STRYKER Corp. v. XL Ins. America INC., File No. 4:01-CV-157.

• Decision Date: 16 September 2010
• Docket Number: File No. 4:01-CV-157.
• Parties: STRYKER CORPORATION and Howmedica Osteonics Corp., Plaintiffs, v. XL INSURANCE AMERICA INC., formerly known as Winterthur International America Insurance Company, et al., Defendants.
• Court: U.S. District Court — Western District of Michigan

726 F.Supp.2d 754

STRYKER CORPORATION and Howmedica Osteonics Corp., Plaintiffs,

v.XL INSURANCE AMERICA INC., formerly known as Winterthur International America Insurance Company, et al., Defendants.

File No. 4:01-CV-157.

United States District Court, W.D. Michigan,Southern Division.

June 24, 2010.

Opinion Amending Judgment Sept. 16, 2010.

COPYRIGHT MATERIAL OMITTED.

COPYRIGHT MATERIAL OMITTED.

D. Andrew Portinga, David J. Gass, J. Michael Smith, Miller Johnson PLC, Grand Rapids, MI, Daniel P. Perk, Miller Johnson PLC, Kalamazoo, MI, for Plaintiffs.

David Bloss, Melinda Anne Pitman, Michael W. Betz, Bloss Betz, Grand Rapids, MI, Jonathan D. Hacker, O'Melveny & Myers LLP, Washington, DC, Paul R. Koepff, O'Melveny & Myers LLP, New York, NY, for Defendants.

OPINION

ROBERT HOLMES BELL, District Judge.

This matter is before the Court on a motion filed by Plaintiffs Stryker Corporation (“Stryker”) and Howmedica Osteonics Corporation, a subsidiary of Stryker, to amend or correct the final judgment pursuant to Rules 59(e) and 60(a) of the Federal Rules of Civil Procedure (Dkt. No. 1098), and Defendant XL Insurance America Inc.'s motion for relief from judgment pursuant to Rule 60(b)(6) of the Federal Rules of Civil Procedure (Dkt. No. 1114). Also before the Court is Defendant's motion to strike and objection to Plaintiffs' proposed bill of costs. (Dkt. No. 1111.)

I. Background

This diversity action arises out of an insurance coverage dispute between Plaintiffs and Defendant. After Plaintiffs were sued by third-parties for injuries related to products manufactured and/or sold by Plaintiffs, Plaintiffs sought coverage from Defendant under a policy obligating Defendant to defend and indemnify Plaintiffs for all such claims arising out of the same “batch” of defective products. Defendant refused to defend or indemnify the claims, and Plaintiffs eventually settled with the third-parties. Plaintiffs brought this action to enforce the insurance policy and to seek compensation for their defense costs and costs of settlement of the third-party claims. During the first stage of litigation, the Court determined that the third-party claims were covered by the policy and that Defendant had breached its duty to defend and indemnify the third-party claims.

During the second stage of the litigation, the damages phase, Plaintiffs moved for a determination as to their entitlement to interest pursuant to the interest provisions of Michigan's Uniform Trade Practices Act, Mich. Comp. Laws § 500.2006. (Dkt. No. 1034.) In response, Defendant argued that Plaintiffs were not entitled to interest under that statute because: (1) § 500.2006 applies to a different type of insurance, one relating to property damage rather than a liability policy; (2) Plaintiffs did not provide a satisfactory proof of loss as required by § 500.2006(4); (3) the insurance claims were reasonably in dispute, and § 500.2006 does not permit recovery of interest on claims that are reasonably in dispute; and, (4) Plaintiffs are not entitled to interest accruing from the date that Defendant received notice of the first third-party claim in the same “batch” of claims; rather, interest should accrue, if at all, in relation to notice of each of the individual claims. ( See Dkt. No. 1039, Def.'s Resp. to Mot. for Partial Summ. J.)

On December 15, 2008, 2008 WL 5235886, the Court granted Plaintiffs' motion, in part, and held that Plaintiffs are entitled to twelve percent interest under Mich. Comp. Laws § 500.2006 on the judgment, accruing in relation to the date of notice of each individual claim covered by the policy rather than the date of notice of the first claim in the “batch” of claims. (Dkt. Nos. 1055, 1056.) The Court rejected Defendant's arguments that § 500.2006 does not apply to liability policies and that Plaintiffs had not provided a satisfactory proof of loss. (Dkt. No. 1055, 12/15/2008 Op. at 9-12.)

As to Defendant's argument that § 500.2006 does not apply to claims that are reasonably in dispute, the Court held that, based on the Michigan Court of Appeals decision in Griswold Properties, L.L.C. v. Lexington Insurance Co., 276 Mich.App. 551, 741 N.W.2d 549 (2007) (“ Griswold II ”), and the Michigan Supreme Court's statements in Yaldo v. North Pointe Insurance Co., 457 Mich. 341, 578 N.W.2d 274 (1998), the Michigan Supreme Court would likely interpret the “reasonably in dispute” language in § 500.2006(4) to apply to third-party tort claimants, not the insured under the contract of insurance. ¹ Applying this interpretation, the Court determined that Plaintiffs are entitled to interest under Mich. Comp. Laws § 500.2006 because, even if the insurance claims were reasonably in dispute, Plaintiffs are insured parties directly entitled to benefits under the contract of insurance, not third-party tort claimants. (Dkt. No. 1055, 12/15/1008 Op. 7-9.)

