Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_08-cv-02558/USCOURTS-caed-2_08-cv-02558-35/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

DALE M. WALLIS, D.V.M., JAMES L. 

WALLIS, and HYGIEIA BIOLOGICAL 

LABORATORIES, INC., a California 

Corporation,

Plaintiffs,

v.

CENTENNIAL INSURANCE COMPANY, 

INC., a New York Corporation,

and ATLANTIC MUTUAL INSURANCE 

CO., INC., a New York 

Corporation, 

Defendants,

AND RELATED COUNTERCLAIMS AND 

THIRD PARTY COMPLAINT. 

CIV. NO. 08-2558 WBS AC

MEMORANDUM AND ORDER RE: 

MOTION TO AMEND JUDGMENT AND 

BILL OF COSTS

----oo0oo----

On November 12, 2013, this court entered judgment in 

favor of defendants Centennial Insurance Company, Inc., and 

Atlantic Mutual Insurance Company, Inc., after a nine-day bench 

trial. Plaintiffs Dale M. Wallis, D.V.M. (“Dr. Wallis”), James 

Case 2:08-cv-02558-WBS-AC Document 275 Filed 02/20/14 Page 1 of 11
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L. Wallis (“Mr. Wallis”), and Hygieia Biological Laboratories, 

Inc. (“Hygieia”) now move the court to amend its findings or make 

additional findings pursuant to Federal Rule of Civil Procedure 

52(b) and to alter and amend the judgment pursuant to Rule 59(e). 

(Docket No. 271.) 

I. Factual and Procedural Background

This action arises out of defendants’ alleged 

wrongdoing in defending Dr. Wallis under a professional liability 

insurance policy. After plaintiffs filed their Complaint, 

defendants subsequently filed a counterclaim against plaintiffs 

and a third party complaint (“TPC”) against plaintiffs’ attorney, 

Joanna Mendoza. Following a bench trial, the court ruled that: 

(1) plaintiffs had failed to prove by a preponderance of evidence 

their claims for breach of contract and breach of the implied 

covenant of good faith and fair dealing; (2) defendants had 

failed to prove by a preponderance of evidence their counterclaim 

for declaratory relief against plaintiffs and their TPC against 

Mendoza; and (3) defendants were entitled to judgment in the 

amount of $115,995.90 on their counterclaim for indemnity against 

plaintiffs. Wallis v. Centennial Ins. Co., --- F. Supp. 2d. ----

, Civ. No. 08-2558 WBS AC, 2013 WL 6000974, at *1-16 (E.D. Cal. 

Nov. 12, 2013). 

II. Motion to Amend

Rule 52(b) provides, “[o]n a party’s motion filed no 

later than 28 days after the entry of judgment, the court may 

amend its findings--or make additional findings--and may amend 

the judgment accordingly.” Fed. R. Civ. P. 52(b). “Motions 

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under Rule 52(b) are primarily designed to correct findings of 

fact which are central to the ultimate decision; the Rule is not 

intended to serve as a vehicle for a rehearing.” Crane-McNab v. 

County of Merced, 773 F. Supp. 2d 861, 873 (E.D. Cal. 2011)

(Shubb, J.) (citing Davis v. Mathews, 450 F. Supp. 308, 318 (E.D.

Cal. 1978)). Therefore, “[a] motion to amend a court’s factual 

and legal findings is properly denied where the proposed 

additional facts would not affect the outcome of the case or are 

immaterial to the court’s conclusions.” Ollier v. Sweetwater 

Union High Sch. Dist., 858 F. Supp. 2d 1093, 1117 (S.D. Cal. 

2012) (citing Weyerhaeuser Co. v. Atropos Island, 777 F.2d 1344, 

1352 (9th Cir. 1985)).

Rule 59(e) provides that a court may alter or amend a 

judgment. The rule “offers an ‘extraordinary remedy, to be used 

sparingly in the interests of finality and conservation of 

judicial resources.’” Kona Enters., Inc. v. Estate of Bishop, 

229 F.3d 877, 890 (9th Cir. 2000) (quoting 12 James Wm. Moore et 

al., Moore’s Federal Practice § 59.30[4] (3d ed. 2000)). 

