Frederking v. Cincinnati Insurance Company

Filing 49

ORDER DENYING 46 Motion for Reconsideration Signed by Judge Xavier Rodriguez. (mgr)

Case 5:17-cv-00651-XR Document 49 Filed 05/20/20 Page 1 of 9

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
RICHARD BRETT FREDERKING,
Plaintiff,

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v.
CINCINNATI INSURANCE COMPANY,
Defendant.

SA-17-CV-00651-XR

ORDER
On this date, the Court considered Plaintiff Richard Brett Frederking’s (“Frederking”)
Motion for Reconsideration (ECF No. 46), Defendant Cincinnati Insurance Company’s
(“Cincinnati”) Response (ECF No. 47), and Frederking’s Reply (ECF No. 48). For the reasons
stated herein, Frederking’s motion is DENIED.
BACKGROUND
This case arises out of a dispute surrounding a punitive damages award in favor of
Frederking. In a separate lawsuit (“the Underlying Lawsuit”) arising out of injuries Frederking
suffered in an auto collision caused by a drunk driver, Carlos Xavier Sanchez (“Sanchez”),
Frederking was awarded $137,025.00 in compensatory damages against Sanchez and his
employer, Advantage Plumbing Services (“Advantage”). Frederking was awarded an additional
$207,550.00 in punitive damages against Sanchez alone.1 Cincinnati, who insured Advantage at
the time of the collision, defended both Sanchez and Advantage in the Underlying Lawsuit under

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In the Underlying Lawsuit, Frederking brought claims in Texas state court against Sanchez for negligence and gross
negligence, and against Advantage for respondeat superior and negligent entrustment. The trial court granted
Advantage partial summary judgment, dismissing the respondeat superior claim after finding that Sanchez did not act
in the course and scope of his employment for Advantage at the time of the collision. The jury found for Frederking
on the remaining claims.

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a reservation of rights, and when Frederking prevailed Cincinnati paid to him $153,086.94 in
satisfaction of the full amount of the compensatory damages award. Cincinnati refused, however,
to pay the punitive damages award.
Frederking brought the present lawsuit against Cincinnati, alleging breach of contract and
seeking a declaration that Cincinnati was obligated to pay the punitive damages award. The sole
question presented in this case, then, is whether Cincinnati is obligated to indemnify Sanchez for
his own grossly negligent conduct under the insurance policy between Cincinnati and Advantage
(“the Policy”). On March 27, 2018, the Court granted Cincinnati’s first motion for summary
judgment after finding the collision caused by Sanchez’s grossly negligent decision to drink and
drive was not an “accident” and/or “occurrence” under the Policy. ECF No. 25. The Fifth Circuit
ultimately disagreed, and reversed and remanded the case, Frederking v. Cincinnati Ins. Co., 929
F.3d 195, 200 (5th Cir. 2019), at which point Cincinnati again moved for summary judgment on
two other grounds: that (1) Sanchez was not an “insured” under the Policy at the time of the
collision, and even if he was (2) Texas public policy precludes Cincinnati from indemnifying
Sanchez for the punitive damages award. ECF No. 42.
On March 20, 2020, the Court granted summary judgment in favor of Cincinnati, holding
that Texas public policy precludes Cincinnati from indemnifying Sanchez for the exemplary
damages awarded against him for his own grossly negligent conduct. ECF No. 45. In doing so,
the Court examined the framework laid out by the Texas Supreme Court in Fairfield Ins. Co. v.
Stephens Martin Paving, L.P., 246 S.W.3d 653 (Tex. 2008), and the application of that case by the
Fifth Circuit in Minter v. Great Am. Ins. Co., 394 F. App’x 47 (5th Cir. 2010). ECF No. 45 at 6–
9. In granting summary judgment for Cincinnati, the Court reasoned that:
Applying the Fairfield considerations, the Court finds that in this case Texas public
policy prohibits the indemnification of the exemplary damages award against
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Sanchez for his own gross negligence. As in Minter, Sanchez was a repeat DWI
offender who pled guilty to DWI as a result of the collision and who admitted his
own actions or inactions caused Frederking’s injuries. A jury found that Sanchez’s
“extreme and avoidable” conduct warranted the imposition of exemplary damages
against Sanchez alone, not his employer. Fairfield, 246 S.W.3d at 670. Allowing
Sanchez’s employer’s insurance policy to cover those damages would allow “the
burden of the exemplary damages [to] fall entirely on the insurer and its
policyholders, not on the tortfeasor” and would not serve either the punitive or
deterrence-related purposes of exemplary damages under Texas law. Id. at 668. In
fact, allowing Sanchez to be insured against the consequences of his own actions
would frustrate the important public policy of punishing and deterring drivers who
cause injury to others after choosing to drink and drive. As Cincinnati points out,
Sanchez did not negotiate the insurance contract with Cincinnati, Advantage did;
Sanchez did not pay the premium for the coverage afforded by the Policy,
Advantage did. And Cincinnati did in fact pay Sanchez and Advantage’s portion
of the damages inasmuch as they were compensatory of Frederking’s injuries. But
the exemplary damages awarded against Sanchez in order to punish and deter his
own grossly negligent conduct must be borne by Sanchez alone, not by his
employer’s insurer.
Id. at 9–10. Frederking now seeks reconsideration of the Court’s order under Rule 59(e). ECF
No. 56.
DISCUSSION
I.

