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noting that reconsideration motions may be granted when there is a need to correct a manifest error or to prevent manifest injustice
Summary of this case from Collins v. Countrywide Home Loans, Inc.Opinion
Civil No. 02-00159 HG-BMK.
January 29, 2004
Defendant The Doctors' Company ("Defendant" or "TDC") challenges only a portion of the Order denying its Motion for Summary Judgment filed on November 25, 2002, and granting in part Plaintiff Reliance Insurance Company's ("Plaintiff" or "Reliance") Motion for Partial Summary Judgment filed on January 8, 2003. Specifically, TDC seeks withdrawal of those portions of the Court's Order granting Reliance's Motion for Partial Summary Judgment as to subrogation and the denial of TDC's Motion for Summary Judgment, including the award of $2 million in subrogation and attorneys' fees.
STANDARD OF REVIEW
Rule 59(e) of the Federal Rules of Civil Procedure permits a district court to reconsider and amend a previous order. The Rule, however, offers an "extraordinary remedy, to be used sparingly in the interests of finality and conservation of judicial resources." Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir. 2003) (citation omitted).
It is well settled in the Ninth Circuit that a successful motion for reconsideration must accomplish two goals. First, the motion must demonstrate some reason why the court should reconsider its prior decision. See Na Mamo O`Aha'ino v. Galiher, 60 F. Supp.2d 1058, 1059 (D. Hawaii 1999) (citation omitted). Second, it must set forth facts or law of a strongly convincing nature to induce the court to reverse its prior decision. Id. (citation omitted).
Courts have established only three grounds justifying reconsideration: (1) an intervening change in controlling law; (2) the discovery of new evidence not previously available; and (3) the need to correct clear or manifest error in law or fact in order to prevent manifest injustice. See Mustafa v. Clark County School District, 157 F.3d 1169, 1178-79 (9th Cir. 1998);Great Hawaiian Financial Corp. v. Aiu, 116 F.R.D. 612, 616 (D. Hawaii 1987), rev'd on other grounds, 863 F.2d 617 (9th Cir. 1988). The District of Hawaii has implemented these standards in Local Rule 60.1.
ANALYSIS
A. Previously unavailable evidence
Defendant TDC maintains that the recently obtained deposition testimonies of Layton C. Severson and Willis Hap Knutson constitute new evidence, which previously was unavailable, and which warrants the Court's reconsideration of its September 25, 2003 Order. The Severson and Knutson depositions do not constitute facts. Instead they contain legal theories regarding the duties to defend and indemnify, which may be found in Hawaii caselaw, available to TDC at the time it filed its Motion for Summary Judgment.
TDC's argument that it is not liable to indemnify its insureds until there is a demonstration that the insureds were liable is unavailing. As the Court explained in the September 25, 2003 Order, TDC, through settlement, waived that requirement.
B. Court error in finding that Drs. Kubota and Pearce were legally liable at settlement
To warrant reconsideration of the Court's September 25, 2003 Order, TDC must show that the Court "committed clear error or the initial decision was manifestly unjust." School Dist. No. 1J, Multhomah County, Or. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993). Reiteration of arguments originally made in support of, or in opposition to, a motion for summary judgment do not provice a valid basis for reconsideration. See All Hawaii Tours, Corp. v. Polynesian Cultural Center, 116 F.R.D. 645, 650 (D. Haw. 1987) (citation omitted), rev'd in part on other grounds, aff'd in part without opinion, 855 F.2d 860 (9th Cir. 1988).
TDC, in its Motion for Reconsideration, reiterates the arguments regarding Reliance's failure to establish the legal liability of Drs. Kubota and Pearce, which it previously asserted in its Motion for Summary Judgment, and which this Court rejected in its Order filed September 25, 2003.
C. TDC's obligation to pay more than two limits of liability
A motion for reconsideration is not a proper mechanism for presenting new legal theories that the movant failed to raise with respect to the underlying motion for summary judgment. See Carroll, 342 F.3d at 945; All Hawaii Tours, Corp., 116 F.R.D. at 650 (citing Rudell v. Comprehensive Accounting Corp., 802 F.2d 926, 933 (7th Cir. 1986), cert. denied, 480 U.S. 907 (1987)). The movant is not permitted to present new arguments following its loss at summary judgment. All Hawaii Tours, Corp., 116 F.R.D. at 650 (citation omitted). Failure to raise issues in opposition to summary judgment functions as a waiver. Id. (citing Publishers Resource v. Walker-Davis Publications, 762 F.2d 557, 561 (7th Cir. 1985)).
