Certain Underwriters at Lloyds London v. Inlet Fisheries Incorporated

Filing 225

Order on Motion for Miscellaneous Relief, Order on Motion for Reconsideration

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
CERTAIN UNDERWRITERS AT LLOYDS,
LONDON, SUBSCRIBING TO CERTIFICATE
OF INSURANCE OP01 0025, through Puget
Sound Underwriters, Inc.,
Plaintiffs,
v.
INLET FISHERIES, INC., an Alaska
corporation; and INLET FISH PRODUCERS,
INC., an Alaska corporation,
Defendants.

INLET FISHERIES, INC., an Alaska
corporation; and INLET FISH PRODUCERS,
INC., an Alaska corporation,
Third-Party Plaintiffs,
v.
TOTEM AGENCIES, INC., a Washington
corporation; and AMERICAN E&S
INSURANCE BROKERS CALIFORNIA, INC.,
a Washington corporation,
Third-Party Defendants,

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Case No. 3:04-cv-00058-JWS
ORDER FROM CHAMBERS
[Re:

Motions at Dockets
203 and 204]

I. MOTIONS PRESENTED
At docket 204 defendants Inlet Fisheries, Inc. (“IFI”) and Inlet Fish Producers,
Inc. (“IFP”) (collectively “Inlet”) have moved for reconsideration of the order entered by
this court at docket 181 denying Inlet’s motion for summary judgment and granting the
motion of plaintiff Certain Underwriters at Lloyds, London (“Lloyds”) for summary

judgment. At docket 203, Inlet has requested the court relax the requirement of the
local rules that a motion to reconsider an order be filed within five days of its entry.1/
The basis for both motions is newly discovered evidence. Lloyds has opposed the
motions. Oral argument was not requested and would not assist the court.
II. STANDARD OF REVIEW
Inlet cites FED. R. CIV. P. 59(e) as the authority for the motion and Lloyds’
opposition in part suggests the motion is untimely under Rule 59(e). Rule 59 governs
post-judgment motions to amend judgment or for new trial, not interlocutory orders.
Although the court entered an order granting summary judgment, no final judgment was
entered;2/ therefore, Rule 59 does not apply.3/ However, as long as a district court
retains jurisdiction over a case, it has inherent power to reconsider and modify an
interlocutory order for sufficient cause.4/ That inherent power is not unfettered: “the
court may reconsider previously decided questions in cases in which there has been an
intervening change of controlling authority, new evidence has surfaced, or the previous
disposition was clearly erroneous and would work a manifest injustice.”5/ Only the
second ground, newly discovered evidence, is raised in the case at bar.
To succeed, Inlet must show that (1) the evidence is newly discovered or was
unknown until after the prior motions were submitted for decision and (2) that with
reasonable diligence such evidence could not be discovered and produced prior to their

1/

D.AK. LR 59.1.

2/

FED. R. CIV. P. 54(b); 10A CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY
KANE, FEDERAL PRACTICE & PROCEDURE CIVIL, §2715 (3d ed. 1998).
3/

United States v. Martin, 226 F.3d 1042, 1048 (9th Cir. 2000).

4/

City of Los Angeles, Harbor Division v. Santa Monica, 254 F.3d 882, 885 (9th Cir.

2001)
5/

Leslie Salt Co. v. United States, 55 F.3d 1388, 1393 (9th Cir. 1995); see also School
District No. 1J, Multnomah County, Or. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993)
(“[r]econsideration [of grant of summary judgment] is appropriate if the district court (1) is
presented with newly discovered evidence, (2) committed clear error or the initial decision was
manifestly unjust, or (3) if there is an intervening change in controlling law”).
.
ORDER [RE: MOTIONS AT DOCKETS 203 AND 204]
Lloyds of London v. Inlet Fisheries,
Case No. 3:04-cv-00058-JWS

2

submission.6/ The newly discovered evidence must also be of sufficient probative value
to change the disposition of the motions.7/
III. BACKGROUND/PROCEDURAL HISTORY8/
In May 2004 Lloyds filed its original motion for summary judgment.9/ Inlet, in
response to that motion, filed an affidavit under FED. R. CIV. 56(f), seeking a
continuance until such time as Inlet could conduct discovery to oppose that motion.10/
Although somewhat critical of the dilatory tactics employed by Inlet in defending against
this action, the court granted Inlet’s request.11/ In March 2005 Lloyds renewed its
motion for summary judgment.12/ A month later Inlet opposed this motion and crossmoved for summary judgment.13/ On June 15 Lloyds filed its combined opposition to
Inlet’s cross-motion and reply to Inlet’s opposition to Lloyds’ motion.14/ On July 11 Inlet
filed its reply to Lloyds’ motion.15/ Inlet did not request a continuance under Rule 56(f).
The court granted Lloyds’ motion and denied Inlet’s motion.16/
In support of its motion for summary judgment and in opposition to Inlet’s crossmotion, Lloyds submitted the declaration of Russell Brown, a vice president of Water

6/

Feature Realty, Inc. v. City of Spokane, 331 F.3d 1082, 1093 (9th Cir. 2003); Coastal
Transfer Co. v. Toyota Motor Sales, U.S.A., 833 F.2d 208, 211 (9th Cir. 1987)
7/

Id.

