Coco Rico, LLC v. Universal Insurance Company (1st Cir. 2025):
A Landmark on Evidentiary Rigor for Consequential Damages, Business-Interruption Caps, and “Obstinacy”–Based Fee Awards

1. Introduction

Hurricane María devastated Puerto Rico in September 2017, damaging plaintiff Coco Rico, LLC’s beverage-concentrate plant. Coco Rico sought payment under its Business Income & Extra Expense (BI & EE) coverage with Universal Insurance Company. After negotiations stalled, Coco Rico sued in federal court (D.P.R.) for breach of contract, consequential damages under Puerto Rico Civil Code §3018, and attorneys’ fees / prejudgment interest under P.R. Rules Civ. P. 44.1(d) and 44.3(b).

A jury awarded (i) $873,000 for BI & EE loss (exceeding Coco Rico’s own $686,098 proof and the policy’s $750,000 limit) and (ii) $250,000 in consequential damages for Universal’s “bad faith”. Post-verdict, Universal sought to trim both awards; Coco Rico sought fees and interest for Universal’s alleged obstinacy. The district court refused all relief except reducing BI & EE to the $750,000 policy cap.

On cross-appeals, the First Circuit (Judges Gelpí, Lipez, Rikelman) reversed in part and affirmed in part, crafting three key holdings that now guide economic-loss litigation:

1. A jury may not award BI & EE damages above the highest figure proved by competent evidence. Here, $686,098 was the ceiling.
2. Consequential damages require concrete evidentiary support; counsel’s statements or vague owner testimony are insufficient.
3. “Obstinacy” for fees/interest focuses solely on conduct during the litigation, not on pre-suit behavior; denial of fees without explanation is not an abuse where the record supports it.

2. Summary of the Judgment

• Business Interruption Loss: Award reduced from $873,000 to the $686,098 figure proved at trial; the district court abused its discretion in allowing anything higher.
• Consequential Damages: $250,000 verdict set aside; no evidence beyond speculation supported any additional loss post-restoration period.
• Attorneys’ Fees & Pre-judgment Interest: District court’s summary denial affirmed; Universal’s litigation conduct was not “obstinate” within P.R. R. Civ. P. 44.1(d)/44.3(b).
• Costs and Post-Judgment Interest: Unchallenged and left intact.
• Disposition: Reversed in part, affirmed in part, remanded for entry of amended judgment consistent with the opinion; each party bears its own appellate costs.

3. Analysis

3.1 Precedents Cited and Their Influence

• Dopp v. Pritzker, 38 F.3d 1239 (1st Cir. 1994)
  – Provides the “heavy burden” for disturbing jury economic-damage awards and articulates the “rational appraisal” standard: a verdict exceeds the universe of possible awards when no evidence supports it.
  – Adopted substantively to find $750k award irrational when only $686k proven.
• Koster v. TWA, 181 F.3d 24 (1st Cir. 1999)
  – Confirms appellate deference when a trial judge “ratifies” a verdict, yet still allows reversal if award is outside rational range. – Quoted to emphasize jury cannot exceed amount plaintiff “quite specific[ally]” claims.
• Achille Bayart & Cie v. Crowe, 238 F.3d 44 (1st Cir. 2001) & Cordeco Dev. Corp. v. Santiago Vásquez, 539 F.2d 256 (1st Cir. 1976)
  – Set the bar against awards that rest on “conjecture and speculation”; applied to strike the consequential-damages verdict.
• Correa v. Cruisers, 298 F.3d 13 (1st Cir. 2002) & related Puerto Rico fee cases (Mejías-Quiros, P.R. Tel.)
  – Outline definition of “obstinacy” and require deference to district court’s discretion; served to uphold denial of fees.

