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The Humane Society of United States v. National Union Fire Insurance Co. of Pittsburgh, PA

United States District Court, D. Maryland

April 21, 2017

THE HUMANE SOCIETY OF THE UNITED STATES, et al.
v.
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA

          MEMORANDUM OPINION

          DEBORAH K. CHASANOW United States District Judge

         Presently pending and ready for resolution in this insurance coverage dispute is the motion for reconsideration and clarification filed by Plaintiff The Humane Society of the United States (“HSUS” or “Plaintiff”). (ECF No. 138). The court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, Plaintiff's motion will be denied.

         I. Background

         A more complete recitation of the factual background can be found in the prior memorandum opinion resolving the motion for summary judgment filed by Defendant National Union Fire Insurance Company of Pittsburgh, Pa. (“National Union” or “Defendant”). (See ECF No. 84, at 1-7). Plaintiff, along with Plaintiffs Jonathon Lovvorn and Kimberly Ockene (collectively, “Plaintiffs”), filed the initial complaint in this case in the Circuit Court for Montgomery County, and Defendant removed the action to this court.[1] (ECF Nos. 1; 2). Plaintiffs asserted a claim for insurance coverage against Defendant in connection with a lawsuit filed against HSUS by Feld Entertainment, Inc. under a 2009-2010 insurance policy (the “2009-2010 Policy”). (ECF No. 2 ¶¶ 15; 36). The original scheduling order set August 15, 2013, as the deadline for the amendment of pleadings. (ECF No. 11, at 2). The parties completed discovery on October 10, 2014, and Defendant moved for summary judgment on November 20, 2014 (ECF No. 68). On July 30, 2015, the court issued a memorandum opinion and order granting in part and denying in part Defendant's motion for summary judgment. (ECF Nos. 84; 85). The court entered judgment in favor of Defendant on a portion of the breach of contract claim, concluding that “no coverage is available for HSUS under the 2009-2010 Policy, ” but denied Defendant's summary judgment motion as to the individual plaintiffs.[2] (ECF No. 84, at 25-39).

         On September 8, 2015, Plaintiffs expressed their intent to seek leave to file an amended complaint for the first time (ECF No. 86), and on September 28, Plaintiffs filed a motion for leave to amend (ECF No. 90). In the proposed amended complaint, Plaintiffs sought to add claims for breach of contract and declaratory judgment under two additional insurance policies sold by Defendant to HSUS: Policy No. 965-95-51, for the period January 1, 2007, to June 1, 2008 (the “2007-2008 Policy”); and Professional Liability Insurance for Corporate Counsel, Policy No. 01-950-29-84, for the period June 1, 2009, to June 1, 2010 (the “Employed Lawyers Policy”). (See ECF No. 90-2).

         On June 10, 2016, while Plaintiffs' motion for leave to amend was pending, Plaintiff HSUS filed the same claims it was seeking leave to bring in this action as a new action against Defendant in this court. Complaint, The Humane Soc'y of the U.S. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., No. PWG 16-2029 (D.Md. June 10, 2016), ECF No. 1. That case is pending before the Honorable Paul W. Grimm. Plaintiffs did not withdraw their motion for leave to amend or inform the court of the filing of the new action.

