Generation Trade Inc v. Ohio Security Insurance Company
Filing
81
Memorandum Opinion and Order granting 76 Motion to Alter Judgment filed by Generation Trade Inc. The Court VACATES its 5/21/2019 judgment in this case. The Court will issue separate orders controlling any new scheduling matters in this case. (Ordered by Judge Ed Kinkeade on 8/6/2019) (ykp)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
GENERATION TRADE, INC.,
Plaintiff,
v.
OHIO SECURITY INSURANCE
COMPANY,
Defendant.
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Civil Action No. 3:18-CV-0434-K
MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiff’s Rule 59(e) Motion to Alter or Amend Judgment
and/or for Reconsideration (the “Motion”) (Doc. No. 76). The Court has carefully
considered the Motion, the brief in support of the Motion, the response, the applicable
law, and the relevant record. Because Plaintiff Generation Trade, Inc. presents new
evidence that creates a genuine dispute of material fact, and because the relevant factors
weigh in favor of allowing Plaintiff Generation Trade, Inc. to present this evidence to
the Court through a Rule 59(e) motion, the Court GRANTS the Motion and hereby
VACATES its prior judgment in this case (Doc. No. 75).
I.
Factual and Procedural History
The parties are familiar with the facts underlying this insurance dispute, and the
Court has previously set forth the relevant facts in its prior order granting summary
judgment (Doc. No. 74). The Court therefore only discusses the new evidence
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presented by Plaintiff Generation Trade, Inc. (“Generation Trade”) and the relevant
procedural history of this case that resulted in the Motion that is the subject of this
Order.
Defendant Ohio Security Insurance Company (“OSIC”) moved for summary
judgment on Generation Trade’s claims on October 26, 2018, approximately a month
and a half before the discovery deadline. Although Generation Trade alleges that it
intended to rely upon discovery that had not yet occurred at the time OSIC moved for
summary judgment, including depositions conducted by defense counsel, Generation
Trade did not request an extension to respond to OSIC’s summary-judgment motion
and instead filed a timely response. Generation Trade did move for leave to file a
surreply on December 4, 2018, and in its proposed surreply, Generation Trade included
deposition testimony from Andre Simon (“Simon”) (the owner of Generation Trade)
and Dan Mizell (“Mizell”) (a non-retained expert). Because of some difficulty in
scheduling the deposition of Roberto Pasillas (“Pasillas”) (a roofing contractor who
worked on the roof of the property in this case in May 2016), the deposition of Pasillas
did not occur until December 10, 2018, and the transcript of this deposition was not
available until December 27, 2018. Pasillas’s deposition testimony is the relevant
evidence for purposes of this Order.
On May 21, 2019, this Court granted summary judgment in favor of OSIC on
Generation Trade’s breach-of-contract claim because Generation Trade failed to
2
present evidence that a genuine dispute of material fact remained on the issue of
concurrent causation. In its order, the Court noted that Simon’s affidavit did not create
a genuine issue of material fact on the concurrent-causation issue. The Court
acknowledged that lay-witness testimony about the condition of property prior to an
alleged covered loss can create a genuine dispute of material fact on an issue of
concurrent causation. Simon, however, did not assert in his affidavit that he had
observed the roof of Generation Trade’s property at any time prior to the alleged July
4/5, 2016 hailstorm; Simon instead only stated that “[he] did not personally observe
hail damage to the metal roofing system at the property at any time prior to June
2016.” GT APP 000918. Generation Trade did not provide the Court with any
indication that Simon in fact examined the roof in anyway prior to June 2016.
The Court’s observation about the phrasing of this statement in Simon’s
affidavit is important to a discussion of the various testimony from Pasillas. Generation
Trade included an affidavit from Pasillas in its appendix in support of its response to
the motion for summary judgment. GT APP 000917. In his affidavit, Pasillas explains
that he personally was responsible for removing a portion of the older, 24-gauge metal
panels from the roof and replacing them with the newer, 26-gauge metal panels. Pasillas
states that these new, 26-gauge panels were not damaged and did not have any hail
dents at the time he installed them in May 2016. In the fifth paragraph of his affidavit,
Pasillas states, “I did not observe any hail damage to the metal panels prior to the July
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4/5, 2016 hailstorm.” Although this testimony could suggest that Pasillas, who
performed this work on the roof in May 2016, would have personally observed the
state of the older, 24-gauge metal roof prior to Generation Trade’s alleged date of loss,
there were three issues with the Court reaching such conclusion at the time of the
summary-judgment briefing. First, Generation Trade did not cite to the Pasillas
affidavit in its response to the motion for summary judgment as evidence that the roof
was not damaged by hail prior to the alleged July 4/5, 2016 hailstorm. Generation
Trade only cited this affidavit in its response to the motion for summary judgment as
support “that there was no hail damage to the newer panels at the time of installation
in May 2016.” Second, Pasillas’s statement about not observing any hail damage prior
to the July 4/5, 2016 hailstorm is, on its face, similar to Simon’s statement about
Simon’s observations: It does not inform the Court whether, and to what extent,
Pasillas inspected the older, 24-gauge metal roof. Third, it is unclear from the text of
this six-paragraph affidavit what “metal panels” Pasillas was referencing when he stated
he did not observe any hail damage. The beginning paragraphs of the affidavit discuss
the new, 26-gauge metal panels that Pasillas installed, so this affidavit suggested,
especially in light of how Generation Trade cited the affidavit in its response to
summary judgment, that Pasillas’s observation about the lack of hail damage to the
“metal panels” meant the metal panels he installed (i.e., the 26-gauge panels) rather
than all the metal panels.
