Founders Insurance Company v. Richard Ruth's Bar & Grill LLC et al
ORDER denying (227) Motion for Reconsideration ; denying (228) Motion for Reconsideration ; denying (229) Motion for Reconsideration in case 2:13-cv-03035-DCN; denying (158) Motion for Reconsideration ; denying (159) Motion for Reconsideration ; denying (160) Motion for Reconsideration in case 2:14-cv-03272-DCN Associated Cases: 2:13-cv-03035-DCN, 2:14-cv-03272-DCN(rweh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
FOUNDERS INSURANCE COMPANY,
RICHARD RUTH’S BAR & GRILL LLC,
RICHARD RUTH, SR., JANE RUTH,
and GEORGE GIANNARAS, as guardian
for EMMANUEL KEHAGIAS,
RICHARD RUTH’S BAR & GRILL LLC,
RICHARD RUTH, SR., and JANE RUTH,
and GEORGE GIANNARAS, as guardian
for EMMANUEL KEHAGIAS,
FOUNDERS INSURANCE COMPANY,
BROWN & BROWN, INC., HULL &
COMPANY, INC., and UTICA MUTUAL
This matter comes before the court on various motions filed by declaratory
judgment action (2:13-cv-03035-DCN) defendant and bad faith action (2:14-cv03272-DCN) plaintiff George Giannaras, as Guardian for Emmanuel Kehagias
(“Kehagias”), pursuant to Federal Rule of Civil Procedure 59(e). Specifically,
Kehagias filed the following three motions: (1) a motion to alter and/or amend the
court’s order denying Kehagias’s motion for summary judgment and granting
Founders Insurance Company’s (“Founders”) motion for summary judgment, ECF
No. 221, thereby holding that Founders is not required to provide coverage under the
policy; (2) a motion to alter or amend the court’s order granting Brown & Brown,
Inc.’s (“Brown”) motion for summary judgment and granting Hull & Company, Inc.’s
(“Hull”) motion for summary judgment, ECF No. 222; and (3) a motion to alter or
amend the court’s order granting Founders’s motion for summary judgment in the bad
faith action, ECF No. 224. The court will address each motion in this consolidated
order in turn.
The facts underlying this dispute have been briefed and discussed by this court
ad nauseam. In sum, the parties filed five separate motions for summary judgment
and created a record well over 1,000 pages. Kehagias briefed the underlying issues
numerous times, submitting nineteen exhibits with its motion for summary judgment
and seventeen exhibits with its opposition to Founders’s motion for summary
judgment. The court heard oral arguments on the motions during the course of over
two hours on December 14, 2015. Thereafter, the court issued five separate orders,
totaling almost 100 pages. Needless to say, the parties and the court have
thoughtfully considered these issues.
The Fourth Circuit has recognized three grounds for amending an earlier
judgment under Federal Rule of Civil Procedure 59(e): (1) to accommodate an
intervening change in controlling law; (2) to account for new evidence not available
at trial; or (3) to correct a clear error of law or prevent manifest injustice. Pac. Ins.
Co. v. Am. Nat. Fire Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998). A Rule 59(e)
motion “may not be used to relitigate old matters, or to raise arguments or present
evidence that could have been raised prior to the entry of judgment.” Exxon Shipping
Co. v. Baker, 554 U.S. 471, 486 n.5 (2008) (internal quotation marks omitted).
Further, “mere disagreement [with a district court’s ruling] does not support a Rule
59(e) motion.” Hutchinson v. Staton, 994 F.2d 1076, 1082 (4th Cir. 1993). “In
general reconsideration of a judgment after its entry is an extraordinary remedy which
should be used sparingly.” Pac. Ins. Co., 148 F.3d at 403 (citation and internal
quotation marks omitted). A motion for reconsideration “is not a license for a losing
party’s attorney to get a second bite at the apple.” Bey v. Shapiro Brown & Alt, LLP,
997 F. Supp. 2d 310, 321 (D. Md. 2014) (citing Shields v. Shetler, 120 F.R.D. 123,
125–26 (D. Colo. 1988)).
