Cherri Walker v. Life Insurance Company of North America

[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 21-12493
____________________
CHERRI WALKER,
Plaintiff-Appellant,
versus
LIFE INSURANCE COMPANY OF NORTH AMERICA,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Northern District of Alabama
D.C. Docket No. 5:16-cv-00506-HNJ
____________________
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2 Opinion of the Court 21-11736
Before LAGOA and BRASHER , Circuit Judges, and B OULEE ,* District
Judge.
L AGOA , Circuit Judge:
This case arises from an insurance dispute between Cherri
Walker and Life Insurance Company of North America (“LINA”).
Between 2013 and 2015, LINA made multiple determinations that
Walker did not qualify for disability benefits under her long-term
disability insurance policy and her life insurance policy. In re-
sponse, Walker sued LINA for breach of contract and bad-faith fail-
ure to provide insurance benefits.
The district court granted summary judgment for LINA on
Walker’s bad-faith claim based on the multiple medical opinions
that supported LINA’s determinations. At a pre-trial hearing, the
district court held that, under Alabama law, Walker could not re-
cover mental anguish damages for her breach of contract claim and
excluded evidence of such damages. Finally, following a jury ver-
dict in Walker’s favor on the breach of contract claim related to the
long-term disability insurance policy, the district court determined
that Walker was entitled to simple pre-judgment interest at a rate
of 1.5 percent under the policy and simple post-judgment interest
at a rate of 0.08 percent pursuant to 28 U.S.C. § 1961. In determin-
ing that the long-term disability insurance policy provided for sim-
ple rather than compound interest, the district court struck a
* Honorable J.P. Boulee, United States District Judge for the Northern District
of Georgia, sitting by designation.
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21-12493 Opinion of the Court 3
document produced by Walker because it was not properly au-
thenticated.
Walker now argues that the district court erred at each of
these steps. After careful review, and with the benefit of oral argu-
ment, we affirm all of the district court’s rulings on appeal.
I. FACTUAL AND PROCEDURAL HISTORY
Walker is a citizen of Alabama. The Healthcare Authority
of Athens Limestone Hospital (the “Authority”) is a state entity
that operates the Athens Limestone Hospital in Athens, Alabama.
The Authority employed Walker as a respiratory therapist and as a
director.
The Authority held for the benefit of its employees two
group insurance policies: (1) a long-term disability insurance policy
and (2) a life insurance policy.1 LINA, a citizen of Pennsylvania,
issued both policies.
1 The life insurance policy provides certain disability benefits (e.g., waiver of
premium, extension of coverage) separate from the disability policy. The jury
did not find in Walker’s favor on the life insurance policy, however, and the
issues raised in this appeal relate solely to the disability policy. Thus, while we
sometimes refer to the life policy during our discussion of the factual and pro-
cedural history of this case, we do not discuss in any detail the terms of that
policy as they are not relevant to our consideration of the issues before us on
this appeal.
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4 Opinion of the Court 21-12493
The disability policy provides for monthly disability pay-
ments if an employee becomes “disabled.” The policy defines “dis-
abled” as follows:
The Employee is considered Disabled if, solely be-
cause of Injury or Sickness, he or she is:
1. unable to perform the material duties of his or
her Regular Occupation; and
2. unable to earn 80% or more of his or her In-
dexed Earnings from working in his or her
Regular Occupation.
After Disability Benefits have been payable for 24
months, the Employee is considered Disabled if,
solely due to Injury or Sickness, he or she is:
1. unable to perform the material duties of any
occupation for which he or she is, or may rea-
sonably become, qualified based on education,
training or experience; and
2. unable to earn 60% or more of his or her In-
dexed Earnings.
Thus, the disability policy defines “disabled” differently, using one
definition for initial claims and a more stringent definition after
benefits have been payable for twenty-four months.
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21-12493 Opinion of the Court 5
Separately, for initial coverage purposes, the policy gener-
ally requires an elimination period of ninety days.2 And as relevant
to interest paid on claims, the disability policy provides:
Time of Payment
Disability Benefits will be paid within 45 days, upon
receipt of due written proof of loss, at regular inter-
vals of not more than one month. Disability Benefits
not paid within 45 days of receipt of due written proof
of loss shall be considered overdue. The Insurance
Company will pay the insured one and one-half per-
cent per month on the amount of any claim which is
considered overdue until it is finally settled and adju-
dicated.
Any balance unpaid at the end of any period for which
the Insurance Company is liable will be paid at that
time.
On October 12, 2012, Walker ceased working at the Author-
ity due to fibromyalgia, rheumatoid arthritis, and chronic pain.
Walker subsequently submitted disability claims under both the
disability policy and the life policy. On February 26, 2013, the Au-
thority’s Director of Human Resources, Sabrina Weaver, emailed
LINA. At that point, LINA had not yet approved either of Walker’s
2 In the insurance industry, the term “elimination period” refers to the length
of time between the occurrence of a qualifying event/condition and the re-
ceipt of benefits. Thus, under the disability policy, a disabled employee will
begin receiving monthly benefits ninety days after the date of his or her disa-
bility.
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6 Opinion of the Court 21-12493
disability claims. In her email, Weaver stated: “The delay in finding
resolution to Ms. Walker’s request for [short-term disability] and
LTD has caused her severe stress which has triggered an adrenal
crash. She has an appointment with a lawyer today following her
doctor’s appointment.” LINA approved Walker’s claim under the
disability policy the next day.
By doing so, LINA found that Walker was incapable of per-
forming the material duties of her regular occupation and of earn-
ing at least 80 percent of her regular earnings and therefore deter-
mined that she was entitled to twenty-four months of disability
benefits. For some reason, LINA designated August 12, 2012, as
Walker’s date of disability, making November 11, 2012, the effec-
tive start date for the disability benefits pursuant to the disability
policy’s ninety-day elimination period. LINA’s long-term disability
claims manager, Deborah Bacak, later acknowledged that it was a
mistake to select August 12, 2012, as Walker’s date of disability
given that Walker continued to work through October 12, 2012. In
light of its decision to approve Walker’s claims for disability bene-
fits under the disability policy, LINA also automatically provision-
ally approved Walker’s claim for waiver of premium under the life
policy.
On July 9, 2013, LINA sent Walker a letter indicating that it
was reviewing her claim for waiver of premium under the life pol-
icy. The letter requested that Walker provide LINA with addi-
tional medical information from her physicians, including infor-
mation about her diagnosis and functional abilities. The letter also
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21-12493 Opinion of the Court 7
warned Walker that failure to provide the requested information
to LINA by August 22, 2013, “may result in an extension of the time
period required [for LINA] to make a decision, or [LINA’s] decision
may be based on the available information on file.” LINA followed
up with Walker in a letter dated July 24, 2013, reiterating the need
for additional information and reminding her of the August 22,
2013, deadline.
