiguous
against

the district court granted summary

inter
_____

FSIC, ruling

that

Lyon's fire-related
alia
____

that

PEIC's

Lyon,

its

policies, which
their sole

obligations.
omnibus

supposed

drafter;

and

The

clause

limited coverage for

proprietorships,

ordered Lyon

to reimburse

dollars they had advanced

awarded

PEIC and

that

applicable to both the

was

sole

PEIC and FSIC

precluded coverage

PEIC

individual insureds to

business involvement in the Dupont Plaza.

amount.

policy

as to who was covered and thus should be construed

proprietor endorsement

then

neither

for

Lyon's

The district court

and FSIC

the five

million

for the settlement obligations and

FSIC

pre-judgment

interest on

the

These appeals followed.

II.

Because

the

district court

judgment,

Goldman
_______

v. First Nat'l Bank of Boston, 985

___________________________

policy.
in

1993), and first

the

of

summary

(1st Cir.

we review

disposed
court's

the case

ruling de
__

on

novo,
____

F.2d 1113, 1116

address coverage under

the PEIC

Holders and Lyon claim that the district court erred

finding that the omnibus clause was ambiguous and then in

construing it

against Holders and

the clause unambiguously extends

Lyon.

They

contend that

coverage to Holders and the

-5-5-

Holders

partnership and,

construed

if

ambiguous, then

it should

be

against the insurers or at least a trial should be

provided.
The
insured

omnibus clause is contained at the end of the named

endorsement

beginning with

which

lists

by

the William Lyon Company

many business entities

name

53

insureds,

and including among

two individuals, one being Lyon.

The

omnibus clause reads:

NAMED INSURED ENDORSEMENT
It is understood and agreed that item 1 of the
policy declarations ["Name of Insured"] shall read
as follows:
. . .
The interest of the William Lyon Company or any of
its
affiliated entities
in any
joint power
agreement, joint venture, partnership or similar
entity, and any entity in which any named insured
owns
majority
interest, possesses
management
responsibility, or responsibility for insurance.
Holders

and

Lyon

treat the

last

17

sentence (beginning

"any entity") as an

assert

is

that

Lyon

"named

words

of the

final

independent clause;

insured"

and

possessed

management
alleged

or

insurance

Holders

Holders and the

responsibility

partnership,

or

both;

for

Holders,

and conclude

the
that

Holders partnership are each "any entity" of

the type described

in the last 17 words and thus are insured

under the policy.

One
trace

may wonder at first

through the omnibus

glance why it

clause to Holders

is necessary to
or the Holders

partnership, since under an earlier clause of the endorsement

-6-6-

Lyon himself is unquestionably a named

a

insured.

However, as

partner or manager of Holders, Lyon was barred from making

a claim

in his own right

PEIC policy's sole

as a named insured

because of the

proprietor endorsement, which

contains a

special limitation on coverage otherwise available to a named

individual insured.

The sole proprietor endorsement reads as

follows:
INDIVIDUAL AS NAMED INSURED
It is agreed that if any named insured designated
in the declaration is an individual, coverage under

this policy for such individual named insured shall

apply only with respect to the conduct of a
business of which he is the sole proprietor.
In our

view this

provision excludes

coverage not

only for

Lyon claiming directly but also for Holders, or the

supposed

Holders partnership, claiming through

clause.

This is

Lyon under the omnibus

PEIC's first argument in its

appeals brief

and we think that it is persuasive.

The parties

are agreed that California

interpretation of the insurance

there is nothing
that

in the

relates directly

law governs the

policies in this case.

California precedents
to the

interplay between

clause and a

sole proprietor endorsement.

the language

of the two provisions head-on,

cited to

But
us

an omnibus

We thus confront
mindful that an

insurance policy--like any other contract--is to be construed

as a whole

and not by reading its parts

in isolation.

Cal.

-7-7-

Civ. Code

1641; Bank

of the West

v. Superior

Court, 833

_________________

_______________

P.2d 545, 552 (Cal. 1992).