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In the instant Motion, Generation Trade produces, for the first time, Pasillas’s
deposition testimony. Pasillas’s deposition testimony provides a more definite picture
of what Pasillas observed while he was installing the new, 26-gauge metal panels to the
roof. For example, when discussing the portion of the older, 24-gauge metal panels that
Pasillas replaced, Pasillas testified that he never saw any hail damage to the older, 24gauge metal panels he replaced. GT APP 001678–79. When questioned further,
Pasillas provided more context. Pasillas confirmed that his statement in his affidavit—
that the new, 26-gauge panels were undamaged and had no hail dents when he installed
them—was accurate. GT APP 001680. When asked in the next question whether he
ever saw any hail damage to the older panels, Pasillas responded “no.” Id. Unlike his
affidavit, which appeared to focus on the condition of the newly installed panels (as
evidenced by the only citation to the affidavit in Generation Trade’s response to the
motion for summary judgment), the deposition provides evidence that Pasillas
observed the condition of the older roof in May 2016 and did not see any hail damage
to those older metal panels. As discussed below in this Order, this testimony is
significant for purposes of the Court’s concurrent-causation analysis.
II.
Applicable Law
“A Rule 59(e) motion ‘calls into question the correctness of a judgment.’”
Templet v. HydroChem Inc., 367 F.3d 473, 478 (5th Cir. 2004) (quoting In re Transtexas
Gas Corp., 303 F.3d 571, 581 (5th Cir. 2002)). A Rule 59(e) “motion is not the proper
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vehicle for rehashing evidence, legal theories, or arguments that could have been offered
or raised before the entry of judgment.” Id. at 479. The Fifth Circuit has instead
recognized three narrow grounds for a Rule 59(e) motion: (1) “a manifest error of law
or fact”; (2) “newly discovered evidence”; and (3) “an intervening change in the
controlling law.” Schiller v. Physicians Res. Grp. Inc., 342 F.3d 563, 567–68 (5th Cir.
2003) (quoting Rosenzweig v. Azurix Corp., 332 F.3d 854, 863–64 (5th Cir. 2003)).
“Rule 59(e) has been interpreted as covering motions to vacate judgments, not just
motions to modify or amend.” Edward H. Bohlin Co., Inc. v. Banning Co., Inc., 6 F.3d
350, 355 (5th Cir. 1993).
A district court reviewing a Rule 59(e) motion must balance “two important
judicial imperatives relating to such a motion: 1) the need to bring litigation to an end;
and 2) the need to render just decisions on the basis of all the facts.” Templet, 367 F.3d
at 479. The standard of review that the Fifth Circuit applies when reviewing appeals of
decisions on Rule 59(e) motions provides insight into the “considerable,” but “not
limitless,” discretion the district court has in deciding Rule 59(e) motions. Id. When
the basis for a Rule 59(e) motion is the presentation of new evidence, “if the district
court refuses to consider the [new evidence], the reviewing court applies the abuse of
discretion standard.” Id. at 477. The district court’s decision about whether to consider
the new evidence or not “need only be reasonable.” Id. If the district court chooses to
consider the new evidence but “still grants summary judgment, the appropriate
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appellate standard of review is de novo.” Id. “Reconsideration of a judgment after its
entry is an extraordinary remedy that should be used sparingly,” but there are two steps
in the district court’s analysis that make this remedy “extraordinary.” Id. at 479. The
first step by the district court is simply whether it should even consider the new
evidence, and, in this decision, the district court has “considerable discretion” and must
“only be reasonable.” Id. at 477, 479. At this first step, “[t]he task for the district court
is to strike the proper balance between [two] competing interests”: “1) the need to
bring litigation to an end; and 2) the need to render just decisions on the basis of all
the facts.” Id. at 479. It is only at the second step that the remedy provided by a Rule
59(e) motion potentially becomes “extraordinary” because, upon reconsideration, the
finality of the district court’s original judgment may be disturbed. See id. Despite the
fact that Rule 59(e) is an extraordinary remedy, district courts must still consider the
propriety of the movant’s Rule 59(e) motion to determine if the movant presents one
of the “sparing” situations that merit reconsideration of a judgment. See, e.g., In re La.