On August 29, 2013, based on a review of the then-available
information, LINA decided not to approve Walker for continued
waiver of premium under the life policy. In arriving at that deci-
sion, LINA considered, among other things, the opinion of Larry
Featherston, a rehabilitation specialist who concluded that Walker
could perform some occupations in her local labor market. Walker
appealed LINA’s August 29, 2013, decision three times over the
next year and a half, and LINA affirmed that decision each time.
Meanwhile, separate from her claims for disability benefits
under the two insurance policies, Walker applied for Social Secu-
rity Disability Benefits. On April 8, 2014—after LINA had already
twice affirmed its decision to deny Walker benefits under the life
policy—the Social Security Administration (the “SSA”) approved
Walker for disability benefits and recognized a period of disability
beginning on October 12, 2012. In making that decision, the SSA
afforded “great weight” to the residual functional capacity ques-
tionnaires submitted by Dr. Nancy Neighbors, Walker’s primary
care physician, which showed that Walker suffered from intracta-
ble pain at multiple sites, experienced adrenal fatigue and
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8 Opinion of the Court 21-12493
fibromyalgia pain one to three times a week that confined her to
bed, experienced a reduced range of motion, and could not return
to work. The SSA afforded only “partial weight” to the functional
capacity evaluation completed by Heidi Teague on January 7, 2013,
which concluded that Walker could perform sedentary work.
On June 10, 2014, around two months after the favorable
SSA decision, LINA informed Walker that it had reviewed her
claim under the disability policy and determined that she would no
longer qualify for disability benefits beyond November 2014—the
end of the initial twenty-four-month benefits period. As part of its
review, LINA considered a report completed by Dr. Matthew
Lundquist on May 28, 2014. Dr. Lundquist’s report agreed with
Teague’s determination that Walker could perform sedentary
work and disagreed with some of Dr. Neighbors’s findings. LINA
also considered a Transferable Skills Analysis performed by Colin
Loris, a rehabilitation specialist. Loris’s analysis concluded that
Walker could perform some occupations in her local labor market,
specifically the positions of office manager and health care facility
administrator. Based on these opinions, LINA determined that
Walker did not qualify as “disabled” for purposes of continuing to
receive benefits under the disability policy beyond the initial
twenty-four-month coverage period. Walker appealed that deci-
sion.
In considering Walker’s appeal, LINA retained Dr. David
Knapp, an independent board-certified rheumatologist, to review
Walker’s medical record and physical condition. Dr. Knapp’s
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21-12493 Opinion of the Court 9
review process included conferring by telephone with Walker’s pri-
mary care physician, Dr. Neighbors, and Walker’s rheumatologist,
Dr. Kun Chen. Like Dr. Lundquist, Dr. Knapp prepared a compre-
hensive report detailing his analysis and findings. That report con-
cluded that Walker “does not require any medically necessary
work activity restrictions” and “is not physically functionally lim-
ited.” In light of that report, LINA affirmed its decision to deny
Walker benefits beyond the twenty-four-month initial coverage pe-
riod under the disability policy.
Following these unfavorable decisions, Walker sued LINA
in federal court, relying on diversity jurisdiction under 28 U.S.C.
§ 1332. The operative complaint asserts two claims against LINA
under Alabama law: (1) breach of contract, and (2) bad-faith failure
to provide insurance benefits.
LINA eventually moved for summary judgment on both of
Walker’s claims. As to the breach of contract claim, LINA argued
that the record established that Walker did not meet the applicable
definition of “disabled” under the two insurance policies. As to the
bad-faith claim, LINA asserted that it had at least an “arguable rea-
son” for denying Walker benefits under both policies based on the
medical opinions indicating that Walker was physically capable of
working.3
3 As explained below, the third essential element of bad-faith claims under Al-
abama law is the absence of an arguable reason for failing to provide benefits.
State Farm Fire & Cas. Co. v. Brechbill, 144 So. 3d 248, 256–58 (Ala. 2013).
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10 Opinion of the Court 21-12493
The district court granted in part and denied in part LINA’s
motion for summary judgment. The district court denied the mo-
tion as to the breach of contract claim “[b]ecause reasonable jurors
could reach opposite conclusions regarding Walker’s disability sta-
tus after evaluating the evidence presented.” But the district court
agreed that LINA had an arguable reason for denying benefits
based on the available record and therefore granted the motion as
to the bad-faith claim. In explaining its reasoning on this point, the
district court noted that “it must apply the [directed verdict] stand-
ard in evaluating the third element” of bad-faith claims. In denying
Walker's subsequent motion for reconsideration, the district court
clarified its discussion of the directed verdict standard and reaf-
firmed its position that, under the ordinary summary judgment
standard, Walker’s bad-faith claim was defeated by the existence of
an arguable reason for denial.4 The district court also noted that
there was not a genuine issue of material fact as to whether the
insurer had actually considered that reason in this case because
LINA expressly referenced the relevant medical opinions in its
Thus, an insured cannot succeed on a bad-faith claim if the insurer had an ar-
guable reason for denying benefits.
Id. at 258.
4 In its order denying reconsideration, the district court correctly noted that,
up until her motion for reconsideration, Walker had not specified whether the
bad-faith claim was of the “normal” or “abnormal” variety.
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21-12493 Opinion of the Court 11
denial decisions.5 Accordingly, the case proceeded to trial on
Walker’s breach of contract claim alone.
Before trial, LINA filed a motion in limine and a trial brief,
arguing in both that the district court should exclude evidence of
mental anguish damages because such damages are unavailable un-
der Alabama law for Walker’s breach of contract claim. In the trial
brief, LINA further argued that any calculation of pre-judgment in-
terest must be done by the court and not the jury. In response,
Walker asserted that LINA had waived the mental anguish dam-
ages argument by failing to raise it on summary judgment and that,
in any event, mental anguish damages are available for her breach
of contract claim under Alabama law. Walker also acknowledged
that the court, not the jury, calculates the interest owed, but she
maintained that the insurance policies provide for a compound in-
terest rate of 1.5 percent. The district court ruled that mental an-
guish damages were unavailable to Walker on her breach of con-
tract claim and that the court would calculate pre-judgment
5 Walker’s motion for reconsideration also argued that summary judgment
was inappropriate given LINA’s unexplained and unjustified alteration of
Walker’s date of disability. Although the district court did not specifically ad-
dress this argument in its order denying reconsideration, Walker has not de-
veloped any argument on appeal related to LINA’s alteration of her date of
disability, and the issue has thus been abandoned.
See Sapuppo v. Allstate
Floridian Ins. Co., 739 F.3d 678, 680 (11th Cir. 2014);
see also United States v.
Campbell, 26 F.4th 860, 871–74 (11th Cir. 2022) (en banc).
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12 Opinion of the Court 21-12493
interest, but it did not, at that time, resolve the issue of simple ver-
sus compound interest.
The jury ultimately reached a verdict, finding for Walker on
the breach of contract claim, but only for the disability policy, and
awarded Walker $160,342.00.