Reading the parts together, we think that a reference to
"any named insured"

in the omnibus

company or individual named

clause fairly means

any

in the named insured endorsement

but subject to any other language that directly restricts the

__________
extent to which that company or individual is classified as a
named insured.

The sole proprietor

endorsement does impose

such a restriction as to Lyon: it says that even though named

as

an insured,

conduct

he

is covered

of a business of

As already

noted, it is

personally

liable

for

"only

with respect

which he is

fire,

the

the sole proprietor."

for this reason that

the

to

would

not

Lyon, even if
be

directly

are not faced with a

claim by

protected as a named insured.

Appellants argue that we
Lyon

in

his own

right

but

rather with

entity"--here, Holders and the Holders

Lyon

as

"any named

responsibility.
endorsement,
to

the

has

by virtue

claim by

"any

partnership--in which

management or

of the

insurance

sole proprietorship

Lyon is "any named insured" only with a respect

conduct

proprietor.

Yet

insured"

of a

A sole

business

of

proprietorship

which
is a

he is

the

business form

sole
in

which an individual--rather than, for example,

a partnership

or

Black's
Law
_____________

corporation--owns

Dictionary,
__________

the

business.

1392 (6th ed. 1990).

See
___

No one claims that Holders

-8-8-

or the Holders partnership fits this definition; nor is there

any

plausible

claim

that

Lyon's

participation in

either

entity was in the capacity of sole proprietor.

In

sum,

proprietor

we

think

that

by

its

language

endorsement--in describing the

the

sole

coverage for "any

named insured" who is an "individual" limits other references

to Lyon as

"any named insured" wherever that phrase appears.

Where the entity claiming through Lyon in

is

not a

entity

sole proprietorship,

was not

business,
clause.

in

then that

And while the

ambiguities of

and his relationship

his capacity
entity is

the omnibus clause

as
not

to the

sole proprietor
covered by

concept of ambiguity

its own, the policy language

of

the omnibus

is not without
does not appear

to us to be fuzzy or unclear on this point.

Insurance
continuous

policies

narrative

succession of

are commonly

but, as

this

constructed not
one

juxtaposed clauses defining

as a

illustrates, by
the insured,

a
the

risks

covered,

the

extent

and

amount

of

coverage,

and

(typically) the various limitations or restrictions on all of

these concepts.
some

Such

complicated

a document not only invites

Christmas

toy,

virtually

but, like

demands

that

different parts be inserted into one another according to the

instructions.

Here,

the

fact that

endorsement and

the omnibus clause

the

sole

proprietor

pivot on the

same words

-9-9-

("any named insured") makes

it especially easy to

read them

together.
Appellants respond by asserting that the sole proprietor
endorsement imposes no limitation
other

than an

purports

individual

to restrict

on coverage for any entity

because

the

"coverage under

individual named insured .

________________________

. ."

endorsement
this policy

The "function

of the endorsement, appellants say, was to

itself
for such
________

and purpose"

limit coverage to

business, as opposed to
that PEIC has
endorsement

personal, risks.

not previously relied

as it now

Finally, they

on the sole

does and has

say

proprietor

therefore "waived" this

interpretation as a ground for sustaining the judgment below.

We

think

that

the underscored

consistent with reading

the named

such a named insured

insured:

is

the limitation to apply

"such individual named insured"

through
_______

language

since

Holders cannot claim coverage

entirely

not only to

but also any entity claiming

based on its relationship with

Lyon could

not claim

coverage,

derivatively through Lyon.

As

for the purpose and function argument, the endorsement on its

face does not draw a personal versus business distinction; it
restricts claims

to one specific business

an individual may
excluding
jointly

act, namely, as

a sole proprietor,

other possibilities (e.g.,

____
owned company)

that might

appellants' claims.

-10-10-

capacity in which

partner, manager
otherwise be

while
of a

helpful to

As

for

waiver, appellants

sentences in

their reply

confine

themselves

brief, offer no

to two

details, and

can

fairly be said to have waived the waiver argument themselves.