Crawfish Producers, 852 F.3d 456, 465–66 (5th Cir. 2017) (holding that “[t]here [were]
several factors the district court should have considered when determining whether to
grant” a Rule 59(e) motion predicated on the introduction of new evidence); Luig v. N.
Bay Enters., Inc., 817 F.3d 901, 906 (5th Cir. 2016) (refusing to affirm the district
court’s denial of a Rule 59(e) motion on the basis that Rule 59(e) is an “extraordinary
remedy that should be used sparingly” when there were “several factors that the district
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court should have considered when determining whether to grant [the movant’s] 59(e)
motion”).
III.
Analysis
Generation Trade moves for reconsideration of the Court’s judgment in this case
on two grounds: (1) manifest error of law and (2) newly discovered evidence. The Court
addresses Generation Trade’s first ground for reconsideration (manifest error of law)
before turning to the focal point of this Order: Generation Trade’s new evidence.
A. Manifest Error of Law
The Court is not persuaded that it committed a manifest error of law solely based
upon Generation Trade’s citation to a footnote in 2223 Lombardy Warehouse, LLC v.
Mount Vernon Fire Ins. Co., Civ. Action No. 3:17-CV-2795-D, 2019 WL 1583558 (N.D.
Tex. Apr. 12, 2019) (Fitzwater, J.). As a preliminary note, the Court is unconvinced
that a footnote in a sister court’s decision can be the basis for a manifest error of law
by this Court, and Generation Trade fails to point this Court to any law that would
suggest the contrary.
Second, the situation presented in 2223 Lombardy is not as analogous to the
situation in front of this Court as Generation Trade would suggest. The footnote cited
by Generation Trade in 2223 Lombardy explains why the insured’s expert’s own
testimony, which concerned the possibility that a hailstorm prior to the insurance
policy’s coverage period damaged the property, did not trigger a concurrent-causation
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issue but instead presented a credibility issue concerning the insured’s expert. Id. at *7
n.7. Generation Trade argues this footnote supports its assertion that “submission of
testimony of ‘possible’ damage by the insurer’s expert is insufficient and can do no more
than create a credibility question that must be considered by the trier of fact.”
(emphasis added). Generation Trade’s argument on this issue is misleading for at least
two reasons. First, Generation Trade suggests that all of OSIC’s evidence concerning a
hailstorm prior to the insurance policy’s inception was analogous to the insured’s
expert’s admission that it was “possible” prior hailstorms had damaged the property in
2223 Lombardy. Second, Generation Trade’s argument ultimately conflates the burden
of production with the burden of persuasion. The Court addresses these points in turn.
In 2223 Lombardy, the insured’s expert testified to a possibility that prior
hailstorms might have damaged the property, but there is no indication that this
admission by the insured’s expert was supported by any of the expert’s investigation,
research, or conclusions. Id. at *7. The court in 2223 Lombardy described the insured’s
expert’s investigation and his use of weather radar data only dating back to three years
prior to the alleged date of loss. Id. The expert’s investigation indicated two possible
dates for the hailstorms that may have caused the alleged damage, both of which were
covered under the applicable policy. Id. In other words, the inference from this footnote
and the discussion of the insured’s expert’s investigation is that the insured’s expert’s
investigation only found two possible dates for the date of loss, and the insurance policy
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covered both these dates. Id. Based on the 2223 Lombardy court’s discussion of the
expert’s investigation, the expert’s testimony that it was possible an earlier hailstorm
might have damaged the property implies that it was possible a prior storm outside the
scope and timeframe of the expert’s investigation might have resulted in damage to the
property. See id. There is no discussion that an expert for the insurer found evidence of
a hailstorm prior to the insurance policy’s coverage that might have resulted in at least
some of the damage to the property. The 2223 Lombardy court correctly characterized
this testimony from the insured’s expert as a credibility issue because it produces a
question that the trier of fact must decide: whether the insured’s expert’s investigation
sufficiently accounted for hailstorms prior to the insurance policy’s coverage period.
In the case before this Court, the Court relied upon the insurer’s expert’s
testimony that certain hailstorms prior to the insurance policy’s inception occurred
throughout the years, and certain hailstorms could have produced some of the damage
to the property’s roof. Although Generation Trade repeatedly argues that Timothy
Marshall (“Marshall”) (OSIC’s expert) failed to identify a hailstorm not covered by the
insurance policy that damaged the property, Marshall relied upon weather reports in
identifying prior hailstorms that had the potential of damaging the property. Marshall’s
process is therefore similar to both Kelly Parker’s (“Parker”) (Generation Trade’s
expert) process, as well as the insured’s expert’s process in 2223 Lombardy: All three
experts, as a part of their investigations, relied upon weather reports as evidence that a
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certain hailstorm damaged the property on certain alleged dates. The reason 2223
Lombardy is distinguishable from the instant case is because the “possibility” testimony
by the insured’s expert in 2223 Lombardy most likely stemmed from the lack of an
investigation as to certain timeframes by the expert, whereas Marshall’s testimony that
a storm prior to the insurance policy’s inception could have caused some of the damage
stems from Marshall’s investigation. Had OSIC relied solely upon testimony from
Parker that hailstorms prior to the insurance policy’s inception could have caused the
damage, and had Parker’s testimony about this “possibility” been only because Parker
could not discount such a possibility based on the limited timeframe examined in his
investigation, then Generation Trade’s situation would be more analogous to the
insured’s situation in 2223 Lombardy. Instead, Generation Trade uses the footnote of
2223 Lombardy to reargue an issue the Court turns to next: the applicable burden on
OSIC to establish a non-covered hailstorm at summary judgment.