One week later, Walker submitted a brief containing pro-
posed interest calculations for her successful breach of contract
claim. Walker maintained that the disability policy provides for an
interest rate of 1.5 percent,
compounded monthly. In support of
that position, Walker cited a series of other district court cases in
which LINA ultimately either agreed or had to pay compound in-
terest under substantially similar insurance policies. Walker also
produced, for the first time, a document that purported to be an
excerpt of LINA’s Claims Policies and Procedures Manual. That
document states that “[a]ll interest paid is compounded interest,
unless the contract language specifically directs some other
method of interest calculation.” Lastly, Walker highlighted the fol-
lowing deposition testimony of LINA’s corporate representative,
Richard Lodi:
Q. And just so -- to be clear here, is the interest at
one and a half percent, is it compounded
monthly or compounded annually?
[Objection to form: foundation.]
A. It doesn’t indicate that. It just says the insur-
ance company will pay the insured one and
one-half percent per month on the amount of
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21-12493 Opinion of the Court 13
any claim which is considered overdue until it
is finally settled and adjudicated.
Q. So what does that mean?
A. Other than what it says, I can’t add to that.
Q. If it’s one and half percent per month which
would imply that it’s compounded monthly
that would be a reasonable interpretation even
if you disagree with it?
[Objection to form: foundation.]
A. That seems reasonable.
LINA moved to strike both the excerpt and the deposition
testimony. As to the excerpt, LINA argued that the document had
not been produced during discovery, had not been presented at
trial, and had not been authenticated. As to the deposition testi-
mony, LINA argued that Walker did not designate that deposition
testimony for purposes of trial and did not question the representa-
tive on the calculation of interest at trial. LINA’s motion to strike
also requested that that pre-judgment interest be calculated as sim-
ple interest.
The district court granted in part and denied in part LINA’s
motion to strike. First, the district court ruled that that, under Al-
abama law, the disability policy provides for simple interest. In so
ruling, the district court rejected the suggestion that LINA was
bound to pay compound interest simply because it did so in other
cases. Second, the district court granted LINA’s request to strike
the excerpt because it was not properly authenticated under
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14 Opinion of the Court 21-12493
Federal Rule of Evidence 901, and, even if it had been properly au-
thenticated, there is no indication that the excerpt applies to Ala-
bama insurance policies. Third, the district court denied LINA’s
request to strike Lodi’s deposition testimony but still determined
the disability policy provides for simple interest.
Ultimately, the district court determined that Walker was
entitled to simple pre-judgment interest at a rate of 1.5 percent
from December 2014 through June 11, 2021, totaling $94,602.11,
and simple post-judgment interest at a rate of 1.5 percent from June
11, 2021, onward. The district court contemporaneously entered a
corresponding final judgment.
Walker moved to amend the final judgment to (1) calculate
pre-judgment interest through June 24, 2021 (the date of the final
judgment) rather than June 11, 2021, and (2) recognize May 21,
2021 (the date of the jury verdict) as the effective reinstatement
date for Walker’s disability benefits under the disability policy.
LINA did not oppose either of Walker’s requests but did request
that the post-judgment interest rate be changed from 1.5 percent
to 0.08 percent because post-judgment interest is governed by the
federal interest statute, 28 U.S.C. § 1961, and the disability policy
does not “contain an express provision” overriding the statute.
Walker opposed LINA’s request.
The district court entered an amended final judgment that
incorporated both parties’ requests. The amended final judgment
thus recognizes a simple pre-judgment interest rate of 1.5 percent,
consistent with the district court’s earlier ruling, and a simple post-
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21-12493 Opinion of the Court 15
judgment interest rate of 0.08 percent, consistent with LINA’s re-
quest.
Walker filed a timely notice of appeal.
II. STANDARDS OF REVIEW
We review
de novo a district court’s grant of summary judg-
ment.
Marbury v. Warden, 936 F.3d 1227, 1232 (11th Cir. 2019).
In doing so, we “view all the evidence and draw all reasonable in-
ferences in the light most favorable to the non-moving party.”
Caldwell v. Warden, FCI Talladega, 748 F.3d 1090, 1098 (11th Cir.
2014). Summary judgment is proper when the evidence, viewed in
this light, “presents no genuine issue of material fact and compels
judgment as a matter of law in favor of the moving party.”
Id.
(quoting
Owusu-Ansah v. Coca-Cola Co., 715 F.3d 1306, 1307 (11th
Cir. 2013)).
We also review
de novo “a district court’s determination
and application of state law in a diversity case.”
Pendergast v.
Sprint Nextel Corp., 592 F.3d 1119, 1132 n.11 (11th Cir. 2010). “In
Alabama, the interpretation of a contract, including an insurance
contract, is a question of law reviewed
de novo.”
Twin City Fire
Ins. Co. v. Ohio Cas. Ins. Co., 480 F.3d 1254, 1258 (11th Cir. 2007).
We review evidentiary rulings, including rulings on motions
to strike, for abuse of discretion.
United States v. Brown, 415 F.3d
1257, 1264–65 (11th Cir. 2005);
Benson v. Tocco, Inc., 113 F.3d
1203, 1208 (11th Cir. 1997). Under the abuse of discretion standard,
we affirm unless the district court has either made a clear error of
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16 Opinion of the Court 21-12493
judgment or applied the wrong legal standard.
United States v.
Frazier, 387 F.3d 1244, 1259 (11th Cir. 2004). Moreover, even when
a district court has abused its discretion in making an evidentiary
ruling, we will not reverse the district court if the ruling constitutes
harmless error.
See Allstate Ins. Co. v. Swann, 27 F.3d 1539, 1543
(11th Cir. 1994).
III. ANALYSIS
On appeal, Walker’s arguments concern three main topics:
(1) the dismissal of her bad-faith claim on summary judgment; (2)
the availability of mental anguish damages for her breach of con-
tract claim under Alabama law; and (3) the calculation of pre- and
post-judgment interest. We begin with the district court’s sum-
mary judgment ruling as to the bad-faith claim.
A. The Dismissal of Walker’s Bad-Faith Claim on Summary
Judgment
Walker argues that the district court erred by granting sum-
mary judgment in LINA’s favor on the bad-faith claim. We disa-
gree. The evidence establishes that LINA had an arguable reason
for determining that Walker did not qualify for disability benefits
under the disability policy.
The Supreme Court of Alabama first recognized the tort of
bad faith in the insurance context in
Chavers v. National Security
Fire & Casualty Co., 405 So. 2d 1 (Ala. 1981). In
Chavers, the Su-
preme Court of Alabama held that an actionable tort arises for an
insurer’s conduct where there is either (1) no lawful basis for the
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21-12493 Opinion of the Court 17
refusal to pay or (2) an intentional failure to determine whether or
not there is any lawful basis for the refusal to pay.
Id. at 7. Alabama
courts often refer to refusal-to-pay claims as “normal” bad-faith
claims and to failure-to-investigate claims as “abnormal” bad-faith
claims.