Legal Standards
The Federal Rules of Civil Procedure do not provide for a “motion for reconsideration.”

Rather, such motions are typically construed as either a motion to alter or amend a judgment under
Rule 59(e) or a motion for relief from judgment under Rule 60(b), depending on when the motion
was filed. Hamilton Plaintiffs v. Williams Plaintiffs, 147 F.3d 367, 371 n.10 (5th Cir. 1998). A
motion such as Frederking’s, filed within 28 days after the entry of the judgment, is considered
under Rule 59(e). Id.
A Rule 59(e) motion “calls into question the correctness of a judgment” and “is an
extraordinary remedy that should be used sparingly.” Templet v. HydroChem, Inc., 367 F.3d 473,
478–79 (5th Cir. 2004) (internal citations omitted). In considering such a motion, a court must

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balance “the need to bring litigation to an end” and “the need to render just decisions on the basis
of all the facts.” Id. at 479. Although courts have “considerable discretion” to grant or to deny a
Rule 59(e) motion, id., the rule favors denial. S. Constructors Grp., Inc. v. Dynalectric Co., 2 F.3d
606, 611 (5th Cir. 1993).
A Rule 59(e) motion will be granted in limited circumstances: “(1) where there has been
an intervening change in the controlling law; (2) where the movant presents newly discovered
evidence that was previously unavailable; or (3) to correct a manifest error of law or fact.” Demahy
v. Schwarz Pharma, Inc., 702 F.3d 177, 182 (5th Cir. 2012). The only ground Frederking urges in
his motion is “manifest error.” ECF No. 46 at 2. To find such an error, the error must be “plain
and indisputable” and one “that amounts to a complete disregard of the controlling law.” Lyles v.
Medtronic Sofamor Danek, USA, Inc., 871 F.3d 305, 311 (5th Cir. 2017), cert. denied, 138 S. Ct.
1037 (2018).
A Rule 59(e) motion “cannot be used to raise arguments which could, and should, have
been made before the judgment issues.” Simon v. United States, 891 F.2d 1154, 1159 (5th Cir.
1990). “[S]uch a motion is not the proper vehicle for rehashing evidence, legal theories, or
arguments that could have been offered or raised before the entry of judgment.” Templet, 367 F.3d
at 479. Nor can it be used to “relitigate old matters” that have already been resolved. Exxon
Shipping Co. v. Baker, 554 U.S. 471, 485 n.5 (2008) (quoting 11 C. Wright & A. Miller, Federal
Practice and Procedure § 2810.1 (2d ed. 1995)).
II.

Analysis
In moving for reconsideration, Frederking argues the Court committed two manifest errors

when granting summary judgment in favor of Cincinnati:
First, the Court’s order improperly shifted the summary judgment burden of proof
to Frederking to disprove Cincinnati’s theory of law, when it was Cincinnati’s
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burden to prove Texas courts would adopt the novel position it advances here.
Second, this Court improperly applied the Fairfield balancing test, instead adopting
an unreported Fifth Circuit opinion that itself failed to apply this balancing test.
ECF No. 46 at 2.
a. Did this Court improperly shift the summary judgment burden?
As to the first purported error, Frederking argues that Cincinnati did not carry its summary
judgment burden to prove its affirmative defense based on Texas public policy, and that the Court
improperly imposed a burden on Frederking to rebut that theory. Id. at 3.
Contrary to Frederking’s arguments, Cincinnati met its summary judgment burden. The
contours of the parties’ burdens under Rule 56 are well-established, but the Court finds it necessary
to repeat them here:
Summary judgment is appropriate where the Court is satisfied “that there is no
genuine issue as to any material fact and that the moving party is entitled to a
judgment as a matter of law.” … The burden of establishing the nonexistence of a
“genuine issue” is on the party moving for summary judgment…. This burden has
two distinct components: an initial burden of production, which shifts to the
nonmoving party if satisfied by the moving party; and an ultimate burden of
persuasion, which always remains on the moving party.
Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986) (Brennan, J., dissenting) (internal citations
omitted). Frederking is of course correct that under Rule 56 Cincinnati was required to “show that
there is no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law,” FED. R. CIV. P. 56(a), and that the burden was on Cincinnati to establish the
elements of its public policy defense. See Chaplin v. NationsCredit Corp., 307 F.3d 368, 372 (5th
Cir. 2002) (“[I]f the movant bears the burden of proof on an issue…because…as a defendant he is
asserting an affirmative defense, he must establish beyond peradventure all of the essential
elements of the…defense to warrant judgment in his favor.”) (emphasis in original). Here,
Cincinnati met that burden.

