Accident Insurance Company Inc v. US Bank National Association et al
Filing
315
ORDER AND OPINION denying 305 Motion for a New Trial, Motion to Amend the Court's Finding of Facts and Conclusions of Law, and Motion to Alter or Amend Judgment. Signed by Honorable J Michelle Childs on 3/31/2021.(asni, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
COLUMBIA DIVISION
Accident Insurance Company, Inc.,
a South Carolina Corporation,
)
)
)
Plaintiff,
)
)
v.
)
)
U.S. Bank National Association,
)
)
Defendant.
)
___________________________________ )
U.S. Bank National Association,
)
)
Third-Party Plaintiff,
)
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v.
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)
Southport Lane Advisors,
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Southport Specialty Finance,
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Administrative Agency Services,
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and Alexander Chatfield Burns,
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Third-Party Defendants.
)
____________________________________)
Civil Action No.: 3:16-cv-02621-JMC
ORDER AND OPINION
Plaintiff Accident Insurance Company, Inc. (“Accident”) filed this action against
Defendant U.S. Bank National Association (“U.S. Bank”) seeking monetary damages related to
its allegedly deficient administration of a reinsurance trust account created pursuant to a written
trust agreement. (ECF No. 154 at 21 ¶ 116–25 ¶ 141.)
This matter is before the court on Accident’s Motion for a New Trial, Motion to Amend
the Court’s Finding of Facts and Conclusions of Law, and Motion to Alter or Amend Judgment
pursuant to Rules 52 and 59 of the Federal Rules of Civil Procedure. (ECF No. 305.) U.S. Bank
opposes Accident’s Motion in its entirety. (ECF No. 308.) For the reasons stated below, the
court DENIES Accident’s Motion for a New Trial, Motion to Amend the Court’s Finding of
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Facts and Conclusions of Law, and Motion to Alter or Amend Judgment.
I. RELEVANT BACKGROUND TO THE PENDING MOTION
In this matter, Accident alleged claims against U.S. Bank for breach of contract, breach
of fiduciary duty, negligence/gross negligence, negligent misrepresentation, and civil conspiracy.
(See ECF No. 154 at 21 ¶ 116–25 ¶ 141.) The parties’ dispute centers on the provisions of their
Trust Agreement, which provided in relevant part:
Paragraph 1(a): The Grantor hereby creates a trust account for the sole use and
benefit of the Beneficiary pursuant to the terms of this Agreement [].
Paragraph 1(b): The rights and duties of the Grantor, the Beneficiary and the
Trustee under this Agreement are not subject to any conditions or qualifications
not set forth in the Agreement.
Paragraph 2(a): The Trustee shall receive Assets from the Grantor, deposit the
Assets into the Trust Account and hold the Assets in the Trust Account for
safekeeping, subject to the terms of this Agreement. All Assets of the Trust
Account shall be held by the Trustee in physical or customary book entry form at
the Trustee’s offices in the United States. The Trustee shall notify the Beneficiary
and Grantor within ten (10) days of any deposits into the Trust Account.
Paragraph 2(b): The Assets shall consist only of cash (United States legal tender)
and Eligible Securities (as hereinafter defined). The Trustee shall have no duty or
responsibility with respect to the qualification, character or valuation of the Assets
deposited in the Trust Account, except to determine whether the Assets are in
such form that the Beneficiary, or the Trustee upon direction by the Beneficiary,
may whenever necessary negotiate any such Assets without consent or signature
from the Grantor or any other person or entity.
Paragraph 3(a): Without notice to or the consent of the Grantor, the Beneficiary
shall have the right, at any time, to withdraw from the Trust Account, upon
written notice to the Trustee (a “Withdrawal Notice”), such Assets as are
specified in the Withdrawal Notice . . . . The Beneficiary need present no
statement or document in addition to a Withdrawal Notice in order to withdraw
any Assets.
Paragraph 3(b): Upon receipt of a Withdrawal Notice, the Trustee shall
immediately take any and all steps necessary to transfer absolutely and
unequivocally to the Beneficiary or to its order all right, title and interest in the
Assets being withdrawn, and shall deliver the physical custody of such Assets to
or for the account of the Beneficiary as specified in the Withdrawal Notice. The
Trustee shall notify the Grantor and Beneficiary within ten (10) days of any such
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withdrawal from the Trust Account. The Beneficiary shall acknowledge receipt
of any withdrawn Assets within five (5) days of such receipt.
Paragraph 5(a): Following notice to the Beneficiary, the Trustee shall surrender
for payment all maturing Assets and all Assets called for redemption and deposit
the proceeds of any such payments into the Trust Account. All such proceeds
shall be Invested, as instructed by the Grantor or its designated investment advisor
in Eligible Securities satisfying the requirements of Applicable Law regarding the
investment of Assets in the Trust Account. Any instruction or order concerning
such investment of Assets shall be referred to as an “Investment Order”. The
Trustee shall execute each Investment Order and settle securities transactions by
itself or by means of an agent or broker. The Trustee shall not be responsible for
any act or omission, or for the solvency, of any such agent or broker.
