United States Court of Appeals
For the First Circuit
Nos. 04-2104
04-2105
DR. PORFIRIO FRANCESCHI; ANGELA CASTILLO DE FRANCHESCI; CONJUGAL
PARTNERSHIP FRANCESCHI-CASTILLO,
Plaintiffs, Appellants/Cross-Appellees,
v.
HOSPITAL GENERAL SAN CARLOS, INC. AND/OR HOSPITAL SAN CARLOS,
INC. D/B/A HOSPITAL SAN CARLOS BORROMEO,
Defendant, Appellee/Cross-Appellant.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Justo Arenas, U.S. Magistrate Judge]
Before
Lynch and Lipez, Circuit Judges,
and Baldock,* Senior Circuit Judge.
Raul Barrera Morales, with whom Hernandez Sanchez Law Firm was
on brief, for appellant.
Myrta Estrella Nieves Blas, with whom Santos & Nieves Blas was
on brief, for appellee.
August 24, 2005
*
Hon. Bobby R. Baldock, of the Tenth Circuit, sitting by
designation.
LIPEZ, Circuit Judge. Appellant Dr. Porfirio Franceschi,
a physician, had a contract dispute with the hospital that employed
him. The contract had an arbitration clause, and the parties
attempted to select an arbitral panel. For various reasons, the
arbitration never happened. Instead, the dispute was eventually
tried to a jury, which returned a verdict for Dr. Franceschi on
both contract damages and compensatory damages for emotional
distress. On the hospital's motion for new trial or remittitur,
the court substantially reduced the emotional damages award.
The appeal (by plaintiffs) and cross-appeal (by the
hospital) raise a bevy of issues: (1) whether the case should have
been dismissed in light of the arbitration clause, (2) whether the
suit was untimely, (3) whether the court erred in reducing the
emotional damages award, (4) whether the jury's economic damages
award was excessive and should have been reduced, and (5) whether
the jury's economic damages award was too low and should have been
increased. We hold that the hospital forfeited its arbitration
argument by failing to pursue an interlocutory appeal when that
argument was first denied by the district court in a summary
judgment ruling. The other issues also pose no obstacles to
affirming the district court.
I.
We recite the facts in the light most favorable to the
jury's verdict, United States v. Castellini, 392 F.3d 35, 39 (1st
-2-
Cir. 2004), and present only those facts necessary to the
disposition of this appeal.
Dr. Franceschi, a radiologist, was recruited from the
Texas hospital where he worked to join Hospital San Carlos in
Puerto Rico. His employment contract specified his compensation as
follows:
1) "THE HOSPITAL" shall pay "THE RADIOLOGIST"
a minimum guarantee of ten thousand dollars
($10,000.00) a month which shall be payable on
the first of the following month.
2) Every three months the total amount
collected for the production and
interpretation of the radiological studies
charged by "THE HOSPITAL" shall be computed
and of the amount in excess of the minimum
guarantee, "THE RADIOLOGIST" shall be paid 35%
of the net profit of the Department.
When Dr. Franceschi received his first paycheck, it was
much smaller than he expected. He spoke to the hospital's director
of finances and its administrator, each of whom explained that
after calculating the department's net income, the hospital then
subtracted 55% as a so-called "contractual adjustment." Each
claimed that such an adjustment was customary in Puerto Rico. The
net effect of the adjustment was to reduce the pie from which Dr.
Franceschi received a 35% slice.
Dr. Franceschi left the hospital when his contract
expired in December 1994. After some preliminary skirmishing in
the Puerto Rico commonwealth court, the parties attempted to pursue
arbitration as provided by the employment contract's arbitration
-3-
clause. Efforts at arbitration began in the fall of 1996, but
seemed to founder on the attempt to select a panel. In January
1998, Dr. Franceschi's lawyer sent a letter to the hospital saying
that "before proceeding to formalize the panel, I believe we should
meet" to discuss settlement. Apparently nothing happened, and Dr.
Franceschi eventually obtained new counsel. In the spring of 2000,
Dr. Franceschi's counsel wrote to the hospital to revive
arbitration talks. The hospital responded that it considered the
matter closed.
In September 2000, Dr. Franceschi and his wife filed this
lawsuit in federal court. Shortly thereafter, the hospital filed
a motion for summary judgment on the grounds that the contract
required arbitration and that the statute of limitations had run.
In March 2001, the district court denied the motion. First, it
found that the arbitration clause, by its terms, did not apply to
this dispute. Second, it found that, although the three-year
statute of limitations ran from the date that Dr. Franceschi
rendered services, the January 1998 letter from his attorney
restarted the three-year period because it demonstrated the
creditor's intent to collect the debt.
In April 2004, the case was tried to a jury. At the
close of plaintiff's evidence, the hospital moved for judgment as
a matter of law, which the court denied. The hospital did not
renew its motion at the close of all the evidence. The next day,
-4-
the jury returned a verdict for the Franceschis, awarding $152,792
for breach of the contract, plus $100,000 each to the doctor and
his wife for mental and emotional anguish. The hospital then filed
a motion for judgment as a matter of law, which the court denied as
procedurally barred, and a motion for a new trial or remittitur.
The court denied the motion for a new trial, but granted the motion
for remittitur in part. After finding that there was no evidence
of the plaintiffs' extreme mental anguish, the court reduced those
awards to $5,000 each.
Plaintiffs appeal the contract damages award, seeking
$225,784 instead of the $152,792 awarded. Plaintiffs also seek to
restore the award for mental anguish to the full $200,000. The
hospital cross-appeals the damages awards, maintaining that it owes
Dr. Franceschi only $16,857 and nothing for mental anguish. The
hospital also appeals the court's denial of its motion for a new
trial, and argues that the district court erred in denying its
motion for summary judgment on the grounds of the statute of
limitations and the arbitration clause.
