Kemp et al v. CTL Distribution, Inc. et al

Filing 82

RULING granting 69 Motion to Reconsider and Enter Judgment. Accordingly, it is ORDERED that Delta Trailer, Inc.'s motion for entry of judgment 68 is hereby DENIED. For the written reasons assigned herein, the Courts previous ruling 67 is h ereby revised to grant CTL's motion for summary judgment 34 in full. It is further ORDERED that Delta Trailer, Inc.s alternative request for leave to file a crossclaim is DENIED as moot. (See Crossclaim, Doc. 79 ).. Signed by Judge James J. Brady on 3/13/2012. (CMM)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
RONA YOUNG KEMP, ET AL.
CIVIL ACTION NO. 09-1109-JJB-SCR
VERSUS
CTL DISTRIBUTION, INC., ET AL.
RULING ON MOTIONS TO RECONSIDER AND ENTER JUDGMENT
Before the Court are two motions. Defendant CTL Distribution, Inc. (“CTL”), seeks
partial reconsideration of this Court’s ruling denying in part CTL’s motion for summary
judgment against third-party defendant Delta Trailer, Inc. (“DTI”) (Doc. 69), which DTI opposes
(Doc. 77). DTI seeks an entry of final judgment under Rule 54(b) so as to appeal the Court’s
grant of summary judgment in favor of CTL on the issue of DTI’s contractual obligations to
indemnify, defend, and hold harmless CTL unless and until it is shown CTL acted with gross
negligence in causing the wrongful death of its former worker, Martin Young. (Doc. 68). CTL
filed an opposition (Doc. 71), and DTI filed a reply (Doc. 73). Oral argument is unnecessary.
Jurisdiction over this action exists under 28 U.S.C. §§ 1332 and 1367.
I.
The central claim in this case, brought by the estate and survivors of Martin Young,
alleges wrongful death against DTI, Martin’s former employer. Martin allegedly died after
exposure to toxic fumes from chemical material left in a tank trailer he was cleaning in the scope
of his employment.
The current disputes center around this Court’s ruling (Doc. 67) which, in relevant part,
found: (1) DTI was required by its service agreement with CTL to defend and indemnify CTL
unless and until CTL was found to have acted with gross negligence in causing Young’s death
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(Doc. 67, p. 16); and (2) a provision of the service agreement requiring DTI to maintain liability
insurance and add CTL to that insurance “where applicable,” which the Court found ambiguous
and required parol evidence to construe. (Id., pp. 6-8).
In its motion to enter final judgment (Doc. 68), DTI urges that unless the Court enters a
final judgment on the issue of indemnity, there will be “a circuity or multiplicity of actions”
because the ruling had the “immediate effect” of requiring DTI to defend and indemnify CTL
even though the Court may later determine DTI no longer owes CTL that duty under the gross
negligence exclusion of the indemnity provision in the service agreement. (Id., p. 4). It asserts
that “no just reason for delay” exists as a barrier to entry of final judgment on this particular
claim, citing Fed. Rule Civ. P. 54(b). While not expressly stated, DTI obviously desires to
appeal the Court’s ruling on the indemnity issue before resolution of the underlying action which
would determine what degree of negligence, if any, CTL employed in causing Young’s death. In
response, CTL argues that the possibility of DTI establishing that it acted with gross negligence
in this case is quite slim. It also argues that this case has matured past the point where piecemeal
review would provide a practical advantage over the costs and inconveniences inherent in
effectively delaying the proceedings here while DTI appeals.
In its motion to reconsider, CTL contends that DTI admitted its intent to have the
insurance coverage provision of the service agreement, even with its “where applicable”
language, cover liability insurance. This Court acknowledged that fact in its ruling, though in a
different context. (Ruling, Doc. 67, p. 12, n. 9). Thus, CTL urges that summary judgment on
that ambiguous provision would not be improper since the admission shows no material fact
exists regarding the parties’ intent. It also argues that the Court’s ruling recognized the dispute
regarding who drafted the service agreement. In essence, DTI argues if the contract is found to

