H.E. MCGONICAL INC. v. HARLEYSVILLE LAKE STATES INSURANCE COMPANY et al

Filing 82

ENTRY DENYING PLAINTIFF'S MOTION TO RECONSIDER - McGonigal's motion to reconsider demonstrates his disappointment in the Court's two dismissal Orders (Filing No. 41 ; Filing No. 68 ), and the Order denying leave to amend the Compl aint (Filing No. 66 ), not a manifest error of law or fact that would warrant alteration of or amendment to the challenged orders. Accordingly, for the reasons stated above, McGonigal's Motion to Reconsider (Filing No. 69 ) is DENIED. Signed by Judge Tanya Walton Pratt on 4/18/2017. (JLS)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION
H.E. McGONIGAL, INC.,

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Plaintiff,
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v.
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HARLEYSVILLE LAKE STATES INSURANCE )
COMPANY, and COREPOINTE INSURANCE
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COMPANY,
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Defendants.
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Case No. 1:15-cv-00549-TWP-DML

ENTRY DENYING PLAINTIFF’S MOTION TO RECONSIDER
This matter is before the Court on Plaintiff H.E. McGonigal, Inc.’s (“McGonigal”) Motion
to Reconsider filed pursuant to Federal Rule of Civil Procedure 54(b) (Filing No. 69). Following
motions to dismiss filed by Defendants Harleysville Lake States Insurance Company
(“Harleysville”) and CorePointe Insurance Company (“CorePointe”), the Court dismissed
McGonigal’s claims for insurance bad faith against Harleysville and CorePointe (Filing No. 41;
Filing No. 68). The Court also denied McGonigal’s request for leave to amend its Complaint
because of McGonigal’s lack of diligence in pursuing and pleading its bad faith claims and the
unfair prejudice that would result against Harleysville and CorePointe (Filing No. 66). McGonigal
asks the Court to reconsider the dismissal Orders and the Order denying leave to amend the
Complaint. For the following reasons, the Court DENIES McGonigal’s Motion to Reconsider.
I. LEGAL STANDARD
This Motion is properly classified as a motion to reconsider under Federal Rule of Civil
Procedure 54(b) because no final judgment has been entered in this case. See Fed. R. Civ. P. 54(b)
(“any order or other decision, however designated, that adjudicates fewer than all the claims or the

rights and liabilities of fewer than all the parties does not end the action as to any of the claims or
parties and may be revised at any time before the entry of a judgment adjudicating all the claims
and all the parties’ rights and liabilities”).
The Court applies a similar standard as applied to motions to alter or amend a judgment
under Rule 59(e). Motions to reconsider filed pursuant to Rule 54(b) or Rule 59(e) are for the
purpose of correcting manifest errors of law or fact or to present newly discovered evidence not
available at the time of briefing, and a motion to reconsider an order under Rule 54(b) is judged
by largely the same standard as a motion to alter or amend a judgment under Rule 59(e). KatzCrank v. Haskett, 2014 U.S. Dist. LEXIS 95144, at *6 (S.D. Ind. July 14, 2014); Woods v. Resnick,
725 F. Supp. 2d 809, 827–28 (W.D. Wis. 2010).
Motions to reconsider “serve a limited function: to correct manifest errors of law or fact or
to present newly discovered evidence.” State Farm Fire & Cas. Co. v. Nokes, 263 F.R.D. 518,
526 (N.D. Ind. 2009). The motion is to be used “where the Court has patently misunderstood a
party, or has made a decision outside the adversarial issues presented to the Court by the parties,
or has made an error not of reasoning but of apprehension.” Bank of Waunakee v. Rochester
Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990) (citation omitted).
The purpose of a motion for reconsideration is to ask the Court to reconsider matters
“properly encompassed in a decision on the merits.” Osterneck v. Ernst & Whinney, 489 U.S. 169,
174 (1989). The motion “will be successful only where the movant clearly establishes: (1) that
the court committed a manifest error of law or fact, or (2) that newly discovered evidence
precluded entry of judgment.” Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 954 (7th Cir.
2013) (citation and quotation marks omitted). A manifest error “is not demonstrated by the
disappointment of the losing party. It is the wholesale disregard, misapplication, or failure to

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recognize controlling precedent.” Oto v. Metropolitan Life Ins. Co., 224 F.3d 601, 606 (7th Cir.
2000) (citation and quotation marks omitted).
“Reconsideration is not an appropriate forum for rehashing previously rejected arguments
or arguing matters that could have been heard during the pendency of the previous motion.”
Ahmed v. Ashcroft, 388 F.3d 247, 249 (7th Cir. 2004) (citation and quotation marks omitted).
Relief pursuant to a motion to reconsider is an “extraordinary remed[y] reserved for the exceptional
case.” Foster v. DeLuca, 545 F.3d 582, 584 (7th Cir. 2008).
II.

DISCUSSION

The Court provides a brief background of this case to begin its discussion. In January
2015, McGonigal brought this action against Harleysville and CorePointe, asserting claims for
breach of contract and breach of the duty of good faith and fair dealing in connection with
insurance policies sold by Harleysville and CorePointe to McGonigal. McGonigal is an Indiana
car dealership company located in Kokomo, Indiana. CorePointe is an insurance company based
out of Birmingham, Michigan, and Harleysville is an insurance company based out of Harleysville,
Pennsylvania. McGonigal purchased insurance policies from both Harleysville and CorePointe to
cover losses incurred in its car dealership business.
Around January 18, 2013, McGonigal learned that approximately sixteen vehicles were
fraudulently purchased with funds drawn on a McGonigal account, and McGonigal received no
compensation for the vehicles. After discovering the loss, McGonigal submitted insurance claims
to both Harleysville and CorePointe in accordance with the policies’ terms.