TDC's argument that it cannot, under the facts of the instant case, be obligated to pay more than two limits of liability is a new argument that TDC could have raised with respect to the underlying motions for summary judgment. In failing to raise this argument at summary judgment, TDC waived its right to assert the argument following the Court's ruling on the summary judgment motions, in the instant motion for reconsideration. See id.
TDC's argument also is substantively unsupported. TDC misconstrues the Court's September 25, 2003 Order as finding that Straub's liability was exclusively based on the hospital's status as the employer of Drs. Pearce and Kubota. In fact, the portion of the Court's Order that TDC quotes in its Motion for Reconsideration indicates a broader basis of liability: "`Straub was being sued under the theory of respondeat superior and agency principles on behalf of the acts and omissions of its agents, servants, and employees, including Drs. Kubota and Pearce.'" (Def. Mot. for Reconsideration at 24-25.) In addition to indicating that Straub was vicariously liable for the acts of its agents, servants, and employees, including, but not limited to, Drs. Kubota and Pearce, the Court, in its September 25, 2003 Order, noted that the civil complaint underlying the settlement at issue contained allegations of negligence against Straub. TDC's argument that it cannot, under the Court's findings, be obligated to pay more than two limits of liability is based on an incorrect reading of the Court's September 25, 2003 Order.
D. Apportionment of liability
Section 663-12 of the Hawaii Revised Statutes provides that "[w]hen there is such a disproportion of fault among joint tortfeasors as to render inequitable an equal distribution among them of the common liability by contribution, the relative degrees of fault of the joint tortfeasors shall be considered in determining their pro rata shares. . . ." TDC's contention, that there could have been a disproportionate distribution of fault among the parties to the settlement, cannot be raised now. Any objection TDC had to an equal distribution among Straub and Drs. Kubota and Pearce for their common liability should have been raised at settlement. TDC waived its objection when it entered into the settlement.
E. Reliance's entitlement to subrogation to the positions of Drs. Kubota and Pearce
TDC, in its Motion for Reconsideration, argues that Reliance cannot be subrogated to the positions of Drs. Kubota and Pearce because Reliance only made payment on behalf of Straub. This is a new argument and is not properly raised in a motion for reconsideration. See Carroll, 342 F.3d at 945 (holding that it is improper to present new legal theories not raised with respect to the underlying motion for summary judgment in a motion for reconsideration); All Hawaii Tours, Corp., 116 F.R.D. at 650 ("Failure to raise issues in opposition to summary judgment functions as a waiver.") (citation omitted). In any event, as the Court indicated throughout its September 25, 2003 Order, the facts are clear that Drs. Kubota and Pearce, in addition to Straub, were contemplated by Reliance as defendants in the underlying action and settlement. The Court's Order properly held that Reliance is entitled to be subrogated to the positions of Drs. Kubota and Pearce, as well as Straub.
F. TDC's bad faith argument
TDC argues that Reliance is not entitled to equitable subrogation because of its alleged bad faith with respect to the action underlying the settlement. This is another new argument, improperly raised in a motion for reconsideration. See Carroll, 342 F.3d at 945; All Hawaii Tours, Corp., 116 F.R.D. at 650 (citation omitted). Regardless, Reliance's Confidential Settlement Statement to the settlement judge does not appear to rise to the level of bad faith, as alleged by TDC.
G. Attorneys' fees
TDC argues that the Court improperly awarded Reliance attorneys' fees. As the Court's September 25, 2003 Order indicated, the Court applied Hawaii substantive law in evaluating the parties' respective motions for summary judgment. Federal courts sitting in diversity apply the law of the forum state regarding an award of attorneys' fees. Kona Enterprises, Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000) (citations omitted). Section 431:10-242 of the Hawaii Revised Statutes provides as follows:
Where an insurer has contested its liability under a policy and is ordered by the courts to pay benefits under the policy, the policyholder, the beneficiary under a policy, or the person who has acquired the rights of the policyholder or beneficiary under the policy shall be awarded reasonable attorney's fees and the costs of suit, in addition to the benefits under the policy." (Emphasis added.)
The fact that neither party had briefed the issue of Reliance's entitlement to attorneys' fees prior to the Court's September 25, 2003 Order is of no import. The Court, in ordering TDC to pay benefits under its policy to Reliance, was required by § 431:10-242 to award Reliance reasonable attorneys' fees.
CONCLUSION
In accordance with the foregoing, Defendant's Motion for Reconsideration is DENIED.IT IS SO ORDERED.