A recurring argument from Generation Trade has been that Marshall’s
testimony—that a non-covered storm could have caused some of the damage to the
property—is not sufficient evidence to satisfy OSIC’s burden to establish a non-covered
hailstorm caused some of the loss. Therefore, Generation Trade argues that the burden
has not shifted back to Generation Trade to produce evidence that would afford a jury
a reasonable basis to segregate damages. The Court has addressed this argument
previously in its order granting summary judgment, but the Court addresses this issue
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again in an effort to elaborate on the relevant law in this case at this procedural posture:
the burden of production at summary judgment.
In the brief in support of its Motion, Generation Trade makes an argument it
has referenced in various filings throughout this case: “the jury cannot determine based
upon [evidence from Marshall] that a storm outside the coverage period more likely than
not caused damage” to the roof of the property. (emphasis added). Generation Trade’s
use of this language throughout its filings suggests that it does not fully understand
how the doctrine of concurrent causation operates under Texas law and the effect of
the doctrine when raised during summary judgment.
“[T]he doctrine of concurrent causation is not an affirmative defense or an
avoidance issue.” Wallis v. United Servs. Auto. Ass’n, 2 S.W.3d 300, 303 (Tex. App.—
San Antonio 1999, pet. denied). “Because an insured can only recover for covered
events, the burden of segregating the damage attributable solely to the covered event
is a coverage issue for which the insured carries the burden of proof.” One Way Invs.,
Inc. v. Century Sur. Co., Civ. Action No. 3:14-CV-2839-D, 2016 WL 5122124, at *2
(N.D. Tex. Sept. 21, 2016) (Fitzwater, J.) (citing Wallis, 2 S.W.3d at 303). Recognizing
that concurrent causation is not an affirmative defense is important in the summaryjudgment analysis because it means that a defendant does not have to “establish beyond
peradventure all of the essential elements of the . . . defense to warrant [summary]
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judgment in [the movant’s] favor.” Fontenot v. Upjohn Co., 780 F.2d 1190, 1994 (5th
Cir. 1986).
Once a party recognizes that the doctrine of concurrent causation is just the
“rule which embodies the basic principle that insureds are entitled to recover only that
which is covered under their policy,” the applicable summary-judgment procedure
becomes slightly more straightforward. Wallis, 2 S.W.3d at 303. An insurer moves for
summary judgment, arguing that an insured cannot produce evidence to satisfy the
insured’s ultimate burden to allocate its covered loss from its non-covered loss. See Nat’l
Union Fire Ins. of Pittsburgh, Pa. v. Puget Plastics Corp., 735 F. Supp. 2d 650, 669 n.23
(S.D. Tex. 2010) (explaining how “[t]he burden of allocation remains with the insured
party”). In making its motion, the insurer may choose to produce evidence of a noncovered event, which typically is an event not covered either because of the type or
date of the event, that contributes to the total loss alleged by the insured, thus invoking
the doctrine of concurrent causation. See id. (“Thus, under Wallis, once testimony of
concurrent causes has been offered into the record, the insured has the burden of allocating
the damages among the various causes.” (emphasis added)); see also Certain Underwriters
at Lloyd’s of London v. Lowen Valley View, L.L.C., 892 F.3d 167, 170 (5th Cir. 2018)
(“The summary judgment evidence reveals that several hail storms struck the vicinity of
the hotel in the several years preceding [the insured’s] claim. Only one of these storms
fell within the coverage period.” (emphasis added)). Because “[t]he insured bears the
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burden of establishing that its claim is covered by the policy,” the insured then must
produce evidence that the insured’s alleged loss is covered. Certain Underwriters at Lloyd’s
of London, 892 F.3d at 170. Consequently, in cases where the insurer has produced
evidence of a non-covered event, because the ultimate burden of proof remains with
the insured at trial to prove what percentage of the damage, if any, is covered by the
policy, the burden shifts to the insured to produce evidence that would allow a jury to
segregate covered from non-covered loss. See Fiess v. State Farm Lloyds, 392 F.3d 802,
807 (5th Cir. 2004). In other words, the insured must produce evidence supporting
one of two alternate theories: (1) evidence that all the claimed loss resulted from a
covered event or (2) evidence that provides a jury a reasonable basis to segregate
covered from non-covered loss. See Certain Underwriters at Lloyd’s of London v. Lowen
Valley View, L.L.C., Civ. Action No. 3:16-cv-0465-B, 2017 WL 3115142, at *9 (N.D.
