LM Insurance Corporation et al v. Canal Insurance Company
OPINION & ORDER: Court ORDERS that 36 Motion to Amend/Correct is DENIED. Liberty Mutual's 35 Bill of Costs REMAINS REFERRED to the Clerk of the Court. Signed by Judge Karl S. Forester on 6/28/2012. (SCD)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
CIVIL ACTION NO. 11-81-KSF
LM INSURANCE CORPORATION
and LIBERTY MUTUAL FIRE
OPINION & ORDER
CANAL INSURANCE COMPANY
Currently before the Court is the motion of the Defendant, Canal Insurance Company
(“Canal”), to alter or amend the Court’s Opinion & Order of March 22, 2012 pursuant to Rule 59(e)
of the Federal Rules of Civil Procedure. This motion is now ripe for review.
FACTUAL AND PROCEDURAL BACKGROUND
The Plaintiffs, LM Insurance Corporation and Liberty Mutual Fire Insurance Company
(collectively “Liberty Mutual”), filed this action for declaratory relief pursuant to 28 U.S.C. § 2201
et seq. and Rule 57 of the Federal Rules of Civil Procedure against Canal. Specifically, Liberty
Mutual sought a ruling declaring the scope of Canal’s duties with respect to a lawsuit brought against
Liberty Mutual and Canal’s insured, Hinkle Contracting Corporation (“HCC”), in Bourbon Circuit
Court, captioned Pamela Henney, individually and as Executrix of the Estate of Charles Henney v.
Hinkle Contracting Corporation, et al., Civil Action No. 09-CI-000325 (“the Henney Action”).
After a discovery period, the parties filed their cross motions for summary judgment.
On March 22, 2012, the Court entered its Opinion & Order [DE #32] holding that Canal was
HCC’s primary insurer and Liberty Mutual and LM were excess insurers. As a result, the Court
determined that Liberty Mutual is entitled to full reimbursement from Canal for all defense costs it
paid in defense of HCC, including prejudgment interest at 8% per annum. On April 19, 2012, the
Court entered judgment in favor of Liberty Mutual for $421,925.51 plus prejudgment interest [DE
#38]. The Bill of Costs tendered by Liberty Mutual [DE #35] has been referred to the Clerk of Court
Canal has filed a motion to amend or correct pursuant to Rule 59(e) of the Federal Rules of
Civil Procedure [DE #36]. In its motion, Canal challenges several of the Court’s rulings. For the
reasons set forth below, Canal’s motion will be denied.
A motion pursuant to Rule 59(e) may be granted if there was “(1) a clear error of law; (2)
newly discovered evidence; (3) an intervening change in controlling law; or (4) a need to prevent
manifest injustice.” Intera Corp. v. Henderson, 428 F.3d 605, 620 (6th Cir. 2005). Rule 59(e),
however, cannot be sued to “re-argue a case” or “present new arguments that could have been raised
prior to judgment.” Howard v. United States, 533 F.3d 472, 475 (6th Cir. 2008)
Canal first argues that the Court erroneously denied its request for a hearing on the motions
for summary judgment. It argues that without a hearing, the Court was unable to determine the
reasonableness of the damages. The Court disagrees. Attached to Liberty Mutual’s motion for
summary judgment were affidavits, cancelled checks, invoices, check requests, and contracts in
support of their claim for damages. The Court carefully reviewed this evidence and found these
costs to be reasonable. Moreover, Canal chose not to participate in the defense of HCC. There is
no authority to allow Canal to second guess Liberty Mutual’s decisions to hire consultants or to pay
experts in conjunction with its defense of HCC.
Second, Canal argues that Liberty Mutual is not entitled to recover defense costs it incurred
prior to the filing of the Henney Action. Canal, however, failed to raise any objection to these presuit costs prior to this motion despite the fact that the invoices for the pre-suit costs were tendered
to Canal as an exhibit to Liberty Mutual’s motion for summary judgment. It is too late for Canal to
raise the argument at this time. See Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d
367, 374 (6th Cir. 1998). Moreover, Liberty Mutual reasonably incurred this pre-suit defense costs
in anticipation of suit being filed in light of the magnitude and circumstances of this claim. While
the Canal Policy states that a duty to defense does not arise until a “suit” has been filed, the pre-suit
defense costs incurred by Liberty Mutual were reasonable to legitimately protect HCC in anticipation
of a suit being filed.
Third, Canal argues that Liberty Mutual’s attempted tender was invalid under the terms of
the Canal Policy and Liberty Mutual was not entitled to recover pre-tender expenses. This argument
has already been rejected by the Court will not be reconsidered in the context of this Rule 59(e)
Next, Canal contends that the Court erred in awarding pre-judgment interest to Liberty
Mutual. Canal argues that because it was not a party to any agreement to incur defense costs for
HCC, the damages are not liquidated as to Canal. However, the defense costs should have been paid
by Canal pursuant to Canal’s contract with HCC. Canal cannot be allowed to shirk its duty to
defend, then fail to make Liberty Mutual whole for the lost use of its due and payable money during
the time required to secure ultimate judgment. See Lincoln Elec. Co. v. St. Paul Fire and Marine
Ins. Co., 210 F.3d 672, 691-94 (6th Cir. 2000).
Finally, Canal reasserts its arguments that LM’s commercial general liability policy is
primary and that Liberty Mutual’s commercial auto policy is co-excess with Canal’s Policy. The
Court considered and rejected these arguments in conjunction with the motion for summary
judgment. Canal has failed to present any “clear error” or “manifest injustice” which would warrant
reconsideration by this Court.
Accordingly, the Court, being fully and sufficiently advised, hereby ORDERS that Canal’s
motion to alter or amend [DE #36] is DENIED. Liberty Mutual’s Bill of Costs [DE #35]
REMAINS REFERRED to the Clerk of Court.
This June 28, 2012.
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