See State Farm Fire & Cas. Co. v. Brechbill, 144 So. 3d 248,
256–58 (Ala. 2013). However, the Supreme Court of Alabama has
emphasized that, although there are two “methods” of establishing
bad faith, “there is only
one tort of bad-faith refusal to pay.”
Id. at
257–58 (emphasis in original).
The tort of bad faith consists of the following essential ele-
ments: (1) a breach of an insurance contract; (2) a refusal to pay the
claim; (3) the absence of an arguable reason for failing to pay; and
(4) the insurer’s knowledge of such an absence.
Id. at 258. If a
plaintiff is traveling under the failure-to-investigate theory—and
thus is bringing an “abnormal” bad-faith claim—there is another
essential element: (5) “the insurer’s intentional failure to determine
whether there is a legitimate or arguable reason to refuse to pay
the claim.”
Id. (quoting
Nat’l Sec. Fire & Cas. Co. v. Bowen, 417
So. 2d 179, 183 (Ala. 1982)).
To be clear, “[r]egardless of whether the claim is a bad-faith
refusal to pay or a bad-faith refusal to investigate, the tort of bad
faith requires proof of the third element[:] absence of a legitimate
reason for denial.”
Id. at 258;
see also McLaughlin v. Alabama
Farm Bureau Mut. Cas. Ins. Co., 437 So. 2d 86, 91 (Ala. 1983) (“If
any one of the reasons for denial of coverage is at least ‘arguable,’
this Court need not look any further.”). In other words, a plaintiff
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18 Opinion of the Court 21-12493
traveling under either theory of bad faith “must go beyond a mere
showing of nonpayment and prove a
bad faith nonpayment, a non-
payment without any reasonable ground for dispute,” otherwise
the claim fails.
Bowen, 417 So. 2d at 183 (emphasis in original);
see
also State Farm Fire & Cas. Co. v. Balmer, 891 F.2d 874, 877 (11th
Cir. 1990) (“[R]egardless of the imperfections of [an insurer’s] in-
vestigation, the existence of a debatable reason for denying the
claim at the time the claim was denied defeats a bad faith failure to
pay claim.”).
Although Alabama law historically treated the two theories
of bad faith differently on summary judgment, more recent prece-
dent suggests a convergence of the two theories at summary judg-
ment. “Normal” bad-faith claims, i.e., claims of refusal to pay, fail
as a matter of law on summary judgment if the insured is not enti-
tled to a directed verdict on the related breach of contract claim. In
the past, “abnormal” bad-faith claims, i.e., claims of failure to in-
vestigate, however, could survive summary judgment even if the
insured is not entitled to a directed verdict on the related breach of
contract claim.
E.g.,
White v. State Farm Fire & Cas. Co., 953 So.
2d 340, 348 (Ala. 2006). More recent precedent, however, suggests
that where a “normal” bad-faith claims fails under the directed ver-
dict standard so does an “abnormal” bad-faith claim.
See Brechbill,
144 So. 3d at 258 (“Because the trial court’s ruling [that the plaintiff
was not entitled to a pre-verdict judgment on the contract claim]
eliminated the third element of bad-faith refusal to pay, [the plain-
tiff’s ‘abnormal’ bad-faith claim] must fail.”). To decide this case,
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21-12493 Opinion of the Court 19
we do not have to resolve this uncertainty about the applicability
of the directed verdict standard to “abnormal” bad-faith claims. Re-
gardless of the merits of a related contract claim, all bad-faith claims
fail on summary judgment “where the trial court . . . expressly
[finds] as a matter of law that the insurer had a reasonably legiti-
mate or arguable reason for refusing to pay the claim at the time
the claim was denied.”
Id. at 260.6
In this case, Walker brought an “abnormal” bad-faith claim,
which the district court disposed of via summary judgment. At
first, there was some confusion regarding which theory of bad-faith
Walker was traveling under and therefore whether the district
court erroneously applied the directed verdict rule to the bad-faith
claim. But as the district court’s order denying reconsideration
clarified, the district court’s summary judgment ruling ultimately
rested on a determination that LINA had an arguable reason for
terminating Walker’s disability benefits under the disability policy.
We affirm that finding on appeal.
LINA’s initial, June 10, 2014, determination that Walker did
not qualify as “disabled” for purposes of receiving benefits beyond
twenty-four months was supported by Dr. Lundquist’s report and
6 To the extent Walker suggests that the question of whether an arguable rea-
son for denial exists necessarily “is a question of fact for the jury,” such sug-
gestion is incorrect. When the insurer had an arguable reason for its denial
decision and there is no genuine issue of material fact on that point, summary
judgment is warranted.
Weaver v. Allstate Ins. Co., 574 So. 2d 771, 774 (Ala.
1990).
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20 Opinion of the Court 21-12493
the Transferable Skills Analysis completed by Colin Loris.7 Like-
wise, LINA’s January 26, 2015, decision to affirm the initial denial
was supported by the same two opinions as well as the new, De-
cember 8, 2014, report by Dr. Knapp.
Walker generally contends that, when viewed along with
the rest of the available information, the opinions of Dr. Lundquist,
Colin Loris, and Dr. Knapp do not provide an arguable reason for
denying benefits. Walker argues, for instance, that LINA did not
afford sufficient weight to the SSA’s favorable determination or to
the opinions of Walker’s treating physicians. But LINA expressly
acknowledged the SSA’s favorable determination in both of its de-
cisions to deny Walker long-term disability benefits. And both of
LINA’s decisions were based on reports that specifically engaged
with information provided by Walker’s treating physicians. Thus,
the record evidence indicates that that there is no genuine issue of
material fact as to whether LINA considered the full range of avail-
able information.
Walker further attacks the propriety of LINA’s denial deci-
sions by highlighting a June 3, 2019, report by John W. McKinney,
7 Walker argues that LINA’s June 10, 2014, decision necessarily constituted bad
faith because it “speculated” about what Walker’s physical condition would
be five months later. That argument is meritless. The November 2014 cutoff
was a function of the disability policy’s twenty-four-month initial coverage pe-
riod, and there is no authority that suggests that LINA acted in bad faith by
determining, based on Walker’s physical condition at the time, that Walker
would not qualify for an extension of coverage and by providing Walker with
notice five months in advance of that cutoff.
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21-12493 Opinion of the Court 21
a rehabilitation counselor. McKinney’s report criticizes the analy-
sis of the reports relied upon by LINA and concludes that Walker
has qualified as “disabled” since October 2012. But McKinney’s re-
port was unavailable to LINA at the time of its decisions; even if
the report had been available, the existence of another conflicting
professional opinion would not have meant that LINA lacked an
arguable reason for deciding as it did under Alabama law.