Paragraph 5(b): The Grantor may direct the Trustee to accept substitute Assets for
other Assets held in the Trust Account.
Paragraph 5(c): The Grantor represents and warrants that each Investment Order
or Asset substitution will involve an investment in Eligible Securities satisfying
the requirements of Applicable Law regarding investments in the Trust Account.
The Trustee has no responsibility for determining whether any Assets invested
pursuant to an Investment Order or Asset substitution are made in Eligible
Securities that comply with the requirements of Applicable Law regarding
investments in the Trust Account.
Paragraph 8(a): The Trustee shall furnish to Grantor and Beneficiary an
accounting of all Assets in the Trust Account upon its inception and thereafter at
intervals no less frequent than as of the end of each calendar month. Such
accounting shall include a statement of all Assets in the Trust Account and shall
be given as soon as [] practicable, but in no event later than fifteen (15) days after
such date.
Paragraph 8(b): Before accepting any Asset for deposit to the Trust Account, the
Trustee shall determine that such Asset is in such form that the Beneficiary
whenever necessary may, or the Trustee upon direction by the Beneficiary will,
negotiate such Asset without consent or signature from the Grantor or any person
or entity other than the Trustee in accordance with the terms of this Agreement.
Paragraph 8(g): Unless otherwise provided in this Agreement, the Trustee is
authorized to follow and rely upon all instructions given by officers named in any
authorized signers list furnished to the Trustee from time to time by the Grantor
and the Beneficiary, respectively, and by attorneys-in-fact acting under written
authority furnished to the Trustee by the Grantor or the Beneficiary, including,
without limitation, instructions given by letter, facsimile transmission, telegram,
teletype, cablegram or electronic media, if the Trustee believes such instructions
to be genuine and to have been signed, sent or presented by the proper party or
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parties. The Trustee shall not incur any liability to anyone resulting from actions
taken by the Trustee in reliance in good faith on such instructions.
Paragraph 8(i): The Trustee shall not be liable for any loss, liability, costs or
expenses, (including reasonable attorney's fees and expenses) incurred or made
arising out of or in connection with the performance of its duties hereunder in
accordance with the provisions of this Agreement, unless such loss, liability, costs
or expenses are caused by its own negligence, willful misconduct or lack of good
faith.
Paragraph 12(b): The term “Applicable Insurance Law” shall mean the law of the
State of New York.”
Paragraph 12(f): The term “Eligible Securities” shall mean and include
certificates of deposit issued by a United States bank and payable in United States
legal tender and securities representing investments of the types specified in
subsections (1), (2), (3), (4), (6), (8) and (10) of Section 1404(a) of [] New York
Insurance Law; provided, however, that no such securities shall have been issued
by a Parent or a Subsidiary of either the Grantor or the Beneficiary. Any deposit
or investment direction by Grantor shall constitute a certification by Grantor to
the Trustee that the Assets so deposited, or to be purchased pursuant to such
investment directions, are Eligible Securities under Applicable insurance Law,
and the Trustee shall be entitled to rely on Grantor's representation.
Paragraph 13: This Agreement shall be subject to and governed by the laws of the
State of Delaware.
(Def. Ex. No. 89.) After denying U.S. Bank’s Motion for Summary Judgment as to Accident’s
claims (see ECF Nos. 223, 232), the court conducted a bench trial at which the parties presented
evidence and argument starting on July 8 through July 12, 2019, and concluding on July 15,
2019. (ECF Nos. 275, 277–281, 286–291.) Specifically, the court heard live testimony from
thirteen (13) witnesses and was read the deposition testimony of one (1) witness. The parties
also stipulated to the admission of the reports of three (3) expert witnesses in lieu of live
testimony. (See ECF No. 265.)
On April 20, 2020, the court filed its Findings of Fact,
Conclusions of Law, and Order (the “April Order”), concluding that judgment should be entered
in favor of U.S. Bank on all of Accident’s claims; and for Accident on U.S. Bank’s counterclaim
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for contractual indemnification.1 (ECF No. 303 at 52–53.) Additionally, the court’s April 20,
2020 Judgment stated that neither party shall take from the other on their respective claims. (See
ECF No. 304.)
On May 18, 2020, Accident filed the instant Motion for a New Trial, Motion to Amend
the Court’s Findings of Facts and Conclusions of Law, and Motion to Alter or Amend Judgment.
(ECF No. 305.)
On June 15, 2020, U.S. Bank filed a Response to Accident’s Motions
contending that the court should deny the Motions in all respects. (ECF No. 308.)
II.
A.
