Illinois National Insurance Company v. National Union Fire Insurance Company of Pittsburgh, PA. et al
Filing
83
ORDER DENYING THIRD-PARTY DEFENDANT MARSH USA INC.'S MOTION FOR RECONSIDERATION OF INTERLOCUTORY ORDER AND DENYING DEFENDANT NORDIC PCL CONSTRUCTION, INC.'S MOTION FOR PARTIAL RECONSIDERATION OF INTERLOCUTORY ORDER 70 ; 73 ; 74 ; 77 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 6/13/12. (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
ILLINOIS NATIONAL INSURANCE
COMPANY, an Illinois
corporation; and NATIONAL
UNION FIRE INSURANCE COMPANY
OF PITTSBURGH, PA., a
Pennsylvania corporation,
)
)
)
)
)
)
)
Plaintiffs,
)
)
vs.
)
)
)
NORDIC PCL CONSTRUCTION,
)
INC., f/k/a NORDIC
CONSTRUCTION, LTD., a Hawaii )
)
corporation,
)
)
Defendant.
_____________________________ )
)
NORDIC PCL CONSTRUCTION,
)
INC., f/k/a NORDIC
)
CONSTRUCTION LTD., a Hawaii
)
corporation,
)
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Defendant and
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Third-Party
)
Plaintiff,
)
vs.
)
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MARSH USA, INC.,
)
Third-Party
)
Defendant.
)
_____________________________ )
CIVIL NO. 11-00515 SOM/KSC
ORDER DENYING THIRD-PARTY
DEFENDANT MARSH USA INC.’S
MOTION FOR RECONSIDERATION OF
INTERLOCUTORY ORDER AND DENYING
DEFENDANT NORDIC PCL
CONSTRUCTION, INC.’S MOTION FOR
PARTIAL RECONSIDERATION OF
INTERLOCUTORY ORDER
ORDER DENYING THIRD-PARTY DEFENDANT MARSH USA INC.’S MOTION
FOR RECONSIDERATION OF INTERLOCUTORY ORDER AND DENYING DEFENDANT
NORDIC PCL CONSTRUCTION, INC.’S MOTION FOR PARTIAL
RECONSIDERATION OF INTERLOCUTORY ORDER
The court has before it two motions seeking
reconsideration of its order of April 26, 2012 (“Partial
Dismissal Order”).
One motion is filed by Third-Party Defendant
Marsh USA Inc., the other by Defendant Nordic PCL Construction,
Inc.
Nordic has also joined in Marsh’s reconsideration motion.
This court denies both reconsideration motions.
The parties are familiar with the facts of this case,
which are detailed in the Partial Dismissal Order and not
repeated here.
The parties are also familiar with Local Rule
60.1, governing motions for reconsideration of interlocutory
orders.
The present order therefore focuses on the arguments
raised in favor of reconsideration.
The opposition memoranda filed by Plaintiffs thoroughly
address the movants’ arguments and need little supplementation.
Moreover, having addressed in the Partial Dismissal Order most of
the arguments contained in the reconsideration motions, the court
keeps the present order brief, instead of repeating the
opposition arguments or this court’s own earlier ruling.
I.
MARSH’S RECONSIDERATION MOTION
Even if, as Marsh argues, it may seek reconsideration
of the court’s ruling on claims brought neither by nor against
Marsh, Marsh’s motion fails.
A.
Marsh’s Disagreement with this Court Does Not
Warrant Reconsideration.
It appears to this court that much of Marsh’s
reconsideration motion merely reargues matters already addressed
by this court.
Nothing in Marsh’s reconsideration motion
persuades this court that it has misapplied the “law of the
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circuit” rule, or that Burlington ceases to be good law binding
on this court.
This court has already addressed why Tri-S Corp.
V. Western World Ins. Co., 110 Haw. 473, 135 P.3d 82 (2006), does
not nullify Burlington.
This court has also already noted that,
in Burlington, the Ninth Circuit had before it preexisting Hawaii
Supreme Court decisions and cannot be said by any district court
in this circuit to have misconstrued those decisions in the
absence of clearly contrary Hawaii Supreme Court decisions.
While Marsh contends that Tri-S makes it clear that Burlington is
incorrect, the Hawaii Intermediate Court of Appeals, four years
after Tri-S was decided, expressly validated and followed
Burlington in Group Builders, Inc. v. Admiral Insurance Co., 123
Haw. 142, 231 P.2d 67 (Haw. Ct. App. 2010).
The ICA was
certainly bound by the Hawaii Supreme Court, and must have
thought that its decision was consistent with prior Hawaii
Supreme Court decisions, including Tri-S.
That is, while Marsh
treats Group Builders as a deviation from preexisting law,
nothing in the ICA’s decision suggests that it intended to thwart
the Hawaii Supreme Court.
This court continues to read Burlington as controlling.
B.
This Court Has Not Nullified Act 83.
Marsh complains that this court’s Partial Dismissal
Order has made a nullity of Act 83.
Marsh is mistaken.
