Zurich American Insurance Company et al v. L.P.C.&D., Inc. et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
ZURICH AMERICAN INSURANCE
COMPANY, ET AL.
Plaintiffs
v.
L.P.C.&D., INC. ET AL.
Defendants
CIVIL NO. 24-1538 (RAM)
OPINION AND ORDER
This 	matter 	comes 	before 	the 	Court 	on 	Defendants 	L.P.C.&D.,
Inc. 	(“LPCD”), 	Las 	Piedras 	Construction 	Corp. 	(“Las 	Piedras”),
Tejo, 	Inc. 	(“Tejo”), 	Equipment 	Depot, 	Inc. 	(“EDI”), 	Kane
Caribbean, 	Inc. 	(“KCI”), 	Piezas 	Extra, 	Inc. 	(“PEI”), 	Equipos 	de
Boquerón, 	Inc. 	(“EBI”), 	Caribbean 	Raceway 	Park, 	Inc. 	(“CRP”),
Hacienda 	Cuco, 	Inc. 	(“HCI”), 	and 	Pedro 	Feliciano 	Benítez
(“Feliciano 	Benítez”) 	(collectively, 	“Defendants” 	or
“Indemnitors”)’s 	Motion 	for 	Reconsideration 	asking 	this 	Court 	to
rethink 	its 	earlier 	ruling 	on 	Magistrate 	Judge 	Marcos 	E. 	Lopez’s
December 12, 2025 Report and Recommendation (“R & R”). (Docket No.
73).
After 	presiding 	over 	an 	evidentiary 	hearing, 	the 	Magistrate
Judge 	recommended 	that 	Plaintiffs 	Zurich 	American 	Insurance
Company 	(“Zurich”), 	Fidelity 	and 	Deposit 	Company 	of 	Maryland
(“F&D”), 	XL 	Specialty 	Insurance 	Company 	(“XLS”), 	and 	XL
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Civil No. 24-1538(RAM) 	2
Reinsurance 	America, 	Inc. 	(“XLR”) 	(collectively, 	“Plaintiffs” 	or
“Sureties”)’s 	Motion 	to 	Compel 	at 	Docket 	No. 	2 	be 	denied, 	on 	the
grounds 	that 	the 	Sureties 	failed 	to 	demonstrate 	the 	irreparable
harm 	necessary 	for 	preliminary 	injunctive 	relief. 	(Docket 	No. 	63
at 	38). 	The 	Sureties 	and 	the 	Indemnitors 	each 	filed 	timely
objections 	to 	the 	R 	& 	R. 	(Docket 	Nos. 	70 	and 	71). 	The 	Sureties
also filed a Response in Opposition to the Indemnitors’ objection.
(Docket No. 72).
The Court reviewed the record de novo and adopted in part and
rejected in part the R & R. (Docket No. 73). The Court ruled that
the 	loss 	suffered 	by 	the 	Sureties 	was 	not 	“merely” 	economic 	or
redressable 	by 	money 	damages. 	Id. 	at 	15. 	Consistent 	with 	the
Restatement 	(Third) 	of 	Suretyship 	and 	Guaranty 	and 	the 	great
majority 	of 	the 	case 	law 	from 	across 	the 	nation, 	this 	Court
concluded 	that 	the 	Sureties 	had 	shown 	irreparable 	harm 	and 	so
respectfully 	rejected 	the 	Magistrate’s 	recommendation. 	Id. 	The
Court instructed the Indemnitors to deposit collateral with Zurich
in 	the 	amount 	of 	$2,676,471.31 	and 	to 	provide 	the 	Sureties 	with
reasonable access to books, records, and accounts. Id. at 22.
On 	March 	2, 	2026, 	the 	Indemnitors 	filed 	the 	present 	Motion
for 	Reconsideration, 	arguing 	that 	the 	Court 	committed 	manifest
errors of law by “failing to consider the evidence presented during
the 	evidentiary 	hearing” 	and 	by 	not 	considering 	a 	state 	case 	in
which 	the 	Puerto 	Rico 	Aqueduct 	and 	Sewer 	Authority 	(“PRASA”) 	had
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Civil No. 24-1538(RAM) 	3
already 	surrendered 	more 	than 	$4.3 	million 	to 	judicial 	custody.
