Howard v. Maxum Indemnity Company

Filing 23

MEMORANDUM OPINION AND ORDER denying 18 Motion to Reconsider the Court's Order. (Ordered by Senior Judge A. Joe Fish on 1/23/2017) (twd)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

WESLEY HOWARD,
Plaintiff,
VS.
MAXUM INDEMNITY COMPANY,
Defendant.

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CIVIL ACTION NO.
3:16-CV-2487-G

MEMORANDUM OPINION AND ORDER

Before the court is the plaintiff’s motion to reconsider the court’s order
granting the defendant’s motion to dismiss (docket entry 18). For the reasons stated
below, the motion is denied. The court set forth the background of this case in a
recent memorandum opinion and order. See Memorandum Opinion and Order of
November 18, 2016 (“Order”) (docket entry 15).
I. ANALYSIS
A. Legal Standard
The Federal Rules “do not recognize a ‘motion for reconsideration’” in those
words. Lavespere v. Niagara Machine & Tool Works, Inc., 910 F.2d 167, 173 (5th Cir.

1990), cert. denied, 510 U.S. 859 (1993). Instead, courts in the Fifth Circuit will treat
a so-called motion for reconsideration either as a motion to alter or amend a
judgment under Rule 59(e), or as a motion for relief from judgment under Rule
60(b). Id.
When deciding whether such a motion falls under Rule 59(e) or Rule 60(b),
the court will look to when the motion was served. Id. “If the motion is served
within [28]1 days of the rendition of judgment, the motion falls under Rule 59(e); if
it is served after that time, it falls under Rule 60(b).” Id. In this case, because the
plaintiff’s motion for reconsideration was filed within 28 days of the order dismissing
the case, it will be considered a motion to alter or amend a judgment under Rule
59(e).
In order to succeed, “[a] motion to alter or amend the judgment under Rule
59(e) must clearly establish either a manifest error of law or fact or must present
newly discovered evidence and cannot be used to raise arguments which could, and
should, have been made before the judgment issued.” Schiller v. Physicians Resource
Group Inc., 342 F.3d 563, 567 (5th Cir. 2003) (internal quotation marks omitted).
Importantly, a “Rule 59(e) motion is not proper to re-litigate matters that have been
resolved to the movant’s dissatisfaction” and a party cannot attempt to obtain a

1

In 2009, the time period listed in Rule 59(e) was extended from 10 days
to 28 days. See Advisory Committee Notes, 2009 Amendments, FED. R CIV. P. 59(e).
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“second bite at the apple” on issues that were previously addressed by the parties and
the court. Alvarado v. Texas Rangers, No. EP-03-CA-0305-FM, 2005 WL 1420846, at
*2 (W.D. Tex. June 14, 2005). “Reconsideration of a judgment after its entry is an
extraordinary remedy that should be used sparingly.” Templet v. HydroChem Inc., 367
F.3d 473, 479 (5th Cir.), cert. denied, 543 U.S. 976 (2004).
B. Application
The plaintiff, Wesley Howard (“Howard”), contends that the court erred by
applying Texas substantive law instead of Oklahoma substantive law to Howard’s
claim. Plaintiff’s Motion to Reconsider Dismissal (“Motion to Reconsider”) at 2-3
(docket entry 18). Howard contends that Oklahoma law applies because the
insurance contract was entered into in Oklahoma and both the insured and insurer
are located in Oklahoma. Id. at 3. Howard avers that, under Oklahoma law, the
assignment of the insurance policy was valid and, therefore, he has standing to sue.
Id. at 4. Maxum contends that Howard’s challenge fails because Howard waived any
Oklahoma choice of law argument by failing to include it in his response to Maxum’s
motion to dismiss. Defendant’s Response to Plaintiff’s Motion to Reconsider (docket
entry 20); Defendant’s Brief and Memorandum in Support of Its Response to
Plaintiff’s Motion to Reconsider at 3 (docket entry 21).
In a diversity case such as this, the rules of the forum state determine which
substantive law will govern the dispute. Klaxon v. Stentor Electric Mfg. Co., Inc., 313

