Nationwide Mutual Fire Insurance Company v. Superior Solution LLC et al
Filing
40
ORDER denying 33 Motion to Alter Judgment. Signed by Honorable Patrick Michael Duffy on November 10, 2016.(jmcg, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
Nationwide Mutual Fire Insurance
Company,
)
)
)
Plaintiff,
)
)
v.
)
)
Superior Solution, LLC a/k/a Superior
)
Solutions, LLC, Peniel Construction Group, )
LLC a/k/a Penuel Construction, LLC,
)
Portrait Homes-South Carolina, LLC,
)
Portrait Homes-Beresford Commons,
)
LLC, Pasquinelli Homebuilding, LLC,
)
Beresford Commons Homeowners
)
Association, Inc., and Joseph Constantini )
and Susan M. Constantini, on behalf of
)
themselves and others similarly situated,
)
)
Defendants.
)
____________________________________)
C.A. No.: 2:16-cv-423-PMD
ORDER
This matter is before the Court on Defendants Beresford Commons Homeowners
Association, Inc., Joseph Constantini, and Susan Constantini’s 1 motion to alter or amend the
Court’s Order dated September 7, 2016. (ECF Nos. 33 & 30). For the reasons stated herein, the
HOA’s motion is denied.
BACKGROUND/PROCEDURAL HISTORY
This declaratory judgment action arises out of a construction defect lawsuit brought by
the HOA in state court against Portrait Homes and its subcontractors, including Superior
Solution, LLC. Nationwide seeks a declaratory judgment that it has no duty to defend or
1.
The Court will refer to these three parties collectively as the “HOA.”
indemnify Superior or Peniel Construction Group, LLC, in that underlying litigation. 2 Superior
and Peniel have not appeared in this case, so the clerk entered default against Superior on July
11, 2016, and against Peniel on August 10, 2016. Nationwide filed motions for default judgment
against both Superior and Peniel on August 10. The HOA filed a motion to set aside the entries
of default on August 10, and it supplemented that motion with a memorandum the following day.
The Court issued an Order granting Nationwide’s motions and denying the HOA’s motion on
September 7. The HOA filed the instant motion to alter or amend pursuant to Rule 59(e) of the
Federal Rules of Civil Procedure on September 16, and Nationwide responded on September 30.
Accordingly, these matters are now ripe for consideration.
LEGAL STANDARD
The HOA bases its Motion on Rule 59(e) of the Federal Rules of Civil Procedure.
However, because the prior Order was an interlocutory order, 3 the HOA’s motion is more
appropriately considered in the context of “the [C]ourt’s inherent power to reconsider and revise
any interlocutory order, as recognized by Rule 54(b).” Jensen v. Conrad, 570 F. Supp. 91, 103
(D.S.C. 1983); see Fed. R. Civ. P. 54(b) (“[A]ny order or other decision, however designated,
that adjudicates fewer than all the claims . . . may be revised at any time before the entry of a
judgment adjudicating all the claims . . . .”). Accordingly, the Court construes the Motion as one
brought under Rule 54(b).
2.
Superior was the original named insured on Nationwide’s 2005–2006 and 2006–2007 policies. During the
2006–2007 policy period, the named insured was changed to Peniel. Peniel is not a defendant in the underlying
litigation.
3. Rule 59(e) governs motions to alter or amend a “judgment.” Fed. R. Civ. P. 59(e). The Federal Rules of Civil
Procedure define “judgment” as “a decree and any order from which an appeal lies.” Fed. R. Civ. P. 54(a). Thus,
this definition includes both final judgments and appealable interlocutory orders. See id. Here, final judgment has
not been entered as to all claims or parties, and the Court has not directed the entry of final judgment as to fewer
than all claims or parties pursuant to Rule 54(b). Additionally, the Court’s prior Order was not certified as an
immediately appealable interlocutory order under 28 U.S.C. § 1292(b). See Joe Hand Promotions, Inc. v. Double
Down Entm’t, LLC, No. 0:11-CV-02438, 2012 WL 6210334, at *1 (D.S.C. Dec. 13, 2012). Thus, the Court’s prior
Order is not a “judgment,” which means Rule 59(e) does not apply.
“An interlocutory order is subject to reconsideration at any time prior to the entry of a
final judgment.” Fayetteville Inv’rs v. Commercial Builders, Inc., 936 F.2d 1462, 1469 (4th Cir.
1991); see also See Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 12 (1983)
(indicating that decision whether to modify an interlocutory order is within district court’s
discretion). Although the precise standard governing motions to reconsider an interlocutory
order is unclear, the Fourth Circuit has stated that Rule 54(b) motions are “not subject to the
strict standards applicable to motions for reconsideration of a final judgment.” Am. Canoe Ass’n
v. Murphy Farms, Inc., 326 F.3d 505, 514 (4th Cir. 2003). Nevertheless, district courts in the
Fourth Circuit generally look to Rule 59(e)’s standards for guidance. See, e.g., Joe Hand
Promotions, Inc., 2012 WL 6210334, at *2; Ruffin v. Entm’t of E. Panhandle, No. 3:11-CV-19,
2012 WL 1435674, at *3 (N.D. W. Va. Apr. 25, 2012); R.E. Goodson Constr. Co. v. Int’l Paper
Co., No. 4:02-cv-4184-RBH, 2006 WL 1677136, at *1 (D.S.C. June 14, 2006); Akeva L.L.C. v.