See
Brechbill, 144 So. 3d at 258–60 (concluding that the genuine dispute
between the parties’ experts was sufficient to defeat the insured’s
“abnormal” bad-faith claim on summary judgment);
McLaughlin,
437 So. 2d at 91 (affirming the district court’s grant of summary
judgment in favor of the insurer on a bad-faith claim when the par-
ties presented conflicting evidence and thus it could not be said that
“there was
no arguable reason for denial of coverage”) (emphasis
in original)).
Ultimately, the evidence establishes that LINA was at least
arguably justified in determining that Walker did not qualify as
“disabled” under the disability policy for purposes of receiving ben-
efits beyond twenty-four months based on the opinions of Dr.
Lundquist, Colin Loris, and Dr. Knapp. The record evidence
shows that LINA considered the full range of information available
to it, including information that was contrary to the reports on
which it ultimately based its determinations. Even when read in
the light most favorable to Walker, the record does not indicate a
genuine issue of material fact over whether those reports were so
obviously deficient, incomplete, or outweighed by conflicting
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22 Opinion of the Court 21-12493
evidence that LINA acted in bad faith by relying on them. Because
the record demonstrates that there was no genuine issue of mate-
rial fact relating to this issue, Walker cannot, as a matter of law,
establish the third element of bad faith, and the district court did
not err by recognizing that. We affirm the summary judgment or-
der.
B. Mental Anguish Damages
Walker’s second main argument on appeal is that the district
court erred by excluding evidence of mental anguish damages be-
cause such damages are unavailable under Alabama law. In the
alternative, Walker argues that we should certify the question of
the availability of mental anguish damages to the Supreme Court
of Alabama. Neither of these arguments is persuasive. The Su-
preme Court of Alabama has made clear that mental anguish dam-
ages are unavailable for breach of contract claims related to long-
term disability insurance policies, like Walker’s, and no further
clarification on this point of state law is needed.
In general, Alabama law does not permit the recovery of
mental anguish damages for breach of contract claims,
see Bir-
mingham Waterworks Co. v. Vinter, 51 So. 356, 356 (Ala. 1910),
including claims that concern insurance contracts,
see Vincent v.
Blue Cross-Blue Shield of Ala., Inc., 373 So. 2d 1054, 1056 (Ala.
1979). The rationale underlying this rule is that, ordinarily, mental
anguish damages are “too remote,” “not within the contemplation
of the parties,” and not “naturally cause[d]” by a breach of contract.
F. Becker Asphaltum Roofing Co. v. Murphy, 141 So. 630, 631 (Ala.
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21-12493 Opinion of the Court 23
1932). But Alabama law recognizes an exception to this general
rule “where the contractual duty or obligation is so coupled with
matters of mental concern or solicitude, or with the feelings of the
party to whom the duty is owed, that a breach of duty will neces-
sarily or reasonably result in mental anguish or suffering.”
Id. (cit-
ing
S. Ry. Co. v. Rowe, 73 So. 634, 638 (Ala. 1916)). The Supreme
Court of Alabama has applied this exception to breaches of contrac-
tual duties concerning the habitability of one’s house or dwelling,8
the health of pregnant women and their unborn children,9 the
safety of women during night-time travel,10 and the safety and
8
See Indep. Fire Ins. Co. v. Lunsford, 621 So. 2d 977, 979 (Ala. 1993) (finding
the jury’s award of mental anguish damages to be proper and supported when
the defendant breached a contract to insure the plaintiff’s mobile home, which
was damaged in a windstorm);
Liberty Homes, Inc. v. Epperson, 581 So. 2d
449, 454 (Ala. 1991),
as modified on denial of reh’g , (May 24, 1991) (holding
that mental anguish damages were available when the defendant failed to
properly construct the electrical system of plaintiff’s home and where there
was evidence of the plaintiff suffering mental anguish due to electrical prob-
lems);
Orkin Exterminating Co. v. Donavan, 519 So. 2d 1330, 1333 (Ala. 1988)
(holding that mental anguish damages were available for a breach of contract
claim against an exterminator who failed to protect the plaintiff’s house
against termites).
9
See Taylor v. Baptist Med. Ctr., Inc., 400 So. 2d 369, 374–75 (Ala. 1981) (hold-
ing that mental anguish damages were available where a hospital breached a
contract by failing to provide adequate medical care to a woman in labor,
which resulted in the death of the child).
10
See Nashville, C. & St. L. Ry. v. Campbell, 101 So. 615, 617–18 (Ala. 1924)
(allowing mental anguish damages when the defendant carrier failed to stop
its train at a certain station and knowingly caused a female passenger to have
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24 Opinion of the Court 21-12493
operating conditions of automobiles.11 Based on those decisions,
we have understood the mental anguish damages exception to be
“narrow” and applicable only where there are “especially sensitive
contractual duties.”
Ruiz de Molina v. Merritt & Furman Ins.
Agency, Inc., 207 F.3d 1351, 1359–61 (11th Cir. 2000).
Walker argues that the disability policy falls under this ex-
ception because long-term disability insurance is “so coupled with
matters of mental concern” that a breach of the contractual duty
could “reasonably result in mental anguish.” In support of this ar-
gument, Walker points out that, in advertising its policies, LINA
emphasizes the “peace of mind” that its policies can offer. Walker
also points to the email sent by Sabrina Weaver on February 26,
2013, which refers to Walker suffering an adrenal crash from stress
over resolution of her disability claims, as evidence that Walker in
fact experienced mental anguish as a result of LINA’s overall con-
duct.12
to wait at another station, located in a remote area without any nearby build-
ings or accommodations, for five to ten minutes at night).
11
See Volkswagen of Am., Inc. v. Dillard, 579 So. 2d 1301, 1303, 1306–07 (Ala.
1991) (holding that mental anguish damages were available for the plaintiff’s
breach of warranty claim where his new automobile’s conditions put him in
physical danger and once left him without a working vehicle at night about
three hours from home).
12 Walker contends, in a footnote, that LINA “arguably waived” the right to
challenge the availability of mental anguish damages by failing to raise the is-
sue in its motion for summary judgment. Walker made the same contention
below, but the district court implicitly rejected that argument. We defer to
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21-12493 Opinion of the Court 25
The Supreme Court of Alabama, however, has made clear
that the ordinary relationship between long-term disability insur-
ance and mental well-being is not sufficient to trigger the mental
anguish damages exception. In
Sanford v. Western Life Insurance
Co., 368 So. 2d 260 (Ala. 1979), the plaintiff, as the executor of the
decedent’s estate, sued the decedent’s insurer for breaching a long-
term disability insurance policy that, like the disability policy here,
provided for monthly payments in the event of disability.
Id. at
261. On appeal, after discussing the general rule on mental anguish
damages and the exception to it, the Supreme Court of Alabama
concluded that the case “[did] not fall within [the] exception to the
general rule.”
Id. at 264.
Despite
Sanford’s clear implications for this matter, Walker
challenges
Sanford’s applicability and significance on multiple
fronts. These challenges fail.