In all three motions to alter or amend, Kehagias argues that the court must
reconsider its prior orders to correct a clear error of law or prevent manifest injustice.
However, Kehagias’s motions each attempt to relitigate the issues.
A. Motion to Alter or Amend the Court’s Ruling in ECF No. 221
On June 8, 2016, the court entered an order granting Founders’s motion for
summary judgment, ECF No. 159, and denying Kehagias’s motion for partial
summary judgment, ECF No. 155. In doing so, the court held that, under the
unambiguous notice provisions of the general liability and liquor liability policies
issued by Founders to Richard Ruth’s Bar & Grill, LLC, Richard Ruth, Sr. (“Mr.
Ruth”), and Jane Ruth (“Ms. Ruth”) (collectively “the Ruths”), the Ruths failed to
provide proper notice of Kehagias’s underlying personal injury lawsuit. The court
further held that the Ruths’ failure to provide notice as required under the policy
caused Founders substantial prejudice. Therefore, the court held that the Ruths’
conduct obviated Founders’s contractual duty to provide coverage.
In his motion, Kehagias makes the following arguments: (1) Founders waived
the notice requirements in the Policy; (2) Cherie Dumez (“Dumez”) is Founders’s
agent for purposes of notice; (3) Founders failed to establish prejudice as a matter of
law; and (4) the court’s order creates a manifest injustice by holding that Founders
suffered substantial prejudice because the court failed to consider evidence. First and
foremost, Kehagias’s motion is a thinly disguised attempt to relitigate the issues
previously and extensively briefed, argued, and addressed and decided by the court.
Kehagias does not provide new evidence or controlling law but simply argues that the
court got it wrong. Nevertheless, the court will address Kehagias’s arguments.
Kehagias first argues that Founders waived the notice provisions of the Policy
because Ms. Ruth forwarded previous claims to Ms. Dumez, who would thereafter
forward the claim to Hull, who would, in turn, forward the claim to Founders.
Kehagias contends that he set forth his waiver and estoppel arguments in his response
to Founders’s motion, ECF No. 179, and during the December 14, 2015 hearing.
Notably, the words “waiver” and “estoppel” cannot be found in Kehagias’s response.
ECF No. 179. Similarly, the words “waiver” and “estoppel” were never uttered by
Kehagias’s counsel during the December 14, 2015 hearing. Although Kehagias did
outline the “course of conduct” among the parties in handling prior claims, Kehagias
did not argue that Founders waived the notice provisions of the Policy nor did he
present any case law to support such an argument. Rather, the course of conduct
argument was presented to the court regarding the assumption of a duty under the
Second Restatement of Torts. See ECF No. 222 at 6–8.
The court cannot be expected to read Kehagias’s mind by anticipating and
addressing all conceivable arguments potentially implicated in a record well over
1,000 pages but not presented to the court. Kehagias’s waiver and estoppel
arguments ignore the “well-established principle that arguments raised for the first
time in a motion for reconsideration are generally deemed waived.” United States v.
Foreman, 369 F.3d 776, 797 (4th Cir. 2004); see, e.g., Holland v. Big River Minerals
Corp., 181 F.3d 597, 605 (4th Cir. 1999) (stating that an issue first presented in a
motion pursuant to Fed. R. Civ. P. 59(e) “is not preserved for appellate review unless
the district court exercises its discretion to excuse the party’s lack of timeliness and
consider[s] the issue”); Mungo v. Taylor, 355 F.3d 969, 978 (7th Cir. 2004)
(“Arguments raised for the first time in connection with a motion for reconsideration,
however, are generally deemed to be waived.”) (citation omitted); DiMarco–Zappa v.
