CONTE'S PASTA CO., INC. v. REPUBLIC FRANKLIN INSURANCE COMPANY
OPINION. Signed by Judge Renee Marie Bumb on 1/8/2021. (rss, )
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[Docket No. 51]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CONTE’S PASTA CO., INC.,
Civil No. 18-12410 (RMB/AMD)
REPUBLIC FRANKLIN INSURANCE
WHEELER, DIULIO & BARNABEI, P.C.
By: Jonathan Wheeler, Esq.
One Penn Center
1617 JFK Boulevard, Suite 1270
Philadelphia, PA 19103
Counsel for Plaintiff
GIMIGLIANO MAURIELLO & MALONEY, P.A.
163 Madison Avenue, Suite 500
P.O. Box 1449
Morristown, New Jersey 07962
Counsel for Defendant
BUMB, UNITED STATES DISTRICT JUDGE:
Before the Court is Defendant Republic Franklin Insurance
Company’s (“RFI”) Motion for Reconsideration or, in the
alternative, for Clarification of the Court’s Opinion and Order.
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[Docket No. 51]. On May 29, 2020, the Court granted Plaintiff
Conte’s Pasta’s Motion for Summary Judgment and Denied Defendant
RFI’s related Cross-Motion. [Docket Nos. 49 and 50]. RFI now
seeks reconsideration of the Court’s opinion with respect to
only the cause of action for conversion. For the reasons set
forth herein, RFI’s Motion for Reconsideration will be DENIED.
In addition, RFI’s request for clarification of the Court’s
previous order will be GRANTED.
The Court previously detailed the factual background of
this dispute in its Opinion concerned the parties’ Cross-Motions
for Summary Judgment. [See Docket No. 49]. It will now address
only the facts relevant to RFI’s current motion.
This action concerns an insurance coverage dispute arising
out of listeria contamination of gluten-free pizza crusts
manufactured by Conte’s Pasts Co., Inc. In an underlying action,
Conte’s was sued by a customer, Nature’s One, for various claims
related to that contamination. Conte’s tendered the defense of
that suit to its insurer, RFI, which denied coverage.
The parties’ Cross-Motions for Summary Judgment [Docket
Nos. 30 and 31], in this action, addressed the scope of coverage
of their insurance agreement. The Court identified three
theories of liability within that context: (1) contamination
claims, (2) failed inspection claims, and (3) conversion claims.
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The Court held that the contamination claims and failed
inspection claims were not covered by the policy, but that the
conversion claims were. [Docket No. 50].
RFI’s instant motion asks the Court to reconsider its
ruling as to the conversion claims. [Docket No. 51]. The
conversion claims are those that “arise out of the allegation
that Nature’s One provided packaging equipment owned by Nature’s
One to Conte’s Pasta that Conte’s Pasta failed to return.”
[Docket No. 49].
In the District of New Jersey, motions for reconsideration
are governed by Local Civil Rule 7.1(i), which provides:
Unless otherwise provided by statute or rule (such as
Fed. R. Civ. P. 50, 52 and 59), a motion for
reconsideration shall be served and filed within 14
days after the entry of the order or judgment on the
original motion by the Judge or Magistrate Judge. A
controlling decisions which the party believes the
Judge or Magistrate Judge has overlooked shall be
filed with the Notice of Motion.
The purpose of a motion for reconsideration is to present
newly discovered evidence or to correct manifest errors of law
or fact. Howard Hess Dental Laboratories Inc. v. Dentsply
Intern., Inc., 602 F.3d 237, 251 (3d Cir. 2010) (quoting Max’s
Seafood Café v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999))
(quoting Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir.
1985)). Accordingly, the party seeking reconsideration must show
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at least one of the following grounds: “(1) an intervening
change in the controlling law; (2) the availability of new
evidence that was not available when the court granted the
motion for summary judgment; or (3) the need to correct a clear
error of law or fact or to prevent manifest injustice.” RFI’s
motion asserts the final ground.
