Atl. Specialty Ins. Co. v. Mr. Charlie Adventures, LLC

• Decision Date: 05 May 2015
• Docket Number: CIVIL ACTION NO. 13-458-CG-N
• Parties: ATLANTIC SPECIALTY INSURANCE COMPANY, Plaintiff, v. MR. CHARLIE ADVENTURES, LLC and KIM P. KORNEGAY, Defendants.
• Court: U.S. District Court — Southern District of Alabama

ATLANTIC SPECIALTY INSURANCE COMPANY, Plaintiff, v. MR. CHARLIE ADVENTURES, LLC and KIM P. KORNEGAY, Defendants.

CIVIL ACTION NO. 13-458-CG-N

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

May 5, 2015

ORDER

This matter is before the court on Defendants' motion to alter or amend pursuant to FED. R. CIV. PROC. 59(e) (Doc. 78), Plaintiff's opposition (Doc. 83), and Defendants' reply (Doc. 84). For the reasons stated below, Defendants' motion to alter or amend is due to be denied.

BACKGROUND

This case involves an insurance claim for damage to Defendants' yacht, the "Mr. Charlie," and its contents by a fire that occurred on March 3, 2013. Plaintiff, Atlantic Specialty Insurance Company ("Atlantic") filed its complaint seeking a declaration that it does not owe coverage for the fire and Defendants asserted counterclaims for breach of contract and bad faith. (Docs. 1, 16).

Atlantic's experts, Guy Plaisance and Gary Jones, concluded that the fire originated in the engine compartment in the vicinity of the aft end of the starboardengine and resulted from the seawater intake screen for the starboard strainer being restricted by marine growth. (Docs. 34-2, 35-6). Atlantic denied the insurance claim based on the reports of Jones and Plaisance. Atlantic concluded that coverage was excluded by the policy because the loss results from "marine life" and/or Defendants' "failure to maintain the covered yacht in good condition and repair."

Defendants moved to exclude the opinions of Guy Plaisance and Gary Jones under Rules 403 and 702. (Docs. 34 & 35). This Court granted Defendants' motions to exclude, finding that Plaisance and Jones' determination of the cause of the fire did not stem from a reliable methodology, sufficient factual basis, and reliable application of the methodology to the facts. (Doc. 75). The Court found, after reviewing Mr. Plaisance's qualifications, that he had sufficient experience to offer opinion testimony on the cause and origin of the fire, (Doc. 75, p. 6), but that some of the data Plaisance relied upon was inaccurate or unreliable and he was unsure where some of his information came from.¹ As such, the Court found that Plaisance had failed to fully support his conclusion that the fire was caused by the screen being occluded by marine growth. (Doc. 75, p. 10). Because Jones relied on the conclusions of Plaisance and the information Plaisance relied upon and did notcomplete additional inspections or tests that might have proved or disproved his theory, Jones' opinion was also found to be unreliable. (Doc. 75, pp. 12-13).

On November 7, 2014, this Court granted summary judgment in favor of Defendants on their claim for breach of contract, but granted summary judgment in favor of Atlantic as to Defendants' counterclaim for bad faith. (Doc. 76). Specifically, the Court found that because the opinions of Atlantic's experts had been excluded as unreliable, Atlantic had no reliable evidence as to the cause of the fire and could not support its contention that the cause of the fire was excluded by the policy of insurance. (Doc. 76, p. 9). As to Defendants' bad faith claim, the Court discussed the elements of such a claim and found that Defendants' claim failed because Defendants failed to show that those elements were met. The Court explained that the evidence showed that Atlantic had an arguable reason to deny the claim and there was no evidence that Atlantic knew there was no arguable reason. The Court reasoned as follows:

Atlantic reports that it diligently investigated the claim and relied on the opinions of its experts, Guy Plaisance and Gary Jones. Although this court has now excluded those opinions, there is no evidence Atlantic knew that the opinions should not be relied upon. "To defeat a bad faith claim, the defendant does not have to show that its reason for denial was correct, only that it was arguable." Liberty Nat. Life Ins. Co. v. Allen, 699 So.2d 138, 143 (Ala. 1997). Accordingly, at the time of the denial Atlantic appears to have had an arguable reason to deny the claim.

(Doc. 76, p. 10). The Court also stated that "there is no evidence that Atlantic or its claim agents had any reason to disbelieve the experts when they ultimately opined that the cause of the fire was marine growth on the screens." (Doc. 76, p. 15). TheCourt also discussed at length three cases relied upon by Defendants to support their contention that Atlantic could not rely on its expert reports as an arguable reason for denial: White v. State Farm & Cas. Co., 953 So.2d 340, 350 (Ala. 2006); Alfa Mut. Fire Ins. Co. v. Thomas, 738 So.2d 815, 822-23 (Ala. 1999); and Livingston v. Auto Owners Ins. Co., 582 So.2d 1038, 1042-43 (Ala. 1991). (Doc. 76, pp. 10-14). This Court found that these three cases did not apply to this case.

