Communications Unlimited Contracting Services, Inc. et al v. Broadband Infrastructure Connection, LLC et al
Filing
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MEMORANDUM AND ORDER - IT IS HEREBY ORDERED that Defendant Mid-Continents motion to alter or amend the judgment is DENIED. Signed by District Judge Audrey G. Fleissig on 11/10/21. (KJS)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
COMMUNICATIONS UNLIMITED,
CONTRACTING SERVICES, INC.,
et al.,
Plaintiffs,
v.
BROADBAND INFRASTRUCTURE
CONNECTION, LLC, et al.,
Defendants.
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No. 4:16-CV-00516-AGF
MEMORANDUM AND ORDER
This matter is before the Court on Defendant Mid-Continent’s motion to alter or
amend the judgment. Doc. 308. For the reasons set forth below, the motion will be
denied.
BACKGROUND
Plaintiffs Communications Unlimited (CUI) and its insurer Travelers filed this
action for indemnification and contribution after Defendants Broadband (now defunct)
and its insurer Mid-Continent denied defense and coverage for a negligence lawsuit
against CUI and Broadband. On September 1, 2021, this Court issued a Memorandum
Opinion finding that Broadband was contractually obligated to indemnify CUI for the
underlying settlement pursuant to the terms of their subcontracting agreement (the
“MSA”), and that CUI was entitled to defense and coverage under Broadband’s insurance
policies with Mid-Continent naming CUI as an additional insured. Doc. 304. The Court
found that Plaintiffs were entitled to recover their defense costs and full indemnification
for the settlement. As relevant to the present motion, the Court concluded that MidContinent’s excess policy applied before Travelers’ policies by virtue of Broadband’s
assumption of liability under the MSA, notwithstanding “other insurance” provisions in
Mid-Continent’s polices. Doc. 304 at 24-26.
In support of its motion to alter or amend the judgment, Mid-Continent asserts that
the Court misapplied Eighth Circuit and Missouri appellate precedent in concluding that
the MSA renders Mid-Continent’s policy primary. In response, Plaintiffs argue that MidContinent improperly seeks to relitigate an issue already fully examined by the Court, and
that in any case the Court’s legal conclusion was correct.
DISCUSSION
Legal Standard
Under Rule 59(e), a court may alter or amend a judgment upon a motion filed no
later than 28 days after entry of the judgment. Fed. R. Civ. P. 59(e). Rule 59(e) gives the
court power to rectify its own mistakes following entry of judgment. White v. N.H. Dep’t
of Emp’t Sec., 455 U.S. 445, 450 (1982). Rule 59(e) motions are limited, however, to
correcting “manifest errors of law or fact or to present newly discovered evidence.”
United States v. Metro. St. Louis Sewer Dist., 440 F.3d 930, 933 (8th Cir. 2006). District
courts have broad discretion in determining whether to grant a Rule 59(e) motion. Id.
Analysis
Mid-Continent takes issue with the Court’s reliance on Wal-Mart Stores, Inc. v.
RLI Ins. Co., 292 F.3d 583, 590 (8th Cir. 2002), and Fed. Ins. Co. v. Gulf Ins. Co., 162
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S.W.3d 160, 165 (Mo. App. E.D. 2005). In both cases, the courts discussed the hazard of
circuitous litigation that would result from application of the “other insurance”
provisions. Mid-Continent argues that such a concern is not present here because
Broadband was dismissed from the suit and Mid-Continent’s counterclaim against
Plaintiffs was barred. Mid-Continent asserts that the policies should control without
regard to the MSA.
The Court does not agree that Wal-Mart and Federal Insurance fail to provide
authority or at least persuasion here simply due to procedural posture. General principles
of contract interpretation still apply. Those principles recognize that, while competing
“other insurance” clauses are “mutually repugnant” and are treated to pro-rate coverage,
an indemnity agreement may shift an entire loss to one insurer. Federal Ins. Co., 162
S.W.3d at 164. Courts give controlling effect to the indemnification obligation over
“other insurance” clauses, particularly where one of the policies covers the indemnity
obligation. Id. at 165.
The rationale for this exception is to give effect to the insureds’ indemnity
agreement. To hold otherwise would render the indemnity contract between
the insureds completely ineffectual and would obviously not be a correct
result, for it is the parties’ rights and liabilities to each other which
determine the insurance coverage; the insurance coverage does not define
the parties’ rights and liabilities one to the other. To apply the “other
insurance” provisions to reduce the indemnitor’s insurer’s liability would
serve to abrogate the indemnity agreement.
Id. (cleaned up).
Mid-Continent’s attempt to disregard Broadband’s indemnity obligation under the
MSA is wholly inconsistent with the foregoing principles, and the Court is not persuaded
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that this precedent is inapplicable merely because there is no risk of circuitous litigation
in this particular case. See also Amerisure Mut. Ins. Co. v. Fed. Ins. Co., Case No. 4:15CV-509-SPM, 2016 WL 1721124, at *11 (E.D. Mo. Apr. 29, 2016) (enforcing indemnity
agreement over “other insurance” clauses).
Nor does the parties’ dismissal of Broadband on the eve of trial change this
analysis. Indeed, Mid-Continent is estopped from making this argument. As stated in the
Court’s Opinion, the parties stipulated that the dismissal of Broadband would “have no
preclusive effect on any remaining claims, and the entire loss can be claimed by Plaintiffs
against Defendant Mid-Continent Casualty Company.” Doc. 201.
There is no manifest error of law or fact in the Court’s conclusion warranting
relief under Rule 59(e).
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendant Mid-Continent’s motion to alter or
amend the judgment is DENIED.
AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
Dated this 10th day of November 2021.
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