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To meet its initial burden of production, Cincinnati was required to “make a prima facie
showing that it is entitled to summary judgment.” 10A C. Wright & A. Miller, Federal Practice
& Procedure § 2727.1 (4th ed. 2020). Specifically, the elements of the public policy defense
required Cincinnati to “consider the general public policies of Texas” and “weigh[] the interest in
enforcing agreements versus the public policy interest against such enforcement.” Fairfield, 246
S.W.3d at 655, 663. They did so, by successfully arguing the application of Fairfield to the
undisputed facts in this case entitled them to judgment as a matter of law.2 At that point, the
summary burden judgment shifted to Frederking to “show[] that there is a genuine issue for trial.”
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). Frederking failed
to do so, and the parties seem to acknowledge that there are no genuine disputes of fact material
to the public policy defense in this case.3 The ultimate burden of persuasion, of course, remained
with Cincinnati, and this Court explained its reasoning for being persuaded that in this case Texas
public policy precludes the indemnification of the punitive damages award against Sanchez for his
own grossly negligent conduct.4 ECF No. 45 at 9 (applying Fairfield considerations to this case).

Whether Texas public policy prohibits Cincinnati’s insurance coverage of the punitive damages award against
Sanchez is a “matter of law” for this Court, not a factfinder, to decide. See Hoover Slovacek LLP v. Walton, 206
S.W.3d 557, 562 (Tex. 2006) (“[W]hether a contract…is contrary to public policy…is a question of law”); Saks v.
Sawtelle, Goode, Davidson & Troilo, 880 S.W.2d 466, 471 (Tex. App.—San Antonio 1994, writ denied) (affirming
trial court’s grant of summary judgment based on finding that causes of action were barred by public policy as a matter
of law). Frederking’s true complaint with the Court’s judgment, then, seems to lie with the Court’s determination as
a matter of law, not with any improper shift of the summary judgment burden. The purported “error” in this Court’s
application of Fairfield is addressed below in Section II(b).
3
Frederking argues in his motion that “fact issues exist as to the scope of Sanchez’s permission to use the vehicle at
issue,” which relates to whether Sanchez was an “insured” under the Policy but is irrelevant to the public policy
defense. See ECF No. 46 at 2.
4
Frederking argues that Cincinnati “cited no Texas Supreme Court case” holding that Texas public policy excused its
compliance with a contractual obligation to pay the punitive damages at issue, “nor any intermediate Texas appellate
case on this point.” ECF No. 46 at 4. This argument is better put as an attack on the Court’s determination as a matter
of law, applying the Fairfield test, that Cincinnati was entitled to judgment based on its Texas public policy defense—
even in the absence of an on-point opinion from the Texas Supreme Court. Any purported error in the Court’s
application of Fairfield is addressed in Section II(b).
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The Court’s observation that Frederking “fail[e]d to point the Court to any contrary
precedent” was not an improper shift of the summary judgment burden. ECF No. 45 at 9. Rather,
it was commentary on the ultimate reasons the Court was persuaded by Cincinnati’s public policy
defense: namely, that Cincinnati followed the Texas Supreme Court’s formulation for evaluating
the insurability of exemplary damages; Cincinnati pointed to the Fifth Circuit’s own application
of Fairfield to facts nearly identical to this case; and that the Court could not find (and Frederking
failed to raise) any contrary precedent to persuade the Court otherwise. For all of these reasons,
the Court’s Erie-guess,5 like the Fifth Circuit’s in Minter, is that the Texas Supreme Court would
hold the punitive damages award against Sanchez for his own grossly negligent conduct
uninsurable in this case. There is no manifest error in the Court’s imposition of the summary
judgment burdens. The Court will not alter or amend its judgment on this basis.
b. Did this Court improperly apply Fairfield?
As to the second purported error, Frederking simply argues the Court incorrectly applied
the Fairfield balancing test. ECF No. 46 at 4–5. In doing so, Frederking does nothing more than
“rehash” arguments that were already raised and rejected by the Court. See Templet, 367 F.3d at
479. Frederking attacks the Minter court’s holding, where the Fifth Circuit found on nearly
identical facts to those presented here that the Fairfield factors precluded an employer’s insurer
from indemnifying an award of punitive damages against a grossly negligent employee. ECF No.
46 at 5 (“[S]ince Minter…totally failed to engage in this ‘weighing’ analysis…this Court’s reliance