Cabanillas, 238 F.3d 25, 33 (1st Cir. 2001) (“To the extent that appellants’
reconsideration motion sought to raise an argument waived at the trial stage, it must
necessarily fail.”); Pittston Co. Ultramar Am. Ltd. v. Allianz Ins. Co., 124 F.3d 508
n.12 (3d Cir. 1997) (declining to consider on appeal issue raised for the first time in a
post-judgment motion); CMM Cable Rep, Inc. v. Ocean Coast Props., Inc., 97 F.3d
1504, 1526 (1st Cir. 1996) (stating that “there is absolutely no merit” to the argument
“that we should find [a party’s] arguments preserved because they were advanced in
its motion for reconsideration”); Manor Healthcare Corp. v. Guzzo, 894 F.2d 919,
922 n.4 (7th Cir. 1990) (“Raising an issue in a motion for reconsideration does not
save the issue for appeal.”) (citations omitted); Am. Meat Inst. v. Pridgeon, 724 F.2d
45, 47 (6th Cir. 1984) (holding issue raised for first time in motion for reconsideration
constituted waiver). As the Seventh Circuit has recognized, “[m]otions for
reconsideration serve a limited function: to correct manifest errors of law or fact or to
present newly discovered evidence. Such motions cannot in any case be employed as
a vehicle to introduce new evidence that could have been adduced during pendency of
the [original] motion.” Publishers Res., Inc. v. Walker–Davis Publ’ns, Inc., 762 F.2d
557, 561 (7th Cir. 1985) (internal quotation marks and citation omitted). “[M]otions
to reconsider are not appropriate vehicles to advance . . . new legal theories not
argued before the ruling.” Zurich Capital Markets, Inc. v. Coglianese, 383 F. Supp.
2d 1041, 1045 (N.D. Ill. 2005).
Consequently, “‘a party who fails to present his strongest case in the first
instance generally has no right to raise new theories or arguments in a motion to
reconsider.’” United States v. Duke Energy Corp., 218 F.R.D. 468, 474 (M.D.N.C.
2003) (quoting Fidelity State Bank, Garden City, Kan. v. Oles, 130 B.R. 578 (D. Kan.
1991)). “The court is not required to supply the rationale that the parties were unable
to find.” Id.; see also Drake v. City of Fort Collins, 927 F.2d 1156, 1159 (10th Cir.
1991) (“court will not construct arguments or theories for the [litigants] in the
absence of any discussion of those issues”). Ironically, Kehagias has waived this
waiver argument by failing to properly present it to the court in the course of briefing
and arguing five summary judgment motions over two years of litigation.
Kehagias next argues that Dumez is Founders’s agent and that the court
“overlooked key evidence in holding that Mrs. Ruth never gave notice of the suit to
Dumez, thus creating manifest injustice.” ECF No. 227, at 9. Kehagias’s argument
that Dumez was acting as Founders’s apparent or implied agent fails because it was
never raised before the court in the extensive briefing on these issues. As stated
above, a Rule 59(e) motion is not the proper vehicle by which a part my present new
arguments to the court. See Foreman, 369 F.3d at 797.
Further, in arguing that Ms. Ruth gave Dumez notice of the underlying
personal injury suit, Kehagias cites excerpts of Dumez and Ms. Ruths’ depositions
not included in the extensive briefing. Founders did in fact attach Dumez’s
deposition to a previous motion that was later withdrawn in light of the parties’
updated motions. See ECF No. 50, Ex. 6. However, Dumez’s deposition was not
attached to Kehagias’s filings, and although Founders attached certain portions of
Dumez’s deposition to its filings, Kehagias’s motion now relies on excerpts from the
depositions not presented to the court in the operative summary judgment briefs.
Rule 56(c) of the Federal Rules of Civil Procedure provides that
[a] party asserting that a fact cannot be or is genuinely disputed must
support the assertion by: (A) citing to particular parts of materials in
the record, including depositions, documents, electronically stored
information, affidavits or declarations, stipulations (including those
made for purposes of the motion only), admissions, interrogatory
answers, or other materials; or (B) showing that the materials cited do
not establish the absence or presence of a genuine dispute, or that an
adverse party cannot produce admissible evidence to support the fact.