Tex. July 7, 2017) (Boyle, J.) aff’d, 892 F.3d 167 (5th Cir. 2018) (“As discussed below,
however, neither these documents nor any other evidence submitted by [the insured]
raise a genuine issue of material fact as to whether the damage was entirely due to the
June 13, 2012 storm or from which a jury could reasonably segregate the damages
between storms.”). Because the burden of persuasion is not on the insurer to prove a
non-covered event, after the insurer produces competent summary-judgment evidence
that a non-covered event could have contributed to the total loss alleged by insured,
the insured must produce evidence that a fact question remains concerning the
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concurrent-causation issue. See Bayle v. Allstate Ins. Co., 615 F.3d 350, 355–60 (5th Cir.
2010) (explaining the “simple, burden-shifting minuet” that “arises from the effect of
summary judgment on the burdens of production and not any shift between the parties’
respective burdens of persuasion” in an insurance case under analogous Louisiana law);
Bodenheimer v. PPG Indus., Inc., 5 F.3d 955, 957–58 (5th Cir. 1993) (explaining the
Fifth Circuit’s approach to an analogous situation presented in summary judgment for
federal cases concerning employment discrimination, where it is the court’s
responsibility to “assess whether [an employee] has tendered factual evidence that
would lead a jury to reasonably conclude that [an employer’s] reasons are a pretext for
. . . discrimination”).
The effect in this case was that on the evidence before the Court during the
briefing for summary judgment, Generation Trade failed to produce competent,
summary-judgment evidence (as is its burden at summary judgment) that
demonstrated a genuine dispute of material fact remained in at least one of two ways:
(1) that all the damage resulted from the July 4/5, 2016 hailstorm or (2) that there was
a reasonable basis for a jury to segregate covered hail damage from non-covered hail
damage (i.e., hail dents that either preceded or followed the insurance policy’s
inception). For these reasons, the Court did not commit a manifest error of law.
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B. Newly Discovered Evidence
The Court has discussed the substance of Generation Trade’s “newly discovered
evidence” (Roberto Pasillas’s deposition testimony) in the factual background of this
Order. The Court therefore turns to the relevant analysis of whether the Court should
allow Generation Trade to present this evidence at this procedural posture and, if
considered, whether Pasillas’s deposition testimony creates a genuine dispute of
material fact such that the Court should vacate its judgment in this case.
The discovery of new evidence does not necessarily justify relief under Rule
59(e). Molina v. Equistar Chems. LP, 261 F. App’x 729, 734 (5th Cir. 2008) (denying
Rule 59(e) relief without considering the effect of the newly discovered evidence
because the movant could have procured the evidence in a timely fashion). The value
of the newly discovered evidence produced by the movant is not the dipositive factor
when determining whether to grant a Rule 59(e) motion; it is only one factor a court
should consider. Templet, 367 F.3d at 477–78. In fact, “an unexcused failure to present
evidence available at the time of summary judgment provides a valid basis for denying
a subsequent motion for reconsideration.” Id. at 479 (citing Russ v. Int’l Paper Co., 943
F.2d 589, 593 (5th Cir. 1991)). Courts in this District have often emphasized that
evidence is not “newly discovered” for purposes of Rule 59(e) when the movant could
have procured the evidence through proper diligence or a request for additional time
from the court. See, e.g., Davila v. Walmart Stores, Inc., Civ. Action No. 3:15-CV-287416
D, 2017 WL 1509303, at *3–*4 (N.D. Tex. Apr. 27, 2017) (Fitzwater, J.) (“Nor does
[the movant] assert that, despite his exercise of due diligence, he could not find the
statement before summary judgment.”); Ayala v. Ledezma, Civ. Action No. 3:13-cv-703O, 2014 WL 11456584, at *1 (N.D. Tex. Aug. 15, 2014) (O’Connor, J.) (“Evidence
does not amount to ‘newly discovered evidence’ under Rule 59(e) where a plaintiff
could have pursued discovery earlier by proper diligence or asked the court for
additional time but did not.”); Riddle v. DynCorp Int’l Inc., 773 F. Supp. 2d 647, 649
(N.D. Tex. 2011) (Lindsay, J.); see also Infusion Res., Inc. v. Minimed, Inc., 351 F.3d 688,
696–97 (5th Cir. 2003) (“This Court has held that a 59(e) motion to reconsider should
not be granted unless: (1) the facts discovered are of such a nature that they would
probably change the outcome; (2) the facts alleged are actually newly discovered and
could not have been discovered earlier by proper diligence; and (3) the facts are not
merely cumulative or impeaching.”).