LEGAL STANDARD2
Motion for New Trial under Rule 59(a)
A motion for a new trial under Rule 59(a) may be granted “on all or some of the issues . .
. to any party . . . for any reason for which a new trial has heretofore been granted in an action at
law in federal court.” Fed. R. Civ. P. 59(a). This rule allows a trial court to set aside the verdict
and order a new trial only if “(1) the verdict is against the clear weight of the evidence, or (2) is
based upon evidence which is false, or (3) will result in a miscarriage of justice even though
there may be substantial evidence which would prevent the direction of a verdict.” Atlas Food
Sys. & Servs. Inc. v. Crane Nat’l Vendors, Inc., 99 F.3d 587, 594 (4th Cir. 1996). In evaluating a
motion for a new trial, the district court has the discretion to “weigh the evidence and consider
the credibility of witnesses.” Knussman v. Maryland, 272 F.3d 625, 647 (4th Cir. 2001);
Swentek v. USAIR, Inc., 830 F.2d 552, 559 (4th Cir. 1987).
B.
Motion to Alter or Amend a Judgment under Rule 59(e)
Rule 59 allows a party to seek an alteration or amendment of a previous order of the
The April Order contains a vast recitation of the relevant factual and procedural background of
the matter and is incorporated herein by reference. (See ECF No. 303 at 4 ¶ 1–17 ¶ 52.)
2
Because the court sits in diversity jurisdiction, it must apply federal procedural law. See, e.g.,
Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427 (1996).
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court. Fed. R. Civ. P. 59(e). Under Rule 59(e), a court may “alter or amend the judgment if the
movant shows either (1) an intervening change in the controlling law, (2) new evidence that was
not available at trial, or (3) that there has been a clear error of law or a manifest injustice.”
Robinson v. Wix Filtration Corp., 599 F.3d 403, 407 (4th Cir. 2010); see also Collison v. Int’l
Chem. Workers Union, 34 F.3d 233, 235 (4th Cir. 1994). It is the moving party’s burden to
establish one of these three grounds in order to obtain relief. Loren Data Corp. v. GXS, Inc., 501
F. App’x 275, 285 (4th Cir. 2012). The decision whether to reconsider an order under Rule 59(e)
is within the sound discretion of the district court. Hughes v. Bedsole, 48 F.3d 1376, 1382 (4th
Cir. 1995). A motion to reconsider should not be used as a “vehicle for rearguing the law,
raising new arguments, or petitioning a court to change its mind.” Lyles v. Reynolds, C/A No.
4:14-1063-TMC, 2016 WL 1427324, at *1 (D.S.C. Apr. 12, 2016) (citing Exxon Shipping Co. v.
Baker, 554 U.S. 471, 485 n.5 (2008)).
C.
Motion to Alter or Amend a Judgment under Rule 52(b)
Rule 52(b) provides that “on a party’s motion filed no later than 28 days after entry of
judgment, the court may amend its findings—or make additional findings—and may amend the
judgment accordingly.” Fed. R. Civ. P. 52(b). “Although Rule 52(b) does not provide a specific
standard for review of such motions, the Fourth Circuit has recognized three grounds on which a
court may alter or amend an earlier judgment: (1) to accommodate an intervening change in
controlling law; (2) to account for new evidence not available at trial; or (3) to correct clear error
of law or prevent manifest injustice.” Stogsdill v. Keck, C/A No. 3:12-cv-0007-JFA, 2015 WL
3396821, at *1 (D.S.C. May 26, 2015) (citations omitted). “A motion pursuant to Rule 52(b),
just like a Rule 59(e) motion, may properly seek to correct manifest errors of law or fact or to
present newly discovered evidence.” Id. (citation omitted). “It is not the intention or purpose of
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Rule[] 52(b) . . . to permit parties to ‘relitigate old matters,’ or ‘give an unhappy litigant one
additional chance to sway the judge.’” Id. (citations omitted).
III.
ANALYSIS
In its Motions, Accident identifies seven (7) assertions of alleged error in the court’s
April Order.3 The court addresses each of Accident’s specific criticisms below.
A.
The Court Should Have Applied South Carolina Substantive Law To Accident’s
Fiduciary Duty And Tort Claims4
1. The Parties’ Arguments
Accident argues that the court erred by applying Delaware substantive law to its claims
for breach of fiduciary duty, negligence/gross negligence, negligent misrepresentation, and civil
conspiracy.