(Docket No. 76 at 4, 6).
On 	March 	18, 	2026, 	the 	Sureties 	filed 	a 	Response 	to 	the
Indemnitors’ 	Motion 	for 	Reconsideration, 	arguing 	that 	the
Indemnitors’ 	“arguments 	are 	mere 	reiterations 	of 	issues 	already
brought before the Court and decided by the Court,” both as to the
evidentiary hearing testimony issue and the deposit of funds in an
antecedent state case issue. (Docket No. 93 at 2).
I. 	STANDARD OF REVIEW
The 	Federal 	Rules 	of 	Civil 	Procedure 	do 	not 	provide 	for 	the
filing 	of 	motions 	for 	reconsideration. 	Consequently, 	a 	motion
which asks “the court to modify its earlier disposition of a case
because 	of 	an 	allegedly 	erroneous 	legal 	result 	is 	brought 	under
Fed. 	R. 	Civ. 	P. 	59(e).” 	Marie 	v. 	Allied 	Home 	Mortg. 	Corp., 	402
F.3d 1, 7 (1st Cir. 2005); see also United States v. Pérez-Greaux,
382 	F. 	Supp.3d 	177, 	178 	(D.P.R. 	2019). 	A 	Rule 	59(e) 	motion 	is 	an
extraordinary 	remedy 	and 	may 	be 	granted 	only 	if 	the 	party 	moving
for 	reconsideration 	identifies 	a 	manifest 	error 	of 	law, 	newly
discovered evidence, or any other circumstance such as a change in
controlling 	law 	to 	warrant 	granting 	its 	motion 	for
reconsideration. See United States v. Peña-Fernández, 394 F. Supp.
3d 	205, 	207 	(D.P.R. 	2019) 	(quoting Biltcliffe 	v. 	CitiMortgage,
Inc., 772 F.3d 925, 930 (1st Cir. 2014)).
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Civil No. 24-1538(RAM) 	4
According 	to 	the 	First 	Circuit, 	reconsideration 	is 	“an
extraordinary remedy which should be used sparingly.” U.S. ex rel.
Ge 	v. 	Takeda 	Pharm. 	Co., 	737 	F.3d 	116, 	127 	(1st 	Cir. 	2013)
(internal 	quotation 	omitted). 	Indeed 	“[w]hen 	the 	motion 	simply
regurgitates 	contentions 	that 	were 	previously 	made 	and 	rejected,
the movant has no legal basis to insist upon reconsideration.” Liu
v. Mukasey, 553 F.3d 37, 39 (1st Cir. 2009); see also Santa Cruz-
Bacardi 	v. 	Metro 	Pavia 	Hospital, 	Inc., 	2019 	WL 	4453620, 	at 	*2
(D.P.R. 	2019) 	(internal 	quotation 	omitted) 	(emphasis 	added).
Further, 	such 	a 	motion 	may 	not 	be 	brought 	by 	a 	losing 	party 	to
“raise 	legal 	theories 	that 	should 	have 	been 	raised 	earlier.”
Teamcare 	Infusion 	Orlando, 	Inc. 	v. 	Humana 	Health 	Plans 	of 	Puerto
Rico, 	2018 	WL 	9412924, 	at 	*6 	(D.P.R. 	2018) 	(citation 	omitted).
Hence, 	a 	reconsideration 	does 	“not 	provide 	a 	vehicle 	for 	a 	party
to 	undo 	its 	own 	procedural 	failures.” 	Peña-Fernández, 	2019 	WL
3716472, at *2 (internal quotation omitted).
