Chubb Custom Insurance Company v. Grange Mutual Casualty Company et al

Filing 134

OPINION AND ORDER denying 126 Motion for procedural modification of order. Chubb is ORDERED to file a renewed motion for summary judgment by 12/30/11. Signed by Magistrate Judge Norah McCann King on 12/20/11. (rew)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
CHUBB CUSTOM INSURANCE
COMPANY,
Plaintiff,
vs.

Civil Action 2:07-CV-1285
Judge Smith
Magistrate Judge King

GRANGE MUTUAL CASUALTY
COMPANY, et al.,
Defendants.
OPINION AND ORDER
This matter is before the Court on Defendants’ Motion for
Procedural Modification of Order Dated September 29, 2011 Directing
Further Briefing of Bad Faith Counterclaim, Doc. No. 126.
The Court has previously set forth at length the factual
background of this action.
125.

See, e.g., Opinion and Order, Doc. No.

Briefly, plaintiff Chubb Custom Insurance Company (“Chubb”)

issued an Insurance Company Professional Liability Policy, Policy
Number 7022-9033 (“the Policy”), under which each defendant
(collectively, “Grange”) is a named insured.

Id. at 1-2.

In 2005, a

class action was filed in state court against Grange and other
insurance companies, alleging that Grange and others had improperly
used certain computer software in connection with the processing of
claims (“the Hensley Action”).

Id. at 2.

After Grange was dismissed

from the Hensley Action in December 2007, a second lawsuit (“the
Gooding Action”) was filed against Grange and later settled.

Id.

Following that settlement, Grange sought indemnification for
settlement payments made in the Gooding Action and for defense costs

in the Hensley Action and/or Gooding Action.

Id.

Shortly thereafter, Chubb filed the instant declaratory action,
seeking declaratory judgment that the Hensley Action, the Gooding
Action, and the settlement are not covered under the Policy (Count I);
that there is no “Loss” under the Policy and therefore no coverage
(Count II); that it has no duty to indemnify Grange because the
“benefits due exclusion” applies (Count III); and that its advancement
of defense costs to Grange was reasonable and proper and should be
reimbursed (Count IV).

In response, Grange filed an answer and

counterclaim alleging claims of breach of contract (Count I),
indemnification (Count II), bad faith (Count III), and estoppel (Count
IV).
On February 15, 2011, Chubb moved for summary judgment on all
claims, Doc. No. 68, and Grange moved for partial summary judgment,
Doc. No. 69 (seeking summary judgment in its favor as to Chubb’s
Counts I, II, and III, the granting of partial summary judgment as to
Count IV, and the granting of summary judgment as to Count II of its
Counterclaim).

On September 29, 2011, the Court denied in part

Chubb’s motion for summary judgment and granted Grange’s motion for
partial summary judgment.

Opinion and Order, Doc. No. 125.

However,

the Court deferred ruling on Chubb’s motion for summary judgment as it
relates to Grange’s bad faith counterclaim, instructing the parties to
provide supplemental briefing on this issue.

Id. at 24.

The Court

also requested “briefing on the issue of whether Grange is entitled to
an additional reimbursement of approximately $200,000 for defense
costs.

The parties’ supplemental briefs shall be filed no later than

December 16, 2011, with responses and replies to be filed pursuant to
2

S.D. Ohio Civ. R. 7.2.”

Id.1

Nearly two months later, Grange moves, pursuant to Fed. R. Civ.
P. 60(a), to modify the Opinion and Order, Doc. No. 125, to the extent
that Grange seeks to extend the briefing schedule detailed in that
decision.

Grange argues that the Court’s prior Order, Doc. No. 60,2

stayed discovery as to privileged information and as to experts, and
that “the Court may have overlooked the fact that the parties have not
yet completed discovery as to the bad faith claim and, therefore,
should not be compelled to submit final briefing on this issue to the
Court until they have had the opportunity to do so.”
3.

Doc. No. 126, p.