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U.S. 487, 496 (1941); Alberto v. Diversified Group, Inc., 55 F.3d 201, 203 (5th Cir.
1995). “Under Texas conflicts law, in the absence of a contrary manifestation, an initial
presumption is that the parties intend for the law of the jurisdiction where the
contract is made to govern.” Lockwood Corporation v. Black, 669 F.2d 324, 327 (5th
Cir. 1982) (emphasis added).
Howard applies the five-factor choice of law test appearing in the case of Mayo
v. Hartford Life Insurance Co., 220 F. Supp. 2d 714, 744 (S.D. Tex. 2002) (applying
five factors to determine which state’s law to apply to a breach of contract action),
aff’d and remanded, 354 F.3d 400 (5th Cir. 2004), to support his argument that the
court should have applied Oklahoma law. See Motion to Reconsider at 3. However,
Howard did not raise this argument in his response to Maxum’s motion to dismiss -nor has Howard raised this argument anywhere else in the record. See generally
Plaintiff’s Response to Defendant’s 12(b)(6) Motion to Dismiss (“Howard’s
Response”) (docket entry 13). Therefore, Howard has waived the choice of law
argument he advances in the instant motion. See Schiller, 342 F.3d at 567; Fruge v.
Amerisure Mutual Insurance Company, 663 F.3d 743, 747 (5th Cir. 2011) (“Failure to
raise an argument before the district court waives that argument, including an
argument for choice-of-law analysis.”).
Moreover, a close examination of the record is instructive here. The record
shows that Howard has not only waived any choice of law argument, but also that

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Howard expressed a “contrary manifestation” to the court applying Oklahoma law.
Howard’s complaint makes no reference to Oklahoma law. See generally Plaintiff’s
Original Petition (docket entry 1-3). In fact, the only state law referenced in
Howard’s complaint is Texas state law. See id. at 5-8. While Howard attached the
insurance agreement between Maxum and the insured, JJ&P Hotels (“JJ&P”), to his
complaint, it does not have choice of law clause. See id., Exh. A. Thus, the
complaint does not conclusively establish that Howard’s action arises under
Oklahoma law.
However, the crux of the instant motion depends on the parties’ briefing of
Maxum’s motion to dismiss. In its motion to dismiss, Maxum argues:
JJ&P’s stipulation of liability and assignment of rights
under the policy to Howard do not bestow a direct-action
right on Howard, for two reasons. First, the policy
prohibits assignment and the prohibition is enforceable
even though Maxum denied a defense to the insured.
Second, any rights under the policy had not matured at the
time of the assignment since there was no judgment to be
indemnified, and they remain immature since there is still
no judgment.
Brief in Support of Defendant’s Motion to Dismiss at 5-6 (docket entry 11) (internal
citations omitted). To support its propositions, Maxum overwhelmingly cites cases
applying Texas law.2 Id. Moreover, Maxum’s motion states, “The policy was

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In its motion to dismiss, Maxum cites the following cases applying
Texas law regarding the no direct action rule: (1) Nautilus Insurance Company v.
Concierge Care Nursing Centers, Inc., 804 F. Supp. 2d 557, 559 (S.D. Tex. 2011);
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delivered to the insured in Oklahoma. Because there is no conflict between
Oklahoma and Texas law on any issue presented by this motion, however, the Court
need not conduct a conflict-of-law analysis.”3 Id. at 7 n.30.
If, as Howard asserts in the instant motion, this court was to apply Oklahoma
law, presumably Howard would have pointed to Oklahoma law in his response. See
Arthur W. Tifford, PA v. Tandem Energy Corporation, 562 F.3d 699, 705 n.2 (5th Cir.
2009) (“The parties have briefed Texas’s law of conversion . . . by failing to brief any
other state’s law, the parties have forfeited any choice of law argument.”). However,
Howard’s response to Maxum’s motion to dismiss fails to invoke any Oklahoma law
as to the no direct action rule or the no assignment clause. See generally Howard’s
Response; see also Playboy Enterprises, Inc. v. Sanchez-Campuzano, 519 F. App’x 219,
225 (5th Cir.) (holding that the defendant waived his argument that Illinois law
should apply when, aside from one footnote, he “applied Texas law in his briefing

(2) International Interests, LP v. Mt. Hawley Insurance Company, No. CIV.A. H-11-0580,
2014 WL 4537784, at *5 (S.D. Tex. Sept. 11, 2014); (3) Nautilus Insurance Company
v. Country Oaks Apartments Ltd., 566 F.3d 452, 458 (5th Cir. 2009); (4) Northfield
Insurance Company v. Loving Home Care, Inc., 363 F.3d 523, 536 (5th Cir. 2004); and
(5) Farmers Texas County Mutual Insurance Company v. Griffin, 955 S.W.2d 81, 84
(Tex. 1997). Id. at 6 n.25-26. Maxum cites a single Oklahoma case for the general
proposition that “a plaintiff does not have a right to bring a direct action against the
insurer of an alleged tortfeasor.” Id. 5 n.23 (quoting Weekley v. Bennett Motor Express,
LLC, 858 F. Supp. 2d 1257, 1259 (N.D. Okla. 2012)).
3

The court notes that Maxum’s primary reference to Oklahoma law in its
motion to dismiss was regarding the pollution exclusion in the insurance policy -- not
the no direct action rule or the validity of the no assignment clause. Id. at 7.
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before the district court”), cert. denied,

U.S.

