Opinion
No. 3:16-cv-02091-MO
03-22-2018
CAMPBELL GLOBAL, LLC, a Delaware limited liability company; and BASCOM SOUTHERN, LLC, a Delaware limited liability company, Plaintiffs, v. AMERICAN STATES INSURANCE COMPANY, an Indiana corporation; AMERICAN ECONOMY INSURANCE COMPANY, an Indiana corporation; GENERAL INSURANCE COMPANY OF AMERICA, a New Hampshire corporation; and FIRST NATIONAL INSURANCE COMPANY OF AMERICA, a New Hampshire corporation, Defendants.
OPINION AND ORDER MOSMAN, J.,
This matter comes before the Court on the Motion for Reconsideration [47] filed by Plaintiffs Campbell Global, LLC, and Bascom Southern, LLC; and the Motion to Strike Plaintiffs' Exhibits [49] filed by Defendants American States Insurance Company, American Economy Insurance Company, General Insurance Company of America, and First National Insurance Company of America. Plaintiffs alternatively move for entry of a partial final judgment pursuant to Federal Rule of Civil Procedure 54(b) as to the Stage One claim for breach of contract. Defendants oppose Plaintiffs' Motion for Reconsideration, but do not oppose Plaintiffs' alternative Motion for a partial final judgment.
For the reasons that follow, the Court GRANTS Defendants' Motion to Strike Plaintiffs' Exhibits [49], DENIES Plaintiffs' Motion for Reconsideration [47] in part insofar as Plaintiffs seek reconsideration of the Court's Opinion and Order [38], but GRANTS Plaintiffs' Motion [47] in part insofar as Plaintiffs' seek a partial, final judgment on the Stage One claim.
I. Defendants' Motion to Strike
In their Motion, Defendants move to strike the Declarations of the Honorable Braxton L. Kittrell, Jr. [48-1], Edward F. Travis [48-2], and Tony Logan [48-3], the arbitrators in the underlying arbitration. In those Declarations the arbitrators each indicate they intended the Arbitration Award to sound in both contract and in negligence, and not solely in contract as this Court found in its Opinion and Order [38]. Defendants move to strike the Declarations on two bases: (1) the Declarations were not part of the stipulated record on summary judgment and, therefore, the Court should not consider them on this Motion for Reconsideration; and (2) even if Plaintiffs had included the arbitrators' Declarations in the record on summary judgment, they would have been inadmissible.
The Court agrees with Defendants on both bases. In lieu of discovery on the Stage One claims, the parties submitted a stipulated record on summary judgment that did not include the arbitrators' Declarations. Moreover, the Declarations are external to the stipulated record insofar as they were not referenced or otherwise incorporated in the record and did not exist at the time that the parties litigated the Cross-Motions for Summary Judgment. Consideration of the Declarations at this late date would deprive Defendants of the benefit of their bargain to limit the scope of the summary-judgment record considered while still requiring Defendants to forego the right to discovery before dispositive-motion practice on the Stage One claim. Finally, Plaintiffs have not established any good cause for why they did not previously obtain or include the Declarations in the record on summary judgment. Accordingly, the Court concludes it would be inappropriate to consider the Declarations on Plaintiffs' Motion for Reconsideration.
In any event, the Court notes the Declarations would be inadmissible. In general, "[p]arties cannot call on arbitrators to explain anything 'vague and uncertain in their award.'" Am. Family Mut. Ins. Co. v. Spectre West Builders Corp., No. CV09-968-PHX-JAT, 2011 WL 488891 (D. Az. Feb. 4, 2011) (quoting Alexander v. McNear, 28 F. 403, 406 (C.C.D. Cal. 1886)); see also Ghebreselassie v. Coleman Sec. Servs., Inc., No. 88-6122, 1990 WL 4661, at *3 (9th Cir. Jan. 25, 1990) (noting an "arbitrator's declaration explaining the award, which stated a different basis for his decision" would not have been admissible if the plaintiff had objected). The Court finds the purpose of the arbitrators' Declarations is to explain the basis of the Arbitration Award, and not, as Plaintiffs contend, to explain procedural aspects of the arbitration or to demonstrate the matters submitted and considered by the arbitrators.