Despite the emphasis on timely production of relevant evidence during the
summary-judgment briefing, the Fifth Circuit has recently clarified the general rule that
“an unexcused failure to present evidence available at the time of summary judgment
provides a valid basis for denying a subsequent motion for reconsideration.” Luig, 817
F.3d at 906–07 (quoting Templet, 367 F.3d at 479). The keyword of this rule, according
to the Fifth Circuit, is “the qualification that the failure to present the evidence be
‘unexcused.’” Id. Rather than focus solely on the timeliness of the evidence and the
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movant’s diligence (or lack thereof) in pursuing the evidence, the Fifth Circuit
reiterated the four factors a district court should consider for a Rule 59(e) motion that
presents new evidence: “(1) the probative value of the evidence, (2) whether the
evidence was available to [the movant] at the time of the summary judgement motion,
(3) the reason that [the movant] did not present the evidence before summary
judgment was effectively granted, and (4) potential prejudice to [the non-movant].” Id.
at 906 (citing Templet, 367 F.3d at 478); see also In re La. Crawfish Producers, 852 F.3d
at 466 (reaffirming the relevant four factors a district court should consider for Rule
59(e) motions presenting new evidence). “These factors . . . are simply illustrative and
not exhaustive. . . . Rule 59(e) motions provide the district court with ‘considerable
discretion.’” ICEE Distribs., Inc. v. J&J Snack Foods Corp., 445 F.3d 841, 848 (5th Cir.
2006) (quoting Templet, 367 F.3d at 482–83 (Dennis, J., dissenting)). The Court thus
analyzes Pasillas’s deposition testimony under each factor in turn.
The first factor is “the probative value of the evidence.” Luig, 817 F.3d at 906.
The Court finds Pasillas’s deposition testimony highly probative to the issue of
concurrent causation. The testimony from Pasillas is clearly supportive of one of the
two arguments that would demonstrate a genuine dispute of material fact on the issue
of concurrent causation: Generation Trade’s position that the roof of the property was
undamaged prior to the July 4/5, 2016 hailstorm. Although the excerpts of the
deposition testimony presented to the Court, which is only five pages of the larger
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transcript, could more explicitly describe how Pasillas both examined the older, 24gauge roof and saw no indication of hail damage, the portions of the transcript
provided, construed in the light most favorable to Generation Trade, are enough to
create at least an inference that a genuine dispute of material fact exists. See Boudreaux
v. Swift Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir. 2005) (discussing the deferential
review of the facts and inferences in favor of the non-movant at summary judgment).
The Court finds this evidence probative for another reason: At least as it appears at
this stage of the litigation, Pasillas is the only witness who can speak to the condition
of the roof in the timeframe between the inception of the insurance policy and
Generation Trade’s alleged date of loss because Pasillas is the only witness that observed the
roof in that timeframe. For these two reasons, the Court finds that the first factor weighs
strongly in favor of granting Generation Trade’s Rule 59(e) motion.
The Court addresses the second and third factors together, as both factors relate
to the timing of the evidence’s discovery and presentation to this Court. As a
preliminary note, the Court recognizes that the Fifth Circuit has used slightly different
language when evaluating the “availability” of the evidence to the Rule 59(e) movant.
Compare ICEE Distribs., 445 F.3d at 848 (stating that the relevant factor addresses
“whether the evidence was available to the [Rule 59(e)] movant before the nonmovant
filed the summary judgment motion” (emphasis added)) with Templet, 367 F.3d at 478
(stating that the same factor addresses “whether the evidence was available to the non19
movant [at summary judgment] before it responded to the summary judgment motion”
(emphasis added)). Because “[t]hese factors . . . are simply illustrative and not
exhaustive” of the larger Rule 59(e) analysis, the Court addresses the timing of Pasillas’s
deposition, as well as Generation Trade’s failure to present it to the Court until after
the Court entered its judgment, in the broader context of the schedule and progression
of the litigation in this case. See ICEE Distribs., 445 F.3d at 848.
Generation Trade points to the Court’s scheduling order and the timing of
OSIC’s motion for summary judgment as the reason why Generation Trade could not
timely present Pasillas’s deposition testimony to the Court. For example, scheduling
Pasillas’s deposition proved troublesome for the parties, as Pasillas missed his first
scheduled deposition, and the deposition only occurred on the last day of discovery.
The transcript was not available until December 27, 2018. Consequently, Generation
Trade had filed both its response and its motion requesting leave to file a surreply prior
to Pasillas’s deposition occurring. Therefore, based solely upon the briefing schedule
for summary judgment, Pasillas’s deposition testimony was not available to Generation
Trade during the briefing for summary judgment.
The Court’s scheduling order, coupled with OSIC’s early motion for summary
judgment, is only part of the story that explains why the Court did not have Pasillas’s
deposition testimony during the summary-judgment briefing. Generation Trade is also
responsible to a large extent for its failure to timely produce this evidence.
