Wallis v. Centennial Ins. Co.
| Decision Date | 20 February 2014 |
| Docket Number | CIV. NO. 08-2558 WBS AC |
| Court | U.S. District Court — Eastern District of California |
| Parties | DALE M. WALLIS, D.V.M., JAMES L. WALLIS, and HYGIEIA BIOLOGICAL LABORATORIES, INC., a California Corporation, Plaintiffs, v. CENTENNIAL INSURANCE COMPANY, INC., a New York Corporation, and ATLANTIC MUTUAL INSURANCE CO., INC., a New York Corporation, Defendants, AND RELATED COUNTERCLAIMS AND THIRD PARTY COMPLAINT. |
MOTION TO AMEND JUDGMENT AND
On November 12, 2013, this court entered judgment in favor of defendants Centennial Insurance Company, Inc., and Atlantic Mutual Insurance Company, Inc., after a nine-day bench trial. Plaintiffs Dale M. Wallis, D.V.M. ("Dr. Wallis"), JamesL. Wallis ("Mr. Wallis"), and Hygieia Biological Laboratories, Inc. ("Hygieia") now move the court to amend its findings or make additional findings pursuant to Federal Rule of Civil Procedure 52(b) and to alter and amend the judgment pursuant to Rule 59(e). (Docket No. 271.)
This action arises out of defendants' alleged wrongdoing in defending Dr. Wallis under a professional liability insurance policy. After plaintiffs filed their Complaint, defendants subsequently filed a counterclaim against plaintiffs and a third party complaint ("TPC") against plaintiffs' attorney, Joanna Mendoza. Following a bench trial, the court ruled that: (1) plaintiffs had failed to prove by a preponderance of evidence their claims for breach of contract and breach of the implied covenant of good faith and fair dealing; (2) defendants had failed to prove by a preponderance of evidence their counterclaim for declaratory relief against plaintiffs and their TPC against Mendoza; and (3) defendants were entitled to judgment in the amount of $115,995.90 on their counterclaim for indemnity against plaintiffs. Wallis v. Centennial Ins. Co., --- F. Supp. 2d. ----, Civ. No. 08-2558 WBS AC, 2013 WL 6000974, at *1-16 (E.D. Cal. Nov. 12, 2013).
Rule 52(b) provides, "[o]n a party' s motion filed no later than 28 days after the entry of judgment, the court may amend its findings--or make additional findings--and may amend the judgment accordingly." Fed. R. Civ. P. 52(b). "Motionsunder Rule 52(b) are primarily designed to correct findings of fact which are central to the ultimate decision; the Rule is not intended to serve as a vehicle for a rehearing." Crane-McNab v. County of Merced, 773 F. Supp. 2d 861, 873 (E.D. Cal. 2011) (Shubb, J.) (citing Davis v. Mathews, 450 F. Supp. 308, 318 (E.D. Cal. 1978)). Therefore, "[a] motion to amend a court's factual and legal findings is properly denied where the proposed additional facts would not affect the outcome of the case or are immaterial to the court's conclusions." Ollier v. Sweetwater Union High Sch. Dist., 858 F. Supp. 2d 1093, 1117 (S.D. Cal. 2012) (citing Weyerhaeuser Co. v. Atropos Island, 777 F.2d 1344, 1352 (9th Cir. 1985)).
Rule 59(e) provides that a court may alter or amend a judgment. The rule "offers an 'extraordinary remedy, to be used sparingly in the interests of finality and conservation of judicial resources.'" Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000) (quoting 12 James Wm. Moore et al., Moore's Federal Practice § 59.30[4] (3d ed. 2000)). Reconsideration under Rule 59(e) is appropriate only where the court "(1) is presented with newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law." Smith v. Clark Cnty. Sch. Dist., 727 F.3d 950, 955 (9th Cir. 2013) (quoting Sch. Dist. No. 1J, Multnomah Cnty., Or., v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993)). To be successful, a Rule 59(e) motion "should not merely present arguments previously raised." United States v. Wetlands WaterDist., 134 F. Supp. 2d 1111, 1130 (E.D. Cal. 2001) (Wanger, J.) (citing Backlund v. Barnhart, 778 F.2d 1386, 1388 (9th Cir. 1985)).