3.2 Court’s Legal Reasoning

(a) Business Interruption Award

The panel applied the Dopp/Koster standard to an economic-loss verdict. Every trial reference—from owner Hahn, expert Iglesias, closing argument, and pre-trial order— pegged BI & EE loss at $686,098. Exhibits U & Y (late-2019 e-mails referencing a $900k “claim”) lacked any underlying financial data and “contained no facts substantiating that Coco Rico suffered this loss.” Because a jury must anchor its number in record evidence, the district court erred by letting $750,000 stand, even though that figure happened to equal the policy cap.

(b) Consequential Damages

Section 3018 damages are permissible only with proof. The only alleged figure ($130,000 per year) appeared solely in counsel’s argument, not in testimony. Hahn’s trial statement that BI & EE losses were the “only losses” doomed the claim. Without financials, method, or expert analysis, the verdict rested on speculation; Rule 50(b) relief was mandatory.

(c) Fees & Interest – “Obstinacy”

Puerto Rico law treats fee/interest awards as substantive but discretionary. The focus is litigation obstinacy, not pre-suit claims handling. Universal’s pleadings, defenses, and “zero-owed” trial stance were not frivolous; some evidence supported them, and losing at trial does not equal obstinacy. Therefore, the district court’s unexplained denial was within its discretion.

3.3 Likely Impact of the Decision

• Heightened Evidentiary Expectation: Plaintiffs must tie any consequential-damage number to concrete proof (documents, calculations, or expert analysis). Counsel’s summations cannot cure evidentiary voids.
• BI & EE Litigation: Insureds cannot recover more than the highest proven loss, even if the policy cap allows it. Insurers can safely challenge verdicts exceeding the plaintiff’s own evidence.
• P.R. “Obstinacy” Doctrine Clarified: Pre-litigation bad faith or claims-handling misconduct is irrelevant when seeking fee shifting under Rules 44.1(d)/44.3(b). Practitioners must catalogue in-court conduct to support obstinacy motions.
• Strategic Trial Implications: Plaintiffs may now hedge against under-presentation of damages by (i) retaining experts for all categories (including post-restoration losses), and (ii) explicitly reserving the right to seek amounts up to the policy limit.
• Broader Circuit Persuasion: While rooted in Puerto Rico law, the evidentiary principles apply throughout the First Circuit (Maine, Massachusetts, New Hampshire, Rhode Island) wherever state law mirrors the common-law requirement that economic damages be “susceptible of reasonable ascertainment”.

4. Complex Concepts Simplified

• Business Income & Extra Expense (BI & EE) Coverage
  Insurance that reimburses (i) lost net income and (ii) extraordinary costs incurred to resume operations after a covered peril, but only during the defined “period of restoration”. Policies almost always cap recovery (here $750k).
• Consequential (Extra-Contractual) Damages
  Losses flowing beyond the contract price—e.g., lost customers, reputational harm—recoverable under P.R. Civil Code §3018 only if the breaching party acted with fraud, negligence, or delay, and only with adequate proof of amount.
• Rule 50(b) – Judgment as a Matter of Law
  A procedural device letting the trial judge (and later the appellate court) remove a jury verdict that no rational juror could reach on the evidence.
• “Obstinacy” (Rules 44.1(d) & 44.3(b))
  Puerto Rico’s fee-shifting mechanism, akin to “bad-faith litigation conduct”: stubborn, frivolous, or dilatory tactics during the case—not before.

5. Conclusion

Coco Rico, LLC v. Universal Insurance Company supplies a trio of clear messages for insurers, insureds, and litigators alike:

1. Economic-damage verdicts must match the proven numbers; a policy cap does not justify an evidence-free windfall.
2. Consequential-damage claims demand the same quantitative discipline as contractual damages; speculation—whether by owner or counsel—will be struck down on appeal.
3. Puerto Rico’s unique “obstinacy” fee regime looks inward at the lawsuit itself; pre-suit acrimony is beside the point.

In tightening the evidentiary screws and delineating the reach of fee-shifting, the First Circuit provides a roadmap for district courts across the circuit and strengthens predictability in complex commercial-insurance disputes.