Even though

McGonigal allegedly complied with the terms of the policies, and despite the loss allegedly being
a loss covered by the policies, Harleysville and CorePointe denied McGonigal’s claims.

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Because of the denial of the claims, McGonigal filed a Complaint in this Court, seeking
coverage for the loss and damages for the insurers’ breach of contract and failure to act in good
faith. On April 13, 2015, Harleysville filed a motion to dismiss, asserting that the Complaint failed
to provide any factual basis to support a claim of insurance bad faith (Filing No. 5). On October
26, 2015, the Court granted Harleysville’s motion to dismiss the bad faith claim against
Harleysville (Filing No. 41). On January 4, 2016, CorePointe filed its motion to dismiss the bad
faith claim asserted against CorePointe, asserting the same argument advanced by Harleysville—
that the Complaint failed to provide any factual basis to support a claim of insurance bad faith
(Filing No. 45).
More than a month after CorePointe’s motion to dismiss was filed and almost four months
after the Court’s Order dismissing the bad faith claim against Harleysville, on February 23, 2016,
McGonigal filed a motion requesting leave to amend its Complaint regarding its bad faith claims
(Filing No. 49). This motion was filed after the deadline to amend the pleadings had expired. On
July 18, 2016, the Court denied McGonigal’s motion to amend the Complaint because of
McGonigal’s lack of diligence in pursuing and pleading its bad faith claims and the unfair
prejudice that would result against Harleysville and CorePointe (Filing No. 66). Then on August
31, 2016, the Court granted CorePointe’s motion to dismiss the bad faith claim asserted against
CorePointe (Filing No. 68). McGonigal filed its Motion to Reconsider, asking the Court to vacate
or amend the two dismissal Orders and the Order denying leave to amend the Complaint.
In its Motion to Reconsider, McGonigal argues that the Court improperly required a
heightened pleading standard for its insurance bad faith claim when the Court granted the
Defendants’ motions to dismiss. McGonigal further argues that the Court erred when it disallowed

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amendment of the Complaint because it should have been allowed to plead facts required by the
Court’s Orders on the motions to dismiss.
The Defendants respond that McGonigal is improperly rehashing its old arguments and
simply arguing that the Court erred in its reasoning, neither of which warrants reconsideration.
The Defendants further point out that the Court did not require a heightened pleading standard for
the insurance bad faith claim, as McGonigal now argues.
While the particularity required by Federal Rule of Civil Procedure 9(b) for fraud claims
is not applicable to claims of insurance bad faith, case law is abundantly clear that a recitation of
the elements of a cause of action or mere labels are not sufficient under the pleading requirements
of Rule 8. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (although “detailed
factual allegations” are not required, mere “labels,” “conclusions,” or “formulaic recitation[s] of
the elements of a cause of action” are insufficient); Bissessur v. Ind. Univ. Bd. of Trs., 581 F.3d
599, 603 (7th Cir. 2009) (“it is not enough to give a threadbare recitation of the elements of a claim
without factual support”). McGonigal failed to provide anything beyond a recitation of the
elements of a cause of action or mere labels for its bad faith claim. While the Court understands
McGonigal’s disappointment in the Court’s reasoning and decision in the dismissal Orders, such
disappointment is not a sufficient basis to prevail on a motion to reconsider. See Oto, 224 F.3d at
606 (manifest error “is not demonstrated by the disappointment of the losing party”).
McGonigal’s arguments are simply a disagreement with the Court’s reasoning, not with
the Court’s apprehension or with the legal standards applied. The Court did not require a
heightened pleading standard for McGonigal’s bad faith claims, and McGonigal has not shown an
error of law or fact. Thus, McGonigal’s Motion to Reconsider is not warranted.

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Additionally, McGonigal has failed to show any error of law or fact regarding the Court’s
denial of his motion for leave to amend the Complaint. Rather, it argues a simple disappointment
with the Court’s reasoning. Regarding that motion, the Court applied the correct legal standard,
correctly understood the facts, and reasoned that McGonigal was not diligent in seeking leave to
amend its Complaint. The Court further reasoned that allowing amendment at that late stage would
unfairly prejudice the Defendants. The Court committed no error regarding the law or the facts
that justifies reconsideration.
The Court acknowledges McGonigal’s assertion of new facts regarding the September
2016 indictment of its employee Randy Hoover. However, the Court briefly notes that these “new
facts” do not support an insurance bad faith claim based on the facts of this case where the insurer
investigated and denied the claim in 2013. The Court also reminds the parties that insurers owe
their policyholders a duty of good faith and fair dealing when processing insurance claims.
However, “this new cause of action does not arise every time an insurance claim is erroneously
denied.” Erie Insurance Co. v. Hickman, 622 N.E.2d 515, 520 (Ind. 1993).
III. CONCLUSION
McGonigal’s motion to reconsider demonstrates his disappointment in the Court’s two
dismissal Orders (Filing No. 41; Filing No. 68), and the Order denying leave to amend the
Complaint (Filing No. 66), not a manifest error of law or fact that would warrant alteration of or
amendment to the challenged orders. Accordingly, for the reasons stated above, McGonigal’s
Motion to Reconsider (Filing No. 69) is DENIED.

SO ORDERED.
Date: 4/18/2017

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DISTRIBUTION:
Joseph Andrew Samreta
SKILES DETRUDE
[e-mail]
Richard Robert Skiles
SKILES DETRUDE
[e-mail]
Edward F. Harney, Jr.
HUME SMITH GEDDES GREEN & SIMMONS
[e-mail]
John J. Piegore
SANCHEZ DANIELS & HOFFMAN LLP
[e-mail]
Timothy V. Hoffman
SANCHEZ DANIELS & HOFFMAN LLP
[e-mail]

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