Plaintiffs request several amendments to the findings of fact that would simply add more background to the court's memorandum of decision without being central to the decision or affecting the judgment. These proposed amendments include: (1) providing greater context to the finding that the Sedgwick firm withdrew because Mendoza accused the firm of engaging in unethical conduct; (2) clarifying the court's finding regarding the purpose of a payment plaintiffs received in the 2009 settlement; and (3) adding more detail to the finding regarding the jury verdict in the underlying matter. The addition of these proposed amendments would not change the court's opinion, and the court declines to amend its decision simply to articulate the facts in a way that would be pleasing to plaintiffs.1 See Ollier, 858 F. Supp. 2d at 1117 (). Accordingly, the courtwill deny plaintiffs' motion to amend these findings.
The court also sees no purpose to plaintiffs' proposed amended finding that the Mennemeier, Glassman & Stroud firm withdrew only as a result of a breakdown in its relationship with plaintiffs. This amendment would not alter the court's conclusion that plaintiffs failed to prove their claim that defendants interfered with the ability of counsel to litigate the case. If anything, it would amount to an affirmation that plaintiffs' own actions rather than any interference by defendants caused the deterioration in their relationship with Andy Stroud's firm. In addition, plaintiffs seek an amended finding regarding Stroud's testimony to clarify that Stroud admitted that plaintiffs had raised concerns regarding his representation. (Id. at 16:13-18:20.) This, too, would not alter the court's conclusion that the reduced payments from defendants did not impact Stroud's defense of the case. Both Stroud and Wilcox testified to this effect, and the record evinces that many of plaintiffs' concerns related to differences over strategy, rather than limitations caused by defendants. Accordingly, the court will deny these proposed amendments.
Plaintiffs also seek to amend the court's finding that "Mendoza did not seek payment directly from plaintiffs," (Nov. 12, 2013 Order at 6:18-19 (Docket No. 268)), as well as the court's later conclusion that plaintiffs failed to show "by a preponderance of the evidence that they ever had, or will have, to make up the shortfall between the fees Mendoza billed and the amount defendants paid," (id. at 16:23-25). Plaintiffs contendthat the evidence presented at trial, including Mendoza's fee agreements and invoices as well as correspondence with defendants, demonstrates that Mendoza sought payment directly from plaintiffs and that plaintiffs are legally obligated to pay the fees. ( The court considered this evidence at trial and found it unpersuasive. Dr. Wallis testified that she did not recall paying fees to Mendoza, and the court need not infer that Mendoza sought payment simply because Mendoza had discussions with plaintiffs regarding their finances. Further, plaintiffs contend the documents make it "clear" that "Mendoza was going to make the demand of the plaintiffs to pay the fees required by the fee agreements . . . if defendants failed to pay them." (Id. at 7:26-28.) Yet plaintiffs' entire argument at trial was that defendants failed to pay the fees, and plaintiffs did not present any persuasive evidence of such a demand from Mendoza.
Moreover, this amendment would still not change the court's conclusion that plaintiffs failed to prove any damages caused by defendants. Even if plaintiffs intended ultimately to pay the difference between what Mendoza charged and what the defendants paid, it does not mean plaintiffs suffered damages as a result of defendants' bad faith or breach of the duty to defend. Plaintiffs failed to prove that they have suffered any damages in the form of the shortfall between what Mendoza billed and what was reasonable and necessary. Any amendment to the court's findings regarding plaintiffs' intent to eventually pay these fees and costs would not affect this conclusion.Accordingly, the court will deny the proposed amendment.
Defendants were required only to pay what was reasonable and necessary to the defense. To that end, plaintiffs seek an amended finding that the unpaid fees and costs were reasonable and necessary to the defense. Plaintiffs contend that the evidence presented at trial, including the fee agreements, invoices, and status reports, establish the value of these services. But plaintiffs failed to prove that those services were reasonable and necessary to the defense. Simply because plaintiffs agreed to pay for these fees and costs does not mean they were reasonable and necessary and therefore that the insurer is obligated to cover them.2 Further, the court already considered the evidence plaintiffs discuss in their motion and found it insufficient to prove their claim by a preponderance of the evidence. Plaintiffs offer no new evidence or changes in law that would otherwise disturb this conclusion, much less the court's holding that the question of reasonableness must be determined in arbitration.3 Absent a determination from an arbitrator regarding the reasonableness of the fees and costs,there are no grounds for the court to revisit this conclusion.4 Accordingly, the court will deny plaintiffs' proposed amendment regarding the reasonableness of fees and costs.
Finally, plaintiffs seek an amended finding that Mr. Wallis paid Joel Baiocchi for work related to the cross-complaint. (Pls. Mem. at 14:2-15:12.) As evidence, plaintiffs point to invoices in...
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