(ECF No. 305 at 15.) In support of this argument, Accident contends that the
choice of law provision in the parties’ Trust Agreement is not broad enough to extend “to tort
claims arising outside of the agreement.”5 (Id. at 17 (citing Charleston Marine Containers, Inc.
v. Sherwin-Williams Co., 165 F. Supp. 3d 457, 469 (D.S.C. 2016); Palmetto Health Credit Union
v. Open Sols. Inc., No. 3:08-cv-3848, 2010 WL 2710551, at *2 (D.S.C. July 7, 2010); Hitachi
Credit Am. Corp. v. Signet Bank, 166 F.3d 614, 628 (4th Cir.1999)).) Therefore, Accident
believes that “South Carolina law applies to those claims because the harm was incurred by
3
The court observes that Accident did not specify which of Rules 52 or 59 were applicable to
each individual assertion of error. However, in the headings for six (6) out of the seven (7)
assertions of error, Accident stated that it was seeking to amend the April Order’s findings of
fact and/or legal conclusions. (See ECF No. 305 at 5, 8, 13, 20, 23.) This is in contrast to
Accident’s general request that “the [c]ourt grant a new trial or, in the alternative, amend its
findings of fact and conclusions of law to conform to the preponderance of evidence presented at
trial.” (Id. at 3.)
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The court observes that this specific assertion of error is the fourth out of seven (7) alleged by
Accident. However, because the choice of law argument made by Accident is referenced in at
least one other assertion of error, the court will address this alleged error first. (See, e.g., ECF
No. 305 at 20.)
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The choice of law provision in the parties’ Trust Agreement states that “[t]his Agreement shall
be subject to and governed by the laws of the State of Delaware.” (Def. Ex. No. 89 at 008977 ¶
13.)
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Accident in South Carolina [and u]nder traditional South Carolina choice of law principles, the
state’s substantive law in which the injury occurred typically governs a tort action.” (Id. at 18
(citing Bannister v. Hertz Corp., 450 S.E.2d 629 (S.C. Ct. App. 1994); Dawkins v. State, 412
S.E.2d 407 (S.C. 1991)).) Accordingly, Accident seeks to have the court “amend its conclusions
of law to apply the proper substantive law and reconsider its ruling on each claim in light of
South Carolina substantive law.” (Id. at 19.)
In response to Accident’s choice of law contentions, U.S. Bank argues that the court did
not err in applying Delaware substantive law to Accident’s claims for breach of fiduciary duty,
negligence/gross negligence, negligent misrepresentation, and civil conspiracy because “the
Trust Agreement’s choice of law clause covers all of Accident’s claims.” (ECF No. 308 at 13.)
U.S. Bank asserts in support of this argument that the application of Delaware substantive law
was appropriate because “[u]nder South Carolina choice of law principles, the substantive law
governing a tort action is determined by the state in which the injury occurred, commonly
referred to as the lex loci delicti rule.” (Id. at 14 (citing Rogers v. Lee, 777 S.E.2d 402, 405 (S.C.
Ct. App. 2015)).) In this regard, U.S. Bank argues that Delaware law governs because the harm
Accident suffered was conducted in Wilmington, Delaware at U.S. Bank’s office even though it
“suffered the resulting losses in South Carolina.” (Id. (citing ECF No. 305 at 18).) Finally, U.S.
Bank takes the position that even if its substantive arguments fail, the court did not err because
Accident waived any argument that Delaware law is inapplicable “[b]y affirmatively,
intentionally, and unambiguously asserting that Delaware law applies—both during closing and
in its post-trial submission.” (Id. at 12.)
2. The Court’s Review
The court observes that it previously addressed this issue in an Order entered on July 3,
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2019, wherein it found as follows:
Finally, upon its review, the court observes that the trust agreement involved in
this matter does, in fact, contain a provision that extends the scope of the choiceof-law provision, similar to the one at issue in Charleston Marine Containers,
Inc., 165 F. Supp. 3d at 469. The trust agreement between AIC and U.S. Bank
contains a choice-of-law provision that states the agreement “shall be subject to
and governed by the laws of the State of Delaware[,]” as well as a separate
provision which states that the agreement “constitutes the entire agreement among
the Parties relating to the subject matter hereof . . ..” (ECF No. 262-1 at 9 ¶¶ 13,
16.) The court finds that AIC’s argument is without merit and concludes that all
of AIC’s claims are subject to the trust agreement’s choice-of-law provision.
(ECF No. 270 at 8.) Accident did not seek reconsideration of the court’s July 3, 2019 Order and,
therefore, the court finds that the instant Motion is an impermissible relitigation of old matters
under Rules 52 and 59. See Stogsdill v. Keck, C/A No. 3:12-cv-0007-JFA, 2015 WL 3396821, at
*1 (D.S.C. May 26, 2015) (“It is not the intention or purpose of Rules 52(b) and 59(e) to permit
parties to ‘relitigate old matters,’ or ‘give an unhappy litigant one additional chance to sway the
judge,’” (internal and external citations omitted)).