Reconsideration under Rule 59(e) is appropriate only where the 

court “(1) is presented with newly discovered evidence, (2) 

committed clear error or the initial decision was manifestly 

unjust, or (3) if there is an intervening change in controlling 

law.” Smith v. Clark Cnty. Sch. Dist., 727 F.3d 950, 955 (9th 

Cir. 2013) (quoting Sch. Dist. No. 1J, Multnomah Cnty., Or., v. 

ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993)). To be 

successful, a Rule 59(e) motion “should not merely present 

arguments previously raised.” United States v. Wetlands Water 

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Dist., 134 F. Supp. 2d 1111, 1130 (E.D. Cal. 2001) (Wanger, J.) 

(citing Backlund v. Barnhart, 778 F.2d 1386, 1388 (9th Cir. 

1985)). 

A. Amendments to Findings of Fact

Plaintiffs request several amendments to the findings 

of fact that would simply add more background to the court’s 

memorandum of decision without being central to the decision or 

affecting the judgment. These proposed amendments include: (1) 

providing greater context to the finding that the Sedgwick firm 

withdrew because Mendoza accused the firm of engaging in 

unethical conduct; (2) clarifying the court’s finding regarding 

the purpose of a payment plaintiffs received in the 2009 

settlement; and (3) adding more detail to the finding regarding 

the jury verdict in the underlying matter. (Pls.’ Mem. at 11:25-

12:27; 13:1-4; 13:15-14:1 (Docket No. 271-1).) The addition of 

these proposed amendments would not change the court’s opinion, 

and the court declines to amend its decision simply to articulate 

the facts in a way that would be pleasing to plaintiffs.1 See

Ollier, 858 F. Supp. 2d at 1117 (“A motion to amend a court’s 

factual and legal findings is properly denied where the proposed 

additional facts would not affect the outcome of the case or are 

immaterial to the court’s conclusions.”). Accordingly, the court 

 

1 Counsel for plaintiffs repeatedly assert in their 

briefs that “it is presumed that each of the factual findings 

form the basis of the Court’s conclusions of law and the judgment 

entered on November 12, 2013, and, therefore, hold equal 

importance in the Court’s analysis.” (See, e.g., Pls.’ Mem. at 

1:17-19.) This assertion is not true and has no basis in law. 

Otherwise, the myriad cases rejecting amendments to immaterial 

factual findings would not exist. See, e.g., Crane-McNab, 773 F. 

Supp. 2d at 872-77. 

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will deny plaintiffs’ motion to amend these findings. 

The court also sees no purpose to plaintiffs’ proposed 

amended finding that the Mennemeier, Glassman & Stroud firm 

withdrew only as a result of a breakdown in its relationship with 

plaintiffs. (Pls.’ Mem. at 15:13-16:12.) This amendment would 

not alter the court’s conclusion that plaintiffs failed to prove

their claim that defendants interfered with the ability of 

counsel to litigate the case. If anything, it would amount to an

affirmation that plaintiffs’ own actions rather than any 

interference by defendants caused the deterioration in their 

relationship with Andy Stroud’s firm. In addition, plaintiffs 

seek an amended finding regarding Stroud’s testimony to clarify 

that Stroud admitted that plaintiffs had raised concerns 

regarding his representation. (Id. at 16:13-18:20.) This, too, 

would not alter the court’s conclusion that the reduced payments 

from defendants did not impact Stroud’s defense of the case. 

Both Stroud and Wilcox testified to this effect, and the record

evinces that many of plaintiffs’ concerns related to differences 

over strategy, rather than limitations caused by defendants. 

Accordingly, the court will deny these proposed amendments. 

Plaintiffs also seek to amend the court’s finding that 

“Mendoza did not seek payment directly from plaintiffs,” (Nov. 

12, 2013 Order at 6:18-19 (Docket No. 268)), as well as the 

court’s later conclusion that plaintiffs failed to show “by a 

preponderance of the evidence that they ever had, or will have, 

to make up the shortfall between the fees Mendoza billed and the 

amount defendants paid,” (id. at 16:23-25). Plaintiffs contend 

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that the evidence presented at trial, including Mendoza’s fee 

agreements and invoices as well as correspondence with 

defendants, demonstrates that Mendoza sought payment directly 

from plaintiffs and that plaintiffs are legally obligated to pay 

the fees. (Pls.’ Mem. at 2:1-8:11.) The court considered this 

evidence at trial and found it unpersuasive. Dr. Wallis 

testified that she did not recall paying fees to Mendoza, and the 

court need not infer that Mendoza sought payment simply because 

Mendoza had discussions with plaintiffs regarding their finances. 