Marsh
simply does not agree with this court’s reading of Act 83.
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Marsh
argues that Act 83 was “intended to restore coverage” recognized
by the Hawaii Supreme Court.
25, ECF No. 70-1.
Marsh Mem. In Support of Motion at
To the extent this court reads the insurance
policies in accordance with this court’s reading of Hawaii
Supreme Court decisions, this court cannot be said to be ignoring
Act 83.
To the extent preexisting law was consistent with Group
Builders, the Hawaii legislature does not say that preexisting
law must be ignored.
That is, Act 83 provides a remedy that is
limited to restoring coverage that was lost as a result of the
Group Builders decision.
coverage rights.
Act 83 never purports to create new
If Group Builders denies an insured coverage
that the insured would have had absent Group Builders, then, Act
83 says, the insured is entitled to coverage.
It does not follow
that all insureds that are denied coverage would have had such
coverage in the absence of Group Builders.
While Marsh and this
court are not reading Hawaii Supreme Court law in the same way,
that is not equivalent to this court’s flouting or invalidating
of Act 83.
Application of Act 83 requires an analysis of Hawaii
Supreme Court decisions preceding Group Builders.
As noted
above, far from purporting to deviate from preexisting Hawaii
Supreme Court decisions, which the ICA clearly could not do,
Group Builders was a decision that the ICA thought was consistent
with those preexisting Hawaii Supreme Court cases.
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Act 83 cannot
be read outside of that context.
Act 83 is not a proclamation of
law in a vacuum; its stated purpose is to give effect to
preexisting judicial decisions.
In that respect, Act 83 is
distinguishable from legislation that enacts or amends a statute
in response to a judicial decision that construes a statute in a
manner unacceptable to the legislative body.
In that
circumstance, construction of the decisions preceding the new
enactment or amendment does not determine the applicability of
that new law.
That is not the circumstance presented by Act 83.
A clear example of that different circumstance may be
found in the federal arena in the Lily Ledbetter Fair Pay Act of
2009.
That Act was a response to the United States Supreme
Court’s decision in Ledbetter v. Goodyear Tire and Rubber Co.,
550 U.S. 618 (2007).
The plaintiff in that case was a woman who
sued her employer after discovering that women were paid less
than men for the same work.
was time-barred.
The Supreme Court held that her suit
The Court reasoned that the limitations period
on the claim began to run from the date of the employer’s initial
decision to discriminate, even if that decision was not known to
the employee at the time, and that the limitations period could
not be run from the most recent paycheck.
The 2009 legislation
superseded the Court’s decision by amending the statutory
limitations period.
Thus, Congress addressed a decision that
5
construed limitations legislation by passing new limitations
legislation.
See 42 U.S.C. § 2000e-5(e)(3)(A).
By contrast, Marsh reads Act 83 as stating that the
ICA’s decision in Group Builders contravenes preexisting Hawaii
Supreme Court cases.
It is unusual indeed to have a legislature
seek to trump an appellate court’s reading not of a statute but
of a higher appellate court’s decisions.
appears to be reading Act 83 as doing.
Yet that is what Marsh
In other words, Marsh is
urging this court to read Act 83 as the legislature’s superseding
of the Hawaii ICA’s reading of appellate decisions.
Whether
Marsh’s reading is correct or not, Act 83 never tries to
supersede the preexisting Hawaii Supreme Court cases, which the
Ninth Circuit tells this court how to read.
C.
This Court Has Not Construed Ambiguities Against
the Insured.
Marsh inexplicably contends that this court has
violated rules of contract construction by interpreting
ambiguities relating to completed operations coverage against the
insured.
This court has not done that at all.
Marsh argues that an ambiguous provision in an adhesion
contract must be construed against the drafter.
But before a
court may construe an ambiguous provision, it must satisfy itself
that an ambiguous provision is in issue.
Marsh does not contend
that any party has the benefit of any inference in its favor with
respect to a court’s determination as to whether a provision is
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ambiguous.
The problem with Marsh’s argument is that this court
made no ruling that any provision concerning completed operations
coverage was ambiguous.
The court noted questions it had and
then gave the insured a deadline by which to file an amended
pleading identifying what completed operations provisions it was
relying on.
The court could not determine what policy provisions
were in effect, much less what provisions were being sued over.
Under those circumstances, the issue of how to construe any
provision, ambiguous or not, was simply not before the court.
Before the court could construe or misconstrue any provision, the
provision had to be identified for the court to examine.
has not occurred.
That
Marsh is getting ahead of itself in attacking
the way the court has allegedly construed provisions that the
court is presently unable to identify as being in issue!
II.
NORDIC’S RECONSIDERATION MOTION
A.
A Stay Remains Unwarranted.
Nordic’s motion relies heavily on an oral ruling issued
by the state trial court after this court held its hearing in the
present case and just a few days before this court issued its
Partial Dismissal Order.
This court was unaware of the state
judge’s ruling at the time it issued the Partial Dismissal Order.