II. 	ANALYSIS
A. The alleged surrender of funds to judicial custody
A Rule 59(e) motion asking a court to reconsider its adoption
of 	an 	R 	& 	R 	is 	not 	an 	opportunity 	for 	a 	litigant 	to 	belatedly
contest 	the 	magistrate’s 	earlier 	resolution 	of 	an 	issue. 	In 	the
case at bar, Magistrate Judge Lopez’s R & R explicitly considered
the argument that the Indemnitors restate here, ruling that it was
not sufficiently developed to warrant judgment:
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Civil No. 24-1538(RAM) 	5
During the hearing, Defendants inquired about
the 	fact 	that 	PRASA 	deposited 	a 	four 	million
three hundred thousand dollar ($4,300,000.00)
retainage 	amount 	in 	the 	state 	court 	for 	its
liability in the Soletanche Litigation, which
Plaintiffs 	did 	not 	consider 	during 	the
calculations 	for 	their 	loss 	reserve. 	ECF 	No.
58, 	Evid. 	Hrg., 	Aug. 	20, 	2025, 	at 	1:40:39-
1:41:58. 	Defendants 	attempted 	to 	argue 	that
Plaintiffs should have considered this deposit
when 	calculating 	their 	reserves 	as 	it 	would
impact 	the 	exposure 	risk 	Plaintiffs 	are
facing. 	3:45:46-3:46:17, 	3:46:40-3:47:25.
However, Defendants failed to explain why the
retainage amount PRASA deposited to cover its
liability in the Soletanche Litigation should
have 	been 	considered 	by 	Plaintiffs 	when
calculating 	their 	exposure 	risk, 	when 	the
Appellate 	Judgment 	clearly 	separates 	the
liability 	amount 	PRASA 	faces 	from 	the
liability 	amount 	LPCD 	and 	the 	Sureties 	face.
Exhibit 	5-t 	at 	p. 	69. 	In 	fact, 	neither 	party
elaborated this point during the hearing, nor
have 	they 	provided 	information, 	written 	or
otherwise, 	of 	the 	impact, 	if 	any, 	it 	has 	on
Plaintiffs’ 	exposure 	risk. 	ECF 	No. 	58, 	Evid.
Hrg., 	Aug. 	20, 	2025, 	at 	3:47:31-3:47:46,
3:47:55-3:48:02, 	3:48:55-3:49:09. 	With 	this
limited information, a determination cannot be
made in this regard.
(Docket No. 63 at 35 n.28)
The proper stage to contest the Magistrate’s conclusion that
the record was not sufficiently developed came when the Indemnitors
filed 	their 	Objection 	to 	the 	R 	& 	R. 	(Docket 	No. 	71). 	In 	it, 	they
are 	altogether 	silent 	as 	to 	the 	question 	of 	funds 	under 	judicial
custody 	in 	state 	court. 	Id. 	So, 	there 	is 	no 	newly 	discovered
evidence 	or 	manifest 	error 	of 	law 	here. 	See, 	e.g., 	Alicea 	v.
Machete 	Music, 	744 	F.3d 	773, 	781 	(1st 	Cir. 	2014) 	(“[n]ewly
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Civil No. 24-1538(RAM) 	6
discovered evidence must be of facts existing at the time of trial.
The 	moving 	party 	must 	have 	been 	excusably 	ignorant 	of 	the 	facts
despite 	using 	due 	diligence 	to 	learn 	about 	them”) 	(quoting 	11
Charles 	Alan 	Wright 	& 	Arthur 	R. 	Miller, 	Federal 	Practice 	and
Procedure § 2808).
B. The 	allegation 	that 	the 	Court 	did 	not 	consider 	hearing
testimony
The 	Indemnitors 	assert 	that 	the 	Court 	failed 	to 	consider 	a
portion 	of 	the 	testimony 	at 	the 	evidentiary 	hearing 	held 	by 	the
Magistrate Judge, in which a representative of two of the Sureties
opined 	that 	she 	“[didn’t] 	believe” 	that 	the 	Sureties 	stood 	to
suffer more than a potential economic loss. (Docket Nos. 63 at 24-
25, 	76 	at 	3). 	Unfortunately 	for 	the 	Indemnitors, 	that 	contention
is 	simply 	incorrect. 	The 	Court 	did 	review 	the 	record 	and 	the
Magistrate’s 	opinion 	as 	to 	the 	saliency 	of 	the 	hearing 	testimony
in 	detail. 	The 	Court 	simply 	concluded, 	and 	affirms 	here, 	that 	as
a 	matter 	of 	law, 	the 	Sureties’ 	injury 	is 	not 	limited 	to 	future
dollars 	paid--rather, 	it 	includes 	both 	the 	infliction 	of 	an
unbargained-for 	risk 	of 	loss 	as 	well 	as 	the 	annulment 	of 	the
contractual 	right 	to 	immediate 	collateral 	that 	the 	Sureties
acquired. (Docket No. 73 at 10-11).
