Reynolds v. Allstate Insurance Company et al

Filing 64

ORDER DENYING JOINT MOTION TO VACATE SUMMARY JUDGMENT ORDER 61 (Illston, Susan) (Filed on 10/4/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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GARY V. REYNOLDS,

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Plaintiff,

United States District Court
For the Northern District of California

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No. C 10-4893 SI
ORDER DENYING JOINT MOTION TO
VACATE SUMMARY JUDGMENT
ORDER

v.
ALLSTATE INSURANCE CO., et al.,
Defendants.

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This action was filed by plaintiff Gary Reynolds in Alameda County Superior Court in

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September, 2010. Defendant Allstate Insurance Co. removed it to this Court in October, 2010. On

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January 23, 2012, this Court granted summary judgment in favor of plaintiff Reynolds and against

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defendant Allstate. Allstate appealed, and through the Ninth Circuit Mediation Program, the parties

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settled. As part of that settlement, the parties jointly moved to vacate the Summary Judgment Order.

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Having carefully considered the papers submitted, the Court DENIES the motion to vacate the Summary

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Judgment Order.

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BACKGROUND

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This case arose from a motorcycle accident in which the motorcycle passenger, Janice Costanzo,

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and motorcycle operator, Gary Reynolds, both suffered severe damages. The other vehicle involved in

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the accident was uninsured, and Costanzo sued Reynolds for relief. In that underlying state court

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personal injury action, Allstate was representing Reynolds subject to a reservation of rights to deny

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coverage to plaintiff as to liability for Costanzo’s damages, based on an exclusion in the insurance

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policy. Reynolds subsequently filed this lawsuit seeking a declaration that Allstate was obligated to

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defend and indemnify Reynolds under the terms of Allstate’s policy against the personal injury damage

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claims made by Costanzo in the underlying action.

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On January 23, 2012, this Court granted summary judgment in favor of plaintiff Gary Reynolds

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and against defendant Allstate Insurance Co. The Court found that under the principles of insurance

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policy interpretation, there was an ambiguity in the exclusion, and that a reasonable insured could expect

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coverage. Additionally, the Court found that the exclusion was not plain and clear, and thus should be

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strictly construed against Allstate.

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Allstate appealed the Summary Judgment Order to the Ninth Circuit. Through the Ninth Circuit

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Mediation Program, the parties resolved both the appeal and the underlying tort action. As part of that

United States District Court
For the Northern District of California

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global settlement, the parties jointly moved to vacate the Summary Judgment Order.

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LEGAL STANDARD

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Pursuant to Fed. R. Civ. P. 60(b), a district court may “relieve a party or a party’s legal

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representative from a final judgment, order, or proceeding” for a number of reasons. In determining

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whether to vacate a judgment, district courts must take into account “the consequences and attendant

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hardships of dismissal or refusal to dismiss” and “the competing values of finality of judgment and right

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to relitigation of unreviewed disputes.” American Games, Inc. v. Trade Products, Inc., 142 F.3d 1164,

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1168 (9th Cir. 1998) (quoting Dilley v. Gunn, 64 F.3d 1365, 1370-71 (9th Cir. 1995)). Courts are not

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obliged to vacate a prior order at the behest of the parties in order to facilitate settlement. See Bates v.

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Union Oil Co., 944 F.2d 647, 650 (9th Cir. 1991). The Ninth Circuit has recognized that if courts were

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required to vacate prior rulings after settlement “any litigant dissatisfied with a trial court’s findings

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would be able to have them wiped from the books.” Ringsby Truck Lines, Inc. v. Western Conference

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of Teamsters, 686 F.2d 721 (9th Cir. 1982).

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DISCUSSION

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The parties argue that vacatur will promote mediation and settlement. The Ninth Circuit and

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judicial policy have long-favored mediation and settlements. See Officers for Justice v. Civil Serv.

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Comm’n of City & County of San Francisco, 688 F.2d 615, 625 (9th Cir. 1982) (finding that “voluntary
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conciliation and settlement are the preferred means of dispute resolution”). The Ninth Circuit has

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developed a special mediation program that the parties utilized to resolve their differences in a global

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settlement.
Although the Court recognizes the value of settlements, in this case the considerations weighing

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against vacating the Summary Judgment Order persuade the Court that vacatur would be inappropriate

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here. The interpretation of the exclusion in Allstate’s insurance policy may arise again with different

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litigants. “Judicial precedents are presumptively correct and valuable to the legal community as a

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whole. They are not merely the property of private litigants and should stand unless a court concludes

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that the public interest would be served by vacatur.” U.S. Bancorp Mortg. Co. v. Bonner Mall

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United States District Court
For the Northern District of California

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Partnership, 513 U.S. 18, 26-27 (1994) (quoting Izumi Seimitsu Kogyo Kabushiki Kaisha v. U.S. Philips

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Corp., 510 U.S. 27, 40 (1993) (Stevens, J., dissenting)). The only “public interest” in vacatur urged by

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the parties is the utility of settlement, and here settlement has now been accomplished. The parties did

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not share the terms of the settlement with the Court, as they “are confidential” (Barnes Decl., ¶ 4), but

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they state that one “material term” was their commitment “to file a joint motion seeking vacatur” of the

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summary judgment order. That motion having been filed, the settlement has presumably been

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consummated.

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For the foregoing reasons, the joint motion to vacate the Court’s Summary Judgment Order is
DENIED.

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IT IS SO ORDERED.

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Dated: October 4, 2012
SUSAN ILLSTON
United States District Judge

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