Accordingly, on this record the Court grants Defendants' Motion to Strike Plaintiffs' Exhibits [49]. The Court will not consider the arbitrators' Declarations or any argument that relies on the arbitrators' Declarations in deciding Plaintiffs' Motion for Reconsideration.
II. Plaintiffs' Motion for Reconsideration
As noted, Plaintiffs move the Court to reconsider its Opinion and Order [38] on the basis that the Court clearly erred when it (1) concluded the damages awarded in the arbitration were for breach of contract, and (2) found Defendants did not have a duty to indemnify Plaintiffs for the attorney fees awarded by the arbitrators. Pursuant to Federal Rule of Civil Procedure 54(b), "any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties . . . may be revised at any time before the entry of judgment." Fed. R. Civ. P. 54(b). "A motion for reconsideration can be granted if the court 1) is presented with new evidence, 2) committed clear error or the first decision was manifestly unjust, or 3) is aware of an intervening change in law." Tranxition, Inc. v. Lenovo (United States), Inc., No. 3:12-cv-01065-HZ, 2015 WL 9918263, at *1 (D. Or. Apr. 1, 2015). Parties seeking reconsideration must do more than "re-rais[e] arguments previously made or assert[ ] new legal theories or new facts which could have been presented before the initial hearing." Sam v. Deutsche Bank Nat'l Tr. Co., No. 03:13-cv-01521-MO, 2013 WL 6817888, at *2 (D. Or. Dec. 23, 2013).
Plaintiffs' arguments regarding the Court's finding that the Arbitration Award sounded in contract are largely re-statements of the arguments that they made during the course of litigating the Cross-Motions for Summary Judgment. Accordingly, the Court concludes Plaintiffs have failed to establish the Court clearly erred in so finding.
Plaintiffs also contend the Court clearly erred when it found Defendants did not have a duty to indemnify Plaintiffs for attorney fees and costs that the arbitrators found Plaintiffs liable to pay. Defendants rely on Hunters Ridge Condominium Ass'n v. Sherwood Crossing, LLC, 395 P.3d 892, 904-06 (Or. Ct. App. 2017), to argue the attorney fees should have been covered under the policies as supplementary payments, not as damages for the breach of contract.
As the Court noted in its Opinion and Order, the only apparent basis for the award of attorney fees by the arbitrators was the lease between Plaintiffs and the Grays. Op. and Or. [38], at 10. Moreover, the arbitrators expressly included the attorney fees and costs in the award of damages. The Arbitration Award provided:
As to the Claimants' remaining claims for negligence and breach of contract, the Respondents' Motion for Judgment as a Matter of Law is DENIED, and the Arbitrators hereby find as follows:
a. The Respondents were required to surrender the "Lands" to the Claimants in "good condition" as of March 31, 2013.
b. The "Lands" were not in "good condition" as of March 31, 2013.Declaration of Margaret M. Van Valkenburg [23] Ex. 7, at 2-4. The arbitrators went on to emphasize "[a]lthough the damages awarded herein are actual damages, and not punitive or exemplary damages, the Arbitrators find that the Respondents did not act in good faith." Id. Ex. 7, at 4 (emphasis added). Because the arbitrators classified the attorney fees as damages, and because the arbitrators' award of damages sounded in breach of contract, the Court concludes Defendants do not have a duty to indemnify Plaintiffs for the attorney fees under the insurance policies. Plaintiffs, therefore, have failed to establish the Court clearly erred when it concluded the attorney fees awarded by the arbitrators were damages for the breach of contract.
c. The Claimants have suffered damages due to the "Lands" not being in "good condition" as of March 31, 2013.
d. The "Lands" include the following specific items for which Claimants are awarded damages:
i. Stocking - Damages for overstocked stands and understocked stands are reasonably assessed in the amount of $400,000.
ii. Release - No damages for release of hardwood competition are assessed.
iii. Roads - The roads need repair (including culverts to address creek sediment), and the reasonable damage to the roads (including culverts) is $590,000.