See Ryan
___ ____
1990).
is

v. Royal Ins. Co., 916

________________
Even if they

closely

on which

against

FSIC.
to

surprised

to see

although

the district
Under

difficult

734 (1st

had not, the argument on which

related to,

ground

F.2d 731,

not

that

court disposed

Holders

the argument

or

as the

we rest

identical with,

these circumstances,

imagine

Cir.

the

of

the claim

it is

somewhat

Lyon

was

first one

greatly
in PEIC's

appellate brief.
2.

The

FSIC

policy

identical questions
itself

does

not

to

terms" this
any

overlapping

relating only to Lyon.

contain

establish coverage, Lyon

relating

presents

the omnibus
points to

joint ventures.

but

not

The FSIC policy

endorsement,

a different

According to

endorsement "provides coverage `in

so

to

endorsement

Lyon,

"by its

the event of

occurrence caused by or arising out of any joint venture

. . . or partnership (hereinafter joint venture) in which the

___
insured has an interest.'"
_______

Therefore, Lyon says, the alleged

Holders partnership is entitled to coverage.

This

argument

misleading, quotation

rests
from

on

selective,

the joint

Its opening paragraph reads in full:

venture

and

we

think

endorsement.

It is agreed tjay [sic] in the event of any

occurrence caused by or arising out of any joint
-11-11-

venture, co-venture, joint lease, joint operating

agreement
or
partnership
(hereinafter
joint
venture) in which the insured has an interest, the
limit of liability of the company under this policy
shall be limited to the product of:
There follows a formula

designed, broadly speaking, to limit

the insurer's liability

to the share of the partner who is a

named

insured.

On its face, this endorsement is designed to

limit liability and not to extend coverage to any partnership

not

otherwise covered

(a number

of partnerships

that

joint

are named

insureds).
Thus,
extends

the

claim

the

venture endorsement

protection to any partnership in which Lyon holds an

interest

appears to be mistaken.

matter because Lyon is

a named insured under the

is entitled to claim in his

that there

But this does not end the

was a partnership

policy and

own right as a partner (assuming

and subject

to the

formula's

limitation),
Lyon's

unless

the

own protection.

FSIC

policy

otherwise

restricts

The district court found that it did

and we agree.
Although

the FSIC

policy itself

does not

sole proprietor endorsement contained

does have a provision,
policies,

providing

provisions to the

contain the

in the PEIC policy, it

apparently common in excess liability

that

"[t]his

policy,

except

contrary appear herein, is

where

subject to all

of the conditions, agreements, exclusions and limitations

and

shall follow

the underlying

policies in

of

all respects,

-12-12-

including changes by endorsement."

The

lead

Union,

excess

insurer,

National

policy issued by the

contains

sole

proprietor endorsement (as does the PEIC policy).

The

district

endorsement
"subject to"
for

was

court

adopted

held
by

provision just

the Holders partnership.

that

the

the FSIC
quoted, and

sole

policy

proprietor
through

the

precluded coverage

Lyon does not dispute that the

sole proprietor endorsement would be decisive if it applied-manifestly, it would bar

argues

that

the

his own claim as a

sole

proprietor

incorporated because

it is

extended by the FSIC

policy.

joint

venture

grants

partner--but he

endorsement

inconsistent

is

with the

coverage

He points specifically

endorsement which

not

to the

(allegedly) "affirmatively
_____________

coverage to William Lyon in his capacity as a partner

or joint venturer . . . ."

This conflict
endorsement

is wholly

does not grant

imaginary.

The

joint venture

coverage to William

Lyon in his

capacity as partner; by its terms, it does not grant coverage

to any partner or
___

partnership but rather (as

already noted)

restricts the extent of the protection available to otherwise

covered

partnerships

insureds).
insured, nor

The

(e.g.,
____

partnerships listed

alleged Holders partnership

has Lyon suggested any

as

named

is not a

named

other basis--apart from

the joint venture endorsement--by which the partnership might

be covered.