II.
The issues presented are not legally complex, and we
dispose of them briefly. We address them in approximately the
order in which they arose.
-5-
A. Arbitration
At the summary judgment stage, the hospital argued that
the contract required mandatory arbitration of the complaint. The
district court rejected the hospital's argument on the basis of an
interpretation of the contract. More than three years elapsed
between the district court's denial of the hospital's motion for
summary judgment and the start of trial. In the intervening
period, the hospital did nothing to press its arbitration claim.
In particular, it did not file an interlocutory appeal, which the
Federal Arbitration Act permits. See 9 U.S.C. § 16(a)(1)(B).
In Colon v. R.K. Grace & Co., 358 F.3d 1, 4 (1st Cir.
2003), we signaled that we would likely adopt the rule that failure
to take such an appeal could forfeit the right to arbitration:
Nothing in the statute requires an immediate
appeal but three circuits have held that the
failure to promptly appeal such a denial may
by estoppel foreclose the demanding party's
right to arbitration, although this is not
automatic and depends on a showing of
prejudice to the other side. The reason is
that it is wasteful to have a full trial and
then determine by a post-trial appeal that the
whole matter should have been arbitrated and
so start again. . . . We are sympathetic to
the approach of the [three] Circuits, and it
is wise for us to make this clear by dictum so
as to give warning to the bar.
(Footnote omitted). We did not formally adopt this rule in Colon
because "the district judge did not definitively deny the
arbitration request until after . . . the trial had already
occurred." Id. Here, by contrast, the district court definitively
-6-
denied the request for arbitration at the summary judgment stage,
three years before trial began, and the hospital sat on its
arbitration right throughout that period.
We now hold what Colon forewarned: failure to promptly
appeal a denial of arbitration will, if prejudicial to the opposing
party, operate to forfeit the demanding party's right to
arbitration. In this case, it would prejudice plaintiffs "to have
a full trial and then determine by a post-trial appeal that the
whole matter should have been arbitrated and so start again." Id.
Consequently, the hospital has forfeited its right to arbitration.1
B. Judgment as a Matter of Law
At the close of plaintiffs' case, the hospital moved for
judgment as a matter of law on the ground that the plaintiffs had
not established a sufficient basis upon which a reasonable jury
could find in their favor. The district court denied that motion.
The hospital did not, however, renew the motion at the
close of all the evidence. "If a defendant wishes to renew a
motion for judgment as a matter of law at the post-trial stage,
with a view to having denial of that motion considered by the court
of appeals, the defendant is required to have moved for judgment as
1
The hospital also fleetingly suggests that plaintiffs' claims
were barred by the statute of limitations. In its entirety, the
argument is that "the doctrine of statutes of limitation [and]
laches . . . applies to this case." This type of "short-form
argument[]" is an "invitation[] to this court to fill in the blanks
by itself, which is not our job." Colon, 398 F.3d at 6. We
decline to address the issue.
-7-
a matter of law at the close of all the evidence. . . . This court
therefore has held that it will not consider claims of insufficient
evidence unless the district court was presented with a motion for
judgment as a matter of law at the close of all the evidence."
Keisling v. SER-Jobs for Progress, 19 F.3d 755, 758-759 (1st Cir.
1994). Consequently, this argument has been forfeited.
C. Emotional Damages
The Franceschis challenge the district court's reduction
of the jury's award for emotional distress from $200,000 to
$10,000. District courts may grant a motion for new trial or
remittitur only if the award "exceeds any rational appraisal or
estimate of the damages that could be based on the evidence before
the jury" and is "grossly excessive, inordinate, shocking to the
conscience of the court, or so high that it would be a denial of
justice to permit it to stand." Davignon v. Clemmey, 322 F.3d 1,
12 (1st Cir. 2003) (quotation marks and citations omitted). We
review for abuse of discretion. Id.
This was a commercial dispute arising from a disagreement
about the interpretation of the definition of the phrase "net
profits." While disputes with one's employer over the terms of
compensation, particularly after moving a great distance to work
for that employer, are usually upsetting, the plaintiffs presented
little evidence supporting the claim that Dr. Franceschi or his
wife had suffered extreme mental anguish. The Franceschis present
-8-
nothing in their appellate brief to disturb the district court's
conclusion that the evidence did not support the jury's award. We
find no abuse of discretion.
D. Contract Damages
Both parties challenge the contract award. The hospital
argues that the jury's verdict was excessive and the district court
should have either granted a new trial or reduced the award to
$16,857 -- the amount that the hospital concedes it owes to Dr.
Franceschi based on its interpretation of the contract (i.e., the
interpretation the jury rejected). We see no reason to disagree
with the district court's conclusion that the jury could rationally
interpret the contract as it did, notwithstanding the hospital's
arguments to the contrary. Furthermore, the district court noted
that the jury award, far from excessive, was actually "lower than
what Dr. Franceschi would have received had he been paid the 35% of
. . . the net income after subtracting operational expenses to the
gross revenue." (Emphasis added). The district court was correct
to deny the hospital's motion for new trial or remittitur of the
contract damages.
At the same time, the Franceschis challenge the court's
refusal to increase the contract award to an amount that, they say,
reflects a more logical computation. This argument is a
nonstarter. "[T]he Seventh Amendment flatly prohibits federal
courts from augmenting jury verdicts by additur." Campos-Orrego v.
-9-
Rivera, 175 F.3d 89, 97 (1st Cir. 1999) (citing Dimick v. Schiedt,
293 U.S. 474, 486 (1935)).
Affirmed.
-10-