* * *
ix. Attorney's Fees and Costs - After considering the Claimants' request for attorney's fees and costs as follows: McCorquodale Law Firm, 1500 hours, $450,000; Wilson and Drinkard, 200 hours, $60,000; McCorquodale Law Firm expenses as of August 8, 2016, $120,823.05; and Gray Family expenses of $276,890.72; totaling $907,714, the Arbitrators hereby find that the attorney's fees and costs are reasonable and necessary and due to be awarded to the Claimants.
Accordingly, the Court denies Plaintiffs' Motion for Reconsideration [47] to the extent that Plaintiffs seek reconsideration of the Court's Opinion and Order [38].
III. Motion for Partial Judgment
A district court "may direct entry of a final judgment as to one or more, but fewer than all, claims or parties . . . if the court expressly determines that there is no just reason for delay." Fed. R. Civ. P. 54(b). The judgment must be based on "a decision upon a cognizable claim for relief," and it must represent "an ultimate disposition of an individual claim entered in the course of a multiple claims action." Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 7 (1980) (internal quotation omitted).
In determining whether no just reason for delay exists, the court should consider "judicial administrative interests as well as the equities involved," including "such factors as whether the claims under review were separable from the others remaining to be adjudicated and whether the nature of the claims already determined was such that no appellate court would have to decide the same issues more than once even if there were subsequent appeals." Id. at 8. "It is appropriate to issue a final judgment on one claim in a multi-claim case where 'the legal issues now appealed will streamline the ensuing litigation.'" Am. Int'l Spec. Lines Ins. Co. v. KinderCare Learning Cntr. Inc., Civil Case Nos. 3:07-cv-00642-KI (Lead Case), 3:07-cv-00978-KI, 2008 WL 5146176, at *2 (D. Or. Dec. 5, 2008) (quoting Texaco, Inc. v. Ponsoldt, 939 F2d 794, 798 (9th Cir. 1991)). The moving party bears the burden of proving circumstances "unusual enough to merit departure from the court's general presumption against [entry of judgment under] Rule 54(b)." Birkes v. Tillamook Cty., No. 09-1084, 2012 WL 2178964, at *1 (D. Or. Jun. 13, 2012).
The Court agrees with the parties that a partial judgment as to the Stage One claim is appropriate in this case. Although Plaintiffs' Stage Two claim under a negligent claims handling theory is separate from the Stage One breach of contract claim, the final disposition as to the Stage One claim will affect the merits of the Stage Two claim. Accordingly, the Court finds there is no just reason for delay and it is appropriate to permit Plaintiffs to pursue their anticipated appeal of the Court's grant of summary judgment to Defendants on the breach of contract claim in order to finalize the litigation on Stage One before the Court proceeds to the merits of Stage Two. The Court, therefore, grants Plaintiffs' Motion in part insofar as Plaintiffs seek entry of a final partial judgment as to the breach of contract claim.
CONCLUSION
For these reasons, the Court GRANTS Defendants' Motion to Strike Plaintiffs' Exhibits [49], DENIES Plaintiffs' Motion for Reconsideration [47] in part insofar as Plaintiffs seek reconsideration of the Court's Opinion and Order [38], but GRANTS Plaintiffs' Motion in part insofar as Plaintiffs' seek a partial, final judgment on the breach of contract claim.
The Court directs the parties to confer and to submit to the Court a proposed form of partial final judgment no later than April 2, 2018. In addition, the Court also directs the parties to confer and to file a single, joint status report no later than April 2, 2018, that sets out the parties' recommendations for how to proceed on the Stage Two claim in light of Plaintiffs' anticipated appeal of the disposition of the breach of contract claim.
IT IS SO ORDERED.
DATED this 22nd day of March, 2018.
/s/ Michael W. Mosman
MICHAEL W. MOSMAN
Chief United States District Judge