CERES Environmental Services, Inc. v. Arch Specialty Insurance Company

Filing 42

ORDER that to the extent Arch has asserted that certain claims are subject to dismissal for reasons other than collateral estoppel, Ceres need not address those arguments in its memorandum per the Court's November 8 Order directing the parties to file supplemental briefs answering certain specific questions and addressing the impact of collateral estoppel on the entire case. (Written Opinion). Signed by Judge Judge Richard H. Kyle. (kll)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA

Ceres Environmental Services, Inc.,
Plaintiff,
v.

Civ. No. 10-4570 (RHK/JSM)
ORDER

Arch Specialty Insurance Company,
Defendant.

This matter is before the Court sua sponte.
In this action, Plaintiff Ceres Environmental Services, Inc. (“Ceres”) asserts that
Defendant Arch Specialty Insurance Company (“Arch”), its insurer, failed to pay all of
the costs it incurred defending an underlying action in Alabama state court. Ceres asserts
claims for breach of contract, bad faith, and violation of Alabama and Minnesota law,
and Arch has filed three counterclaims with respect to funds Ceres recovered in a
separate (but related) action in Alabama federal court.
On September 14, 2011, Arch moved for summary judgment, asserting that Ceres
is “collaterally estopped from relitigating the reasonableness of the defense costs it
incurred in defending” the underlying action (Doc. No. 27 at 15); that Motion has been
fully briefed. After reviewing the parties’ Motion papers, however, the Court questioned
what effect, if any, a finding of collateral estoppel would have on this case, particularly
with respect to Ceres’s non-breach-of-contract claims and Arch’s counterclaims.
Accordingly, on November 8, 2011, it directed the parties to file supplemental briefs

answering certain specific questions and addressing the impact of collateral estoppel on
the entire case. (Doc. No. 37.)
The parties have now complied with the Court’s directive and, in its
Memorandum, Arch appears to recognize that a finding of collateral estoppel will not
impact most of Ceres’s claims. Nevertheless, it asserts that it is “prepared” to separately
move for summary judgment on those other claims, and it then proceeds to argue why the
claims should be dismissed. (See Doc. No. 40 at 8-18.) In so doing, Arch has gone
beyond the bounds of the Court’s November 8 Order. Arch’s Motion sought summary
judgment “based on collateral estoppel” (Doc. No. 23), and hence that is the only issue
properly before the Court at this time. To the extent it seeks summary judgment on
grounds besides collateral estoppel, it must file a properly supported Motion complying
with Federal Rule of Civil Procedure 56 and the Local Rules of this Court. The Court’s
request for additional briefing was not intended as an opportunity to raise new issues
purportedly entitling it to summary judgment.
The Court’s November 8 Order permitted the parties to respond to each other’s
memoranda on or before November 28, 2011. For the reasons set forth above, Ceres
need not address in its memorandum any arguments for dismissal asserted by Arch
beyond the specific questions raised by the Court. That is, to the extent Arch has asserted
that certain claims are subject to dismissal for reasons other than collateral estoppel,
Ceres need not address those arguments.
Date: November 21, 2011

s/Richard H. Kyle
RICHARD H. KYLE
United States District Judge
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