As noted above, RFI’s motion concerns only the conversion
claim. When the Court originally addressed this claim, it noted
that RFI “appears to have taken the position that the claim for
conversion is not covered by the policy because the policy
excluded ‘property damage’ that is intentional pursuant to
exclusion 2. Expected or Intended Injury. [Docket No. 49 at 9].
The Court then concluded that RFI has a duty to defend the
conversion claims because conversion is not necessarily an
intentional tort under Ohio or New Jersey law, and ambiguities
in an insurance agreement must be resolved in favor of the
insured, pursuant to Cruz-Mendez v. ISU/Ins. Servs. of San
Francisco, 156 N.J. 556, 571, 722 A.2d 515, 522–23 (1999). [Id.]
RFI now challenges this conclusion. It asserts that that
the Court erred applying the principle that “conversion is not
necessarily an intentional tort” to the facts of this case. More
specifically, RFI contends that Conte’s intentionally kept
Nature’s One’s packaging equipment as a leverage tool to collect
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allegedly unpaid invoices from Nature’s One. In response,
Conte’s challenges RFI’s motion on both procedural and legal
grounds. First, it contends that local district rules do not
permit a party to use a motion for reconsideration in an attempt
to re-litigate matters or to raise arguments that could have
been raised before the Court decided the original motion.
Second, it argues that it had no intention to convert Nature’s
One’s property. Specifically, Conte’s states that its continued
possession of Nature’s One’s packaging equipment was due only to
Nature’s One’s failure to retrieve the equipment1.
The Court is unpersuaded by RFI’s arguments. As the Court
explained in its original opinion “nothing in the Complaint
clearly alleges that Conte’s Pasta acted intentionally when it
allegedly ‘refused to return the equipment.’” [Docket No. 49].
Indeed, RFI’s position relies on a narrow and selective
recitation of the dispute surrounding the return of the
equipment. In its reply brief, RFI states that “[t]he undisputed
facts make clear that . . . Conte’s Pasta did not return the
packaging equipment solely due to Nature’s One’s refusal to pay
Conte’s opposition brief also suggests that, if the Court
is willing to address RFI’s motion, then the Court should also
reconsider its holding that the contamination claims and failed
inspection claims are not covered by the insurance policy.
[Docket No. 52]. That request is denied. Conte’s has not filed a
motion for reconsideration, nor can it do so within the period
established by Local Civil Rule 7.1(i).
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Conte’s Pasta’s invoices for the supposed work performed.”
[Docket No. 54 at 2]. But this view is disputed, and it is
seemingly inconsistent with at least some of the sources which
RFI cites in support. Conte’s instead contends that the
relationship between the allegedly unpaid invoices and the
return of the packaging equipment was limited to who would bear
the shipping costs of the equipment. Although the Court does not
accept this contention as fact, it reinforces the Court’s
original finding that the underlying complaint does not clearly
allege intentional conduct with respect to the conversion
claims. Therefore, and in the absence of clear allegations that
Conte’s acted intentionally, the Court will deny RFI’s motion
MOTION FOR CLARIFICATION
“The general purpose of a motion for clarification is to
explain or clarify something ambiguous or vague, not to alter or
amend.” Resolution Trust Co. v. KPMG Peat Marwick, No. Civ. A.
No. 92–1373, 1993 WL 211555, at *2 (E.D.Pa. June 8, 1993).
Motions for clarification are “often evaluated under the
standard for a motion for reconsideration in this jurisdiction.”
See, e.g. Fastware, LLC v. Gold Type Business Machines, Inc.,
Civil Action No. 09–1530, 2009 WL 2151753, at *2 (D.N.J. July
14, 2009); see also Nye v. Ingersoll Rand Co., Civ. A. No. 08–
3481, 2011 WL 253957, at *3 (D.N.J. Jan. 25, 2011).
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As noted above, RFI seeks clarification of the Court’s May
29, 2020 Order and Opinion. More specifically, RFI asks the
Court to “confirm that RFI’s only obligation is to reimburse
defense costs incurred in connection with the Conversion cause
of action and not the entire Underlying Complaint.” [Docket No.