First, Walker contends that
Sanford is factually distinguisha-
ble because, in that case, the insured employee had retired before
claiming disability and died before the lawsuit commenced. But
those factual distinctions bear no relevance to the question of
whether a contract itself concerns “especially sensitive duties” that
are sufficiently coupled with matters of mental concern to permit
recovery of mental anguish damages.
the district court’s discretion to entertain LINA’s mental anguish damages ar-
gument in a motion in limine after summary judgment and thus reject
Walker’s waiver argument.
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26 Opinion of the Court 21-12493
Next, Walker questions the precedential value of
Sanford by
suggesting that it was decided before a major change in the law
occurred. That change, according to Walker, was the Supreme
Court of Alabama’s decision in
Independent Fire Insurance Co. v.
Lunsford, 621 So. 2d 977 (Ala. 1993). There, the Supreme Court of
Alabama affirmed a jury award for breach of an insurance contract
that included damages for mental anguish.
Id. at 979. Critically,
however, the policy at issue in
Lunsford covered a mobile home
that was damaged in a windstorm.
Id. at 978–79. Thus, rather than
represent a pivotal change in the law,
Lunsford is properly under-
stood as one of the several instances when the Supreme Court of
Alabama has applied the mental anguish damages exception to a
contract concerning the habitability of a dwelling.
See, e.g.,
Liberty
Homes, Inc. v. Epperson, 581 So. 2d 449 (Ala. 1991);
Orkin Exter-
minating Co. v. Donavan, 519 So. 2d 1330, 1333 (Ala. 1988).
Lastly, Walker contends that
Pate v. Rollison Logging
Equipment, Inc., 628 So. 2d 337 (Ala. 1993), is most applicable to
the instant case and indicates that the mental anguish damages ex-
ception applies here.
Pate concerned a credit insurance policy—a
type of policy under which the insurer makes payments on the in-
sured’s existing debt if a certain event (e.g., death or disability) oc-
curs.
Id. at 339–40. On appeal, the Supreme Court of Alabama
held that mental anguishes damages were available for the insurer’s
failure to make the contemplated payments after the insured be-
came disabled.
Id. at 345–46. The
Pate decision is expressly predi-
cated on “the special nature of credit disability insurance,” which,
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21-12493 Opinion of the Court 27
unlike long-term disability insurance, contemplates the possibility
that an insured will be unable to repay a specific debt.
Id. at 345.
While
Pate certainly reinforces the notion that the mental anguish
damages exception may apply to certain insurance policies, for or-
dinary long-term disability insurance policies, like the policy at is-
sue,
Sanford controls.
In sum, the Supreme Court of Alabama held that the plain-
tiff in
Sanford could not recover mental anguish damages for the
insurer’s breach of a long-term disability insurance policy, and nei-
ther Walker’s personal circumstances nor the terms of the disabil-
ity policy meaningfully distinguish this matter from
Sanford. Ala-
bama law therefore calls for the same outcome here.
In the alternative, Walker proposes that we certify the ques-
tion of the availability of mental anguish damages to the Supreme
Court of Alabama. Pursuant to Rule 18(a) of the Alabama Rules of
Appellate Procedures, certification is appropriate only where the
question of law is “determinative of [the] cause” and “there are no
clear controlling precedents” of the Supreme Court of Alabama.
The availability of mental anguish damages is not determinative of
any cause,
see Thai Meditation Ass’n of Ala., Inc. v. City of Mobile,
980 F.3d 821, 838 (11th Cir. 2020) (explaining that a question is “de-
terminative of [a] cause” when it resolves either the entire case or
a claim and not simply a “key issue”), and
Sanford represents a clear
controlling precedent for the reasons discussed above,
see WM
Mobile Bay Env’t Ctr., Inc. v. City of Mobile Solid Waste Auth.,
972 F.3d 1240, 1251 (11th Cir. 2020) (indicating that there must be
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28 Opinion of the Court 21-12493
“substantial doubt” to warrant certification). Thus, certification is
neither necessary nor appropriate, as Alabama law already answers
the question presented.
For these reasons, we affirm the district court’s exclusion of
evidence of mental anguish damages in connection with Walker’s
breach of contract claim.
C. Pre- and Post-Judgment Interest
Walker’s final argument is that the district court erred in its
interpretation of the disability policy as to pre- and post-judgment
interest. As for pre-judgment interest, Walker challenges the dis-
trict court’s determination that the disability policy provides for
simple, rather than compound, interest and the district court’s re-
lated decision to strike the excerpt of LINA’s claims manual. As for
post-judgment interest, Walker challenges the district court’s de-
termination that the disability policy does not contract around the
default post-judgment interest rate set by 28 U.S.C. § 1961. As dis-
cussed below, we affirm the district court’s rulings.
Before turning to Walker’s specific pre- and post-judgment
interest arguments, we review the relevant policy language, which
provides:
Time of Payment
Disability Benefits will be paid within 45 days, upon
receipt of due written proof of loss, at regular inter-
vals of not more than one month. Disability Benefits
not paid within 45 days of receipt of due written proof
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21-12493 Opinion of the Court 29
of loss shall be considered overdue. The Insurance
Company will pay the insured one and one-half per-
cent per month on the amount of any claim which is
considered overdue until it is finally settled and adju-
dicated.
Any balance unpaid at the end of any period for which
the Insurance Company is liable will be paid at that
time.
1. Pre-Judgment Interest
Walker contends that the Time of Payment Provision pro-
vides for
compound pre-judgment interest at a rate of 1.5 percent.
LINA, on the other hand, maintains that the district court correctly
interpreted the Time of Payment Provision to provide for
simple
pre-judgment interest at a rate of 1.5 percent. This dispute boils
down to a disagreement over the meaning of the phrase “any claim
which is considered overdue.” According to Walker, that phrase
broadly includes the full overdue balance owed to a claimant, in-
cluding any unpaid interest. In LINA’s view, the phrase refers only
to overdue claims for disability benefits and not to any unpaid in-
terest.
In federal diversity actions, pre-judgment interest is gov-
erned by state law,
see Venn v. St. Paul Fire & Marine Ins. Co., 99
F.3d 1058, 1066 (11th Cir. 1996), and Alabama law allows litigants
to recover pre-judgment interest at a contractually specified rate
for breach of contract claims,
see Burgess Min. & Constr. Corp. v.
Lees, 440 So. 2d 321, 338 (Ala. 1983).
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30 Opinion of the Court 21-12493
In general, Alabama law requires courts “to enforce an un-
ambiguous, lawful contract, as it is written.”
Ex parte Dan Tucker
Auto Sales, Inc., 718 So. 2d 33, 35 (Ala. 1998). “Where words used
in a contract are susceptible of more than one meaning, [courts
should], if possible, ascertain from all the provisions of the contract
the sense in which the words were used by the parties
.”
Id. at 36.
For contracts of insurance specifically, Alabama recognizes
another rule: “ambiguities in the language of an insurance policy
are construed in favor of the insured, rather than the insurer.”
Blackburn v. Fid. & Deposit Co. of Md., 667 So. 2d 661, 669 (Ala.