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have been drafted by CTL, the ambiguous coverage provision should be construed against CTL
without regard to the parties’ intent or other parol evidence. 1
II.
A. Rule 54(b) Motion for Entry of Judgment
Rule 54(b) provides, in pertinent part, as follows:
When an action presents more than one claim for relief—whether as a claim,
counterclaim, crossclaim, or third-party claim—or when multiple parties are
involved, the court may direct entry of a final judgment as to one or more, but
fewer than all, claims or parties only if the court expressly determines that there is
not just reason for delay.
By its own terms, Rule 54(b) is limited to orders that would be considered final if entered
in a single-claim, two-party case. DeMelo v. Woolsey Marine Indus., Inc., 677 F.2d 1030, 1032
(5th Cir. 1982). The duty to indemnify in this case appears to have been brought by CTL as a
separate claim against DTI. (See CTL’s Third Party Complaint, Doc. 3-10, ¶¶ 8, 10 (third party
demand filed in state court prior to removal)). The Court granted summary judgment to CTL on
this claim, finding that the service agreement unambiguously and expressly provided for
indemnity for acts of ordinary negligence but excepted indemnity for acts of gross negligence.
(Ruling, Doc. 67, pp. 9-10). 2
Rule 54(b) demands district courts weigh the competing considerations of “the
inconvenience and costs of piecemeal review on the one hand and the danger of denying justice
by delay on the other.” Road Sprinkler Fitters Local Union v. Continental Sprinkler Co., 967
F.2d 145, 148 (5th Cir. 1992) (quoting Dickinson v. Petroleum Conversion Corp., 338 U.S. 507,
511 (1950)). The costs and inconvenience of piecemeal litigation are obvious here. DTI owes

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In its motion for summary judgment (Doc. 30) which the Court denied, DTI also argued the “where applicable”
language made the coverage provision null because it is a conditional obligation depending solely on DTI’s whim.
2
While CTL has moved for partial reconsideration of that ruling, that motion does not implicate the indemnity
portion of the ruling.

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CTL a duty to defend this action, a right which would for all practical purposes be delayed
during the pendency of an appeal since the two parties are obviously adverse on this issue. On
the other hand, the Court perceives little “danger” that justice will be denied DTI if the Court
does not enter judgment. DTI rightfully recognizes its duty to defend and indemnify, existent
while CTL’s liability is not established, might retroactively disappear if CTL is found liable due
to gross negligence. But that is the straightforward consequence of the indemnity provision it
signed. (See Service Agreement, Doc. 34-2, p. 3, ¶ 15 (“DTI hereby agrees to indemnify,
defend, and hold harmless … CTL … from and against any injury (including death), damage, or
loss arising under or in connection with this Agreement unless such loss is caused by the gross
negligence of CTL….”)). The plain text could not be clearer, and the Court cannot comprehend
on what basis DTI thinks the interest of justice would be served by entering a separate judgment
on this claim.
DTI talks about the realistic prospect that CTL may be found grossly negligent here, but
that observation appears irrelevant. Regardless of the likelihood DTI has to escape ultimate
responsibility for the costs associated with indemnifying and defending CTL, that determination
necessarily must await the merits resolution of the underlying case, a determination that is
inappropriate now and obviously could not be decided in the first instance on appeal even if a
judgment on the indemnity claim is issued. The costs of entering judgment on this claim,
compared with the minimal danger of denying separate judgment, clearly counsel against
granting this Rule 54(b) motion, and the Court therefore denies it.
B. Motion to Reconsider the Court’s Summary Judgment Denial of CTL’s Coverage
Claim Against DTI
Federal Rule of Civil Procedure 54(b) provides for reconsideration of interlocutory orders
or decisions. Courts thus retain jurisdiction over all the claims in a suit and may alter earlier
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decisions until final judgment has been issued. See Livingston Downs v. Jefferson Downs, 259
F.Supp.2d 471, 475 (M.D. La. 2002) (citing Zapata Gulf Marine, Corp. v. Puerto Rico Maritime
Shipping Authority, 925 F.2d 812, 815 (5th Cir. 1991).

District courts have considerable

discretion in deciding whether to reconsider an interlocutory order. Id. Similarly, Fed. Rule Civ.
P. 52(b) permits the Court to amend its findings on dispositive judgments when a party moves it
to do so under Rule 59(e).
Motions for reconsideration based upon the same arguments previously submitted merely
waste the limited time and resources of the Court. van Heerden v. Bd. of Sup’rs of La. State
Univ. and Agricultural and Mechanical College, No. 10-155, 2010 WL 2545746, at *1 (M.D.
La. June 21, 2010). Similarly, courts generally decline to consider arguments raised for the first
time on reconsideration without adequate justification. McClung v. Gautreaux, No. 11-263,
2011 WL 4062387, at *1 (M.D. La. Sept. 13, 2011). In general, courts will reconsider a ruling
only where an intervening change in the law occurs, new evidence not previously available
emerges, or the need arises to correct a court’s clear error which would otherwise work manifest
injustice. See, e.g., North River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir.
1995).
The Court’s ruling, as mentioned above, found the “where applicable” language rendered
ambiguous the otherwise-clear mandate for DTI to add CTL as an additional insured on its
liability policy. The parties had urged the Court to resolve the ambiguity on a number of
grounds. CTL insisted that the deposition of Huey Beason, DTI’s corporate deponent, admitted
that DTI thought the agreement compelled it to add CTL as an insured on its liability insurance.
Thus, CTL claimed, that admission showed the intent necessary to clarify the meaning of “where
applicable,” at least insofar as it relates to DTI’s duty to add it to the liability insurance at issue