51-1 at 7]. It makes this request because the Court’s previous
Order and Opinion held that some of the asserted claims were
covered by the insurance policy and others were not. In
response, Conte’s argues that the underlying claims were not
mutually exclusive, and instead arose from the same set of
facts. Thus, Conte’s concludes, Nature’s One’s claims against
Conte’s are too “factually interdependent” for RFI’s duty to
defend to be parsed out.
Both parties generally agree on the applicable standards.
[w]here a conflict exists between an insurer and its
insured by virtue of the insurer’s duty to defend
mutually-exclusive covered and non-covered claims
against the insured, the duty to defend is translated
into a duty to reimburse the insured for the cost of
defending the underlying action if it should be
determined, based on the disposition of that action,
that the insured was entitled to a defense.
Grand Cove II Condo. Ass’n, Inc. v. Ginsberg, 676 A.2d 1123,
1131 (N.J. Super. App. Div. 1996) (citing Burd v. Sussex Mut.
Ins. Co., 267 A.2d 7, 10 (1970). Moreover, if defense costs
cannot be apportioned between covered and non-covered claims,
“the insurer must assume the cost of the defense for both
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covered and non-covered claims.” SL Indus., Inc. v. Am.
Motorists Ins. Co., 128 N.J. 188, 215 (1992). But the difficulty
of appropriating costs does not justify imposing all costs on
the insurer. Id. at 216. Indeed, the New Jersey Supreme Court
concluded that courts mistakenly require insurers to pay the
full costs of defense too frequently. Id. Therefore, the Court
instructed that when the insurer and the insured “are unable to
agree [on a fair appropriation of defense costs] . . . courts
will be able to analyze the allegations in the complaint in
light of the coverage of the policy to arrive at a fair division
of costs.” Id.
Conte’s argument raises precisely the concerns that the New
Jersey Supreme Court identified in SL Indus. Plaintiff has not
established the impossibility of appropriating costs between
covered and non-covered claims, only the difficulty in doing so.
But the Court cannot impose full costs on RFI simply because
appropriating the costs is difficult.
In SL Indus., the New Jersey Supreme Court held that courts
should “arrive at a fair division of costs” only if the insurer
and insured are unable to “negotiate a satisfactory settlement
that fairly apportions the defense costs.” Id. Evidently, RFI
has taken the position that “[RFI] and Conte’s Pasta have not
been able to negotiate a ‘satisfactory settlement.’” [Docket No.
54 at 5]. Conte’s, however, has not argued this point.
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The Court finds that the costs of the covered and noncovered claims are capable of apportionment. Given the
importance of this issue, however, the Court seeks to confirm
the parties’ positions before imposing its own division of
costs. Therefore, the parties shall attempt to negotiate a
satisfactory settlement of the defense costs. If they are unable
to negotiate that satisfactory settlement within 60 days of this
opinion and its accompanying order, each party shall file a
letter to the Court outlining what it believes to be the correct
division of costs. The Court will then hold a hearing. This
hearing will afford the Court an opportunity to assess whether
a party has negotiated in bad faith. If a party has negotiated
in bad faith, the Court will not hesitate to impose sanctions.
For the foregoing reasons, RFI’s Motion for Reconsideration
is DENIED. RFI’s Alternative Motion for Clarification of the
Court’s May 29, 2020 Order and Opinion is GRANTED. The parties
shall attempt to negotiate a satisfactory settlement of defense
costs. If they are unable to reach a settlement within 60 days,
the parties shall each file a letter, of no more than three
pages, detailing its position on the correct division. An
appropriate Order accompanies this Opinion.
Case 1:18-cv-12410-RMB-AMD Document 55 Filed 01/08/21 Page 10 of 10 PageID: 900
Dated: January 8, 2021
__s/ Renée Marie Bumb
RENÉE MARIE BUMB
UNITED STATES DISTRICT JUDGE
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