Security Mut. Cas. Co. v. Century Cas. Co.

• Decision Date: 12 May 1980
• Docket Number: No. 77-1752,77-1752
• Citation: 621 F.2d 1062
• Parties: SECURITY MUTUAL CASUALTY COMPANY, Plaintiff-Appellee, v. CENTURY CASUALTY COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1062

621 F.2d 1062

SECURITY MUTUAL CASUALTY COMPANY, Plaintiff-Appellee, v. CENTURY CASUALTY COMPANY, Defendant-Appellant.

No. 77-1752.

United States Court of Appeals Tenth Circuit.

Argued March 14, 1979.

Decided May 12, 1980.

James H. Mosley, Denver, Colo. (Mosley, Wells & Spence, and Michael F. Scott, Denver, Colo., were on brief), for defendant-appellant.

A. Denison Weaver, Chicago, Ill. (John E. Clough of White & Steele, Denver, Colo., was on brief), for plaintiff-appellee.

Before HOLLOWAY, BARRETT and McKAY, Circuit Judges.

HOLLOWAY, Circuit Judge.

Plaintiff-appellee, Security Mutual Casualty Company (Security Mutual), a reinsurer of primary insurance contracts, brought this suit as a declaratory judgment action seeking a determination of its rights and liabilities under a reinsurance treaty with Century Casualty Company (Century), the defendant- appellant, and recovery of its expenses in participating in an appeal from a judgment against one of Century's insureds. Following a crash of an aircraft of Anderson Aviation Company, Century's insured, Century had defended Arizona suits against Anderson and asserted a claim for recovery under the reinsurance treaty. Century filed a counterclaim in Security Mutual's declaratory judgment suit, alleging an antitrust violation and asking for reimbursement under the terms of the reinsurance treaty.

Agreeing with arguments of Security Mutual, the district court found that timely notice of certain claims had not been given by Century and held that Security Mutual was not liable under the reinsurance treaty since notice was a condition precedent to Security Mutual's obligation to indemnify Century. We reversed the trial court's decision, holding that the notice provision of the reinsurance treaty was a covenant by Century and not a condition precedent to Security Mutual's duty to make payment. Security Mutual Cas. Co. v. Century Cas. Co., 531 F.2d 974 (10th Cir.), cert. denied, 429 U.S. 860, 97 S.Ct. 161, 50 L.Ed.2d 137. We concluded (id. at 979):

We reverse the judgment insofar as it holds Security Mutual is not liable under the reinsurance treaty for the Anderson Aviation judgment. The amount of its liability should be determined under the terms of the reinsurance treaty. Therefore, the judgment for damages is also reversed. . . . We remand with directions to enter judgment consistent with this opinion. (Emphasis added).

On remand the district court interpreted our decision and mandate to allow Security Mutual to present evidence of its damages caused by the breach of the notice covenant in the reinsurance treaty and scheduled a hearing for that purpose, as well as for the determination of the amount of Security Mutual's liability to Century under the reinsurance treaty. III R. 2-6. Century then petitioned for a writ of mandamus to prohibit the trial court from conducting "any further proceedings . . . relating to a breach of contract," I R. 24, and the writ was granted. Century Cas. Co. v. United States District Court, No. 76-1707 (10th Cir. Jan. 14, 1977).

In granting that writ we stated that our earlier mandate was "intended to order the entry of a judgment finding that the reinsurance contract was binding and controlled the extent of Security's liability to pay the Anderson Aviation judgment." I R. 25. We also said that "(s)ince the damages awarded (by the trial court before our appellate decision at 531 F.2d 974) were based on the condition precedent theory, the judgment for damages was reversed in toto with no provision for modification or for a new award based on another theory;" that the mandate was intended "to be a conclusive statement of the rights and liabilities of the parties," and that we had not intended "to authorize further proceedings." I R. 25-26. Because we believed that the mandate sufficiently indicated our intent, we issued the writ and remanded the case "for the entry of judgment, not for further proceedings." Additionally we noted that the "scheduled hearing should be considered a violation of the mandate." I R. 26-27.

Pursuant to the original mandate and the terms of the writ of mandamus the district court issued an order on March 31, 1977, directing the entry of judgment. (I R. 29):

Pursuant to the Mandate issued by the Tenth Circuit on March 12, 1976, and the explicit terms of the Writ of Mandamus issued by the Court of Appeals on January 14, 1977, we hereby enter a declaratory judgment in favor of Defendant and against Plaintiff. Plaintiff is liable for the judgment in Anderson Aviation in accordance with the terms of the reinsurance agreement between the parties. The Clerk of the Court is directed to enter judgment for Defendant Century Casualty Company. Plaintiff's Complaint and Cause of Action are hereby Dismissed. Each party will bear its own costs. A copy of the Writ of Mandamus is attached. (Emphasis added).