1995). But “ambiguities are not to be inserted by strained or
twisted reasoning,” and “[t]he fact that the parties interpret [an] in-
surance policy differently does not make the insurance policy am-
biguous.”
Twin City Fire Ins. Co. v. Alfa Mut. Ins. Co., 817 So. 2d
687, 692 (Ala. 2001). “Where the parties disagree on whether the
language in an insurance contract is ambiguous, a court should
construe language according to the meaning that a person of ordi-
nary intelligence would reasonably give it.”
Id.
A plain and full reading of the disability policy confirms that
Walker is entitled to simple pre-judgment interest. The Time of
Payment Provision provides for 1.5 percent interest on “any claim
which is considered overdue,” and that phrase cannot properly be
read to include unpaid interest (and therefore to allow for interest-
on-interest). The term “claim” is used throughout the disability
policy exclusively in the sense of “claim[s] for Disability.” Moreo-
ver, other than in the phrase at issue, the disability policy uses the
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21-12493 Opinion of the Court 31
term “overdue” only one other time: in the previous sentence, re-
ferring to disability benefits. As a final point, the phrase “any claim
which is considered overdue” stands in contrast to the broad lan-
guage in the very next sentence of the Time of Payment Provision:
“Any balance unpaid at the end of any period for which the Insur-
ance Company is liable will be paid at that time.” For these rea-
sons, the Time of Payment Provision unambiguously provides for
1.5 percent pre-judgment interest on overdue
disability benefits
and does not provide for any interest-on-interest (i.e., compound
interest).13
Notwithstanding the plain text of the Time of Payment Pro-
vision, Walker argues that the district court failed to properly
13 LINA submits that this interpretation, besides simply being a more accurate
reading of the text, better aligns with Alabama’s “presumption in favor of sim-
ple interest.” Certainly, the Supreme Court of Alabama has recognized, in the
context of statutory interpretation, the “general American rule that when in-
terest is allowable, it is to be computed on a simple rather than compound
basis in the absence of express authorization otherwise.”
Burlington N. R. Co.
v. Whitt, 611 So. 2d 219, 224 (Ala. 1992) (quoting
Stovall v. Ill. Cent. Gulf R.R.,
772 F.2d 190, 192 (5th Cir. 1984)). It makes sense that the same presumption
would apply in the context of contractual interpretation,
see Am. Mill. Co. v.
Brennan Marine, Inc., 623 F.3d 1221, 1227 (8th Cir. 2010) (discussing the “com-
mon law presumption against compound interest” for both contractual inter-
pretation and statutory interpretation), but the Supreme Court of Alabama
has not expressly confirmed that. Assuming Alabama indeed applies the com-
mon law presumption against compound interest to contracts and does so
much the same as the State of Georgia, then our decision in
Caradigm USA
LLC v. PruittHealth, Inc., 964 F.3d 1259 (11th Cir. 2020), indicates that the
disability policy’s language is not sufficient to overcome that presumption.
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32 Opinion of the Court 21-12493
consider the deposition testimony of LINA’s corporate representa-
tive and other district court cases in which LINA paid compound
interest under substantially similar policies. We disagree. The dep-
osition testimony cited by Walker consists of LINA’s corporate rep-
resentative stating that it “seems reasonable” to interpret the disa-
bility policy as providing for interest compounded monthly. That
testimony does not displace the plain reading of the policy or “rep-
resent a commitment by LINA to a compound interest calcula-
tion.” Likewise, the district court cases cited by Walker are of
limited relevance, given that they neither involve Alabama law nor
could alter or modify the plain meaning of the disability policy’s
text. The district court expressly considered both the deposition
testimony and the other district court cases, but ultimately relied
on to the plain language of the disability policy. We affirm that
decision.
Walker also argues that the district court erred by striking
the excerpt of LINA’s claims manual, which, according to Walker,
confirms that the disability policy is meant to provide for com-
pound interest. But Walker does not explain why the district court
was wrong to strike the excerpt on authenticity grounds. Rule
901(a) of the Federal Rules of Evidence imposes a duty on the pro-
ponent of an item of evidence to “produce evidence sufficient to
support a finding that the item is what the proponent claims it is,”
and Walker entirely failed to do so. Thus, the district court did not
abuse its discretion in striking the excerpt.
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21-12493 Opinion of the Court 33
Moreover, as the district court pointed out, even assuming
the excerpt were properly authenticated, it does not support
Walker’s view that the disability policy provides for compound in-
terest. The excerpt does state that “[a]ll interest paid is com-
pounded interest” unless the given contract specifies otherwise.
But the excerpt purports to provide guidance for “state statutes
which require interest to be paid on insurance claim[s]” and then
lists the relevant states. Alabama does not appear on that list. Nor
has Walker established that the excerpt was in effect during the rel-
evant period with regard to the disability policy.14 As a result, there
is absolutely “no indication” that the excerpt applies to the disabil-
ity policy. Therefore, even if the district court erred in striking the
document, that decision constituted harmless error.
2. Post-Judgment Interest
Walker contends that the district court erred by concluding
that the disability policy does not displace the default post-judg-
ment interest rate set by federal statute.
Unlike pre-judgment interest, post-judgment interest is gov-
erned by federal law in diversity cases.
See Ins. Co. of N. Am. v.
Lexow, 937 F.2d 569, 572 n.4 (11th Cir. 1991). The federal post-
judgment interest statute, 28 U.S.C. § 1961(a), provides:
Interest shall be allowed on any money judgment in
a civil case recovered in a district court. Execution
therefor may be levied by the marshal, in any case
14 The excerpt is dated “February 2, 2001 (Revised 8/9/02).”
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34 Opinion of the Court 21-12493
where, by the law of the State in which such court is
held, execution may be levied for interest on judg-
ments recovered in the courts of the State. Such in-
terest shall be calculated from the date of the entry of
the judgment, at a rate equal to the weekly average 1-
year constant maturity Treasury yield, as published
by the Board of Governors of the Federal Reserve Sys-
tem, for the calendar week preceding the date of the
judgment. The Director of the Administrative Office
of the United States Courts shall distribute notice of
that rate and any changes in it to all Federal judges.
The parties do not dispute that, given the date of judgment,
the applicable statutory interest rate under § 1961 is 0.08 percent.
Walker asserts, however, that the disability policy contracts around
§ 1961 and sets the post-judgment interest rate at 1.5 percent.
As a preliminary matter, we recognize that this Court has
not yet weighed in on the question of whether parties may contract
around 28 U.S.C. § 1961. The consensus among our sister circuits
that have addressed the issue, however, is that parties indeed are
free to displace the default federal post-judgment interest rate.