8/

The facts and procedural history, which are well known to the parties and extensively
set out in the prior orders of the court at dockets 114 and 181 are not repeated here except as
necessary to an understanding of the current motions at bar.
9/
10/

Docket 55.
Docket 87.

11/

Docket 114. Because an intervening amended complaint had been filed, the court
also denied Lloyds’ motion for summary judgment without prejudice.
12/

Docket 135.

13/

Docket 151.

14/

Docket 164.

15/

Docket 172.

16/

Docket 181.

ORDER [RE: MOTIONS AT DOCKETS 203 AND 204]
Lloyds of London v. Inlet Fisheries,
Case No. 3:04-cv-00058-JWS

3

Quality Insurance Syndicate (“WQIS”), the prior pollution insurance carrier for Inlet, to
establish the industry standard on the materiality of information not disclosed by Inlet in
applying to Lloyds for insurance. The newly discovered evidence consists of the
deposition testimony of Brown and numerous documents he produced at a deposition
taken in December 2005 under FED. R. CIV. P. 30(b)(6). Inlet argues that this evidence
is newly discovered because Brown was not identified as a witness until Lloyds filed its
reply to Inlet’s motion for summary judgment and, therefore, Inlet had no opportunity to
depose Brown prior to completion of briefing on summary judgment.
IV. DISCUSSION
A vel non for evidence to be considered “newly discovered” is that the evidence
could not have been discovered and produced at the hearing through the use of
reasonable diligence.17/ Although Inlet may not have known that Lloyds intended to
introduce the declaration of Russell Brown until June 2005, clearly Inlet certainly knew
long before then that the materiality of the omitted information, i.e., the prior cancellation
by WQIS and pollution history of Inlet, were dispositive issues in this litigation. As
Lloyds points out, Inlet also knew, or at least by the exercise of reasonable diligence
should have known, what information Inlet provided WQIS in obtaining coverage. Inlet
was also aware that WQIS was a significant player in the pollution insurance industry
and that its underwriting standards were likely to be of significant importance to the
resolution of the issue of the materiality of the undisclosed information (cancellation of
the WQIS policy and pollution history). Instead of inquiring of WQIS as to its position on
the materiality of the undisclosed information, as did Lloyds, Inlet chose to rely on the
affidavit of Forrest V. (“Woody”) Wilton to establish the existence of a triable issue of
fact. The inadmissability of Wilton’s opinion on the underwriting standards for standalone pollution insurance policies rendered the evidence introduced by Lloyds, including
the Brown declaration, uncontradicted. This was, simply put, a tactical litigation
decision that proved to be wrong.

17/

Engelhard Industries, Inc. v. Research Instrumental Corp., 324 F.2d 347, 352 (9th
Cir. 1963).
ORDER [RE: MOTIONS AT DOCKETS 203 AND 204]
Lloyds of London v. Inlet Fisheries,
Case No. 3:04-cv-00058-JWS

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More tellingly, Inlet does not explain the reason relief was not sought under
Rule 56(f),18/ or the delay of nearly six months after learning of the Brown testimony and
more than two months after the court entered its order to take the Rule 36(b)(6)
deposition of Brown. At the time Lloyds renewed its motion for summary judgment, this
action had been pending for more than two years. As the court noted in its September
2004 order granting Inlet relief under Rule 56(f), Inlet had already been dilatory at that
point in defending this matter and conducting discovery.
Even if the evidence now sought to be considered as newly discovered had been
proffered in connection with the summary judgment motions, it would not have altered
the outcome. Viewed in the light most favorable to Inlet, and contrary to its assertions,
the so-called newly discovered evidence does not contradict the testimony contained in
the Brown affidavit.19/ At most, the evidence may tend to undermine the credibility or
weight to be given to Brown’s testimony. Once the moving party has properly supported
a motion for summary judgment, the opposing party must affirmatively show that a
material issue of fact remains in dispute and may not simply rest on the hope of
discrediting the movant's evidence at trial.20/ In ruling on a motion for summary
judgment, the court may not base its decision on credibility; for the purpose of ruling on
a summary judgment motion the facts asserted in an affidavit are accepted as true.21/

18/

See Barber v. State of Hawai’i, 42 F.3d 1185, 1198 (9th Cir. 1994).