On October 7, 2009, 2009 WL 3256179, the Court entered an opinion, order, and final judgment against Plaintiffs in the amount of $13,903,660, ² reiterating Plaintiffs' entitlement to interest under Mich. Comp. Laws § 500.2006, but directing the parties to file a motion to amend the judgment for purposes of calculating the amount of interest. (Dkt. Nos. 1092, 1094.) On October 15, 2009, Defendant filed a notice of appeal to the Court of Appeals for the Sixth Circuit, and this Court stayed enforcement of the judgment pending determination of Defendant's appeal. (Dkt. Nos. 1095, 1100.) On October 21, 2009, Plaintiffs filed their motion pursuant to Rules 59(e) and 60(a) of the Federal Rules of Civil Procedure to amend judgment to include a calculation of interest under Mich. Comp. Laws § 500.2006(4) and to include prejudgment interest under Mich. Comp. Laws § 600.6013(8). (Dkt. No. 1098.) On January 7, 2010, the Sixth Circuit stayed the appeal pending resolution of the outstanding motions before the Court. On February 4, 2010, Defendant filed a motion for relief from judgment pursuant to Rule 60(b)(6) of the Federal Rules of Civil Procedure, asserting that Plaintiffs are not entitled to interest under Mich. Comp. Laws § 500.2006. (Dkt. No. 1114.)

II. Analysis

A. Interest under Mich. Comp. Laws § 500.2006

Plaintiffs and Defendant have both filed motions that address the extent to which Plaintiffs are entitled to interest under Mich. Comp. Laws § 500.2006. That statute allows a claimant under an insurance policy to recover twelve percent interest for the delay in payment of an insurance claim. See id. The purpose of the statute is to penalize dilatory action on the part of insurers and to encourage prompt payment of claims. Medley v. Canady, 126 Mich.App. 739, 337 N.W.2d 909, 911 (1983).

(1) Plaintiffs' Motion to Amend Judgment

[1] Plaintiffs' motion to amend the judgment seeks to add a calculation of interest in accordance with the Court's prior ruling that Plaintiffs are entitled to twelve percent interest under § 500.2006 on the amount of the final judgment. Depending upon the circumstances, post-judgment motions for interest on damages may be brought pursuant to Rule 59(e) or Rule 60(a) of the Federal Rules of Civil Procedure. Pogor v. Makita U.S.A., Inc., 135 F.3d 384, 388 (6th Cir.1998). “If the language of [the judgment to be amended] awards interest as required by law but leaves the actual calculations for later,” a motion to add the interest is brought pursuant to Rule 60(a). Pogor, 135 F.3d at 388. However, “when a district court's original judgment does not mention an award of interest, then a later motion to fix interest would be governed by the rationale found in Osterneck,” and assigned “to the dominion of Rule 59(e) ... as the motion would amount to an original request for interest.” Id. (referring to Osterneck v. Ernst & Whinney, 489 U.S. 169, 109 S.Ct. 987, 103 L.Ed.2d 146 (1989)).

Plaintiffs' motion for a calculation of interest under § 500.2006 is properly construed as a motion pursuant to Rule 60(a) because this Court indicated in its judgment that Plaintiffs are entitled to interest on the judgment pursuant to Mich. Comp. Laws § 500.2006, “accruing 60 days after the date that Defendant received notice of each claim covered by the insurance policy and continuing until the date of entry of this judgment.” (Dkt. No. 1094.) Rule 60(a) allows a party to correct a “clerical mistake or a mistake arising form oversight or omission whenever one is found in a judgment, order, or other part of the record.” Fed.R.Civ.P. 60(a). Generally, a motion to add a calculation of interest pursuant to Rule 60(a) does not “seek to alter or amend the judgment, but simply ask[s] the court to insert the omitted particulars of the prejudgment interest award.” Pogor, 135 F.3d at 388.

Because Defendant has filed a notice of appeal, the Court must consider the effect of Defendant's notice of appeal on the Court's jurisdiction to consider Plaintiffs' motion. Rule 60(a) does not specify a time limit for bringing a motion, but provides that, “after an appeal has been docketed in the appellate court and while it is pending, such a mistake may be corrected only with the appellate court's leave.” Id. In contrast, Rule 59(e) contains no such limitation. See Fed.R.Civ.P. 59(e).

[2] Defendant filed its notice of appeal before Plaintiffs filed their motion, and the appeal has been docketed. However, the Court of Appeals has stayed the appeal pursuant to Rule 4(a)(4)(A) of the Federal Rules of Appellate Procedure. Rule 4(a)(4)(A) provides that if a party timely files a motion for relief under Rule 60 within ten days of the judgment, or a timely motion to alter or amend judgment under Rule 59, then the time to file an appeal “runs for all parties from the entry of the order disposing of the last such remaining motion.” Fed. R.App. P. 4(a)(4)(A)(iv), (vi). Moreover,

[i]f a party files a notice of appeal after the court announces or enters a judgment-but before it disposes of any motion listed in Rule 4(a)(4)(A)-the...