Fed. R. Civ. P. 56(c)(1) (emphasis added). The court “need consider only the cited
materials.” Fed. R. Civ. P. 56(c)(3). The court is not required to search through the
entire record to determine whether a genuine issue of material fact exists. See
Anderson v. Liberty Lobby, 477 U.S. 242, 250 (1986) (“[W]hen a properly supported
motion for summary judgment is made, the adverse party must set forth specific facts
showing that there is a genuine issue for trial.” (internal quotation marks and citation
omitted)); United States v. 5443 Suffield Terrace, Skokie, III., 607 F.3d 504, 510 (7th
Cir. 2010) (“[S]aying so doesn’t make it so; summary judgment may only be defeated
by pointing to admissible evidence in the summary judgment record that creates a
genuine issue of material fact, and it was not the district court’s job to sift through the
record and make [the party’s] case for him.”); Holland v. Sam’s Club, 487 F.3d 641,
644 (8th Cir. 2007) (“[T]he district court is not obligated to wade through and search
the entire record for some specific facts which might support the nonmoving party’s
claim, rather the nonmoving party must designate the specific genuine issues of
material fact that preclude summary judgment.” (internal quotation marks and citation
omitted)); Chicago Title Ins. Corp. v. Magnuson, 487 F.3d 985, 995 (6th Cir. 2007)
(“A district court is not required to search the entire record to establish that it is bereft
of a genuine issue of material fact.” (internal quotation marks and citation omitted));
Amnesty Am. v. Town of West Hartford, 288 F.3d 467, 470 (2d Cir. 2002) (Rule 56
“does not impose an obligation on a district court to perform an independent review
of the record to find proof of a factual dispute.”); Ragas v. Tenn. Gas Pipeline Co.,
136 F.3d 455, 458 (5th Cir. 1998) (“Rule 56 does not impose upon the district court a
duty to sift through the record in search of evidence to support a party’s opposition to
summary judgment.” (internal quotation marks and citation omitted)); cf. United
States v. Dunkel. 927 F.2d 955, 956 (7th Cir. 1991) (“Judges are not like pigs,
hunting for truffles buried in briefs.”). Kehagias cannot now, in a motion to alter or
amend, point to exhibits attached to Founders’s withdrawn filings to create a genuine
issue of material fact. Kehagias had more than ample opportunity to bring any
relevant portions of Dumez’s deposition to the court’s attention. His failure to do so
does not warrant reconsideration of the court’s ruling.
Further, Kehagias’s plea to the court to reconsider its decision to disregard
Ms. Ruth’s sworn affidavit fails. The court applied well-established precedent in
concluding that “an affidavit contradicting prior testimony cannot be used to create an
issue of fact precluding summary judgment.” ECF No. 221, at 15–16 (citing Barwick
v. Celotex Corp., 736 F.2d 946 (4th Cir. 1984); Alba v. Merrill Lynch & Co., 198 F.
App’x 288, 300 (4th Cir. 2006); Ins. Prods. Mktg., Inc. v. Conseco Life Ins. Co., 2012
WL 3308368, at *7 (D.S.C. Aug. 13, 2012)). The court’s decision was neither a clear
error of law nor did it create manifest injustice.
Kehagias next argues that the court’s ruling that Founders established
substantial prejudice as a matter of law “was based on errors of law, namely
misplaced reliance on St. Paul Mercury Ins. Co. v. American Bank Holdings, Inc.,
2016 WL 1459517 (4th Cir. April 14, 2016), and an incorrect application of firstparty bad faith jurisprudence.” ECF No. 227, at 19. Kehagias further argues that the
court’s holding is inconsistent with its other ruling in ECF No. 222. Lastly, Kehagias
argues that the court overlooked “several key facts,” subjecting him to manifest
injustice. Id. at 20.