Further, plaintiffs contend the documents make it “clear” that 

“Mendoza was going to make the demand of the plaintiffs to pay 

the fees required by the fee agreements . . . if defendants 

failed to pay them.” (Id. at 7:26-28.) Yet plaintiffs’ entire 

argument at trial was that defendants failed to pay the fees, and 

plaintiffs did not present any persuasive evidence of such a 

demand from Mendoza. 

Moreover, this amendment would still not change the 

court’s conclusion that plaintiffs failed to prove any damages 

caused by defendants. Even if plaintiffs intended ultimately to 

pay the difference between what Mendoza charged and what the 

defendants paid, it does not mean plaintiffs suffered damages as 

a result of defendants’ bad faith or breach of the duty to 

defend. Plaintiffs failed to prove that they have suffered any 

damages in the form of the shortfall between what Mendoza billed 

and what was reasonable and necessary. Any amendment to the 

court’s findings regarding plaintiffs’ intent to eventually pay 

these fees and costs would not affect this conclusion. 

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Accordingly, the court will deny the proposed amendment. 

Defendants were required only to pay what was 

reasonable and necessary to the defense. To that end, plaintiffs

seek an amended finding that the unpaid fees and costs were 

reasonable and necessary to the defense. (Pls.’ Mem. at 8:12-

11:24.) Plaintiffs contend that the evidence presented at trial, 

including the fee agreements, invoices, and status reports, 

establish the value of these services. But plaintiffs failed to 

prove that those services were reasonable and necessary to the 

defense. Simply because plaintiffs agreed to pay for these fees 

and costs does not mean they were reasonable and necessary and 

therefore that the insurer is obligated to cover them.2 Further, 

the court already considered the evidence plaintiffs discuss in 

their motion and found it insufficient to prove their claim by a 

preponderance of the evidence. Plaintiffs offer no new evidence 

or changes in law that would otherwise disturb this conclusion, 

much less the court’s holding that the question of reasonableness 

must be determined in arbitration.

3 Absent a determination from 

an arbitrator regarding the reasonableness of the fees and costs, 

 

2 Plaintiffs assert that their agreement to pay for the 

fees and costs “was evidence of the value of those services.” 

(Pls.’ Mem. at 9:14.) Plaintiffs cite Caulfield v. Market St. 

Ry. Co., 20 Cal. App. 2d 220 (1st Dist. 1937), for this 

proposition, but omit the remainder of the sentence in Caulfield

noting that amounts agreed to be paid for services “is not 

conclusive” as evidence of their reasonable value, id. at 221.

3 Plaintiffs’ assertion that the court could simply apply 

the reasonableness factors enunciated in Stokus v. Marsh, 217 

Cal. App. 3d 647, 647 (1st Dist. 1990), is also misplaced, as the

court is not aware of any published authority applying that case 

in the Cumis fees context, where arbitration is the method 

suggested by statute to resolve fee disputes. 

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there are no grounds for the court to revisit this conclusion.

4

Accordingly, the court will deny plaintiffs’ proposed amendment 

regarding the reasonableness of fees and costs. 

Finally, plaintiffs seek an amended finding that Mr. 

Wallis paid Joel Baiocchi for work related to the crosscomplaint. (Pls. Mem. at 14:2-15:12.) As evidence, plaintiffs 

point to invoices in Exhibit 503, but there is nothing in that 

exhibit purporting to show a payment by Mr. Wallis. In any 

event, this amended finding would not change the court’s 

conclusion that the dispute regarding the fees owed for services 

performed by Baiocchi is also subject to the arbitration. 

Accordingly, the court will not amend its findings relating to 

any payment made by Mr. Wallis to Baiocchi.

