Coffeyville Res. Ref. & Mktg. Llc v. Liberty Surplus Ins. Corp..

• Decision Date: 25 October 2010
• Docket Number: No. 08–1204–WEB–KMH.,08–1204–WEB–KMH.
• Citation: 748 F.Supp.2d 1261
• Court: U.S. District Court — District of Kansas
• Parties: COFFEYVILLE RESOURCES REFINING & MARKETING, LLC, Plaintiff,v.LIBERTY SURPLUS INSURANCE CORPORATION, Illinois Union Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA., and Westchester Fire Insurance Company, Defendants.

748 F.Supp.2d 1261

COFFEYVILLE RESOURCES REFINING & MARKETING, LLC, Plaintiff,

v.LIBERTY SURPLUS INSURANCE CORPORATION, Illinois Union Insurance Company, National Union Fire Insurance Company of Pittsburgh, PA., and Westchester Fire Insurance Company, Defendants.

No. 08–1204–WEB–KMH.

United States District Court, D. Kansas.

Oct. 25, 2010.

Arthur E. Rhodes, Constance L. Shidler, Lee M. Smithyman, Smithyman & Zakoura, Chtd., Overland Park, KS, Carl D. Hill, Thomas E. Birsic, K & L Gates LLP, Pittsburgh, PA, Douglas Y. Curran, Mark D. Hinderks, Scott C. Hecht, Stinson Morrison Hecker LLP, Edmund S. Gross, CVR Energy, Inc., Kansas City, MO, for Plaintiff.Benjamin S. Norrell, Bryan P. Vezey, Joseph A. Ziemianski, Peter B. Magnuson, Cozen & O'Connor, Houston, TX, Geron J. Bird, Scott R. Schillings, Hinkle Elkouri Law Firm LLC, Corlin J. Pratt, Terry L. Unruh, Sherwood, Harper, Dakan, Unruh & Pratt, Wichita, KS, Colleen A. Beverly, Mark W. Zimmerman, Timothy F. Jacobs, Clausen Miller, P.C., Chicago, IL, for Defendants.

Memorandum and Order

WESLEY E. BROWN, Senior District Judge.

This matter is before the court on the following motions: Coffeyville Resources' Motion to Clarify and/or for Reconsideration (Doc. 300); National Union's Motion for Reconsideration (Doc. 303); and Illinois Union's Motion for Certification for Immediate Appeal (Doc. 305).

I. Coffeyville Resources' Motion to Clarify and/or for Reconsideration (Doc. 300).

The court made numerous findings in its April 28, 2010 Memorandum and Order, 714 F.Supp.2d 1119 (D.Kan.2010), including the following. The Illinois Union policy is primary and the National Union policy is excess with respect to plaintiff's loss from property damage claims that are within the coverage of both policies. Regarding “clean-up costs,” the Illinois Union policy excludes such costs to the extent they result solely from obligations under environmental laws, but not to the extent they overlap with or constitute settlement of property damage claims. The National Union policy's treatment of clean-up costs under Endorsement 28 by contrast is ambiguous, the result of which is that the National Union policy, unlike the Illinois Union policy, covers clean-up costs relating to third-party property damage even if such costs result solely from obligations under environmental laws or governmental orders.¹ With respect to clean-up costs within the scope of National Union coverage but excluded by Illinois Union, National Union's coverage is excess only of a $5 million Self–Insured Retention [SIR]. Upon exhaustion of the $5 million SIR, National Union is obligated to “drop down” and cover such costs.

Coffeyville Resources' Motion to Clarify or for Reconsideration asks the court to declare that the previously tendered Liberty Insurance payments and the payments to be made by Illinois Union serve to reduce and exhaust the $5 million SIR, such that the National Union coverage will commence with the first dollar of additional National Union covered losses not covered by Illinois Union. Doc. 301 at 18–19. Plaintiff notes that the court “did not expressly opine on the status of the $5 million SIR exhaustion,” although plaintiff says certain statements in the prior order implied that exhaustion of the $5 million SIR has not yet occurred. Plaintiff contends the uncontroverted facts show the SIR has been exhausted because it is subject to reduction by payment of any $5 million related to the “Occurrence” or “Loss,” whether such payment is by the insured or by another insurance carrier. Plaintiff further contends Liberty's payment of its $25 million limit—including a sublimit of $10 million for clean-up costs—establishes that more than $5 million has already been expended on clean-up costs and that the SIR has been exhausted. Id. at 16. Plaintiff argues the court should address the issue to clarify or correct any inference from the summary judgment suggesting that the SIR has not been exhausted.