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First, Generation Trade was not unaware of this evidence when briefing for
summary judgment occurred. Generation Trade had an affidavit from Pasillas that
Pasillas executed on August 29, 2018, approximately two months prior to OSIC’s
motion for summary judgment. Perhaps because Generation Trade erroneously
believed that other evidence it had would suffice to support its position on the issue of
concurrent causation, the affidavit for Pasillas addressed the condition of the newer,
26-gauge metal panels rather than Pasillas’s observations concerning the older, 24gauge metal panels. (As discussed previously in this Order, Generation Trade’s
intended use for this affidavit is evidenced by the fact that Generation Trade only cited
Pasillas’s affidavit as support for the assertion that the newer, 26-gauge metal panels
were undamaged at the time Pasillas installed these new panels.) In other words,
although Pasillas’s deposition testimony was not available during the briefing for
summary judgment, Generation Trade knew of Pasillas and the nature of his work (and,
consequently, his observations of the roof) prior to summary-judgment briefing.
Generation Trade simply chose not to use its evidence from Pasillas in the manner for
which Generation Trade seeks to do now through Pasillas’s deposition testimony.
Second, Generation Trade cannot solely ascribe its default to OSIC’s early
motion for summary judgment because Generation Trade had other means to ensure
that it could present the deposition testimony to the Court. OSIC filed its motion for
summary judgment over two months before the dispositive-motion deadline and
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approximately six weeks before the close of discovery. If Generation Trade believed
that certain, unconducted discovery was necessary for its response to OSIC’s motion
for summary judgment, Generation Trade could have requested an extension to the
deadline to file its response to the motion for summary judgment. See Ayala, 2014 WL
11456584, at *1 (“Evidence does not amount to ‘newly discovered evidence’ under
Rule 59(e) where a plaintiff could have pursued discovery earlier by proper diligence
or asked the court for additional time but did not.”). Generation Trade never requested
an extension to its response deadline because of the ongoing discovery. Furthermore,
while the deposition testimony was unavailable at the time Generation Trade filed both
its response to summary judgment and proposed surreply, almost five months elapsed
between the date the transcript of Pasillas’s deposition became available and the date
this Court granted summary judgment in favor of OSIC. Generation Trade may not
have been able to produce the deposition testimony during the briefing period for
summary judgment, but Generation Trade did not request leave to present this
evidence to the Court once it became available, and now only presents it to this Court
after the Court entered its judgment on this case. See Local Rule 56.7 (“Except for the
motions, responses, replies, briefs, and appendices required by these rules, a party may
not, without the permission of the presiding judge, file supplemental pleadings, briefs,
authorities, or evidence.” (emphases added)).
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In analyzing the second and third factors for the Rule 59(e) analysis concerning
this new evidence, the Court finds that these two factors weigh slightly in favor of
denying the Motion. While the deposition testimony was not available at the time of
the parties’ briefing for summary judgment, Generation Trade was aware of the
substance of the evidence Pasillas could have provided prior to OSIC’s motion for
summary judgment. Thus, the second factor weighs slightly in favor of denying the
Motion. Generation Trade also did not attempt to provide the Court with this evidence
at any time during the approximately five-month interim period between the
deposition transcript becoming available and this Court granting summary judgment.
Recognizing that Generation Trade may not have wanted to file supplemental evidence
it believed to be potentially cumulative, the Court finds the third factor weighs in favor
of denying the Motion, but only slightly.
The Court pauses in its analysis of the Rule 59(e) factors to reiterate that these
four factors are only “illustrative”; these factors assist a district court by providing
guidance in how the district court might exercise its “considerable discretion.” See ICEE
Distribs., 445 F.3d at 848. Accordingly, while the second and third illustrative factors
in this case may, on their face, suggest that the Court might deny the Motion, the
Court does not find that these two factors outweigh the probative value of Pasillas’s
deposition testimony. Therefore, while the Court does not approve of how Generation
Trade decided to introduce Pasillas’s deposition testimony to the Court, the Court does
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not find Generation Trade’s default egregious enough to deny reconsideration on that
basis alone.
The Court turns to the fourth and final illustrative factor in the Rule 59(e)
analysis: potential prejudice to OSIC. In more specific terms, the inquiry is whether
OSIC “will suffer unfair prejudice if the case is reopened.” Templet, 367 F.3d at 478
(emphasis added). The prejudice to OSIC is that it now must defend this case at trial
rather than benefit from a disposition of the case at summary judgment. The Court
does not find this prejudice “unfair” enough to justify a denial of the Motion,
particularly in light of the significant probative value of Pasillas’s deposition testimony.