Chubb opposes Grange’s motion, contending that (1) Grange does not

need attorney-client privileged documents or expert discovery in order
to respond to summary judgment on its bad faith claim, and (2) Fed. R.
Civ. P. 56(d) is the proper vehicle for the relief Grange seeks, the
requirements of which Grange has failed to satisfy.

Doc. No. 128.

As an initial matter, the Court concludes that Fed. R. Civ. P.
60(a) has no applicability in resolving the instant issue.

“The basic

purpose of [that] rule is to authorize the court to correct errors
that are mechanical in nature that arise from oversight or omission.”
Pruzinsky v. Gianetti (In re Walter), 282 F.3d 434, 440 (6th Cir.
2002).

Here, contrary to Grange’s contention, there is no mechanical

error arising from oversight or omission contained in the Opinion and
Order, Doc. No. 125.

While the Court’s prior Order, Doc. No. 60,

precluded–- with the agreement of the parties–- the discovery that

1

On December 14, 2011, the Court, upon motion, suspended the deadline of
December 16, 2011, pending resolution of Grange’s current motion. Order, Doc.
No. 131.
2

Grange incorrectly states that this Order was dated August 19, 2011.
Doc. No. 126, p. 3. The Order was issued August 19, 2010.

3

Grange now seeks, Grange never moved to lift the stay of discovery or
otherwise bring to the Court’s attention Grange’s claimed need for
this discovery in connection with the supplemental briefing ordered in
the later Opinion and Order.

Stated differently, Grange’s current

attempt to recast its own failure to pay attention to this case and to
the rulings of this Court as the District Judge’s oversight is an
improper, and unpersuasive, use of Rule 60(a).

Indeed, nowhere in its

motion, Doc. No. 126, or its reply memorandum, Doc. No. 128, does
Grange offer any explanation for waiting nearly two months to seek
leave to conduct discovery.

Moreover, Grange provides no insight into

how much time it believes that it needs to conduct such discovery,
instead asking generally that the Court “postpone briefing” and “set a
schedule for the completion of discovery.”
also Doc. No. 129, p. 6.

Doc. No. 126, p. 5.

See

Grange’s utter failure to justify in any way

its vague request is inexplicable and inexcusable, particularly in
light of the age of this case.
Nevertheless, the Court notes that there is no summary judgment
motion pending that contains the arguments as to Grange’s bad faith
counterclaim as outlined by Chubb in its opposition to Grange’s
present motion.

Doc. No. 127, pp. 6-9.

Moreover, Chubb acknowledges

that, once it has filed its supplemental brief containing these
arguments, Grange may move pursuant to Fed. R. Civ. P. 56(d) for
additional time to conduct discovery.

Id. at 10-12.

Under these

circumstances, notwithstanding Grange’s meritless motion, the Court
concludes that some modification of the present schedule is necessary.
WHEREUPON, Defendants’ Motion for Procedural Modification of
Order Dated September 29, 2011 Directing Further Briefing of Bad Faith
Counterclaim, Doc. No. 126, is DENIED.

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However, the supplemental

briefing on the issue of Grange’s bad faith counterclaim is MODIFIED
as follows:
Chubb is ORDERED to file a renewed motion for summary judgment on
the issue of Grange’s bad faith counterclaim no later than December
30, 2011.

Opposing and reply memoranda shall be filed within rule.

However, if after Chubb’s renewed motion is filed Grange
concludes that additional discovery is necessary, Grange is ORDERED to
file a motion pursuant to Fed. R. Civ. P. 56(d), strictly complying
with the requirements of that rule, inter alia, specifying what
additional discovery is necessary in order to respond, within 10 days
of the filing of that renewed motion.

If Chubb opposes any Rule 56(d)

motion filed by Grange, it must file a response within 10 days of the
filing of such motion.

Any reply memorandum must be filed within 7

days of the filing of Chubb’s response.

December 20, 2011

s/Norah McCann King
Norah McCann King
United States Magistrate Judge

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