-13-13-

The result would

not change even

if the joint

endorsement were read affirmatively to extend

venture

coverage under

the FSIC policy to all partnerships where a named insured was

a partner.
of the

For reasons already indicated

PEIC policy,

we think that

would still be restricted

(incorporated

by

the

Lyon as a

named insured

by the sole proprietor endorsement

"subject

partnership

claiming

seeking

take advantage

to

in our discussion

through

to"
him

endorsement);

would

of his

and

impermissibly

status

as a

a
be

partner, a

status in which he has no protection.

Once

again, there

between the joint venture

The

joint

venture

used as

the

insured without
true

under

and sole proprietor

the named
basis for

the

FSIC

covering

individuals.

another is

of

to

protect

partner status

the partnership,

to capacity.

policy

endorsements.

continue

insured, whose

limitation as

corporations) except
provision by

irreconcilable conflict

endorsement would

partnerships where
was

would be no

all
The

insureds

be

(e.g.,
____

restriction of

not automatically a

both can continue to perform a function.

That would

was

one

conflict where

See Cal. Civil Code

___

1641, 1652.
To
language,

conclude
neither

as to
the

coverage
PEIC

nor

claims:
the

FSIC

based
policy

on their
extend

liability

coverage for

alleged Holders

the

fire to

partnership.

Holders,

One might

Lyon or

the

argue about whether

-14-14-

the language can

puzzle
of

be described

as "plain,"

since a

jig-saw

of provisions has to be solved to determine the scope

the

policies.

But

provisions are properly

the

fact

remains

that, when

juxtaposed, their language

________

the

excludes

the claims here made.

Language

is

insurance policy

the

baseline

for

interpretation

or other legal document.

of

an

But judges--like

everyone else--are more comfortable with their readings where

purpose is evident and
to

say

congruent with language.

that "purpose"

is

completely clear

in

It

is hard

this case.

Neither side has tried seriously to illuminate the purpose of

the

various

interact.

provisions
We

appellants have

are

or

therefore

how

their

left

rationales

with

given us no affirmative

the

words,

might
and

reason to disregard

the literal words of the policies.

Although we

do not reach the

against liability, one of

only

insurers' other arguments

them is worth a brief

mention, if

to make clear that a literal reading of policy language

produces no obvious injustice.

The

whole--most

application

importantly,

policies--convey
insuring

the

the

surface

his construction

pertinent documents as a
papers

impression

business

that

and a

bevy of

and

the

Lyon

was

related

enterprises which owned

property in a number

including

There is no indication in the papers

Puerto Rico.

that a hotel in Puerto Rico

of states, not

existed or was in any way to

be

-15-15-

the subject

of either

insurance structure

policy; indeed, an

existed to

entirely separate

cover Lyon's and

the Dupont

Plaza entities' hotel operations.

If Lyon had owned the hotel as a sole
interesting problems might

be posed.

He

proprietorship,

would probably say

that

the language of the

policy squarely covered

individual named insured operating

the

insurers

alternative

would

say--as

defense on

him as an

as a sole proprietor; and

indeed

appeal--that

they

do

in

their

the applications

were

materially misleading in failing to furnish information about

the

hotel.

How

this controversy

would

be resolved

is a

matter of conjecture.
Yet if Lyon did prevail--he says, for example, that
applications did
in

the

not seek information about

hotel--one

suspects

something of a windfall.
in

contracts

envisioned.

that

the

the

his investments

recovery

would

be

Sometimes valid general provisions

do

produce

In

this

recoveries
instance,

at

provisions appear to have forestalled a

that

no

worst,

one
the

quite
general

recovery that no one

quite envisioned.
III.
We turn now to damages.
paid

Lyon up

reservation of
favor of

to

their

rights.

the insurers,

As noted earlier, both insurers

policy

limits

but

subject

After granting summary

the district court

-16-16-

to

judgment in

under California

law awarded
they had
Lyon.

the insurers pre-judgment interest

advanced, at the rate of ten percent, to be paid by

Lyon

now argues that the district court

applying Puerto
award

on the funds

of

Rico law on pre-judgment

pre-judgment

interest

erred in not

interest, where an

depends on

showing

of

obstinacy.
We

review

determination.

de novo a
________

Putnam Resources
________________

466 (1st Cir. 1992).

awarded

district

choice-of-law

v. Pateman, 958
_______

F.2d 448,

In California, pre-judgment interest is

virtually as a matter of right to a prevailing party

as delay
Cal. Civ.

damages to reflect
Code

Co. of Cal., 24
___________
Puerto Rico,

the time

3287; McConnell
_________

value of money.