On the same day, March 31, 1977, the clerk of the district court entered a judgment stating that it is

ORDERED AND ADJUDGED that judgment is entered in favor of the Defendant, Century Casualty Company, and against Plaintiff, Security Mutual Casualty Company, and the Complaint and action herein are dismissed, each party to bear its own costs. (I R. 35).

On April 8, 1977, Security Mutual filed a motion for summary judgment on Century's antitrust counterclaim. On April 11 the district court denied the motion on the ground of mootness, noting inter alia that the clerk had already dismissed the "entire case, pursuant to court order." I Supp. R. 19.

Then on July 14 Century moved the trial court, pursuant to Rule 60(a) and (b), F.R.Civ.P., for relief from the judgment entered on March 31. Century sought amendment of the judgment "in a manner that will reserve for determination the dollar amount owing from Security to Century under the terms of the reinsurance treaty for costs and expenses of investigating and resisting the Arizona suit . . .," inter alia. I R. 36. Century's supporting brief to thus protect its counterclaim argued, inter alia, that such relief was proper because of clerical error, oversight and omission. I R. 31-41.

Finding that there had been "no clerical mistake, inadvertence, newly discovered evidence, fraud, or any other reason justifying relief under Rule 60," the district court instead treated the motion as one made pursuant to Rule 59(e), F.R.Civ.P. Because a motion to alter or amend a judgment under Rule 59(e) must be made within ten (10) days of the entry of judgment, the trial court concluded that Century's motion was untimely. Additionally it noted that our mandamus ruling "explicitly" stated that there were to be no further proceedings. Consequently the court denied Century's motion for relief from the judgment entered. I R. 42-43. It is from this order denying its Rule 60 motion that Century has brought a timely appeal. ¹

I

The appellate contentions

Century's contentions on appeal are mainly based on Rule 60, F.R.Civ.P. Century argues, inter alia, that the judgment of March 31, 1977, dismissing the action should be amended for clerical error under Rule 60(a), citing its provisions that

Clerical mistakes in judgments, orders or other parts of the record and errors therein arising from oversight or omission may be corrected by the court at any time of its own initiative or on the motion of any party . . . .

Century further says that the court has the power and duty to correct judgments issued due to inadvertence or mistake, citing American Trucking Ass'ns v. Frisco Transp. Co., 358 U.S. 133, 145, 79 S.Ct. 170, 177, 3 L.Ed.2d 172; that Century is entitled to amendment of the judgment to conform to the mandate of this court and the district judge's own direction for the entry of judgment; that the effect of the judgment of March 31 as entered is to give Century a right without a remedy, giving the declaratory judgment to Century on the reinsurance treaty, but denying it any opportunity to establish the value of the judgment or to enforce it; and that the error is clear from the record. In addition Century contends that relief under Rule 60(b) is available to it under the provisions on mistake, inadvertence, surprise or excusable neglect; and that relief should be granted under Rule 60(b) to carry out the mandate of the court of appeals.

Security Mutual generally rejects these contentions, relying on the district court's order which found that there was no clerical mistake, inadvertence, newly discovered evidence, fraud or any other reason justifying relief under Rule 60; that no clerical error is shown; that motions under Rule 60(b) are directed to the district court's sound discretion, which was not abused here; and that relief should have been sought under Rule 59(e), by a timely motion within 10 days after the March 31 judgment, whereas Century's motion was not filed until July 14 and was untimely, inter alia.

II

Century argues for relief under Rule 60(a), F.R.Civ.P., seeking amendment of the judgment because of clerical error coming within Rule 60(a), which provides in part:

(a) CLERICAL MISTAKES. Clerical mistakes in judgments, orders or other parts of the record and errors therein arising from oversight or omission may be corrected by the court at any time of its own initiative or on the motion of any party and after such notice, if any, as the court orders.

It is axiomatic that courts have the power and the duty to correct judgments containing clerical errors or judgments issued due to inadvertence or mistake. American Trucking Ass'ns v. Frisco Transp. Co., 358 U.S. 133, 145, 79 S.Ct. 170, 177, 3 L.Ed.2d 172. However Rule 60(a) may not be used to change something which has been deliberately done. See Ferraro v. Arthur M. Rosenberg Co., 156 F.2d 212, 214 (2d Cir.); accord, Blankenship v. Royalty Holding Co., 202 F.2d 77, 79-80 (10th Cir.); see generally 6A Moore's Federal Practice, P 60.06(1) at 4055; 11 Wright & Miller, Federal Practice & Procedure § 2854 at 154. ^1a ...