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Gemini Insurance Co. v. North American Capacity Insurance Co.

United States District Court, D. Nevada

June 18, 2015

GEMINI INSURANCE COMPANY, Plaintiff,
v.
NORTH AMERICAN CAPACITY INSURANCE COMPANY, AND DOES 1-10, Defendants.

WOLKIN CURRAN, LLP, Amy K. Thomas, Esq., San Francisco, California, Attorney for Plaintiff GEMINI INSURANCE COMPANY.

THE GRAD LAW FIRM, Laleaque Grad, Las Vegas, NV, Attorney for Defendant NORTH AMERICAN CAPACITY INSURANCE COMPANY.

ORDER REGARDING STIPULATED MOTION TO STRIKE AND VACATE ORDERS [DOC. # 26 and 32] PURSUANT TO CONDITIONAL SETTLEMENT BETWEEN GEMINI INSURANCE COMPANY AND NORTH AMERICAN CAPACITY INSURANCE COMPANY

LARRY R. HICKS, District Judge.

Plaintiff Gemini Insurance Company and Defendant North American Capacity Insurance Company (collectively "Parties") have reached a conditional settlement, to eliminate continued litigation in this Court and subsequent appellate proceedings which would likely result in the Parties incurring fees and costs cumulatively exceeding the entire value of Plaintiffs original claims. The settlement would also promote judicial efficiency. The settlement is particularly appropriate in this matter, which involves atypical facts and an insurance endorsement form created in December 2002, making it unlikely that the Parties' specific disputes concerning the application of that endorsement form will ever require similar litigation.

The settlement is conditioned on having two orders in this case vacated, namely:

(1) The Court's February 6, 2015 Order [Doc. 26] granting Plaintiff Gemini Insurance Company's ("Gemini") Motion for Partial Summary Judgment [Doc. 16] and denying North American Capacity Insurance's ("North American") Counter-Motion for Summary Judgment [Doc. 21]; and
(2) The Court's April 3, 2015 Order [Doc. 32] denying North American's Motion for Reconsideration of the February 6, 2015 Order.

The Parties' stipulated request and joint motion to vacate those orders is supported by Federal Rules of Civil Procedure and federal precedent. The alternative is continued litigation and trial in this Court, followed by appellate proceedings and potential further litigation on remand, with cumulative fees and costs likely to exceed the dollars at issue.

I.

PROCEDURAL BACKGROUND

On January 14, 2014, Gemini filed a Complaint for Declaratory Relief and Equitable Contribution against North American in the Second Judicial Court of the State of Nevada (Case No. CV1400096). Based on diversity of citizenship, the Complaint was removed to the Federal District Court for the District of Nevada [Doc. No. 1].

In its Complaint, Gemini seeks reimbursement of defense expenses and settlement money paid on behalf of mutual insured Olsen General Contractors in an underlying construction defect action. The Parties filed Cross-Motions for Summary Judgment regarding North American's Duty to Defend [Doc. Nos. 16 and 21].

On February 6, 2015, the Court issued an Order Granting Gemini's Motion and Denying North American's Motion [Doc. No. 26]. On February 20, 2015 North American filed a Motion for Reconsideration regarding the February 6, 2015 Order [Doc. No. 27]. On April 3, 2015, the Court issued an Order Denying North American's Motion for Reconsideration [Doc. No. 32].

The Parties have since engaged in settlement discussions and have agreed on a monetary settlement number which is contingent on the Court granting the Stipulated Motion to Strike and Vacate the Orders pertaining to the Parties' Cross-Motions for Summary Judgment [Doc. Nos. 26 and 32].

Due to its concerns that the Orders have the potential to cause confusion and generate future litigation regarding the application of Designated Work Exclusions (including versions of that exclusion not at issue in the instant matter), North American had intended to seek appellate review of the duty to defend issue addressed in the Orders.

Given the atypical underlying facts and the circumstance that the Parties' primary dispute in this case arises from an endorsement that is more than twelve years old, the specific disputes reflected in Gemini's motion for summary judgment are unlikely to reoccur between the Parties. Gemini accordingly agreed with North American to stipulate and request that the Court strike and vacate the Orders to facilitate a settlement that would be efficient for this Court and the Parties. If the Court grants the Stipulated Motion, the Parties will fully settle all issues in this case, and there will be no trial or subsequent appellate process.

The Parties therefore submit the instant Stipulated Motion to Strike and Vacate the Orders [Doc. Nos. 26 and 32].