First, Kehagias misunderstands the court’s ruling. In analyzing applicable
case law regarding prejudice, the court did not equate Kehagias’s actions to the
insured in Hatchett v. Nationwide Mutual Ins. Co., 137 S.E.2d 608 (S.C. 1964), but
rather those of the Ruths as the insureds under the Policy. As the Ruths’ assignee,
Kehagias stands in their shoes and has no greater rights to its claims than the Ruths
themselves. See, e.g., Moore v. Weinberg, 644 S.E.2d 740, 745 (S.C. Ct. App. 2007)
(“An assignee stands in the shoes of its assignor.”); Twelfth RMA Partners, L.P. v.
Nat’l Safe Corp., 518 S.E.2d 44, 46 (S.C. Ct. App. 1999) (“[T]he assignee should
have all the same rights and privileges . . . as the assignor.”). Thus, the court properly
applied the Ruths’ rights to Kehagias. Further, the court notes that, as is often
necessary when there is little case law directly on point, it relied on Hatchett not as an
absolute corollary to the underlying facts as this case but as persuasive authority
relating to the issue of prejudice resulting from lack of notice. The court did not rely
solely on Hatchett in analyzing these issues; thus, the court’s resulting rulings would
not change absent its reliance, albeit nominal, on Hatchett.
Kehagias next argues that the court improperly relied on St. Paul, 819 F.3d
728. It is apparently necessary for the court to reiterate its prior statements regarding
the standard applied in St. Paul and the standard in this case: “The court applies the
Fourth Circuit’s discussion in St. Paul not as a direct corollary, but as reasoning from
which the court can discern the holding’s applicability to the facts of this case and the
law of South Carolina as persuasive authority.” ECF No. 221, at 27, n.18 (emphasis
added). The court found St. Paul instructive, not precedential. To the extent
Kehagias disagrees with the court’s reliance and discussion, such arguments are not
appropriate for a Rule 59(e) motion.
Kehagias subsequently argues that the court’s holding that Founders suffered
substantial prejudice as a matter of law was inconsistent with other rulings throughout
its orders, namely whether the substantial prejudice was a result of the late notice.
ECF No. 227, at 25–26. The court directs the parties to its discussion of whether
Hull’s alleged negligent handling of the initial letter of representation could be
imputed to Founders. It is undisputed that the Ruths breached the unambiguous
notice provisions of the Policy, and the court finds that such breach resulted in
substantial prejudice to Founders. This holding does not bar potential recovery in a
negligence claim—viable only if a jury were to determine that Hull was Founders’s
agent for purposes of notice—based solely on Hull’s alleged negligent handling of the
initial letter of representation. These conclusions are mutually exclusive and not
Lastly, Kehagias argues that the court ignored key evidence, citing portions of
Alberta Squalls’ testimony. ECF No. 227, at 27. Kehagias does recognize that the
court cited portions of Alberta Squalls’ testimony but argues that it improperly failed
to cite other portions, resulting in manifest injustice. Again, the record in this case
exceeded 1,000 pages, and it would be inefficient and impossible for the court to cite
every potentially relevant piece of information in making its rulings. Obviously, the
court extensively reviewed the entire record in this case, including the entirety of
Alberta Squalls’ deposition testimony. Kehagias again makes this argument in
attempt to relitigate issues already decided by the court. The portions of Alberta
Squalls’ testimony on which Kehagias now relies were considered by the court in the
first instance, and having reconsidered the same, the court declines the invitation to
depart from its prior decision.
B. Motion to Alter or Amend the Court’s Ruling in ECF No. 222
Kehagias moves the court to reconsider its ruling that, should a jury find that
Hull was indeed acting as Founders’s agent and negligently processed the original
letter of representation, such damages flowing therefrom are limited the $105,000.00.