In response, National Union argues plaintiff's motion is improper because it seeks relief beyond what was sought in the initial summary judgment motion, and it therefore fails to satisfy the conditions for reconsideration under Rule 59(e) or D.Kan.R. 7.3. As for the merits of plaintiff's argument, National first contends the $1 million SIR under the Liberty policy does not reduce the National Union SIR because “nowhere in the National Union Pollution Endorsement does it state that the amounts paid by the insured to satisfy a different SIR can reduce the National Union $5,000,000 SIR.” Doc. 302 at 5. Moreover, National contends plaintiff did not argue or set forth any evidence to show that sums received from Liberty were for payment of “judgments or settlements” within the National policy coverage for “Loss.” National next asserts that the court's summary judgment ruling did not find the Retained Limit definition to be ambiguous, and disputes any suggestion by plaintiff that the court found National Union was obligated to pay all alleged clean-up costs “starting at dollar one.” Id. at 6. Lastly, National points out that there has been no adjudication with respect to how much, if any, of the remaining unreimbursed costs constitute reasonable and necessary clean up costs, or the extent to which any such costs are excluded under the Illinois Union policy.Discussion.

The local rules of this district recognize motions for reconsideration of “non-dispositive” orders. D.Kan.R. 7.3(b). By contrast, motions to reconsider “dispositive” orders or judgments must be asserted under Rule 59(e) or Rule 60 of the Federal Rules of Civil Procedure. See D.Kan. 7.3(a). There is some uncertainty whether orders disposing of some but not all claims—such as the court's summary judgment ruling—are considered dispositive under the local rule.² Compare Johnson v. Simonton Bldg. Properties, Inc., 2009 WL 902409, *2 (D.Kan., Mar. 31, 2009) (“the court's order was dispositive because it terminated some of plaintiff's claims.”) and Seyler v. Burlington Northern Santa Fe Corp., 121 F.Supp.2d 1352, 1355 (D.Kan.2000) (“The Court's rulings .... were non-dispositive, in that they did not fully resolve the case and could be challenged by a timely motion under Rule 7.3(b), ...”). This judge has previously concluded that such rulings are interlocutory in character and are non-dispositive within the meaning of Rule 7.3(b). See Fusco v. Insurance Planning Center, No. 05–1245 (D.Kan.) (Doc. 140) (“dispositive order” in Rule 7.3 means a final judgment or order that disposes of all remaining claims in the case). Cf. Fed.R.Civ.P. 54(b) (any order that adjudicates fewer than all the claims or rights of all the parties may be revised at any time before the entry of a final judgment).³ The court therefore considers the parties' motions in this case under D.Kan. R. 7.3(b).

Under Rule 7.3(b), a motion seeking reconsideration generally must be based on an intervening change in controlling law, the availability of new evidence, or the need to correct clear error or prevent manifest injustice. A motion to reconsider is available when the court has misapprehended the facts, a party's position, or the controlling law, but it is not appropriate to revisit issues already addressed or to advance arguments that could have been raised in prior briefing. See e.g., Servants of Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir.2000) (addressing motion under Rule 59(b)). The decision whether to grant a motion to reconsider is committed to the district court's discretion. In re Motor Fuel Temp. Sales Practices Litigation, 707 F.Supp.2d 1145, 1166 (D.Kan.2010).

The court's summary judgment ruling in this case did not address whether the Liberty payment exhausted the National Union SIR because the parties did not raise that issue as part of the summary judgment motions. Ordinarily, the court would decline to address any such matter on reconsideration that could have been presented in the initial motion. But the court agrees with plaintiff that under the complex arrangements presented by the various policies, any question about exhaustion of the National Union SIR at the time of plaintiff's initial motion was contingent upon resolution of a number of underlying coverage questions. Only after resolution of those preliminary issues by the court did exhaustion of the National Union SIR become a concrete as opposed to hypothetical issue. Under the circumstances, the court concludes it is appropriate to address exhaustion of the SIR in the instant motion, now that the matter has become ripe for resolution in view of the court's construction of the Liberty Surplus, Illinois Union, and National Union polices. The court further concludes it is appropriate to do so in order to avoid misconstruction of the findings in the court's prior Memorandum and Order. National Union presents no substantive reason why the matter—which presents a legal question based upon uncontroverted facts—should not now be addressed.

National Union promised under certain circumstances to pay “sums in excess of the Retained Limit” that plaintiff became legally obligated to pay as damages because of property damage. In its prior order, the court determined that National's coverage includes property damage from the July 1, 2007 release of crude oil from plaintiff's refinery because the release was abrupt and neither expected nor intended by plaintiff. The court further determined the National Union policy was ambiguous with respect to coverage for “clean-up costs” incurred solely as a result of governmental orders or regulations, and the National Union policy—unlike the Illinois Union policy—would therefore be construed to cover such costs.

The “Retained Limit” was defined by the National policy to mean:

1. the total applicable limits of Scheduled Underlying Insurance and any applicable Other Insurance providing coverage to the Insured; or

2. the Self–Insured Retention applicable to each Occurrence...