See
Sovereign Bank v. REMI Cap., Inc, 49 F.4th 360, 368 (3d Cir. 2022);
FCS Advisors, Inc. v. Fair Fin. Co., 605 F.3d 144, 148 (2d Cir. 2010);
In re Riebesell, 586 F.3d 782, 794–95 (10th Cir. 2009);
Cent. States,
Se. & Sw. Areas Pension Fund v. Bomar Nat’l, Inc., 253 F.3d 1011,
1020 (7th Cir. 2001);
Citicorp Real Est., Inc. v. Smith, 155 F.3d 1097,
1107–08 (9th Cir. 1998);
In re Lift & Equip. Serv., Inc., 816 F.2d
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21-12493 Opinion of the Court 35
1013, 1018 (5th Cir.),
opinion modified on reh’g, 819 F.2d 546 (5th
Cir. 1987).15 We follow suit.
Although § 1961 speaks of post-judgment interest in manda-
tory terms, e.g., “[i]nterest shall be allowed on any money judg-
ment in a civil case” and “shall be calculated [in the prescribed man-
ner],” the statute “does not expressly limit parties’ ability to agree
to a different post[-]judgment interest rate” or otherwise “indicate[]
that Congress sought to limit freedom of contract.”
Jack Henry &
Assocs., Inc. v. BSC, Inc., 753 F. Supp. 2d 665, 668 (E.D. Ky.
2010),
aff’d, 487 F. App’x 246 (6th Cir. 2012). We find the freedom
of contract principles articulated in
Jack Henry persuasive. With
some exceptions,16 parties can agree to almost anything via con-
tract. “But unless some law or readily identifiable public policy re-
moves an area from freedom of contract’s realm, courts will en-
force an agreement between parties.”
Id. at 668. Here, there is
nothing in the text of § 1961 that abrogates the parties’ freedom of
15 In its only published opinion addressing the question of whether parties can
contract around § 1961, the Sixth Circuit acknowledged the consensus among
other circuit courts but left the issue “for another day” because it was not nec-
essary to resolve that issue.
See Linneman v. Vita-Mix Corp., 970 F.3d 621,
636 (6th Cir. 2020).
16 For example, parties cannot create federal subject matter jurisdiction by
contract.
Tamiami Partners ex rel. Tamiami Dev. Corp. v. Miccosukee Tribe
of Indians of Fla., 177 F.3d 1212, 1222 (11th Cir. 1999). And courts “may refuse
to enforce contracts that violate law or public policy.”
See United Paperwork-
ers Int’l Union, AFL-CIO v. Misco, Inc., 484 U.S. 29, 42 (1987) (citations omit-
ted).
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36 Opinion of the Court 21-12493
contract.
See Westinghouse Credit Corp. v. D’Urso, 371 F.3d 96,
101 (2d Cir. 2004) (explaining that the mandatory language of 28
U.S.C. § 1961 is aimed at “precluding district courts from exercising
discretion over the rate of interest or adopting an interest rate set
by arbitrators” rather than “limiting the ability of private parties to
set their own rates”). Nor is an agreement to set post-judgment
interest violative of a readily identifiable public policy. Certainly,
the parties to a lawsuit “are usually in the best position to deter-
mine the amount of compensation appropriate in [the] case of de-
layed satisfaction,”
D’Urso, 371 F.3d at 102, and we do not read
§ 1961 to prevent the parties from doing so. We therefore hold that
parties can contract around § 1961.
Having determined that parties can contract around § 1961,
we next must determine what standard parties must satisfy in order
to do so. The majority approach is to require that parties use
“clear, unambiguous and unequivocal” contractual language to dis-
place § 1961 and specify some other post-judgment interest rate.
See Sovereign Bank, 49 F.4th at 368;
Tricon Energy Ltd. v. Vinmar
Int’l, Ltd., 718 F.3d 448, 458–59 (5th Cir. 2013);
In re Riebesell, 586
F.3d at 794;
D’Urso, 371 F.3d at 102.17 This requirement is rooted
17 Although the Ninth Circuit has not expressly adopted the “clear, unambig-
uous and unequivocal” language requirement, it has imposed its own “specific
agreement” requirement for overriding § 1961.
See Fid. Fed. Bank, FSB v.
Durga Ma Corp., 387 F.3d 1021, 1023 (9th Cir. 2004);
Citicorp, 155 F.3d at
1108–09. To satisfy that requirement, parties must specifically manifest an in-
tent to contract around the default federal post-judgment interest rate, such as
by agreeing in writing that the contractual rate will apply “after judgment.”
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21-12493 Opinion of the Court 37
in the notion that when a judgment is entered on a contract, any
claim under the contract instantly “merges” into the judgment and
loses its distinct character and identity.
See FCS Advisors, 605 F.3d
at 148;
Soc’y of Lloyd’s v. Reinhart, 402 F.3d 982, 1004 (10th Cir.
2005). Thus, absent clear, unambiguous, and unequivocal lan-
guage to the contrary, the terms of a contract should govern only
the original contract claim and not any successive judgment claim.
Satisfied with that reasoning, and out of respect for the default rule
established by § 1961, we apply the “clear, unambiguous and une-
quivocal” language requirement to the matter at hand.
Under the “clear, unambiguous and unequivocal” standard,
the disability policy fails to displace § 1961. As relevant here, the
Time of Payment Provision simply states that “[t]he Insurance
Company will pay the insured one and one-half percent per month
on the amount of any claim which is considered overdue until it is
finally settled and adjudicated.” Walker contends that, in the con-
text of insurance claims, the phrase “finally settled and adjudicated”
means “finally paid and resolved” and, based on that interpretation,
concludes that the Time of Payment Provision provides for post-
judgment interest in the event that judgment predates payment.
But even assuming that “finally settled and adjudicated” means “fi-
nally paid and resolved,” this language would not satisfy the “clear,
unambiguous and unequivocal” requirement.
See D’Urso, 371
See, e.g.,
Citicorp, 155 F.3d at 1108. As to the Seventh Circuit, it is unclear
whether that court used any heightened requirement for contracting around
§ 1961 in
Bomar National.
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38 Opinion of the Court 21-12493
F.3d at 102 (finding that the parties’ agreement to pay 15.5 percent
interest “from the date payment was due to the date payment is
made” does not sufficiently establish a post-judgment interest rate
of 15.5 percent);
In re Riebesell, 586 F.3d at 794 (determining that
the parties’ contract providing for the accrual of interest “until pay-
ment” at the rate of 24 percent did not displace § 1961 as to post-
judgment interest). Thus, we affirm the district court’s ruling that
§ 1961 controls the post-judgment interest rate here.18
IV. CONCLUSION
For these reasons, we affirm the district court’s dismissal of
the bad-faith claim on summary judgment, exclusion of evidence
of mental anguish damages in connection with the breach of con-
tract claim, and calculation of pre- and post-judgment interest.
AFFIRMED.
18 LINA insists that Walker cannot recover post-judgment interest because she
“did not sue for [such] interest under the disability policy.” We are satisfied
that Walker may recover post-judgment interest given that the operative com-
plaint seeks “interest . . . and such other relief as is just and appropriate” in
connection with the relevant breach of contract claim.
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