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here. DTI, on the other hand, argued “where applicable” created a suspensive condition which
delegated to it, as the obligor required to procure the insurance, the discretion to determine when
and “where” that requirement was “applicable.” If this language created a condition, instead of
mere ambiguity of applicability, the provision must be nullified because a suspensive condition
depending on an act or event under the control of the obligor is null. La. C.C. art. 1770. Both
parties argued the other drafted the language at issue in the hopes of benefitting from the adverse
presumption against the drafter, when all else fails. See La. C.C. arts. 2056-57.
The Court did not resolve the ambiguity, finding genuine issues of material fact remained
in dispute surrounding the true meaning of that provision. However, even though the same
arguments have been raised again, upon reconsideration, the Court believes its previous
determination erred by putting off what must inevitably result. As shown below, because there
actually exists no genuine dispute of material fact regarding the parties’ intent relating to that
particular contractual provision, it is irrelevant who drafted the provision or what the Court
might ultimately hold the provision to mean by relying on other parol evidence.
“Interpretation of a contract is the determination of the common intent of the parties.”
La. C.C. art. 2045. Since the words of this contract have been found facially ambiguous, the
Court cannot rely on those words alone. See La. C.C. art. 2046. Because the words are
susceptible of different meanings, the Court must interpret them in accordance with the object of
the contract. La. C.C. art. 2048. Thus, courts must look to what the parties reasonably expected
at the time of contracting. See, e.g., St. Paul Fire & Marine Ins. Co. v. Valentine, 665 So.2d 43,
47 (La. App. 1st Cir. 1995).
DTI, through its corporate deponent Huey Beason, admitted to thinking the service
agreement required DTI to add CTL as an additional insured. Moreover, DTI attempted, albeit

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unsuccessfully, to actually add CTL to its liability insurance. (See Beason Deposition, Doc. 343, pp. 7-17). Beason’s actions and admissions show DTI intended to provide coverage to CTL
under its liability insurance policy based on the service agreement. Having found the parties’
intent, the Court may go no further and must give effect to their intention. 3 Inquiry into who
drafted the agreement need not ensue. While the meaning of the ambiguous provision was
doubtful when viewed in a vacuum, the parties’ intent resolves that ambiguity. Article 2056, the
provision requiring construction against the drafter, therefore does not come into play because it
is a provision of last resort. La. C.C. art. 2056 (“In case of doubt that cannot otherwise be
resolved, a provision in a contract must be interpreted against the party who furnished its text.”);
see also La. C.C. art. 2057 (“In case of doubt that cannot otherwise be resolved, a contract must
be interpreted against the oblige and in favor of the obligor of a particular obligation.”)
(emphases added).
Because DTI’s actions in this case demonstrate its intent to be bound by the coverage
provision as interpreted by CTL, DTI’s arguments only create a dispute in hindsight. See Amoco
Production Co. v. Tex. Meridian Resources Exploration Inc., 180 F.3d 664, 668-69 (5th Cir.
1999). Obviously, DTI thought the provision effective and attempted to fulfill its duty under it.
Therefore, the Court can only conclude the intent of the parties sought to require DTI to add CTL
as an additional insured on its liability insurance policy. Because the Court recognizes its
previous ruling omitted to follow through on this point, the Court now exercises its discretion
under Fed. Rule Civ. P. 54(b) to revise its previous ruling. Upon reconsideration, summary

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Even if the Court under the totality of the circumstances were inclined to read the “where applicable” language as
creating a suspensive condition, as urged by DTI, the parties’ intent controls when the words themselves do not
suffice. La. C.C. arts. 2045-46. Moreover, CTL’s reading gives meaning to the coverage provision rather than
renders it ineffective, the preferred result under Louisiana contract law. See La. C.C. art. 2049.

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judgment in favor of CTL on the issue of DTI’s duty to provide liability insurance coverage is
warranted.
III.
Accordingly, it is ORDERED that Delta Trailer, Inc.’s motion for entry of judgment
(Doc. 68) is hereby DENIED.
It is further ORDERED that CTL Distribution, Inc.’s motion to reconsider (Doc. 69) is
hereby GRANTED. For the written reasons assigned herein, the Court’s previous ruling (Doc.
67) is hereby revised to grant CTL’s motion for summary judgment (Doc. 34) in full.
It is further ORDERED that Delta Trailer, Inc.’s alternative request for leave to file a
crossclaim is DENIED as moot. (See Crossclaim, Doc. 79).
Signed in Baton Rouge, Louisiana, on March 13, 2012.





JAMES J. BRADY, DISTRICT JUDGE
MIDDLE DISTRICT OF LOUISIANA

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