         On July 11, 2016, the court denied the motion for leave to amend. Plaintiffs' motion had addressed only the liberal standards of Rule 15(a) and not the good cause necessary to modify the scheduling order under Rule 16(b). (ECF Nos. 98; 99). The court held that, even considering the arguments on good cause that had been advanced only in the reply brief, Plaintiffs failed to show good cause for modifying the scheduling order because they failed to establish that they exercised diligence in seeking leave to amend. (ECF No. 98, at 8-16). The court found that Plaintiffs had long known the underlying facts in this matter and could have either included the proposed claims in the complaint or added those claims before the expiration of the scheduling order deadline.[3] (Id. at 12). Instead, Plaintiffs had “deliberately elected not to include any claim under either the 2007-2008 D&O Policy or the Employed Lawyers Policy in the complaint” and had “waited until more than two months following the summary judgment opinion to seek leave to amend the complaint.” (Id. at 11-12). Plaintiffs first sought leave to amend the complaint more than two years after the scheduling order deadline, nearly a year after discovery had concluded, and two months after Defendant's summary judgment motion had been decided. The court determined that this delay showed a lack of diligence and would prejudice Defendant. (Id. at 13-14). Finally, although it was not necessary to consider Plaintiffs' Rule 15 arguments because Plaintiffs had failed to show good cause for modifying the scheduling order under Rule 16, the opinion also noted that denial of leave to amend under Rule 15 was appropriate when the amendment would prejudice the non-moving party, and “determine[d] that Defendant would be prejudiced by Plaintiffs' proposed amendments.” (Id. at 16 & n.7).

         II. Motion for Reconsideration

         In the instant motion, HSUS asks for reconsideration of the denial of leave to amend in light of the January 27, 2017, decision by the Court of Appeals of Maryland in a case filed against Defendant by The Fund for Animals (“FFA”), an affiliate of HSUS, regarding coverage for the same Feld litigation under HSUS's 2007-2008 Policy. (ECF No. 138); see Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. The Fund for Animals, Inc., 451 Md. 431 (2017). Plaintiff argues that the decision of the Court of Appeals affirming the entry of a judgment of liability on the 2007-2008 Policy in favor of FFA and against National Union is entitled to collateral estoppel effect in this case. (ECF No. 138-7, at 17-18). Plaintiff contends that it should be granted leave to amend its complaint to add its own claim against National Union under the 2007-2008 Policy because liability has already been determined. Therefore, Plaintiff argues, there would be no prejudice to Defendant and no impact on the imminent trial in this case on its pending claim for defense costs incurred by the two individual plaintiffs. (See Id. at 17-22).

         A. Standard of Review

         Plaintiff moves for reconsideration under Fed.R.Civ.P. 54(b), which governs reconsideration of an interlocutory order. See Fayetteville Inv'rs v. Commercial Builders, Inc., 936 F.2d 1462, 1469-70 (4th Cir. 1991). Rule 54(b) provides that “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 a judgment adjudicating all the claims and all the parties' rights and liabilities.” Fed.R.Civ.P. 54(b). In the United States Court of Appeals for the Fourth Circuit, the precise standard governing a motion for reconsideration of an interlocutory order is unclear. Fayetteville Inv'rs, 936 F.2d at 1472. While the standards articulated in Rules 59(e) and 60(b) are not binding in an analysis of Rule 54(b) motions, Am. Canoe Ass'n v. Murphy Farms, Inc., 326 F.3d 505, 514 (4th Cir. 2003), courts frequently look to these standards for guidance in considering such motions, Akeva, LLC v. Adidas Am., Inc., 385 F.Supp.2d 559, 565-66 (M.D. N.C. 2005).

Public policy favors an end to litigation and recognizes that efficient operation requires the avoidance of re-arguing questions that have already been decided. Most courts have adhered to a fairly narrow set of grounds on which to reconsider their interlocutory orders and opinions. Courts will reconsider an interlocutory order in the following situations: (1) there has been an intervening change in controlling law; (2) there is additional evidence that was not previously available; or (3) the prior decision was based on clear error or would work manifest injustice.

Akeva, 385 F.Supp.2d at 565-66 (citations omitted); see also Beyond Sys., Inc. v. Kraft Foods, Inc., No. PJM-08-409, 2010 WL 3059344, at *1-2 (D.Md. Aug. 4, 2010) (applying this three-part test when evaluating a motion for reconsideration under Rule 54(b)). A motion for reconsideration under Rule 54(b) may not be used merely to reiterate arguments previously rejected by the court. Beyond Sys., Inc., 2010 WL 3059344, at *2.

         B. ...


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