19/

In fact, in his deposition Brown reaffirmed that the statements made in his declaration
were true and accurate.
20/

Crawford-El v. Britton, 523 U.S. 574, 600 (1998); Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 256–257 (1986); Frederick S. Wyle Professional Corp. v. Texaco, Inc., 764 F.2d 604,
608 (9th Cir. 1985).
21/

Dominguez-Curry v. Nevada Transp. Dept., 437 F.3d 1027, 1035–36 (9th Cir. 2005);
see Bodett v. CoxCom, Inc., 366 F.3d 736, 742 (9th Cir. 2004) (“[i]n other words, the factfinder's
general duty to draw all reasonable inferences in favor of the nonmovant does not require that
the court make a credibility determination on the [movant's] evidence at the summary judgment
stage, even if it has reason to disbelieve that evidence); see also Williams v. Calderon, 48 F.
Supp.2d 979, 989 (C.D.Cal.1998) (noting in the context of a habeas claim “[t]he Court is not to
determine issues of credibility on a motion for summary judgment; instead, the truth of each
party's affidavits is assumed”), aff'd sub nom., Williams v. Woodford, 384 F.3d 567 (9th Cir.
2004).
ORDER [RE: MOTIONS AT DOCKETS 203 AND 204]
Lloyds of London v. Inlet Fisheries,
Case No. 3:04-cv-00058-JWS

5

Creating a triable issue of fact by discrediting the testimony of Brown is precisely
what Inlet is attempting in its motion for reconsideration. Inlet has not produced any
direct evidence that prior policy cancellations and pollution history of an applicant are
not material facts, the nondisclosure of which violates the maritime doctrine of
uberrimae fidei. Instead, Inlet argues that the fact that from the time WQIS first insured
Inlet it did not at any time inquire about the condition of the insured vessels, the
pollution history of the insureds, or any information concerning prior policies undermines
Brown’s testimony that these are material factors in the underwriting decision.
Inlet’s argument is undercut by several factors. There is no evidence that prior to
the time WQIS first issued a policy to Inlet that any carrier had canceled or declined
pollution coverage for Inlet or Inlet had been involved in any marine pollution incidents.
The action by WQIS requiring a survey of the vessels in June 2000 immediately
following the Maren I incident is indicative that condition of the vessels is in fact a
material factor in underwriting decisions. The argument advanced by Inlet also misses
the basic premise of the doctrine of uberrimae fidei as applied in this circuit—a material
fact must be disclosed even in the absence of a request.22/ Just as Lloyds, WQIS was
entitled to rely on that doctrine to provide it with all the information material to the
underwriting decision.
Finally, even if this court were to discount or even disregard the Brown testimony,
the testimony of the Lloyds’ personnel familiar with underwriting standards for standalone marine pollution policies stands uncontradicted. While, as Inlet continues to
argue that the testimony of the Lloyds’ personnel is self-serving, the court is not free to
disregard the testimony of a party that is not inherently incredible simply because it is
self-serving.23/ In this case, the deposition testimony of Lloyds’ personnel is not only
uncontradicted by Inlet, but also consistent with established judicial precedent that both

22/

Cigna Property & Casualty Co. v. Polaris Picture Corp, 159 F.3d 412, 418 (9th Cir.
1998); Certain Underwriters at Lloyds v. Montford, 52 F.3d 219, 222 (9th Cir 1995).
23/

See Leslie v. Grupo ICA, 198 F.3d 1152, 1157–58 (9th Cir. 1999).

ORDER [RE: MOTIONS AT DOCKETS 203 AND 204]
Lloyds of London v. Inlet Fisheries,
Case No. 3:04-cv-00058-JWS

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an insurance applicant’s loss history and cancellation of a prior policy are material.24/
Their testimony is not inherently incredible. If competent evidence contradicting the
testimony proffered by Lloyds exists, Inlet has an obligation to produce that evidence,
which would create a triable issue of fact. This, despite having more than sufficient time
to discover and produce, Inlet has not done. Instead, Inlet attempts to attack the
strength or weight of the evidence produced by Lloyds. Unfortunately for Inlet, even
weak evidence that is uncontradicted is sufficient to establish the lack of a triable issue
of fact.
IV. CONCLUSION
For the foregoing reasons the motions at dockets 203 and 204 are DENIED.
DATED at Anchorage, Alaska, this 24th day of February, 2006
/s/
JOHN W. SEDWICK
UNITED STATES DISTRICT JUDGE

24/

See e.g., Certain Underwriters at Lloyds v. Montford, supra (applicant’s loss history);
Knight v. U.S. Fire Insurance Co., 804 F.2d 9, 13 (2nd Cir. 1986) (prior policy cancellation).
ORDER [RE: MOTIONS AT DOCKETS 203 AND 204]
Lloyds of London v. Inlet Fisheries,
Case No. 3:04-cv-00058-JWS

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