Cal. Rptr. 5, 11 (Cal.

pre-judgment interest

app. III, rule 44.3;

See
___

v. Pacific Mut. Life Ins.

_______________________

when the losing party was obstinate.

32,

court's

App. Ct. 1962).

is imposed as

In

a penalty

See P.R. Laws Ann. tit.

___

Reyes v. Banco Santander de P.R.,

_____
_________________________

N.A., 583 F. Supp. 1444, 1446 (D.P.R. 1984).

____
Because

the

district

court

here

was

sitting

in

diversity, it was required to follow Puerto Rico's choice-oflaw rules.

Puerto Rico applies a "dominant contacts" test in

contract actions.

In re San Juan Dupont Plaza Hotel Fire

_________________________________________

Litig., 745 F. Supp. 79, 82

______

(D.P.R. 1990).

the law that applies is the law of the

most

significant contacts

consideration

to the

Under that test,

jurisdiction with the

disputed issue,

given to the policies at stake.

with due

Id.
___

Although

we agree

with the

-17-17-

the

factors do

district

court

not
that

all point

one way,

California

has

the most

significant

contacts with the issue of pre-judgment interest.

In

substance, pre-judgment

connection

with the

interpretation

contract--specifically, two
governed

William

issued

Lyon

Puerto Rico, by

and

Company and

and

here in

enforcement

of

insurance policies--indisputably

by California law.

negotiated,

interest is sought

The policies were applied for,

paid

for in

Lyon

contrast, has the

California;

himself

were based

and

the

there.

main connection with

the

fire but

no

contacts

fortuity that

with

the

insurance coverage

policies

except

was litigated in

for

the

the same

case as liability for the fire.2

So far as the California pre-judgment interest rule aims
at reflecting the time value of money and making the deprived
litigant whole, California's interest applies with full force
in this case.
first

and

The

fact that the

then sought

dispute still concerns

insurance companies

reimbursement

is happenstance;

liability under California

paid
the

policies.

____________________
2PEIC and FSIC had earlier sought to litigate their
coverage in a declaratory judgment action in California but
the court dismissed the action in light of the omnibus Puerto
Rico litigation. Appellants have asked us to take judicial
notice of a supposed finding in the California action that
Puerto Rico has the most important contacts with this action.
A review of the transcript shows that the California judge
simply determined that a multiplicity of proceedings should
be avoided.
The judge did not undertake a choice of law
analysis on any issue, let alone the one with which we are
concerned.
-18-18-

To the

extent that California wants

its contracting parties

to pay (here, to

repay) obligations promptly, again applying

California law serves California interests.

Of

course, requiring

secondary
Rico's

pre-judgment interest may

purpose--perhaps
case--since

Defendants

who

it

owe debts

more

than

discourages
are

less

have a

secondary

in Puerto

frivolous

defenses.

likely

to

stall

litigate, thus benefitting the courts and the public.

Rico's use of an obstinacy
concerned

with

making

Puerto

test may suggest that it is

the

creditor

whole

than

discouraging meritless litigation in its courts.

and

less
with

Even so, in

this case there is no conflict between Puerto Rico's interest

and the award to the insurers.
Here,
frustrate

the

award

Puerto

of

Rico's

pre-judgment
desire

to

interest
discourage

litigation; at most, pre-judgment interest has

for

different purposes, in a

have been obstinate.

threatened,
balancing

there
might be

interests actually

does

case where the

obstinate

been awarded,
debtor may not

Since Puerto Rico's interests are

is

no

reason

required if
conflicted.

to

engage

California and
See, e.g.,
___ ____

in

not

whatever

Puerto Rico

Fojo v. American
____
________

Express Co., 554 F. Supp. 1199, 1201 (D.P.R. 1983).

___________
Affirmed.
_________

not

-19-19-