Harco National Insurance Company v. Sleegers Engineering, Incorporated et al

Filing 139

ORDER granting 135 MOTION for Reconsideration filed by Bi-Phrase Technologies, L. L. C.; denying 137 MOTION for Reconsideration re 133 Order, filed by Harco National Insurance Company; granting 136 MOTION TO EXTEND Time for Plaintiff to Answer Damages Interrogatories and Setting Trial Schedule. (Answer to Interrogatories due by 1/15/2015), (Discovery due by 5/29/2015, Dispositive Motion Cut-off set for 6/30/2015, Final Pretrial Conference set for 11/23/2015 04:00 PM before District Judge Thomas L. Ludington, Jury Trial set for 12/8/2015 08:30 PM before District Judge Thomas L. Ludington) Signed by District Judge Thomas L. Ludington. [Refer to image for additional dates] (SGam)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
NORTHERN DIVISION
HARCO NATIONAL INSURANCE COMPANY,
Plaintiff,

Case No. 06-cv-11314

v

Honorable Thomas L. Ludington

SLEEGERS ENGINEERING, INC.,
SLEEGERS MACHINING AND FABRICATING, INC.,
and BI-PHASE TECHNOLOGIES, L.L.C.,
Defendants.
__________________________________________/
ORDER GRANTING DEFENDANT’S MOTION FOR RECONSIDERATION,
DENYING PLAINTIFF’S MOTION FOR RECONSIDERATION, GRANTING
PLAINTIFF’S MOTION TO EXTEND, AND SETTING TRIAL SCHEDULE
Plaintiff Harco National Insurance Company initiated this subrogation lawsuit after it
paid almost $5,000,000.00 to its insured, Zaremba Equipment. Harco, as subrogor, maintains
that Defendants’ negligence led to a fire that destroyed Zaremba’s business and building, and
therefore it seeks recovery from Defendants.
On October 10, 2014, Defendants filed a motion in limine regarding Harco’s answers to
the damages interrogatories.

Because Harco did not sufficiently respond to the damages

interrogatories, this Court directed Harco to provide full and complete responses. In addition,
because Harco was not entitled to certain categories of damages as a matter of law, the Court
granted Defendants summary judgment on those damages issues.
On December 9, 2014, Harco and Defendant Bi-Phase Technologies both filed motions
for reconsideration. Because Bi-Phase has identified palpable defects in this Court’s prior Order,

its motion for reconsideration will be granted. In contrast, Harco’s motion for reconsideration
will be denied because its arguments are not cognizable on a motion for reconsideration.
I
A motion for reconsideration will be granted if the moving party shows: “(1) a palpable
defect, (2) the defect misled the court and the parties, and (3) that correcting the defect will result
in a different disposition of the case.” Michigan Dept. of Treasury v. Michalec, 181 F. Supp. 2d
731, 733-34 (E.D. Mich. 2002) (quoting E.D. Mich. LR 7.1(g)(3)). A “palpable defect” is
“obvious, clear, unmistakeable, manifest, or plain.” Id. at 734 (citing Marketing Displays, Inc. v.
Traffix Devices, Inc., 971 F. Supp. 2d 262, 278 (E.D. Mich. 7.1 (h)(3)).
II
In its motion for reconsideration, Bi-Phase identifies two palpable errors in this Court’s
November 25, 2014 Order. Accordingly, Bi-Phase’s motion for reconsideration will be granted.
A
First, Bi-Phase contends that the Court erred when it concluded that Harco may be
entitled to recover the post-judgment interest incurred on the state court judgment.1 As Bi-Phase
correctly contends, the post-judgment interest on the state court judgment is not a category of
damages that would be recoverable by Zaremba. And because Harco “stands in the shoes” of its
subrogee, Zaremba, it may not recover post-judgment interest. Yerkovich v. AAA, 610 N.W.2d
542, 544 (Mich. 2000).

Moreover, this result logically follows; otherwise, Harco could

potentially be allowed to recover post-judgment interest (in federal court) on post-judgment
interest (in state court). To allow such a possibility would be contrary to Michigan subrogation

1

It is important to emphasize that Defendant Bi-Phase is claiming that Harco cannot recover the post-judgment
interest incurred as a result of the judgment in the Zaremba v. Harco litigation in state court. This is in contrast, for
example, to the possibility that Harco may be entitled to recover post-judgment interest if it prevails in this federal
litigation.

-2-

law, which entitles a subrogor only to the amounts that a subrogee may have recovered and no
more. Id.
B
Second, Bi-Phase contends that this Court erred when it accepted Harco’s interrogatory
answer that it had paid $397,541.00 in judgment interest and penalties. Bi-Phase contends that
Harco’s “numbers are completely inaccurate for the judgment.” Def.’s Mot. Reconsideration 5
(emphasis removed). Bi-Phase explains that the inaccuracy arises, in part, because Harco based
its damages calculations on an inaccurate jury verdict. In the state court jury verdict, the jury
calculated a total damage amount of $1,556,558.00. But the jury then assessed plaintiff-Zaremba
at 20% comparative negligence.