The 	Court’s 	view 	accords 	with 	the 	law 	of 	suretyship 	and 	the
advice 	of 	the 	Restatement 	(Third) 	of 	Suretyship 	and 	Guaranty.
RESTATEMENT (THIRD) OF SURETYSHIP AND GUARANTY § 21. The dominant
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Civil No. 24-1538(RAM) 	7
trend in the case law favors the path this Court has charted. See,
e.g., 	Safeco 	Ins. 	Co. 	of 	Am. 	v. 	Schwab, 	739 	F.2d 	431, 	433 	(9th
Cir. 	1984) 	(“Sureties 	are 	ordinarily 	entitled 	to 	specific
performance of collateral security clauses”); Merchs. Bonding Co.
(Mut.) 	v. 	Ark. 	Constr. 	Sols., 	LLC, 	2019 	WL 	452767, 	*4 	(W.D. 	Ark.
2019) 	(“In 	the 	Court’s 	view, 	there 	are 	more 	district 	courts 	that
come down squarely on the side of granting preliminary injunctive
relief 	in 	indemnity 	agreement 	cases”). 	District 	courts 	surveying
the 	case 	law 	from 	across 	the 	country 	have 	observed 	that 	an 	“an
overwhelming majority of district courts” have sided with sureties
in 	ordering 	indemnitors 	to 	furnish 	collateral. 	Argonaut 	Ins. 	Co.
v. 	Summit 	Concrete, 	Inc., 	647 	F. 	Supp. 	3d 	1228, 	1233 	(N.D. 	Ala.
2022) (collateralization “is necessary to protect...the bargained-
for benefit of collateral security, avoidance of present exposure
to 	liability 	during 	pending 	litigation 	against 	indemnitors, 	and
avoidance 	of 	risk 	that...the 	surety 	will 	be 	left 	as 	a 	general
unsecured 	creditor”). 	Other 	courts’ 	review 	of 	the 	precedent 	has
remarked 	that 	“case 	law 	nationwide 	has 	recognized 	the 	right 	of 	a
surety 	to 	use 	the 	equitable 	remedy 	of 	specific 	enforcement 	to
secure collateralization.” Auto-Owners Ins. Co. v. Randy B. Terry,
Inc., 	2013 	WL 	6583959, 	at 	*6 	(N.D. 	Ala. 	2013). 	Similarly, 	other
districts 	have 	noted 	that 	courts 	“routinely” 	find 	that 	“sureties
suffer 	immediate, 	irreparable 	harm 	if 	they 	are 	denied 	receipt 	of
collateral,” 	and 	“generally” 	grant 	“specific 	performance 	to
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Civil No. 24-1538(RAM) 	8
enforce 	collateral 	security 	clauses 	based 	on 	the 	premise 	[that]
such 	remedy 	is 	required 	to 	protect 	the 	surety’s 	bargain.” 	Great
Am. 	Ins. 	Co. 	v. 	SRS, 	Inc., 	2011 	WL 	6754072, 	at 	*8 	(M.D. 	Tenn.
2011); 	Liberty 	Mut. 	Ins. 	Co. 	v. 	Nat’l 	Pers. 	of 	Texas, 	Inc., 	2004
WL 583531, at *2 (N.D. Tex. 2004).
One representative’s insinuation to the contrary at a hearing
does not alter the Court’s above conclusion as a matter of law.
III. CONCLUSION
For 	the 	foregoing 	reasons, 	the 	Indemnitors’ 	Motion 	for
Reconsideration at Docket No. 76 is hereby DENIED.
IT IS SO ORDERED.
In San Juan Puerto Rico, this 25 th day of March 2026.
S/ RAÚL M. ARIAS-MARXUACH
United States District Judge
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