In sum, plaintiffs seek a series of amendments that 

would simply add more background to the court’s decision, or 

simply re-hash arguments that the court found unpersuasive at 

trial, and perhaps posture plaintiffs better for their appeal, 

but would not affect the court’s conclusions,. Because Rule 

52(b) “is not intended to serve as a vehicle for a rehearing,” 

Crane-McNab, 773 F. Supp. 2d at 873, and such motions are 

“properly denied where the proposed additional facts would not 

 

4 Plaintiffs argue for the first time in their Reply 

brief that requiring the parties to arbitrate the question of 

reasonable fees and costs would subject plaintiffs to “manifest 

injustice” because such arbitration cannot occur pursuant to the 

Order of Liquidation for Atlantic Mutual Insurance Company and 

Centennial Insurance Company, issued by the New York Supreme 

Court on April 27, 2011. Plaintiffs do not elaborate further, 

and it is not clear why the Order of Liquidation, which enjoined

and stayed all matters against defendants, would apply only to an 

arbitration award and not to a judgment from this court. 

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affect the outcome of the case or are immaterial to the court’s 

conclusions,” Ollier, 858 F. Supp. 2d at 1117, the court will not 

amend its Order on these grounds. 

B. Reduction of Judgment 

In addition to their above proposed amendments, 

plaintiffs ask the court to reduce the judgment in favor of 

defendants on their counterclaim for indemnity from $115,995.90 

to $28,998.98. (Pls. Mem. at 18:21-19:14.) Plaintiffs contend 

that Andrew Stroud testified that his firm only spent twenty to 

twenty-five percent of its time defending the sanctions appeal as 

it related to plaintiffs, and thus plaintiffs should only be 

required to compensate defendants for this amount. Although 

plaintiffs are incorrect as to the substance of Stroud’s 

testimony--he testified that twenty to twenty five percent of the 

time was spent on Mendoza, with the remainder ostensibly relating 

to plaintiffs--plaintiffs are correct in principle. The court 

will not require plaintiffs to indemnify legal fees incurred to 

defend Mendoza. Therefore, plaintiffs shall only compensate 

defendants for seventy-five percent of the $115,995.90 in fees 

incurred during the defense and appeal of the sanctions, the 

amount of time Stroud testified was attributable to plaintiffs. 

Accordingly, the court shall amend the judgment to award 

defendants $86,996.93 on the counterclaim for indemnity. 

III. Costs

Rule 54(d) of the Federal Rules of Civil Procedure and 

Local Rule 292(f) govern the taxation of costs to losing parties, 

subject to limits set under 28 U.S.C. § 1920. See 28 U.S.C. § 

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1920 (enumerating taxable costs); Fed. R. Civ. P. 54(d)(1) 

(“Unless a federal statute, these rules, or a court order 

provides otherwise, costs--other than attorney’s fees--should be 

allowed to the prevailing party.”); E.D. Cal. L.R. 292(f); 

Crawford Fitting Co. v. J.T. Gibbons, 482 U.S. 437,441 (1987) 

(limiting taxable costs to those enumerated in § 1920). The 

district court has discretion to determine what constitutes a 

taxable cost within the meaning of § 1920. Amarel v. Connell, 

102 F.3d 1494, 1523 (9th Cir. 1997); Alflex Corp. v. 

Underwriters’ Lab., Inc., 914 F.2d 175, 177 (9th Cir. 1990). The 

losing party has the burden of overcoming the presumption in 

favor of awarding costs to the prevailing party. See Russian 

River Watershed Protection Comm. v. City of Santa Rosa, 142 F.3d 

1136, 1144 (9th Cir. 1998); Amarel, 102 F.3d at 152.

Defendants have submitted a cost bill totaling 

$4,607.65. (Docket No. 270.) Plaintiffs do not object, and the 

court finds all costs to be reasonable. Accordingly, the cost of 

$4,607.65 will be allowed.

IT IS THEREFORE ORDERED that:

(1) plaintiffs’ motion that the court amend its 

findings or make additional findings, or to alter or amend the 

judgment, be, and the same hereby is, GRANTED as to the amount of 

damages awarded on defendants’ counterclaim for indemnity, and 

DENIED in all other respects; 

(2) JUDGMENT SHALL BE AMENDED to award defendants 

$86,996.93 against Dr. Wallis, Mr. Wallis, and Hygieia, jointly 

and severally;

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(3) Costs of $4,607.65 will be taxed to plaintiffs.

The Clerk of the Court is instructed to amend the 

judgment accordingly.

Dated: February 20, 2014

 

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