Notwithstanding the aforementioned conclusion, the court in the Charleston Marine
Containers case interpreted choice of law and entire agreement6 provisions similar to the ones in
the parties’ Trust Agreement at issue in this matter and found that it was reasonable to conclude
either that tort claims were part of the “subject matter of the agreement” or, in the alternative, to
decide that they fell “outside the scope of the agreement’s choice of law provision and is
therefore governed under South Carolina law.” Charleston Marine Containers, 165 F. Supp. 3d
6
“In contract law, an integration clause–also sometimes called a merger clause or an entire
agreement clause–is a provision that states that the terms of a contract are the complete and final
agreement between the parties.” Integration clause, https://www.law.cornell.edu/wex /integratio
n_clause (last visited Mar. 15, 2021). The entire agreement provision of the parties’ Trust
Agreement provided that “[t]his Agreement constitutes the entire agreement among the Parties
relating to the subject matter hereof, and there are no understandings or agreements, conditions
or qualifications relative to this Agreement that are not fully expressed in this Agreement.” (Def.
Ex. No. 89 at 008977 ¶ 16.)
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at 469 (“[T]he court finds that either interpretation is reasonable, . . . .”).7 Therefore, upon its
consideration of the foregoing, the court finds that it did not err in concluding that Accident’s
claims for breach of fiduciary duty, negligence/gross negligence, negligent misrepresentation,
and civil conspiracy were covered by the choice of law provision in the parties’ Trust
Agreement. E.g., CitiSculpt, LLC v. Advanced Commercial Credit Int’l (ACI) Ltd., Civil Action
No.: 6:17-cv-69-BHH, 2017 WL 660833, at *2 (D.S.C. Feb. 17, 2017) (“South Carolina
generally respects choice of law provisions, . . . and appears to recognize that a contract’s choice
of law provision can extend to tort claims.” (quoting Charleston Marine Containers, 165 F.
Supp. 3d at 468–69)).
B.
The April Order’s Legal Conclusions Should Be Amended Based On The Duties And
Rights Imposed By Paragraphs 2(a) And 8(g) Of The Trust Agreement
1. The Parties’ Arguments
Accident contends that the court erred by relying “on [P]aragraph 8(g) as the basis for its
conclusions of law that U.S. Bank did not violate Paragraph 2(a) of the Trust Agreement.” (ECF
No. 305 at 5.) In support of this contention, Accident asserts that “[n]othing in Paragraph 8(g)
gives Dallas National the right to control trust assets” and it “was not allowed to direct or control
In Charleston Marine Containers, Inc., the court considered two prior cases that analyzed
similar choice-of-law provisions in regard to tort claims and concluded that tort claims were
covered by the choice-of-law provisions due to their broad wording. Charleston Marine
Containers, Inc., 165 F. Supp. 3d at 468–69; see also Hitachi Credit, 166 F.3d at 628 (finding
that the choice-of-law provision in the agreement was sufficiently broad to encompass contractrelated tort claims); Palmetto Health, 2010 WL 2710551, at *2 (finding that plaintiff’s unfair
trade practices claim was governed by the choice-of-law provision based on its sufficient relation
to the agreement). Based on its analysis, the court in Charleston Marine Containers, Inc. held
that the choice of law provision which stated that the “[Supply Agreement] is governed by the
laws of the State of Ohio,” together with a separate provision that stated the agreement
represented the “entire agreement between the parties [] with reference to the subject matter
hereof,” was sufficient to conclude that alleged negligent misrepresentations were part of the
subject matter of the agreement and therefore covered by its choice-of-law provision and
governed by the laws of the State of Ohio. Charleston Marine Containers, Inc., 165 F. Supp. 3d
at 469.
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any asset movement in the trust account, except for: []asset deposit (Paragraph 2(a)); []asset
redemption and investment of redeemed proceeds (Paragraph 5(a)); and []asset substitution
(Paragraph 5(b)).” (ECF No. 305 at 6.) Accident further asserts that because “U.S. Bank knew
Dallas National lacked authority to direct the sale of the municipal bonds,” U.S. Bank knowingly
violated the Trust Agreement when it allowed Dallas National “to move municipal bonds out of
the trust account in January 2014.” (Id. at 6, 8.)
U.S. Bank responds arguing that there was sufficient trial evidence establishing “that
Dallas National and its investment advisor were empowered to manage and direct account
trading and investments, without exception.” (ECF No. 308 at 7 (citations omitted).) As a
result, U.S. Bank asserts that “[t]he court’s finding that U.S. Bank acted in good faith and
therefore did not breach paragraph 2(a) of the Trust Agreement was not clearly erroneous.” (Id.
at 8 (citation omitted).)
2. The Court’s Review
Dallas National was the grantor specified in the Trust Agreement. (See Def. Ex. No. 89
at 008969.) In the April Order, the court determined that Dallas National directed the selling of
New Mexico municipal bonds on January 13, 2014, and Port of Seattle municipal bonds on
January 14, 2014. (See ECF No. 303 at 36 ¶ 102 (citations omitted).) The court further
determined that Dallas National’s actions did not result in a breach of Paragraph 2(a) by U.S.
