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Catlin Underwriting Agencies Limited v. San Diego Refrigerated Services

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA


July 28, 2010

CATLIN UNDERWRITING AGENCIES LIMITED, PLAINTIFF,
v.
SAN DIEGO REFRIGERATED SERVICES, DOING BUSINESS AS SAN DIEGO TERMINALS; PLA-ART INTERNATIONAL, DOING BUSINESS AS SAN DIEGO COLD STORAGE; SAN DIEGO COLD STORAGE, INC.; MIGUEL CUEVA, ALSO KNOWN AS MIGUEL TAMAYO; SERGIO HERNANDEZ; MARCUS FOODS, INC.; DOES 1 TO 100, INCLUSIVE, DEFENDANTS.
SAN DIEGO REFRIGERATED SERVICES, INC., COUNTER CLAIMANT
v.
CATLIN UNDERWRITING AGENCIES LIMITED, COUNTER DEFENDANT.
MIGUEL CUEVA, COUNTER CLAIMANT
v.
CATLIN UNDERWRITING AGENCIES LIMITED, COUNTER DEFENDANT.

The opinion of the court was delivered by: William Q. Hayes United States District Judge

ORDER

HAYES, Judge

The matter before the Court is the Motion to Alter or Amend Judgment (Doc. # 85) filed by Pla-Art International.

BACKGROUND

This action arises out of an insurance coverage dispute regarding coverage under an insurance policy issued by Plaintiff to Defendants San Diego Refrigerated Services, Inc. and Pla-Art International (collectively the "Insured Defendants"), which are engaged in the business of operating cold storage warehouse facilities. On January 29, 2008, Plaintiff initiated this action by filing its complaint. (Doc. # 1). The complaint sought a judicial determination that Plaintiff did not have a duty to indemnify or to defend the Insured Defendants in a lawsuit relating to the Insured Defendants' release and sale of goods belonging to a third party. Id. On April 13, 2008, the Insured Defendants filed an answer and counterclaim which sought a declaration that Plaintiff did have a duty to indemnify and defend the Insured Defendants and alleged a claim for breach of the covenant of good faith and fair dealing. (Doc. # 13). Plaintiff filed an answer denying the allegations of the counterclaim. (Doc. # 15). The parties filed cross-motions for summary judgment in early 2009. On March 16, 2009, the Court heard oral argument on the cross-motions for summary judgment. On May 12, 2009, the Court ruled on the parties' cross-motions. (Doc. # 54). The Court granted Plaintiff's motion for summary judgment as to the duty to defend and dismissed Plaintiff's claim for a judicial determination that there was no duty to indemnify as moot.*fn1 Id. at 10-11. The Court denied the Insured Defendants' motion for summary judgment. Id. at 10. On May 14, 2009, a judgment was entered. (Doc. # 55). On June 8, 2009, the Insured Defendants filed a notice of appeal. (Doc. # 58).

On September 14, 2009, the United States Court of Appeals for the Ninth Circuit entered an order dismissing the appeal. (Doc. # 70). The order states: "Appellee's motion to dismiss this appeal for lack of jurisdiction is granted because the district court's order challenged in this appeal did not dispose of the action as to all claims and all parties. See Fed. R. Civ. P. 54(b); Chancon v. Babcock, 640 F.3d 221 (9th Cir. 1981)." Id. at 1. The mandate of the Court of Appeals was issued on October 6, 2009. (Doc. # 71).

On October 7, 2009, this Court issued an order spreading the mandate and ordering each party to "file a status report within fifteen days of the date of this order identifying the claims and parties remaining in the case." (Doc. # 72). The order also vacated the judgment. Id.

On October 22, 2009, Plaintiff filed a status report which states that the only remaining claim is the Insured Defendants' second counterclaim for breach of the covenant of good faith and fair dealing. (Doc. # 74). On October 22, 2009, the Insured Defendants filed a status report which also states that the only remaining claim is the Insured Defendants' second counterclaim for breach of the covenant of good faith and fair dealing. (Doc. # 75). On January 6, 2010, the Magistrate Judge ordered the parties to appear at a status conference on January 27, 2010. (Doc. # 76). On February 9, 2010, Plaintiff filed an Amended Motion to Dismiss Defendants' Second Counterclaim. (Doc. # 81). The Insured Defendants conceded that this Court's May 11, 2009 order that Plaintiff had no duty to defend logically required the dismissal of the Insured Defendants' second counterclaim for breach of the covenant of good faith and fair dealing. (Doc. # 82 at 3). The insured defendants stipulated to the dismissal of the second counterclaim, but sought dismissal without prejudice. Id. On April 2, 2010, the Court granted Plaintiff's Amended Motion to Dismiss and dismissed the second counterclaim for breach of the covenant of good faith and fair dealing with prejudice. (Doc. # 83 at 3-4). The Court also amended its May 11, 2009 order granting summary judgment in favor of Plaintiff:

