Collins v. National General Insurance Company
Filing
32
OPINION AND ORDER denying 28 Defendant's Motion for Reconsideration. Signed by District Judge Robert H. Cleland. (LWag)
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
NAOMI COLLINS, Personal Representative of
the Estate of Edward Collins, Jr., Deceased,
Plaintiff,
Case No. 10-13344
v.
NATIONAL GENERAL INSURANCE
COMPANY, a/k/a GMAC INSURANCE,
Defendant.
/
OPINION AND ORDER DENYING
DEFENDANT’S MOTION FOR RECONSIDERATION
Pending before the court is Defendant National General Insurance Company’s
motion for reconsideration. At the direction of the court, Plaintiff Naomi Collins filed a
response on August 17, 2011, and Defendant filed a reply on August 31, 2011. Having
reviewed the briefs and exhibits, the court concludes no hearing on this motion is
necessary. See E.D. Mich. LR 7.1(h)(2). For the reasons stated below, the court will
deny Defendant’s motion.
I. BACKGROUND
Plaintiff Naomi Collins is the personal representative of the deceased
policyholder and insured of Defendant. Prior to the insured’s death, he entered a
contract with Defendant for an uninsured motorist insurance policy (“National General
Policy”). Among other things, the National General Policy provides for insurance
coverage in the event of the insured’s injury or death caused by another motorist whose
insurer “denies coverage” for compensatory damages the insured is “legally entitled to
recover from the owner or operator” of the vehicle for which liability insurance coverage
at the minimum level required by Michigan law is denied. (Pl. Mot. Ex. A at Part C, § A.)
Plaintiff alleges Defendant breached this contract provision. Defendant argues that
there was no denial of coverage upon which to base a claim under the National General
Policy uninsured motorist provision. Upon cross-motions and briefing by the parties, the
court found that there existed just such a denial of coverage. Defendant moved for
reconsideration.
On July 29, 2009, the insured was riding a motorcycle when he was struck and
killed by a car driven by Calvin Smith, who was intoxicated. The vehicle which struck
the insured was owned by Dorothy Lee Berrien, who had insured it in her name under a
policy written by Citizens Insurance Company of the Midwest (“Citizens Policy”).
However, the policy was obtained through a multitude of false statements, for which
reason Citizens eventually rescinded the policy. Plaintiff sought personal injury
protection benefits from Citizens. In a letter dated September 14, 2009, Citizens
informed Plaintiff Naomi Collins that it was “denying Personal Injury Protection (PIP)
benefits . . . because there was no coverage on the date of loss.” (Def. Mot. Ex. 7.)
Plaintiff brought suit against Smith and Berrien in Wayne County Circuit Court on
October 1, 2009. On January 26, 2010, Smith and Berrien tendered an offer of
judgment in the amount of the minimum mandatory liability insurance coverage required
under Michigan law. (Def. Mot. Recons. Ex. C.) Nothing in the record indicates
whether Citizens participated, or agreed to coverage of such offer. Although Citizens
defended Smith and Berrien, it eventually commenced a separate declaratory judgment
action on June 24, 2010. In that action, Citizens sought a declaration of no liability for
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any claims under the Citizens Policy, including those arising from Plaintiff’s claims
against Smith and Berrien. (Def. Mot. Ex. 3.) After summary disposition was denied,
Citizens moved for rehearing, and its motion was granted. Citizens Ins. Co. v. Jackson,
Case No. 10-007334-CK (Wayne Cnty. Cir. Ct. Jan. 11, 2011); (Def. Mot. Ex. 10). The
Wayne County Circuit Court reformed the Citizens Policy to provide coverage of no
more than the minimum required under Michigan law for Plaintiff’s claims against Smith
and Berrien, pursuant to Michigan Compiled Laws § 257.520(f)(1).
II. STANDARD
Federal Rule of Civil Procedure 60 permits a court to grant relief from an order
for several reasons, including “excusable neglect” and “newly discovered evidence that,
with reasonable diligence, could not have been discovered in time to move for a new
trial.” Fed. R. Civ. P. 60(b). Eastern District of Michigan Local Rule 7.1 provides that a
motion for reconsideration shall be granted if the movant can (1) “demonstrate a
palpable defect by which the court and the parties have been misled,” and (2) “show
that correcting the defect will result in a different disposition of the case.” E.D. Mich. LR
7.1(h)(3). “A ‘palpable defect’ is ‘a defect that is obvious, clear, unmistakable, manifest,
or plain.’” United States v. Lockett, 328 F. Supp. 2d 682, 684 (E.D. Mich. 2004) (citing
United States v. Cican, 156 F. Supp. 2d 661, 668 (E.D. Mich. 2001)). A motion for
reconsideration that presents “the same issues ruled upon by the court, either expressly
or by reasonable implication,” will not be granted. E.D. Mich. LR 7.1(h)(3); Czajkowski
v. Tindall & Assocs., P.C., 967 F. Supp. 951, 952 (E.D. Mich. 1997).