In the context of a different project, the state trial court
appears to have relied on Act 83 in determining that policies
issued in 2003 had to be construed as providing coverage for
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occurrences that could arise out of contracts.
The state trial
court appears to have read the ICA decision in Group Builders as
having departed from prior Hawaii Supreme Court law.
Unlike the
state trial court, this court, for the reasons stated in the
Partial Dismissal Order and this court’s discussion of Marsh’s
reconsideration motion, continues to conclude that it remains
bound by Burlington, a decision of the appellate court directly
above this court.
Nordic expresses concern about inconsistent rulings in
the state and federal trial courts.
Nordic’s alarm is premature.
Claims remain in issue in the present case.
Indeed, an amended
pleading has been invited, suggesting that this case is still in
its infancy.
It will likely be months before a final judgment is
entered in this case, and during that time the state case may
well make its way to a state appellate court.
At the moment, the
present case does not involve extensive discovery or expensive
trial proceedings.
formulated.
Instead, pleadings are still being
There is ample time to worry about inconsistencies,
and a stay that may ultimately become appropriate remains
unwarranted for now.
In connection with asking this court to stay the
present case in light of the state trial court ruling, Nordic
urges this court to follow the reasoning of its own decision in
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Benevedes v. GEICO, 2009 WL 705541 (D. Haw. Mar. 18, 2009).
Nordic’s reliance on that decision is misplaced.
Benevedes was an insurance coverage action that had
begun in state court.
Following removal to this court by the
insurer, the insureds moved for remand.
The remand motion was
referred to the magistrate judge, who issued his Findings and
Recommendation (“F&R”).
court.
The F&R recommended remand to the state
In the course of explaining why remand was recommended,
the magistrate judge stated that the underlying personal injury
lawsuit was a parallel action.
No party objected to the F&R, and
this very district judge then adopted the F&R.
Nordic argues that this judge should similarly deem the
construction defect lawsuit proceeding in state court to be
parallel to the present insurance coverage action.
What Nordic
ignores are circumstances present in the Benevedes case but not
present here that affected the analysis of whether the underlying
action and the coverage action were parallel.
In the underlying
personal injury action related to the Benevedes coverage action,
there was a state court order requiring the parties in the
personal injury action to engage in mediation before a mediator
of their choosing.
The state court order further recommended
that the insurance carrier participate in the mediation to make
it “meaningful.”
The state court appears to have contemplated a
compensated nonjudicial mediator.
9
See ECF 11-4 in Benevedes,
Civ. No. 08-00554.
This is not something ordered in every case.
This court is not, of course, saying that any time mediation is
ordered in a related state case the state case must be deemed to
be parallel to a federal coverage action.
However, especially
given the absence of any objection to the F&R, the remand
context, and the mediation order, it made sense to this judge to
adopt the F&R stating that the state and federal actions were
parallel.
By contrast, the present case involves spirited
argument over the issue of whether there is a parallel state
case.
This case is not one that this court could send to a state
court, and no party has suggested that there is a mediation order
in place in any way relating to the present dispute.
Benevedes
is inapposite.
B.
This Court Remains Bound by Burlington.
On another note, this court is puzzled by Nordic’s
argument that a state trial court’s decision, while admittedly
not controlling, should stop this or any other trial court in its
tracks.
Are parties arguing to other state trial judges that
they too should stay their cases to avoid possible inconsistency
with the first state trial court to rule on the Act 83 issue?
On the one hand, Nordic argues that this court (and
presumably the state trial courts) should disregard the ICA’s
reading of Hawaii Supreme Court decisions in favor of the
legislature’s reading of those same decisions.
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On the other
hand, Nordic argues that other trial courts should defer to a
lower court’s reading of Hawaii Supreme Court decisions.
See
Nordic’s Mem. In Support of Reconsideration Motion at 17, ECF No.
74-1 (citing cases in which the Ninth Circuit “did not wait for a
state supreme court decision before departing from prior Circuit
interpretation of state law” and noting that “intermediate
appellate court decisions” may prompt a federal court “to revisit
Circuit law”).
Urging reliance on a state trial court’s
rejection of the ICA’s reading of Hawaii Supreme Court cases,
Nordic appears to be driven by whether it agrees with the content
of a ruling, not the hierarchy of a court.
This court, however,
is clearly governed by a higher court.
III. CONCLUSION
The reconsideration motions filed by Marsh and Nordic are
DENIED.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, June 13, 2012.
/s/ Susan Oki Mollway
Susan Oki Mollway
Chief United States District Judge
ILLINOIS NATIONAL INSURANCE COMPANY v. NORDIC PCL CONSTRUCTION, INC.;
CIVIL NO. 11-00515 SOM/KSC; ORDER DENYING THIRD-PARTY DEFENDANT MARSH
USA INC.’S MOTION FOR RECONSIDERATION OF INTERLOCUTORY ORDER AND
DENYING DEFENDANT NORDIC PCL CONSTRUCTION, INC.’S MOTION FOR PARTIAL
RECONSIDERATION OF INTERLOCUTORY ORDER
11
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