Again, the Court emphasizes that, at least as presented in the summary-judgment
evidence, Pasillas was the only witness who climbed onto the roof and observed the
condition of the older metal panels in the time span between the inception of the
insurance policy and Generation Trade’s alleged date of loss; no other witness, for
either party, offers similar evidence. Because the Court granted summary judgment
after the parties filed pretrial materials, much of the necessary expense that precedes
trial has already occurred. The expense and burden of a trial, when a genuine dispute
of material fact now exists in this case, is not so unfairly prejudicial as to decline
Generation Trade an opportunity to present its case at trial.
For the reasons explained in its discussion of the Rule 59(e) factors above, the
Court finds that reconsideration of its May 21, 2019 judgment is appropriate. Because
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of the significant probative value of the evidence, the other three factors do not weigh
strongly enough against reconsideration under Rule 59(e) to prevent this Court from
exercising its “considerable discretion” to vacate its May 21, 2019 judgment in this
case. ICEE Distribs., 445 F.3d at 848; see also In re La. Crawfish Producers, 852 F.3d at
466–69 (finding the district court abused its discretion when it denied a Rule 59(e)
motion premised upon new evidence); Luig, 817 F.3d at 905–07 (emphasizing the
“probative evidence in [the movant’s] 59(e) motion” in holding that the district abused
its discretion by denying the motion to reconsider).
C. The Effect of the Court’s Reconsideration
Up to this point in this Order, the Court has addressed why reconsideration is
appropriate under Rule 59(e); however, the Court must now briefly address whether
summary judgment is still appropriate on any grounds, taking into consideration the
new evidence (Pasillas’s deposition testimony) that Generation Trade has presented.
See Templet, 367 F.3d at 477 (discussing the two standards of review the Fifth Circuit
employs on appeal of a denied Rule 59(e) motion after summary judgment has been
granted, which is “abuse of discretion” for a decision not to consider the new evidence,
and “de novo” for a decision in which the district court considers the evidence and still
grants summary judgment). Because the Court ultimately finds that genuine disputes
of material fact exist, the Court only briefly addresses OSIC’s two grounds for summary
25
judgment on Generation Trade’s breach-of-contract claim and the effect of the Court’s
decision on Generation Trade’s other claims.
The bulk of this Order addresses OSIC’s concurrent-causation basis for why
summary judgment is appropriate. Because Pasillas’s deposition testimony is
competent summary-judgment evidence that addresses the condition of the roof at a
time shortly before the alleged July 4/5, 2016 hailstorm, Generation Trade has satisfied
its burden of proving that a genuine dispute of material fact exists on the issue of
concurrent causation. Therefore, summary judgment based on OSIC’s ground of
concurrent causation is inappropriate now.
OSIC also moved for summary judgment on the basis that Generation Trade’s
failure to provide “prompt notice” prejudiced OSIC. Summary judgment based on this
argument is only appropriate when (1) notice is not prompt as a matter of law and (2)
the insured’s failure to provide prompt notice prejudiced the insurer. See Hamilton
Props. v. Am. Ins. Co., 643 F. App’x 437, 440–41 (5th Cir. 2016). Notice is not prompt
as a matter of law when the insured provides no explanation justifying the insured’s
delay in providing notice. See id. at 440. In its response to summary judgment,
Generation Trade provides no explanation for the approximately year delay in
reporting the damage. Instead, Generation Trade argues that OSIC was not prejudiced
by the delay, and, as both parties concede, “the existence of prejudice is generally a
question of fact.” Hamilton Props. v. Am. Ins. Co., Civ. Action No. 3:12–CV–5046–B,
26
2014 WL 3055801, at *9 (N.D. Tex. July 7, 2014) (Boyle, J.). Based upon the record
in front of the Court concerning OSIC’s investigation of the property, and taking the
evidence in the light most favorable to Generation Trade, the Court believes that this
case is not the rare case where “the undisputed facts establish prejudice sufficient to
relieve an insurer of its obligations.” St. Paul Guardian Ins. Co. v. Centrum G.S. Ltd., 383
F. Supp. 2d 891, 902 (N.D. Tex. 2003) (Lindsay, J.). Therefore, summary judgment
on this basis is inappropriate.
The summary judgment granted against Generation Trade on its other claims,
other than the negligence claim that even Generation Trade had abandoned by the
time the parties filed their Joint Pre-Trial Order (Doc. No. 62), depended upon the
Court’s analysis that summary judgment on the breach-of-contract claim was
appropriate. Because the Court is no longer granting summary judgment in favor of
OSIC on the breach-of-contract claim, the Court finds that summary judgment on the
accompanying Texas Insurance Code claims is inappropriate.
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IV.
Conclusion
Because the Court finds it appropriate to consider the new evidence presented
by Generation Trade, and because, after considering the new evidence, the Court finds
that genuine disputes of material fact exist in this case, the Court VACATES its May
21, 2019 judgment in this case. The Court will issue separate orders controlling any
new scheduling matters in this case.
SO ORDERED.
Signed August 6th, 2019.
______________________________________
ED KINKEADE
UNITED STATES DISTRICT JUDGE
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