II.

LEGAL ARGUMENT

Federal Rule of Civil Procedure 54(b) governs non-final judgments, including "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." Fed.R.Civ.P. 54(b).[1] Under Rule 54(b), this Court has wide latitude to revise prior orders and an order "may be revised at any time before the entry of a judgment...." Fed.R.Civ.P. 54(b).

Under Rule 54(b), district courts have complete power over non-final orders and may vacate or revise them at any time, if doing so would be consonant with equity. United States Gypsum Co. v. P. Award Metals, Inc., No. C 04-04941 JSW, 2006 WL 1825705, at *1 (N.D. Cal. July 3, 2006); De la O v. Arnold-Williams, No. CV-04-0192-EFS, 2008 WL 4192033, at * 1 (E.D. Wash. Aug. 27, 2008) (quotation marks omitted); See also, Cuviello v. Cal Expo, No. 2:11-CV-2456 KJM, 2014 WL 1379873 (E.D. Cal. Apr. 8, 2014); Jaynes Corp. v. Amer. Safety Insurance Co. 2:10-cv-00764-MMGWF, 2014 WL 8735102 (D.Nev. Dec. 2, 2014) (joint motion to vacate summary judgment order per parties' conditional settlement, pursuant to FRCP 54(b) and 60(b)(6) granted by court). Copies of all Westlaw documents cited in this motion are collectively attached as Exhibit 1.

Courts that exercise Rule 54(b) power in the context of settlement have found vacating a prior order is "consonant with equity" if there are no reasons suggesting the order should not be vacated. See, Midmoutain Contractors, Inc. v. American Safety Indem. No. C10-1239-JLR, 2013 WL 5492952 (W.D. Wash. Oct. 1, 2013).

In United States Gypsum, a district court in the Northern District of California vacated several orders under Rule 54(b), including a summary judgment order and a claims construction order, to facilitate settlement. (United States Gypsum, 2006 WL 1825705, at * 1.) The court in that case required only that the agreement to vacate "was a significant factor in successfully resolving this litigation, " and that there were "no considerations that would justify denial of the motion." Id.

Likewise, in De la O, the court considered factors such as (1) whether all parties have agreed to vacate the order as a condition of the proposed settlement; (2) whether a former party to the action would be adversely affected by vacating the order; and (3) whether the costs of continuing the action with uncertain results are outweighed by the benefits of the proposed settlement. (De la O, 2008 WL 4192033, at * 1.)

In this case, all of the factors weigh in favor of vacating the Orders. First, all parties, Gemini and North American, have joined in the Stipulated Motion requesting that the Court strike and vacate the Orders. Next, there are no former parties to this action, and thus there is no party that can be adversely impacted if the Orders are vacated.

Finally, and most importantly, the benefits of the settlement outweigh costs of continuing the litigation, both in terms of litigation costs to the Parties as well as use of this Court's judicial resources. While the monetary settlement amount agreed to by the parties is confidential, the Parties represent that they would be expected to collectively expend more than the monetary settlement amount in litigation expenses if this matter were to proceed through trial. The Parties also agree that the duty to defend issue in this matter creates a high risk of appeal after trial, which would generate further litigation expenses, and possible remand to this Court.

Therefore, the Parties submit that granting the Stipulated Motion pursuant to Rule 54 is proper under the instant circumstance. In granting this Stipulated Motion, the Court will fully dispose of the case. This will allow the Parties to efficiently resolve their dispute without the use of any further judicial resources.

III.

CONCLUSION

The Parties hereby stipulate and jointly request that the Court strike and vacate the Orders on the Cross-Motions for Summary Judgment [Docs. 26 and 32], which is a condition to the settlement of this action. If the Stipulated Motion is not granted, the Parties will necessarily proceed with litigation and trial, followed by appellate proceedings. Given the limited scope of the Parties' legal disputes, and the dollars actually at issue versus the time and money that will be spent through conclusion of this action, the Court's approval of the Parties' request is in the interests of equity and efficiency, including judicial efficiency.

IT IS SO ORDERED.