Bank based on a plain language reading of the Paragraph 8(g) of the Trust Agreement. (Id. at 36
¶ 103–37 ¶ 105.) Accident contends that the court’s finding was erroneous because Paragraph
8(g) did not provide Dallas National with the ability to sell the aforementioned municipal bonds
of which U.S. Bank had knowledge. (See ECF No. 305 at 6–7.)
Accident’s argument, while well-conceived, only is persuasive if the remaining
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provisions of the Trust Agreement are ignored. Cf. Stonewall Ins. Co. v. E.I. du Pont de
Nemours & Co., 996 A.2d 1254, 1260 (Del. 2010) (“[A] single clause or paragraph of a contract
cannot be read in isolation, but must be read in context.” (citations omitted)). Paragraph 8(g)
authorized U.S. Bank to rely in good faith upon instructions received from authorized officers of
Dallas National. Accident could have presumably prevented Dallas National’s actions by not
allowing this provision into the Trust Agreement. E.g., Plaze, Inc. v. Callas, C.A. No. 20180721-TMR, 2019 WL 1028110, at *5 (Del. Ch. Feb. 28, 2019) (“If [a party] wanted a contractual
right . . . then he should have contracted for it.” (citation omitted)).8 Furthermore, as the trier of
fact, the court weighed the evidence, drew reasonable inferences, and explained in the April
Order why a plain reading of the Trust Agreement, including Paragraph 8(g), did not lead to a
conclusion that U.S. Bank breached Paragraph 2(a). Therefore, the court finds that Accident has
not demonstrated that the analysis in the April Order was erroneous warranting a new trial or
amendment of the April Order.
C.
The April Order’s Legal Conclusions Should Be Amended Based On The Duties
Imposed By Paragraphs 2(b) And 8(b) Of The Trust Agreement
1. The Parties’ Arguments
Accident asserts that the court erred by defining “negotiable” in terms inconsistent with
substantive Delaware law and Delaware contract interpretation principles. (ECF No. 305 at 8, 9
(citing Wooleyhan v. Green, 155 A. 602, 603 (Del. Super. 1931) (Negotiable “applies to any
written instrument given as a security, usually for the payment of money, which may be
transferred by indorsement or delivery, vesting in the party to whom it is transferred or delivered
“Delaware follows the objective theory of contracts.” Plaze, Inc., 2019 WL 1028110, at *4.
“Under Delaware law, courts interpret contracts to mean what they objectively say.” Id. (citation
omitted). “[T]he court looks to the most objective indicia of that intent: the words found in the
written instrument.” Id. “[T]he court ascribes to the words their common or ordinary meaning,
and interprets them as would an objectively reasonable third-party observer.” Id. (citation
omitted).
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a legal title upon which he can support a suit in his own name.” (citation omitted))).) Accident
further asserts that based on the evidence submitted at trial (see ECF No. 305 at 11–12), the
“[c]ourt should have concluded ‘negotiable’ is linked to transferability,” and if it had, the court
would have found that “U.S. Bank failed to meet its duty to determine whether Destra UITs were
transferrable and, therefore, “negotiable” as required by the Trust Agreement.” (Id. at 10, 11.)
Moreover, Accident asserts that “[h]ad U.S. Bank conducted the proper review and determined
Destra UITs were not negotiable as required by the Trust Agreement, then U.S. Bank had the
further obligation to refuse acceptance of the Destra UITs into the trust.” (ECF No. 312 at 2.)
Consequently, the court should amend the April Order “to note the correct definition of
‘negotiable’ and to find the preponderance of the evidence shows U.S. Bank failed to perform its
duties pursuant to Trust Agreement Paragraphs 2(b) and 8(b).” (ECF No. 305 at 13.)
U.S. Bank defends the April Order asserting that the court appropriately “made findings
as to what the appropriate steps were with respect to the Destra UIT[s], and whether U.S. Bank
took those steps.” (ECF No. 308 at 8–9.) U.S. Bank next asserts that “the court reached all the
factual findings necessary to conclude that U.S. Bank made the required determination and ‘did
not breach its obligations under paragraphs 8(b) and 2(b) . . . based on the perceived lack of
negotiability of Destra UITs.’” (ECF No. 308 at 10 (citing ECF No. 303 at 31 ¶ 63).) Finally,
U.S. Bank declares that as a result, “[h]aving found that U.S. Bank took the steps to make the
determination required by contract, the court did not err—much less clearly err—in finding no
breach of paragraphs 8(b) and 2(b).” (ECF No. 308 at 11.)
2. The Court’s Review
In the April Order, the court considered the plain language of Paragraphs 2(b) and 8(b)
and concluded that these provisions only required U.S. Bank to initially determine whether an
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asset could be negotiated and, once that determination was made, they did not necessitate any
further action. (See ECF No. 303 at 29 ¶ 52–31 ¶ 63.) Accident spends a signification portion of
its Motion and Reply arguing that the definition of the term “negotiable” should have been
determinative of whether U.S. Bank breached these provisions.