, 134 S. Ct. 258 (2013). Not only

does Howard not cite any Oklahoma cases regarding the no direct action rule in his
response, he argues that the court should apply Texas law to this issue. Howard’s
Response at 9-10. Specifically, Howard states that “the following law controls” and
proceeds to quote from the case of Rhodes v. Chicago Insurance Company, a Division of
Interstate National Corporation, 719 F.2d 116, 120 (5th Cir. 1983); see also Howard’s
Response at 9-10. Rhodes is a Fifth Circuit opinion applying Texas insurance law and
does not refer to Oklahoma law. See generally 719 F.2d at 118-121. Howard also
explicitly states that Texas law controls the court’s determination on the validity of
the no assignment clause and fails to refer to Oklahoma law.4 See Howard’s Response
at 10.
Additionally, Howard did not respond to Maxum’s assertion that there was no
need to conduct a conflict of law analysis. Howard’s failure to address this argument
in his response constitutes a concession of the issue. Friou v. Phillips Petroleum
Company, 948 F.2d 972, 974 (5th Cir. 1991) (“[The issue] is not discussed in their
briefs. A party who inadequately briefs an issue is considered to have abandoned the
claim.”); Rutter v. Conseco Life Insurance Company, No. 3:09-CV-680-DPJ-JCS, 2011

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Specifically, Howard states, “Defendant is also correct in that its
agreement with JJ&P prohibited assignment. However, Defendant wrongfully denied
its insured’s, JJ&P’s, coverage and breached its duty to defend its insured, and
therefore Rhodes controls.” Howard’s Response at 10 (internal citations omitted).
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WL 2532467, at *5 (S.D. Miss. June 24, 2011) (“The [Plaintiffs’] apparently
concede the issue, having failed to address it in their Response.”).
Moreover, Howard’s response only refers to Oklahoma law regarding the
insurance policy’s pollution exclusion, which was immaterial to the court’s
November 18 opinion. See Howard’s Response at 7-8. This reference was very
limited -- Howard was only responding to the few Oklahoma cases cited by Maxum.
Id. In turn, Howard’s main contention on the application of the pollution exclusion
clause is that the clause is ambiguous and that it ought to be construed against the
drafter. Id. at 8. For this proposition, Howard cites AT & T Corp. v. Rylander, 2
S.W.3d 546 (Tex. App. -- Austin 1999, pet. denied); see also Howard’s Response at 8.
AT & T Corp. v. Rylander is a Texas court of appeals opinion applying Texas law
regarding contract interpretation. See 2 S.W.3d at 559-60. With Howard’s minimal
references to Oklahoma law, it can hardly be said that Howard “depended on
Oklahoma law to support his arguments throughout his briefing.” See Plaintiff’s
Reply in Support of Plaintiff’s Motion to Reconsider at 5 (docket entry 22).
In sum, it is unclear whether there was ever an initial presumption that the
policy arose under Oklahoma law. However, Howard’s failure to raise Oklahoma law
in his response to Maxum’s motion to dismiss is most certainly a “contrary intention”
to the contract arising under Oklahoma law. Howard’s “contrary intention” is even
more evident regarding the issues that the resulted in dismissal of the action for lack

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of standing: (1) the validity of the no assignment clause and (2) failing to overcome
the no direct action rule. Order at 6-7; see also Roth v. Mims, 298 B.R. 272, 283-84
(N.D. Tex. 2003) (Lindsay, J.) (“Moreover, while it is true that the parties may have
cited a couple of Nevada cases, they also cited a plethora of other state and federal
cases, including Texas and 5th Circuit cases in their pleadings, in Roth’s motion to
Dismiss, in Mims’s Motion for Summary Judgment and Roth’s corresponding
response, and in the parties’ proposed findings of fact and conclusions of law. From
this, the bankruptcy court could not have concluded that either of the parties was
advocating that the laws of Nevada be applied to the case at hand.”). Therefore,
Howard waived any choice of law argument and the court did not err by applying
Texas law.
II. CONCLUSION
For these reasons, the plaintiff’s motion is DENIED.
SO ORDERED.

January 23, 2017.

___________________________________
A. JOE FISH
Senior United States District Judge

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