Thus, the resulting jury award required Harco to pay

$1,245,264.40.
However, instead of using the actual, reduced jury award to calculate its damages, Harco
instead used the unreduced amount that does not take into account comparative negligence.
According to Bi-Phase, the correct calculation of interest is as follows:
Reduced Jury Award:

$1,245,264.40

minus

Destroyed Building Contents:

$657,920.00

minus

Cost of Replacing Building:

$898,638.00

minus

Case Evaluation Sanctions:

$134,739.33

Interest Paid:

$574,113.40

Bi-Phase’s calculation appears sound, and Harco has not disputed the calculation.
Accordingly, it appears that Harco paid $574,113.40 in interest—and not the $397,541.00 it
claimed in its responses to interrogatories.

-3-

Harco will be allowed to address this disparity in its answers to Defendants’
interrogatories. As noted in the November 25, 2014 Order, Harco has been directed to provide
full and complete answers to the interrogatories. Indeed, a plaintiff’s method of calculating and
assigning value to damages claims is a fundamental disclosure available in discovery.
C
Bi-Phase has thus identified two palpable errors in this Court’s November 25, 2014 Order
granting its motion in limine in part. Therefore, its motion for reconsideration will be granted.
Harco will be unable to recover interest on the state court judgment—whether pre- or postjudgment—as a matter of law.

In addition, because it appears that Harco has incorrectly

calculated the amount of interest it paid, the parties are not bound by Harco’s initial answer that
it paid only $397,541.00 in interest.
III
Harco also filed a motion for reconsideration, in which it asserts four arguments. But
because not one of these arguments is cognizable on a motion for reconsideration, Harco’s
motion will be denied.
A
Harco first asserts that this Court erred in concluding that it is not entitled to the full
extent of the payments it paid its insured, Zaremba. Harco relies on the cases it originally
advanced in its response, which provide that “[a]s a general matter, past payments of the
obligation define subrogation rights and fix the extent of amounts to be claimed pursuant to those
rights.” Pl.’s Mot. Reconsideration 5-6 (quoting Morrow v. Shah, 450 N.W.2d 96, 99 (Mich. Ct.
App. 1989)) (emphasis original).

-4-

This is the same argument set forth in its response to Defendants’ motion in limine, and
therefore it is not a cognizable argument in Harco’s motion for reconsideration. Eastern District
of Michigan Local Rule 7.1(h)(3) provides that “motions for rehearing or reconsideration which
merely present the same issues ruled upon by the court, either expressly or by reasonable
implication, shall not be granted.” Indeed, a motion for reconsideration “is not properly used as
a vehicle to re-hash old arguments . . .” Smith v. Mount Pleasant Schools, 298 F. Supp. 2d 636,
637 (E.D. Mich. 2003) (citing Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d
357, 3744 (6th Cir. 1998)). Because Harco is re-asserting the same argument it made in its
response, its motion for reconsideration with respect to this issue will be denied.
But even examining its argument on the merits, Harco would still not be entitled to relief.
The cases that Harco cites do not stand for the proposition that Harco asserts—instead, these
cases make clear that past payments to the subrogor create the ceiling for recovery. Indeed, this
is the exact holding in Morrow. In Morrow, the Michigan Court of Appeals cited Milan v.
Kausch, a case in which a court had to determine whether a subrogee’s claim could satisfy the
court’s $3,000.00 jurisdictional limit. Although the insurance company/subrogee asserted that it
could recover $10,000 in tort, the Milan court noted that “Michigan law limited recovery ‘to the
extent of the amounts paid in discharge of the obligation assumed by the subrogee.’” Morrow,
450 N.W.2d at 749-50 (quoting Milan v. Kausch, 194 F.2d 263, 265 (6th Cir. 1952) (applying
Michigan law)). In other words, the subrogee’s past payments delineate the maximum amount it
may recover, but those payments do not create an automatic entitlement to those amounts. Thus,
even considering Harco’s argument on the merits, it would not be entitled to relief.

-5-

B
Harco next asserts that this Court erred when it concluded that the amount recoverable for
Zaremba’s destroyed building would be the actual cash value of the building. Order 9, ECF No.
133 (“Therefore, Harco will be directed to respond to Defendants’ interrogatories seeking
information on the actual cash value of Zaremba’s building.”). Now, Harco asserts—for the first
time—that the correct valuation method for the building would be replacement cost less
depreciation.
But this argument is not cognizable on a motion for reconsideration because Harco did
not assert it in his response. A motion for reconsideration may not be used as “an opportunity to
re-argue a case,” or “to advance positions that could have been argued earlier but were not.”
Smith v. Mount Pleasant Schools, 298 F. Supp. 2d 636, 637 (E.D. Mich. 2003) (citing Sault Ste.
Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 357, 3744 (6th Cir. 1998)). To allow
Harco to present new, alternative arguments at this stage would be patently unfair because
Defendants are not permitted to respond to the motion for reconsideration. See E.D. Mich. LR
7.1(h)(2) (“No response to the motion and no oral argument are permitted . . . .”).
In its response to Defendants’ motion in limine, Harco asserted only one argument with
respect to the value of the building: that the calculation method was irrelevant and not
discoverable because Harco is entitled to recover everything it paid. See Order 9 (“Harco’s
rationale appears to stem from its belief that a breakdown of damages is irrelevant because Harco
is entitled to recover every cent it paid: ‘Harco has never revisited this issue because it had
nothing to do with the calculation of damages in the prior case and has nothing to do with the
calculation of damages in this case so it stands as it was stated.’” (quoting Harco’s Resp. 3, ECF
No. 128)).