Upon its consideration, the court observes that even if it erred in how it defined
negotiability, the error was harmless because it does not change the ultimate resolution of this
issue in U.S. Bank’s favor. See Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728,
738–39 (Del. 2006) (observing that a failure to “look to dictionaries for assistance in determining
the plain meaning of terms which are not defined in a contract” is harmless if the correct
definition fails to change the outcome). Ultimately, the court found in the April Order that the
issue of negotiability lacks such significance because neither Paragraph 2(b) nor 8(b) specified
required actions for U.S. Bank to take if the asset was determined to not be negotiable. (See ECF
No. 303 at 31 ¶¶ 60–62.) Accident argues that U.S. Bank had an obligation to refuse acceptance
of an asset lacking in negotiability, but the court determined that a plain reading of the Trust
Agreement did not support that conclusion. See Lorillard, 903 A.2d at 730 (“When interpreting a
contract, the role of a court is to effectuate the parties’ intent. In doing so, we are constrained by
a combination of the parties’ words and the plain meaning of those words where no special
meaning is intended.”). Even after consideration of Accident’s impassioned arguments, the court
is not persuaded that it committed error in finding that U.S. Bank did not breach Paragraphs 2(b)
and 8(b) of the Trust Agreement.
D.
The April Order’s Legal Conclusions Should Be Amended To Reflect Evidence
Demonstrating U.S. Bank’s Breach Of Paragraph 3(b) Of The Trust Agreement
1. The Parties’ Arguments
Accident contends that the court erred in failing to find that U.S. Bank breached the
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duties imposed by Paragraph 3(b) of the parties’ Trust Agreement. (ECF No. 305 at 14.) To this
point, Accident argues that U.S. Bank failed to “‘immediately’ take ‘any and all’ steps toward
transfer [of assets to Accident] after receiving a withdrawal notice.” (Id. at 15.)
U.S. Bank asserts that “[t]here was no error” in the April Order regarding a breach of
Paragraph 3(b) because there was ample evidence to support the court’s finding that U.S. Bank’s
actions were affected by “Accident’s continuing failure to contact Southport as U.S. Bank
requested.” (ECF No. 308 at 11, 12.)
2. The Court’s Review
In the April Order, the court ultimately found “that the greater weight of the evidence
demonstrates that U.S. Bank did take all steps necessary to transfer assets requested in
Accident’s withdrawal notice.” (ECF No. 303 at 33 ¶ 80.) To reach this conclusion, the court
laid out the evidence that supported finding U.S. Bank did not breach Paragraph 3(b) of the Trust
Agreement. (See ECF No. 303 at 32 ¶ 69–34 ¶ 81.) In its Motions, Accident disagrees with the
court’s assessment claiming that “there was more U.S. Bank could and should have done.” (ECF
No. 305 at 14.)
Upon its review, the court observes that “[w]hile another fact finder might disagree with
the [c]ourt’s credibility determinations, the possibility of such disagreement is not a sufficient
basis to grant a Rule 52(b) Motion.” Ashraf-Hassan v. Embassy of Fr., 185 F. Supp. 3d 94, 111
(D.D.C. 2016). “Rule 52(b) imposes a ‘heavy burden’ on the moving party ‘to demonstrate clear
error.’” Id. (internal citation omitted). Upon consideration of the arguments presented, the court
is not persuaded that it committed error in determining that U.S. Bank did not breach Paragraph
3(b) of the Trust Agreement.
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E.
The April Order’s Legal Conclusions Should Be Amended To Find That U.S. Bank
Breached Its Fiduciary Duties
1. The Parties’ Arguments
Relying entirely on South Carolina law (see ECF No. 305 at 20–22), Accident argues that
the court erred by not finding that U.S. Bank breached fiduciary duties owed to Accident when it
“failed to inform Accident about U.S. Bank’s substantial financial ties to Southport entities.”
(Id. at 20.) Accident asserts that U.S. Bank failed to communicate “pertinent and potentially
harmful” information and such failure was “not an act of good faith.” (Id. at 21–22.) Therefore,
Accident requests that the “the [c]ourt amend its conclusions of law in light of applicable South
Carolina law on fiduciary duty to recognize U.S. Bank’s failure in their duty of candor to
communicate crucial information known by U.S. Bank while administering the trust.” (Id. at
22.)
U.S. Bank responds to Accident’s arguments by first pointing out the “extensive
evidence” presented at trial that demonstrates “there was nothing to disclose about any purported
‘conflict of interest’” based on U.S. Bank’s relationship with Southport entities. (ECF No. 308
at 16–17.) U.S. Bank next argues that under the law of either South Carolina or Delaware,
“[t]here was no error, much less clear error” resulting from the court weighing the evidence
presented and finding that U.S. Bank did not breach any fiduciary duty. (Id. at 17 (citations
omitted).)
