351 F.3d 204 (5th Cir. 2003), 03-30057, Callon Petroleum Co. v. Frontier Ins. Co.

Docket Nº:03-30057
Citation:351 F.3d 204
Party Name:Callon Petroleum Co. v. Frontier Ins. Co.
Case Date:December 03, 2003
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 204

351 F.3d 204 (5th Cir. 2003)

CALLON PETROLEUM COMPANY, Plaintiff-Appellee,

v.

FRONTIER INSURANCE COMPANY, Defendant-Appellant,

Gregory V. Serio, Superintendent of Insurance for the State of New York, as Rehabilitator of Defendant Frontier Insurance Company, Appellant.

No. 03-30057.

United States Court of Appeals, Fifth Circuit

December 3, 2003

Page 205

[Copyrighted Material Omitted]

Page 206

Robert L. Redfearn, Steven A. Jacobson (argued), Robert Leland Redfearn, Jr., Denise C. Puente, Simon, Peragine, Smith & Redfearn, New Orleans, LA, for Plaintiff-Appellee.

John A. Jeansonne, III, Jeansonne & Remondet, New Orleans, LA, John E. Menechino (argued), Mark E. Farrell, Smith, Currie & Hancock, Atlanta, GA, for all Appellants.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before JOLLY and WIENER, Circuit Judges, and ROSENTHAL, District Judge. [*]

E. GRADY JOLLY, Circuit Judge:

Callon Petroleum Company ("Callon") brought this diversity action against Frontier Insurance Company ("Frontier") to collect on a bond it had issued in Callon's favor, and moved for summary judgment. Frontier subsequently became represented by Gregory Serio, the New York State Superintendent of Insurance as rehabilitator ("Superintendent"), who failed to respond to the motion, and the district court granted summary judgment. Over a year later, the Superintendent, after three notices of the judgment, moved to have the adverse summary judgment vacated under Fed.R.Civ.P. 60(b). We hold that the judgment was not void, and that the district court did not err in denying relief from the judgment under Rule 60(b)(4). The crux of our reasoning in affirming the denial of relief under Rule 60(b)(6) is simply that the Superintendent offers no plausible excuse for ignoring the judgment for some fourteen months. We therefore conclude that the district court did not abuse its discretion and affirm its denial of the Superintendent's motion.

I

In December 1997, Callon entered into an agreement with Wood Energy Company ("Wood"), in which Callon assigned its interest in certain mineral leases to Wood. Under the agreement, Wood agreed to plug and abandon the incident oil and gas wells, and to guarantee its performance with a bond in Callon's favor. Subsequently, Frontier, as surety, issued a bond for $2.7 million in Callon's favor.

In August 2000, the Louisiana Commissioner of Conservation demanded that Wood plug and abandon the wells. When Wood failed to respond, the Commissioner demanded that Callon, as the wells' owner, perform the work. In turn, Callon demanded that Frontier comply with the Commissioner's demand, or pay Callon the $2.7 million payable under the bond so Callon could perform the work itself. Frontier neither tendered the penal sum nor performed the work required.

On May 16, 2001, Callon filed suit, alleging that Frontier was liable under the bond for the cost of plugging and abandoning the wells, and otherwise complying with the Commissioner's terms. On July 9, Frontier answered the suit but raised no affirmative defenses. On August 17, Callon

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filed a motion for summary judgment, which was set for hearing on September 5.

On August 24, 2001, the Superintendent initiated delinquency proceedings against Frontier in the Supreme Court of New York. On August 27, that court entered an order to show cause (the "Order to Show Cause"), which restrained Frontier, its officers, directors, shareholders, members, trustees, agents, servants, employees, policyholders, attorneys, managers, and all other persons from the transaction of Frontier's business or the waste or disposition of its property, except as authorized by the Superintendent. The Order also appointed the Superintendent as Frontier's temporary rehabilitator and authorized and directed him to take possession of Frontier's property and conduct its business. On September 4, Frontier's counsel provided the Order to Show Cause to Callon's counsel and filed it with the district court.

On September 5, in the absence of any opposing papers from Frontier, the district court granted Callon's motion for summary judgment. It acknowledged the New York Order to Show Cause but did not consider itself restrained by the Order because disposition of the pending motion was not a transaction of Frontier's business by the restrained persons, as contemplated by that Order. The district court subsequently entered a final judgment against Frontier for $2.7 million.

On October 15, the New York Supreme (trial level) Court entered an order of rehabilitation ("Rehabilitation Order"), making the Superintendent's appointment as rehabilitator of Frontier permanent. In the Rehabilitation Order, the New York court expressly enjoined all persons from prosecuting any actions against Frontier or the Superintendent and from obtaining judgments or making any levy against Frontier's assets. The Superintendent did not file the Rehabilitation Order with the district court until a year later, when he filed it with his Rule 60(b) motion for relief.

As early as October 16, 2001, however, Callon had provided the New York State Department of Insurance with a copy of the district court's final judgment. The accompanying letter stated that Callon considered the judgment final and binding. Then again three months later, in January 2002, Callon wrote another letter insisting on the finality of the district court's order, and demanding the sum owed under the judgment. There was no response from the Superintendent.

On September 5, 2002, a year after the district court granted summary judgment, Callon moved in the New York rehabilitation proceedings to have its claim against Frontier liquidated as a matter of law and fixed at $2.7 million with interest. This action finally prompted the Superintendent, on November 14, to file a Rule 60(b) motion for relief from judgment in the district court. The Superintendent simultaneously filed a motion for stay or dismissal without prejudice...

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