III. DISCUSSION
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The court begins by acknowledging its use of shorthand phrases describing the
somewhat unwieldy interactions among the various parties and nonparties. Defendant
correctly notes that Plaintiff had no “claims” against Citizens. Instead, Plaintiff had
claims against Smith and Berrien, who had contracted with Citizens for insurance
coverage to indemnify against liability arising from claims such as those presented by
Plaintiff. Even though Citizens had a direct financial interest in the resolution of
Plaintiff’s claims against Smith and Berrien, it never rejected any “claims” of Plaintiff.
Citizens did, however, reject Plaintiff’s assertions that the Citizens policy covered
Plaintiff’s claims against Smith and Berrien. This rejection of assertions of contractual
obligations between nonparties Citizens, Smith, and Berrien in the event of the
existence of liability was condensed by the court to a rejection of “Plaintiff’s claims” by
Citizens.
Although somewhat confusing, this terminology rests on a foundation of analysis
recognizing that Plaintiff sought eventual indemnification of the tort liability of Smith and
Berrien by Citizens, reasonably expecting that a judgment may be uncollectible from the
named individuals. Equivocal language at places, without more, does not demonstrate
a palpable defect because correcting it would not “result in a different disposition of the
case.” E.D. Mich. LR 7.1(H)(3).
The next defect suggested by Defendant does have some merit as a possible
basis for the instant motion for reconsideration: the factual assertion that Citizens had
offered to settle the case for $20,000 shortly after Plaintiff brought suit. (Def. Mot.
Recons. Ex. C.) Plaintiff notes, and the court agrees, that a motion for reconsideration
is not a second bite at the apple, nor an opportunity to present evidence or arguments
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that could have been presented in the party’s original briefing. American Marietta Corp.
v. Essroc Cement Corp., 59 F. App’x 668, 672 (6th Cir. 2003); United States v. A.F.F.,
144 F. Supp. 2d 809, 811 (E.D. Mich. 2001). Analogous to Federal Rule of Civil
Procedure 59, motions for reconsideration under Local Rule 7.1(h) “are aimed at re
consideration, not initial consideration.” Sault Ste. Marie Tribe of Chippewa Indians v.
Engler, 146 F.3d 367, 374 (6th Cir. 1998). Defendant could have presented the
evidence of the offer when it originally moved for judgment, but for some reason did not
do so.1 Defendant could also have presented the evidence in its response and reply;
again, it did not. Instead, Defendant chose not to present the only evidence supporting
its bald assertions that Citizens never denied coverage. However, there does exist a
one-line reference to the offer of judgment, without further detail, in the docket sheet of
Collins v. Smith, Case No. 09-024063-NI (Wayne County Cir. Ct.). (Def. Resp. Ex. 9 at
3.) As the evidence does not rise to the level of showing a palpable defect, the court
will consider this as new evidence without deciding whether it is properly presented on a
motion for reconsideration. The court will further note that the proffered evidence
would, at most, support only a finding of a genuine issue of material fact; it could not
suffice to support summary judgment for Defendant.
1
In its reply brief, Defendant stated that it “only learned of the offer of judgment
recently.” (Reply 3.) This contention, however, is undercut by exhibit 9 of Defendant’s
motion for summary judgment, the “Register of Actions” in Collins v. Smith, Case No.
09-024063-NI (Wayne County Cir. Ct.). Listed in the exhibit is a January 26, 2010,
entry entitled “Offer of Judgment, Filed.” Defendant must be presumed to have
analyzed its exhibits before filing its motion for summary judgment. The court rejects the
suggestion that Citizens did not know of the offer of judgment at the time the exhibit was
filed.
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Turning to the merit of Defendant’s argument, the court finds it insufficient to
grant reconsideration. An offer of judgment by Smith and Berrien alone for an amount
that may be below the amount recoverable from Smith, Berrien, and Citizens through
liability insurance coverage is not conclusive. Indeed, nothing on the face of the offer
indicates that Citizens would have agreed to coverage of the judgment if accepted by
Plaintiff. Simply because Citizens may have retained counsel to defend Smith and
Berrien does not indicate that it would consent to pay the offered judgment. In fact,
Citizens shortly thereafter sought a declaration of no liability, arguing only in the
alternative for the statutorily required minimum coverage requirement. Therefore, this
additional evidence fails to show a “palpable defect,” even if considered as properly
presented upon a motion for reconsideration.
Defendant’s next arguments that rescinding the Citizens Policy alone did not
deny coverage and that Plaintiff manipulated the underlying state court case to create
an uninsured motorist both fail to establish grounds for reconsideration. These
arguments present nothing more than a recitation of previously made arguments the
court found unpersuasive. As noted above, Defendant’s additional evidence is not as
conclusive as it seems to Defendant. Nor does the court find some bar to recovery in
Plaintiff’s actions in state court to attempt to obtain more than the statutory minimum
coverage from Citizens. Plaintiff’s argument that Citizens could not reform its policy
was no less sustainable than Citizens’ argument for complete release from liability,
including liability to Plaintiff for the statutory minimum coverage under Michigan
Compiled Laws § 257.520(f)(1). These arguments have already been rejected by the
court.
