Opinion
94 CV 5835 (RCC)
February 16, 2001
OPINION AND ORDER
Carlisle Ventures, Inc. ("Carlisle") brings this motion to recalculate its damages against Banco Español de Crédito, S.A. ("Banesto"). The Court heard oral argument on the subject on February 15, 2001. For the reasons set forth below, the award is calculated as follows: (1) Carlisle is awarded 1,496,155,654 Spanish pesetas in damages; and (2) the District Court's previous award of Carlisle's attorney fees and costs with interest at the Spanish legal rate stands.
The amount represents interest at the Spanish legal rate on the purchase price of the Banesto stock from the purchase date through the resale date.
I. Background
The Court presumes familiarity with the record and will only briefly summarize the proceedings here. See Carlisle Ventures. Inc. v. Banco Espanol de Credito, S.A., 176 F.3d 601 (2d Cir. 1999); Carlisle Ventures. Inc. v. Banco Espanol de Credito. S.A., 1998 WL 259928 (May 21, 1998 S.D.N.Y.). Carlisle brought this action after Banesto breached its Subscription Share Agreement (the "Agreement") with Carlisle. The Agreement, under which Carlisle purchased over two million shares of Banesto common stock in August 1993, was expressly governed by Spanish law and included representations about Banesto's financial condition. Additionally, it contained an indemnification clause in which Banesto promised to indemnify Carlisle in the event of losses or liabilities. In December 1993, the Bank of Spain announced Banesto was suffering from massive and previously undisclosed deficiencies in its capital. The Bank of Spain assumed control of Banesto and installed a restructuring plan. In 1994, Carlisle commenced this litigation against Banesto on five different grounds relating to the stock purchase. In early 1998, Carlisle sold its shares of Banesto for an average of 30 pesetas more per share than it had paid originally.
In March 1998, then-District Judge Sonia Sotomayor granted Carlisle's motion for summary judgment on the issue of liability and held a bench trial to determine damages. In June 1998, the District Court entered a judgment against Banesto, which, in addition to damages based on the difference between the price Carlisle paid for the stock and the true value at the time of purchase, included the award of attorney fees and costs with interest. Banesto appealed, claiming neither Spanish nor United States law supported the award of damages as calculated by the District Court. In May 1999, the Second Circuit Court of Appeals reversed the award of compensatory damages and remanded the matter for a recalculation. The Court of Appeals did not discuss the issue of attorney fees in its opinion.
The parties have agreed that Carlisle is to recover 1,496,155,654 Spanish pesetas, which represents the interest on the purchase price of the Banesto stock from the date of purchase to the date Carlisle recovered its money through resale. Carlisle has withdrawn its request for pre and post-judgment interest on the amount owed by Banesto. The only remaining issue is whether Carlisle is still entitled to the award of attorney fees and post-judgment interest thereon.
II. Discussion
When the District Court initially ruled on the issue of attorney fees, it concluded that Banesto owed Carlisle such fees and costs with interest. Carlisle Ventures, 1998 WL 259928, at *24 ("Under Spanish contract law, Carlisle is entitled to be reimbursed for the legal fees and expenses related to its dispute with Banesto over Banesto's breach of representations and warranties. . . . Carlisle is entitled to interest on its legal fees and expenses . . . at the applicable Spanish statutory rate."). Banesto agreed to and supported this conclusion of law with the exception of the award of interest. Defendant's Proposed Findings of Fact and Conclusions of Law at ¶ 172 ("Carlisle is also entitled to an award of attorneys' fees and expenses incurred in this matter, without interest on the fees and expenses."). Banesto concedes it did not raise the award of fees on its appeal to the Second Circuit, hence the Second Circuit did not have the opportunity to consider it.
Under the law of the case doctrine, "a legal decision made at one stage of litigation, unchallenged in a subsequent appeal when the opportunity to do so existed, becomes the law of the case for future stages of the same litigation, and the parties are deemed to have waived the right to challenge that decision at a later time." Williamsburg Wax Museum Inc. v. Historic Figures, Inc., 810 F.2d 243, 250 (D.C. Cir. 1987). "The doctrine is `based upon sound policy that when an issue is once litigated and decided, that should be the end of the matter.'" In re Highland Financial Corp., 216 B.R. 109, 113 (S.D.N.Y. 1997) (quoting United States v. United States Smelting, Refining Mining Co., 339 U.S. 186, 198 (1950)). The doctrine is applicable in two situations. First, a court will not ordinarily reconsider its own prior decisions, although it retains the discretion to do so. See Sagendorf-Teal v. County of Rensselaer, 100 F.3d 270, 277 (2d. Cir. 1996); 18 Charles Alan Wright, et al., Federal Practice Procedure § 4478 (2d ed. 1981) ("Wright Miller"). "[T]he major grounds that justify reconsideration involve an intervening change of controlling law, the availability of new evidence, or the need to correct clear error or prevent manifest injustice." 18 Wright Miller § 4478.
Second, a lower court must apply a superior court's decision on remand. See Stagl v. Delta Air Lines. Inc., 117 F.3d 76, 79 (2d Cir. 1997) (noting the second situation — also known as the mandate rule — requires the trial court to proceed according to the appellate court's mandate); 18 Wright Miller § see also In re Highland Financial Corp., 216 B.R. 109, 114 (S.D.N.Y. 1997) ("The mandate rule does not prevent the trial court from considering issues not expressly or impliedly decided by the appellate court."). The three generally accepted exceptions to the mandate rule are similar to the principles that trigger a court's decision to reconsider an issue it has already decided — an intervening change in the controlling law; the need to correct a clear error of law or to prevent an obvious injustice; and the availability of substantially different evidence on remand. See id.
In the instant case, the mandate rule does not apply because Banesto did not raise the question of attorney fees on appeal and the Second Circuit did not include the issue in its opinion. This court is not required to address issues that have already been litigated and decided before it. See id. Here, at the trial stage, Banesto conceded it owed Carlisle attorney fees and the District Court adopted that finding of law. Further, although it had the opportunity, Banesto did not make an issue of the attorney fees before the Second Circuit. It would be unfair to allow relitigation of the issue here. Moreover, Banesto can not and did not demonstrate a change in applicable law, a manifest injustice in upholding the District Court's previous decision, or evidence that was not available during earlier proceedings. Therefore, the prior award will stay.
Banesto directs the court to Riley v. MEBA Pension Trust, 452 F. Supp. 117, 120 (S.D.N.Y. 1978), in support of its argument that the law of the case doctrine does not apply here. The Court is not convinced. In Riley, the court, in its discretion, allowed the defendant to raise an argument on remand that it had not raised in its original motion or the appeal. Here, however, unlike Riley, the issue in question — attorney fees — has already been litigated. The District Court found, and Banesto agreed, that Carlisle was owed attorney fees and expenses.
Further, Banesto seeks to avoid paying the fees on the theory that the Second Circuit's opinion was a reversal on the merits and rendered the District Court's opinion null and void. See, e.g., California Med. Ass'n v. Shalala, 207 F.3d 575 (9th Cir. 2000). This is a difficult argument to accept because the Second Circuit did not discuss the merits of the case, i.e., Banesto's liability. Furthermore, Banesto conceded at oral argument that the finding of liability by the District Court was not affected by the Second Circuit.
III. Conclusion
For the reasons explained above, Banesto is to pay Carlisle 1,496,155,654 pesetas in damages and the previous district court award to Carlisle of attorney fees and expenses with interest at the Spanish legal rate will stand.
So ordered.