The Conclusion of the Court's May 11, 2009 Order (Doc. # 54) at page 11 line 24 through page 12 line 3 is vacated and replaced as follows:

IT IS HEREBY ORDERED THAT the Motion for Partial Summary Judgment as to Liability on its First Counterclaim Against Caitlin Underwriting Agencies (Doc. # 42) filed by Defendant Pla-Art International is DENIED. The Amended Motion for Summary Judgment filed by Plaintiff (Doc. # 47) is GRANTED as to Counts 1, 2, and 4 on the grounds that Plaintiff had no duty to defend. Defendants' first counterclaim for breach of the duty to defend is therefore DISMISSED WITH PREJUDICE. Plaintiff's Count 3 for failure to notify is DISMISSED AS MOOT. Plaintiff's claims relating to the Duty to Indemnify are DISMISSED AS MOOT because Defendants were not found liable in the underlying action.

Id. at 4. The Clerk of the Court was ordered to enter judgment in favor of Plaintiff and against Defendants. Id. On April 5, 2010, the Clerk fo the Court entered the judgment. (Doc. # 84).

On April 16, 2010, Pla-Art filed its Motion to Amend or Alter Judgment entered April 5, 2010 pursuant to Federal Rule of Civil Procedure 59. (Doc. # 85).

ANALYSIS

Pla-Art contends that the underlying complaint's first cause of action for breach of contract was "a fallback" which was pleaded in addition to conversion in case the plaintiffs in that action "were unsuccessful in establishing the intent required for the conversion claim." (Doc. # 85 at 2-3). Pla-Art contends that Plaintiff "has not met its burden to present undisputed facts that eliminate any possibility of coverage as a matter of law." Id. at 4. PlaArt contends that if the plaintiff in the underlying case had "succeeded in proving that its contract was breached inadvertently or negligently it could prevail in its claim for contract damages." Id. Pla-Art contends that it established that "there is a potential for coverage because plaintiff in the Underlying Case has alleged a breach of contract which may or may not be intentional." Id. Pla-Art further contends that summary judgment should not have been granted on Count IV of Plaintiff's complaint because the Court dismissed the duty to indemnify count as moot and "the applicability of an exclusion is only relevant" to the issue of duty to indemnify. (Doc. # 85-2 at 5).

Plaintiff contends that Pla-Art must establish that the Court committed clear error in order to alter or amend the judgment pursuant to Federal Rule of Civil Procedure 59(e). (Doc. # 86 at 3). Plaintiff contends that "there is nothing new in [Pla-Art's] argument--Defendant has merely attempted a different and more confusing formulation of the same" arguments previously raised. Id. at 5. Plaintiff contends that the underlying complaint alleged intentional breach of contract because it is accompanied by a claim for conversion. Id. at 5-6. Plaintiff contends that the underlying complaint was based on the "theft of inventory" by employees of the Insured Defendants, an intentional act which does not trigger the duty to defend. Id. at 7.

"It is appropriate for a court to alter or amend judgment under Rule 59(e) if (1) the district court is presented with newly discovered evidence, (2) the district court committed clear error or made an initial decision that was manifestly unjust, or (3) there is an intervening change in controlling law." Duarte v. Bardales, 526 F.3d 563, 567 (9th Cir. 2008) (quotation and citation omitted). Altering or amending a judgment pursuant to Rule 59(e) is an "extraordinary remedy to be used sparingly . . . ." Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir. 2003).

Pla-Art has not contended that there has been an intervening change in law or that there is any newly discovered evidence, "[t]herefore, the only question before" the Court is whether the previous order granting summary judgment in favor of Plaintiff and against the Insured Defendants was "clear error." See McDowell v. Calderon, 197 F.3d 1253, 1255 (9th Cir. 1999). The Court has reviewed the previous orders in this case as well as the briefing and evidence filed by the parties on the cross-motions for summary judgment. After reviewing the record, the Court concludes that there are no grounds to alter or amend the judgment in this case.

CONCLUSION

IT IS HEREBY ORDERED that the Defendant's Motion for Court to Reconsider, Alter or Amend Judgment pursuant to Rule 59(e) (#28) is DENIED.


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