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Defendant’s argument that Plaintiff seeks to enjoy underinsured motorist
insurance without having contracted for such coverage was likewise considered and
rejected. Although the court would have been more clear using the abbreviation “UM”
rather than “UIM” for Defendant’s uninsured motorist policy, the term was defined in the
order. Contrary to Defendant’s assertion, this insertion of a letter does not “belie[] a
deeper issue.” (Def. Mot. Recons. 16.) The court’s opinion recognized that only
uninsured motorist insurance was purchased by Plaintiff, and the court adhered
rigorously to the language chosen by Defendant in its own contract. The court
considered, and rejected, the argument that a vehicle cannot be insured and uninsured
simultaneously, stating:
Where a contract defines a term, the contractual definition of the defined
term controls over the common usage of the term. Farm Bureau Mut. Ins.
Co. of Michigan v. Nikkel, 596 N.W.2d 915, 919-20 (Mich. 1999); Group
Ins. Co. of Michigan v. Czopek, 489 N.W.2d 444, 447 (Mich. 1992).
Whether a vehicle is “uninsured” as the term is colloquially used is
irrelevant where the term is defined within the contract.
(7/1/2011 Order at 12.) Defendant must abide by the unambiguous terms of its
contract. Just as the court’s idiosyncratic but clear definition of “UIM Policy” controls the
meaning of the court’s prior order, so too the definition of an “uninsured motor vehicle”
in Defendant’s contract prevails over what might be more common usage of the term. A
vehicle can indeed be both insured and uninsured at once. The apparent contradiction
may seem to describe a sort of Schrödinger’s insurance coverage, but the court lacks
authority to redefine the unambiguous terms of a valid contract. Rory v. Continental Ins.
Co., 703 N.W.2d 23, 30-31 (Mich. 2005).
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For similar reasons, the court’s previous order does not contain a palpable defect
in its interpretation of the term “denies coverage.” Because the National General Policy
does not define when an insurer “denies coverage,” the court sought out its common
usage. Although the court did not expressly define the term, Defendant’s definition will
suffice. To “deny coverage” is “to refuse to recognize or acknowledge [coverage];
disavow [coverage]; repudiate [coverage].” (Def. Mot. Recons. 17.) The court has
already addressed the issue of whether Citizens denied coverage. Although immediate
payment is not necessary, Citizens denied it was obligated to provide coverage to
Plaintiff for any liability of the nonparty tortfeasors in the state court case. It refused to
acknowledge its potential liability as indemnitor of its insured. It disavowed and
repudiated coverage at the statutory minimum level, going beyond simply defending
with a reservation of rights. Defendant asserts that Citizens could not deny coverage
until Plaintiff had established the liability of the nonparty tortfeasors. However,
Defendant’s own argument would prevent Citizens from ever denying coverage to
Plaintiff because its insurance contract is with its insured. This would not change simply
because Plaintiff obtained a judgment against the insured. It is only “coverage,” not a
specific “claim” which Citizens “denied.” However, Citizens did deny “coverage” of
Plaintiff’s claims against Smith and Berrien, which is to say that it denied the
applicability of its insurance contract to Plaintiff’s claims.
Because the court interprets the phrase “denies coverage” to include the actions
of Citizens, the court’s prior order does not introduce a new clause into the National
General Policy. Nor does the order limit the effect of the provision of uninsured motorist
coverage where the tortfeasor is insured below the minimum limits established by law.
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Motor vehicles freely cross state boundaries, and may be subject to minimum insurance
requirements of the states in which they are registered. As the states may differ in the
minimum level of liability coverage required, this clause is not rendered nugatory by the
court’s order.
None of Defendant’s arguments demonstrate the existence of a “palpable defect”
in the court’s previous order. Defendant simply clarifies its position that no denial of
coverage can exist until an adjudication of liability of the uninsured motorist. This is not
required by the plain language of the National General Policy, and the court may not
rewrite the language to impose such a savings clause for the benefit of either
contracting party. Therefore, the court will deny Defendant’s motion for reconsideration.
IV. CONCLUSION
IT IS ORDERED that Defendant’s motion for reconsideration [Dkt # 28] is
DENIED.
s/Robert H. Cleland
ROBERT H. CLELAND
UNITED STATES DISTRICT JUDGE
Dated: September 28, 2011
I hereby certify that a copy of the foregoing document was mailed to counsel of record
on this date, September 28, 2011, by electronic and/or ordinary mail.
s/Lisa Wagner
Case Manager and Deputy Clerk
(313) 234-5522
S:\Cleland\JUDGE'S DESK\C1 ORDERS\10-13344.COLLINS.Reconsideration.nkt.wpd
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