Although Kehagias now cites Hurst v. Sandy, 494 S.E.2d 847 (S.C. Ct. App. 1997),
in support of its arguments that Hull can be liable for more than physical damage, the
court finds Hurst distinguishable. The plaintiffs in Hurst sustained physical damage
to their property beyond purely economic damages. In response to the motion, the
court directs Kehagias to its discussion of these same arguments on pages six through
ten and particularly the court’s citation to controlling case law decided more recently
than Hurst. See, e.g., Johnson v. Robert E. Lee Acad., Inc., 737 S.E.2d 512, 514
(S.C. Ct. App. 2012) (refusing to apply the doctrine to recognize a duty of care
between an accounting firm and a bookkeeper and office manager for the firm’s
negligence in analyzing financial records); Hendricks v. Clemson Univ., 578 S.E.2d
711, 714 (S.C. 2003) (“The line of cases Miller discusses have thus far been limited
to situations in which a party has voluntarily undertaken to prevent physical harm, not
economic injury.”). Therefore, the court declines Kehagias’s request to reconsider its
Kehagias next argues that the court improperly held that, should Hull’s
negligence in handling the initial letter of representation be imputed to Founders, the
recoverable damages are limited to the Policy limits of $105,000.00. Again, as
outlined by the court, the duty of good faith arising under an insurance contract does
not extend to a person who is not a party to an insurance contract. Therefore, a bad
faith claim cannot be brought against an intermediary. See ECF No. 222, at 12–13.
Further, as outlined by the court, the handling of the initial letter of representation did
not provide the basis for Kehagias’s bad faith claim. Counsel even conceded this
point during the December 14, 2015 hearing.1 Thus, to the extent Hull’s negligence
may be imputed to Founders, Kehagias would only be entitled to recover the Policy
limits and not those damages which would otherwise flow from recovery in a bad
Therefore, the court denies Kehagias’s motion to alter or amend ECF No. 222.
C. Motion to Alter or Amend the Court’s Ruling in ECF No. 224
Lastly, Kehagias moves to alter or amend the court’s ruling granting
Founders’s motion for summary judgment in part in the bad faith action. ECF No.
224. The court finds this motion to be yet another attempt to relitigate arguments that
Kehagias previously made, or could have made, in the summary judgment briefings.
As recognized by Founders in the briefing, if district courts were required to
reconsider arguments that were made, or could have been made, during summary
judgment briefing, “there would be no incentive for a party to respond to a motion for
summary judgment, because if he lost, he would always have a second bite at the
To the extent Kehagias now argues that his counsel did not make such a
concession, the court finds such representation incongruous with the record. At the
beginning of the December 14, 2015 hearing, Kehagias’s counsel stated that one
attorney would be handling the coverage issues while the other would handle the bad
faith issues. The aforementioned concession was offered during the bad faith portion
of Kehagias’s arguments.
apple through a Rule 59(e) motion.” Robinson v. Wix Filtration Corp. LLC, 599 F.3d
403, 411, n.9 (4th Cir. 2010); see also Bey v. Shapiro Brown & Alt, LLP, 997 F.
Supp. 2d 310, 321 (D. Md. 2014) (noting that a motion for reconsideration “is not a
license for a losing party’s attorney to get a second bite at the apple.” (citing Shields
v. Shetler, 120 F.R.D. 123, 125–26 (D. Colo. 1988))). Because such arguments are
procedurally improper, the court declines to specifically address them, but only refers
the parties to its previous rulings on the issues. Kehagias does not cite new evidence
or an intervening change in the law, but rather argues that reconsideration is
necessary to “correct a clear error of law” or to “prevent manifest injustice.” As
stated above, Rule 59(e) provides an extraordinary remedy that should be used
sparingly. The court does not find that it committed a clear error of law, or that its
rulings created manifest injustice to warrant such relief.
Therefore, Kehagias’s motion to alter or amend the court’s rulings in ECF No.
224 is denied.
For the reasons set forth above, the court DENIES Kehagias’s motions to
alter or amend the judgments.
AND IT IS SO ORDERED.
DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
February 1, 2017
Charleston, South Carolina
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