2. The Court’s Review
The premise of this assertion of error by Accident is that the court should have applied
South Carolina law to its claim for breach of fiduciary duty. As explained above, the court
believes it correctly ruled that Delaware law was applicable to Accident’s claim for breach of
fiduciary duty. Therefore, because it is not persuaded that it applied the wrong law to Accident’s
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claim for breach of fiduciary duty, the court finds that Accident is not entitled to relief under
Rules 52 and/or 59 regarding this claim.
F.
The April Order’s Legal Conclusions Should Be Amended Regarding Accident’s Claims
For Breach Of Fiduciary Duty And Negligence/Gross Negligence
1. The Parties’ Arguments
Accident contends that because the court “found U.S. Bank was aware there were
substantive restrictions on transferring Destra UITs” (see ECF No. 303 at 31 ¶ 60), the court
erred in not concluding that U.S. Bank breached its fiduciary duties and was negligent/grossly
negligent. (ECF No. 305 at 23 (citations omitted).) Accident further specifies that U.S. Bank
violated its duties “when it accepted assets it knew did not meet the admission threshold stated in
the Trust Agreement” and failed “to inform Accident of the restrictions on Destra UITs transfers
while knowing that having access to easily transferable assets was Accident’s entire purpose for
the trust.” (Id. (citing Alderman v. Cooper, 185 S.E.2d 809, 813 (S.C. 1971) (noting negligence
claim available against trustee); McNeil v. McNeil, 798 A.2d 503, 509 (Del. 2002) (“Generally, a
trustee must act as the reasonable and prudent person in managing the trust”)).)
U.S. Bank opposes this specific argument reiterating that the court did not err because
pursuant to the Trust Agreement, “U.S. Bank was entitled to follow and rely on the instructions
of Dallas National’s authorized signers.” (ECF No. 308 at 20 (citation omitted).)
2. The Court’s Review
In this assertion of error, Accident argues that as a result of one (1) specific finding
regarding Destra UITs, the court should have reached a different conclusion regarding
Accident’s claims for breach of fiduciary duty and negligence/gross negligence. This argument
completely disregards the specific analysis conducted by the court regarding the viability of
these claims under Delaware law when they are duplicative of other claims. (See ECF No. 303
17
at 40 ¶ 123–45 ¶ 157.) The court does not find any merit in this argument and is persuaded it is
the type of claim deemed inappropriate under Rules 52 and 59.
See Stogsdill, 2015 WL
3396821, at *1 (“It is not the intention or purpose of Rules 52(b) and 59(e) to . . . give an
unhappy litigant one additional chance to sway the judge. (citation omitted)).
G.
The April Order’s Findings Of Fact And Conclusions Of Law Should Be Amended As
To Accident’s Damages
1. The Parties’ Arguments
Accident asserts that the April Order does not “properly reflect the evidence presented at
trial,” and, therefore, the court “should amend its findings of fact and conclusions of law, credit
Mr. Strickland’s expert testimony as credible, and award Accident actual damages on its
contract, fiduciary duty, and negligence/gross negligence claims” in the amount of $7,207,963.
(ECF No. 305 at 23, 24.)
U.S. Bank disagrees arguing that the April Order was “free of clear error” and Accident’s
arguments “ignore[] entirely the extensive evidence on mitigation and damages that U.S. Bank
presented at trial, including the testimony of multiple experts, which would reduce any award to
zero.” (ECF No. 308 at 20.)
2. The Court’s Review
Under Rules 52(b) and Rule 59(e), the court has discretion and need not grant a motion
unless there is an intervening change of controlling law, the availability of new evidence, or the
need to correct a clear error or prevent manifest injustice. See Fed. R. Civ. P. 52(b), 59(e).
Accident does not rely on an intervening change of law or the availability of new evidence to
support its claim for an amended damages amount. Thus, the court must only determine whether
it needs to correct a clear error or prevent manifest injustice.
In the April Order, the court awarded Accident $0 in damages. (See ECF No. 303 at 51 ¶
18
188.) Above, the court considered, but found not meritorious, Accident’s claims that the court
erred in finding for U.S. Bank on Accident’s claims for breach of fiduciary duty,
negligence/gross negligence, negligent misrepresentation, and civil conspiracy. Therefore, the
court is not persuaded that it should amend the Judgment of $0 in damages resulting from the
April Order.
IV.
CONCLUSION
For the foregoing reasons, the court DENIES Accident Insurance Company, Inc.’s
Motion for a New Trial, Motion to Amend the Court’s Finding of Facts and Conclusions of Law,
and Motion to Alter or Amend Judgment. (ECF No. 305.)
IT IS SO ORDERED.
United States District Judge
March 31, 2021
Columbia, South Carolina
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