DISCUSSION

Defendants move to alter or amend this Court's Order of November 7, 2014, granting summary judgment in favor of Atlantic as to Defendants' counterclaim for bad faith (Doc. 76). Specifically, Defendants request this Court to reconsider its interpretation of the law of bad faith and the evidentiary record because Defendants contend that the record provides substantial evidence that Atlantic knew its experts' opinions should not have been relied upon, that Atlantic had reason to disbelieve the opinions of the experts, and that Atlantic knew there was no reason to deny the claim.

"'In the interests of finality and conservation of scarce judicial resources, reconsideration of an order is an extraordinary remedy and is employed sparingly.'" Garrett v. Stanton, 2010 WL 320492, *2 (S.D. Ala. 2010) (quoting Gougler v. Sirius Products, Inc., 370 F.Supp.2d 1185, 1189 (S.D. Ala. 2005); see also Spellman v. Haley, 2004 WL 866837, *2 (M.D. Ala. Feb. 22, 2002) ("litigants should not use motions to reconsider as a knee-jerk reaction to an adverse ruling"). "A motion to reconsider is not a vehicle 'to relitigate old matters, or to raise arguments or presentevidence that could have been raised prior to entry of judgment.'" Id. (quoting Exxon Shipping Co. v. Baker, 554 U.S. 471, 128 S.Ct. 2605, 2617 n. 5, 171 L.Ed.2d 570 (2008). "It is... improper to utilize a motion to reconsider to ask a district court to rethink a decision once made, merely because a litigant disagrees" because "[i]magine how a district court's workload would multiply if it was obliged to rule twice on the same arguments by the same party upon request." Garrett, 2010 WL 320492 at *2 n. 1.

Defendants move for reconsideration under Rule 59(e). However, because this court's order granting summary judgment is not a final order or judgment, the decision whether to reconsider the order must be analyzed under the stricter provision of 60(b), rather than 59(e). See FED. R. CIV. P. 59(e); Bayshore Ford Truck Sales, Inc., 471 F.3d 1233, 1260-61 (11th Cir. 2006) (grant of partial summary judgment is an interlocutory order); Toole v. Baxter Healthcare Corp., 235 F.3d 1307, 1315 (11th Cir. 2000) (an interlocutory order is not subject to the limitations of Rule 59). Federal Rule of Civil Procedure 60(b) provides that a court may relieve a party from a final judgment or order for the following reasons:

(1) mistake, inadvertence, surprise, or excusable neglect;

(2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b);

(3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party;

(4) the judgment is void;

(5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwisevacated, or it is no longer equitable that the judgment should have prospective application; or

(6) any other reason justifying relief from the operation of the judgment.

Generally, a "motion to reconsider is only available when a party presents the court with evidence of an intervening change in controlling law, the availability of new evidence, or the need to correct clear error or manifest injustice." Gipson v. Mattox, 511 F. Supp. 2d 1182, 1185 (S.D. Ala. 2007). The only provisions of Rule 60(b) under which the court can determine that Defendant could be seeking reconsideration are 60(b)(1), and 60(b)(6).

A. Rule 60(b)(1)

Rule 60(b)(1) permits a court to relieve a party from a final judgment, order or proceeding for "mistake, inadvertence, surprise, or excusable neglect." Rule 60(b)(1) can be used "to permit the district court to reconsider and correct its own errors, particularly if they are of an obvious nature amounting to little more than clerical errors." Fackelman v. Bell, 564 F.2d 734, 736 (5^th Cir. 1977). "[S]ome courts have applied 60(b)(1) to theories of mistake of law when the motion was filed before the time to file a notice of appeal had expired." Wendy's Intern., Inc. v. Nu-Cape Const., Inc., 169 F.R.D. 680, 687 (M.D. Fla. 1996) (citing Morris v. Adams-Millis Corp., 758 F.2d 1352, 1358 (10^th Cir. 1985)). "However such relief is available only for obvious errors of law and limited to 'perfunctory correction." Id. (citing Alvestad v. Monsanto Co., 671 F.2d 908, 912-13 (5^th Cir.), cert. denied, 459 U.S. 1070 (1982)); see also Nisson v. Lundy, 975 F.2d 802, 806 (11^th Cir. 1992) ("where a districtcourt's mistake was 'clear on the record' and involved a 'plain misconstruction of the law..., compelling policies of basic fairness and equity reflected by 60(b)' may mandate amendment to 'conform its judgment to the law.'" (citations omitted)). In this case, the court finds that there were not any facially obvious errors of law in the November 7, 2014 order. For the most part, Defendants' motion reiterates the arguments previously raised in support of their motion for summary judgment and in response to Atlantic's motion for summary judgment. Defendants assert that Atlantic had no legitimate or arguable reason for denying the claim and thus, that...