-6-

Having lost that battle, Harco now seeks to set forth a theory for calculating the value of
Zaremba’s’ building. But, as noted above, allowing Harco to assert a new theory would be
unfair and contrary to Sixth Circuit caselaw. See Roger Miller Music, Inc. v. Sony/ATV Publ’g,
LLC, 477 F.3d 383, 395 (6th Cir. 2007) (“under Rule 59(e), parties cannot use a motion for
reconsideration to raise new legal arguments that could have been raised before a judgment was
issued.”) (citing Sault Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367, 374 (6th
Cir. 1998)). Accordingly, Harco’s motion for reconsideration will be denied with respect to this
claim.
C
Harco next asserts that this Court erred in concluding that it could not recover damages
related to Zaremba’s employees’ tools because Zaremba was not the real party in interest.
However, similar to its previous argument, Harco did not assert this argument in its response to
Defendants’ motion in limine.

Indeed, the Court noted that Harco had not responded to

Defendants’ argument and had instead relied solely on the argument that it was entitled to all
past payments: “Harco nevertheless maintains that because it was obligated to pay for the
employee tools pursuant to the insurance contract, it is entitled to recover those damages from
Defendants. . . . Harco has produced no authority to support the proposition that Zaremba could
have recovered the value of its employees’ tools from Defendants, as is its burden.” Order 1112.

Therefore, because Harco is seeking to provide a new argument, its motion for

reconsideration will be denied with respect to this claim.
D
As a final matter, Harco seeks leave to assert claims for express and implied warranties:
“Under this holding of the Court, it should be conceded that Harco is subrogated to the rights of

-7-

Zaremba, including its ability to raise the theories of Breach of Implied and Express Warranties
with very open measures of damages that have been pleaded and preserved by the Zaremba
Corporation.” Pl.’s Mot. Reconsideration 18.
This argument was never presented to the Court, either by Defendants or by Harco.
Thus, the Court has never issued a ruling or order on the issue, and there is nothing to
“reconsider.” Therefore, to the extent that Harco seeks the ability to present these arguments at
some time in the future, its present motion for reconsideration will be denied without prejudice
as to this argument.
IV
On the same day that the parties filed their motions for reconsideration, Harco also filed a
motion to extend the deadline for its answer to Defendants’ interrogatories. ECF No. 136. Harco
asserts that it needs additional time because it will need to conduct some discovery to accurately
respond to the damages interrogatories. In a status conference conducted on December 10, 2014,
the parties agreed that Harco’s deadline may be extended until January 15, 2015.
V
Accordingly, it is ORDERED that Defendant Bi-Phase’s Motion for Reconsideration
(ECF No. 135) is GRANTED.
It is further ORDERED that Plaintiff’s Motion for Reconsideration (ECF No. 137) is
DENIED. To the extent that Harco seeks reconsideration on its claims for (1) the argument that
it is entitled to all past payments, (2) the argument that the appropriate method of calculating the
value of the building is replacement cost less depreciation, and (3) the argument that Harco may
recover the value of Zaremba’s employees’ tools, these claims are DENIED WITH
PREJUDICE. To the extent that Harco seeks reconsideration on its claim that it may present

-8-

theories of Breach of Implied and Express Warranties, this claim is DENIED WITHOUT
PREJUDICE.
It is further ORDERED that Plaintiff’s Motion to Extend (ECF No. 136) is GRANTED.
Harco’s answers to Defendants’ interrogatories will be due on or before January 15, 2015.
It is further ORDERED that the deadlines in this case are as follows:
Exchange Lay Witness Lists:

January 30, 2015

Expert Disclosure under Rule 26(a)(2)
(B) and (C) shall be provided by:
Plaintiff’s Disclosure
Defendants’ Disclosure

February 15, 2015
March 15, 2015

Discovery Cut-Off:

May 29, 2015

Dispositive Motions:

June 30, 2015

Motions Challenging Experts:

June 30, 2015

Motion in Limine:

October 29, 2015

Joint Final Pretrial Order:

November 17, 2015

Jury Instructions:

November 17, 2015

Final Pretrial Conference:

November 23, 2015 at 4:00 p.m.

Trial:

December 8, 2015 at 8:30 a.m.

Dated: December 15, 2014

s/Thomas L. Ludington
THOMAS L. LUDINGTON
United States District Judge

PROOF OF SERVICE
The undersigned certifies that a copy of the foregoing order was served
upon each attorney or party of record herein by electronic means or first
class U.S. mail on December 15, 2014.
s/Tracy A. Jacobs
TRACY A. JACOBS

-9-