Adidas Am., Inc., 385 F. Supp. 2d 559, 565–66 (M.D.N.C. 2005). Therefore, a motion to
reconsider an interlocutory order may be granted for the following reasons: “(1) to accommodate
an intervening change in controlling law; (2) to account for new evidence not [previously]
available . . . ; or (3) to correct a clear error of law or prevent manifest injustice.” Pac. Ins. Co.
v. Am. Nat’l Fire Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998); see also Beyond Sys., Inc. v. Kraft
Foods, Inc., No. PJM-08-409, 2010 WL 3059344, at *2 (D. Md. Aug. 4, 2010) (stating these
standards “are not applied with the same force when analyzing an interlocutory order” (citation
omitted)). A motion for reconsideration is not, however, an opportunity to relitigate issues
already ruled upon simply because a party is dissatisfied with the outcome. Joe Hand
Promotions, 2012 WL 6210334, at *2 (citing R.E. Goodson Constr. Co., 2006 WL 1677136, at
*1). Further, such a motion may not be used to raise arguments that could have been addressed
or presented previously. See Exxon Shipping Co. v. Baker, 554 U.S. 471, 485 n.5 (2008); City of
Charleston v. Hotels.com, LP, 586 F. Supp. 2d 538, 541 (D.S.C. 2008) (citing Pac. Ins. Co., 148
F.3d at 403).
DISCUSSION
In its prior Order, the Court held that the HOA’s failure to demonstrate a meritorious
defense was sufficient reason to deny the HOA’s motion to set aside the entries of default. For
that same reason, the Court granted Nationwide’s motions for default judgments against Superior
and Peniel. The HOA advances three arguments in support of its motion to alter or amend.
First, the HOA asserts that the Court should have concluded that the HOA’s assertion of firstparty claims against Nationwide constituted a meritorious defense. Second, the HOA argues that
it did not have sufficient time to respond to Nationwide’s motions for default judgments.
Finally, the HOA states that the sixth amended complaint from the underlying litigation was
attached as an exhibit to Nationwide’s complaint in this action. The HOA contends that the
underlying complaint demonstrates that Superior was covered for the damage its work allegedly
caused. As a result, the HOA states, the facts of the underlying case remain in dispute and
should be presented to the Court before it makes a coverage determination—necessitating that
the Court grant its motion to alter or amend.
The Court first addresses the issue of inadequate time. Although the HOA rightly points
out that timeliness is a factor the Court must consider in determining whether to lift the entry of
default, nothing prevented the HOA from seeking additional time to respond to Nationwide’s
motions for default judgments. The HOA states that the Court ruled on Nationwide’s motion for
entry of default almost simultaneously, thereby justifying its belief that it needed to file a rapid
response. However, entry of default, governed by Rule 55(a) of the Federal Rules of Civil
Procedure, is a ministerial function the clerk performs when Rule 55(a)’s criteria are met.
Because those criteria were met in this case, the clerk entered the defaults. In contrast, pursuant
to Rule 55(b)(2), a default judgment concerning insurance coverage must be entered by the
Court. See Fed. R. Civ. P. 55(b)(2). Accordingly, the HOA could have sought an extension
from the Court that, if granted, would have assuaged its fear that a default judgment would be
entered before it responded to Nationwide’s motion. Thus, the extreme urgency apparently felt
by the HOA was entirely of its own creation.
The Court addresses the HOA’s remaining arguments together. At this juncture, the
Court notes that a Rule 59(e) motion is not the time to advance arguments that could have been
made before the judgment was entered. See Hill v. Braxton, 277 F.3d 701, 708 (4th Cir. 2002).
Additionally, “[a] meritorious defense requires ‘a proffer of evidence which would permit a
finding for the defaulting party or which would establish a valid counterclaim.’” Vick v. Wong,
263 F.R.D. 325, 329 (E.D. Va. 2009) (quoting Augusta Fiberglass Coatings, Inc. v. Fodor
Contracting Corp., 843 F.2d 808, 811–12 (4th Cir. 1988)).
The HOA emphasizes that it received first-party claims as a result of a settlement, and
that those claims alone demonstrate that the HOA has a meritorious defense that warrants
reconsideration. However, the HOA does not specify what claims it has received, nor does it
explain who assigned away those claims. Additionally, the HOA notes that Nationwide attached
the underlying complaint to its complaint in this action, and it argues that the underlying
complaint constitutes sufficient evidence of a meritorious defense. The Court disagrees on both
counts.
First, the HOA’s brief mention of its first-party claim in the procedural history portion of
its motion to set aside entry of default is an insufficient proffer of evidence demonstrating a
meritorious defense. The HOA points to the Court’s failure to consider those first-party claims
as a reason to alter or amend the prior Order. However, the HOA simply mentions the first-party
claim in the instant motion, and provides no further explanation.
Next, Nationwide’s attachment of the underlying complaint to its complaint in this action
also does not satisfy the proffer requirement. In order to establish that there is a meritorious
defense on the issue of coverage, the underlying facts must be examined in conjunction with the
provisions of the policy. See Penn. Nat’l Mut. Cas. Ins. Co. v. Lewis, 105 F. Supp. 3d 573, 583
(D.S.C. 2015). Here, the HOA failed to do any such analysis in its motion to set aside the entry
of default. As discussed above, the HOA could have requested additional time to prepare its
motion. It chose not to. While the HOA’s motion to alter or amend does examine some of the
underlying facts, it fails to apply them to the policy provisions in any way. Most critically,
matters that could have been raised before judgment are inappropriate considerations for a
motion to alter or amend. Hill, 277 F.3d at 708. The HOA’s arguments simply do not justify
altering or amending the Court’s prior Order.
CONCLUSION
For the foregoing reasons, it is ORDERED that the HOA’s motion to alter or amend the
Court’s September 7, 2016 Order is DENIED.
AND IT IS SO ORDERED.
November 10, 2016
Charleston, South Carolina
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?