Frederking implies by its motion that the Court failed to “make an Erie guess as to how the Texas Supreme Court
would decide the question before [it]” and instead did “merely what [the Court thought] best.” ECF No. 46. On the
contrary, the Court faithfully applied Texas law as interpreted by Texas state courts, including the Texas Supreme
Court in Fairfield, and considering the persuasive opinion of the Fifth Circuit doing the same in Minter. See Hartford
Cas. Ins. Co. v. Powell, 19 F. Supp. 2d 678, 682 (N.D. Tex. 1998) (“Erie and its progeny require no more of a federal
court than conscientiously to satisfy its duty to predict how the state court will decide a question.”) (quoting Batts v.
Tow-Motor Forklift Co., 66 F.3d 743, 750 (5th Cir. 1995), cert. denied, 517 U.S. 1221 (1996)).
5

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on Minter necessarily ported over that unreported case’s analytical defects.”). Frederking goes on
to advocate for a different application of Fairfield in his case. ECF No. 46 at 5–7.
Contrary to Frederking’s arguments, this Court did properly apply the Fairfield test.
Where, as here, the legislature has not explicitly spoken, Fairfield requires a court determining the
insurability of exemplary damages to “weigh[] the interest in enforcing agreements versus the
public policy interest against such enforcement.” Fairfield, 246 S.W.3d at 663. The Court did so
and decided that the application of Fairfield to the facts of this case counsels against the
insurability of punitive damages awarded against a drunk driver, where in the underlying trial the
jury found the driver engaged in certain specific conduct.
Specifically, the Court found that Texas’ general policy favoring freedom of contract,
although “strong” is “not unbounded.” ECF No. 45 at 7 (citing Fairfield, 246 S.W.3d at 664). The
Court agreed with Cincinnati that the public policy in favor of freedom of contract is lessened in
this case given the facts and the parties’ positions. The parties to the contract—Cincinnati and
Advantage—were bound by that contract. Cincinnati defended Advantage in the Underlying
Lawsuit and paid to Frederking the damages assessed against Advantage. But the party whose
grossly negligent conduct was at issue—Sanchez—was further attenuated from the contract. As
the Court observed in its summary judgment order:
Sanchez did not negotiate the insurance contract with Cincinnati, Advantage did;
Sanchez did not pay the premium for the coverage afforded by the Policy,
Advantage did. And Cincinnati did in fact pay Sanchez and Advantage’s portion of
the damages inasmuch as they were compensatory of Frederking’s injuries.
ECF No. 45 at 10. These weakened policy considerations favoring enforceability of contracts are
outweighed in this case by several strong public policies of Texas: policies that require exemplary
damages to serve the purposes of punishment and deterrence, and that exemplary damages must

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be borne by the wrongdoer; and policies that disfavor driving while intoxicated and that punish
DWI offenders. Id. at 7–10.
Considering the specific facts of this case, the Court determined that under Texas law “the
exemplary damages awarded against Sanchez in order to punish and deter his own grossly
negligent conduct must be borne by Sanchez alone, not by his employer’s insurer.” Id. at 10.
Frederking’s arguments that “[b]alancing all these factors…can and should lead to a different
result” is not sufficient to show the sort of “plain and indisputable” error required to support a Rule
59(e) motion. ECF No. 46 at 7; Lyles, 871 F.3d at 311. Frederking’s motion does nothing more
than rehash legal theories and arguments already advanced in opposition to summary judgment.
The Court will not grant the “extraordinary remedy” of altering or amending its judgment on this
basis. Templet, 367 F.3d at 479.
CONCLUSION
For the reasons stated herein, Frederking’s Motion for Reconsideration (ECF No. 46) is
DENIED.
It is so ORDERED.
SIGNED this 20th day of May, 2020.

XAVIER RODRIGUEZ
UNITED STATES DISTRICT JUDGE

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