Exhibit 1

Appendix of Unpublished Federal Decisions

• United States Gypsum Co. v. P. Award Metals, Inc., No. C 04-04941 JSW, 2006 WL 1825705 (N.D. Cal. July 3, 2006);
• De la O v. Arnold-Williams, No. CV-04-0192-EFS, 2008 WL 4192033 (E.D. Wash. Aug. 27, 2008);
• Cuviello v. Cal Expo, No. 2:11-CV-2456 KJM, 2014 WL 1379873 (E.D. Cal. Apr. 8, 2014);
• Jaynes Corp. v. Amer. Safety Insurance Co., 2:10-cv-00764-MMD-GWF, 2014 WL 8735102 (D.Nev. Dec. 2, 2014); and
• Midmoutain Contractors, Inc. v. American Safety Indem. No. C10-1239-JLR, 2013 WL 5492952 (W.D. Wash. Oct. 1, 2013).

Attorneys and Law Firms

David Leon Bilsker, Howrey Simon Arnold & White, San Francisco, CA, Michael M. Geoffrey, Chief Intellectual Property Counsel USG Corporation, Michael P. Padden, Thomas W. Jenkins, Howrey Simon Arnold & White, Chicago, IL, for Plaintiff.

Amanda Fox, Perkins Coie LLP, Menlo Park, CA, David Leon Bilsker, Howrey Simon Arnold & White, San Francisco, CA, for Defendant.

ORDER GRANTING JOINT MOTION TO VACATE CLAIM CONSTRUCTION ORDER AND ORDER GRANTING SUMMARY JUDGMENT OF NON-INFRINGEMENT AND TO ENTER DISMISSAL ORDER

JEFFREY S. WHITE, District Judge.

*1 This matter comes before the Court upon consideration of the parties' joint motion to vacate this Court's Claim Construction Order dated November 8, 2005 and the Order Granting Defendant's Motion for Summary Judgment of Non-Infringement dated March 1, 2006.

ANALYSIS

On June 30, 2006, the parties executed a Settlement Agreement in this matter. Pursuant to the terms of that agreement, the parties ask the Court to vacate its rulings on claim construction and summary judgment and to dismiss the matter with prejudice. A district court may vacate an order granting judgment upon consideration of" the consequences and attendant hardships of dismissal or refusal to dismiss' and the competing values of finality of judgment and right to re-litigation of unreviewed disputes.'" American Games, Inc. v. Trade Products, Inc., 142 F.3d 1164, 1168 (9th Cir.1998) (citing Dilley v. Gunn, 64 F.3d 1365, 1370-71 (9th Cir.1995) (quoting Ringsby Truck Lines, Inc. v. Western Conference of Teamsters, 686 F.2d 720, 722 (9th Cir.1982))).

In this case, however, the claims construction order and order granting summary judgment were interlocutory in nature and did not fully adjudicate the rights and claims of the parties. Thus, they can be vacated at any time prior to final judgment. See, e.g., Persistence Software, Inc. v. The Object People, Inc., 200 FRAT 626, 627 (N.D.Cal.2001); Fed.R.Civ.P. 54(b). In support of their motion, the parties contend that the agreement to file the instant motion was a significant factor in successfully resolving this litigation. The Court concludes that there are no considerations that would justify denial of the motion. Accordingly, the parties' joint motion to vacate is GRANTED.

CONCLUSION

For the foregoing reasons, the Court's Claim Construction Order dated November 8, 2005 (Docket No. 78) and the Court's Order Granting Defendant's Motion for Summary Judgment of Non-Infringement dated March 1, 2006 (Docket No. 160) are VACATED.

It is FURTHER ORDERED that Plaintiffs claims against Defendant and Defendant's counterclaims against Plaintiff are HEREBY DISMISSED WITH PREJUDICE. The Clerk is directed to close the file.

IT IS SO ORDERED.

Attorneys and Law Firms

D. Ty Duhamel, Joachim Morrison, Columbia Legal Services, Wenatchee, WA, Gregory D. Provenzano, Columbia Legal Services, Olympia, WA, Katrin E. Frank, Timothy K. Ford, McDonald Hoague & Bayless, Seattle, WA, for Plaintiffs.

Ann C. Essko, Carrie L. Bashaw, Michael Patrick Lynch, Victor M. Minjares, Attorney General of Washington, Olympia, WA, John K. Mcllhenny, Jr., Kenneth Orcutt, Office of the Attorney General Olympia, WA, for Defendants.

ORDER GRANTING JOINT MOTION TO VACATE ORDERS DECLARING RCW 4.24.350(2) UNCONSTITUTIONAL AND GRANTING JOINT MOTION (Ct.Rec.798) TO APPROVE CLASS SETTLEMENT WHICH IS CONDITIONED A COURT ORDER VACATING ORDERS DECLARING RCW 74.15.030(7), RCW ...


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