Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-00312/USCOURTS-caed-2_05-cv-00312-10/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1331 Fed. Question: Breach of Contract

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

SOVEREIGN GENERAL INSURANCE No. 2:05-cv-0312-MCE-DAD

SERVICES, INC., a California 

corporation, Consolidated with

No. 2:05-cv-1389-MCE-DAD

Plaintiff,

v. 

SCOTTSDALE INSURANCE COMPANY,

an Ohio corporation, et al.,

Defendants.

 /

WESTERN HERITAGE INSURANCE 

COMPANY, an Arizona corporation,

Plaintiff, MEMORANDUM AND ORDER 

v.

SOVEREIGN GENERAL INSURANCE 

SERVICES, INC., a California

Corporation; MARTIN F. SULLIVAN

SR. and GLORIA SULLIVAN, husband

and wife, guarantors,

Defendants.

 /

 

----oo0oo----

Case 2:05-cv-00312-MCE -DAD Document 102 Filed 10/15/07 Page 1 of 8
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2

On February 20, 2007, this Court issued its Memorandum and

Order granting summary judgment in favor of Scottsdale Insurance

Company, National Casualty Company, Scottsdale Indemnity Company,

Western Heritage Insurance Company, R. Max Williamson, and

Joseph A. Lughes (“the Scottsdale Parties”) with respect to all

claims asserted by Sovereign General Insurance Services (“SGI”)

against the Scottsdale Parties in these consolidated proceedings. 

SGI timely filed a Motion for Reconsideration with respect to

that Memorandum and Order, under Federal Rule of Civil Procedure

59(e), on March 1, 2007. For the reasons set forth below, that

Motion will be denied. The Scottsdale Parties’ request for

sanctions in having to oppose the Motion will also be denied.

BACKGROUND

The background of this case was fully explicated in the

Court’s initial Memorandum and Order of February 20, 2007

(“Order”) and need not be repeated here.

STANDARD

A court should be loathe to revisit its own decisions unless

extraordinary circumstances show that its prior decision was

clearly erroneous or would work a manifest injustice. 

Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 816,

108 S. Ct. 2166, 100 L. Ed. 2d 811 (1988). This principle is

generally embodied in the law of the case doctrine. 

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3

That doctrine counsels against reopening questions once resolved

in ongoing litigation. Pyramid Lake Paiute Tribe of Indians v.

Hodel, 882 F.2d 364, 369 (9th Cir. 1989). Nonetheless, in

certain limited situations the court may reconsider its prior

decisions. 

Absent "highly unusual circumstances," reconsideration

pursuant to Rule 59(e) is appropriate only where 1) the court is 

presented with newly discovered evidence; 2) the court committed

clear error or the initial decision was manifestly unjust; or

3) there is an intervening change in controlling law. See Turner

v. Burlington N. Santa Fe R.R. Co., 338 F.3d 1058, 1063 (9th Cir.

2003); School Dist. No. 1J, Multnomah County v. ACandS, Inc.,

5 F.3d 1255, 1263 (9th Cir. 1993)(citations and quotations

omitted). Local Rule 78-230(k) similarly requires a party

seeking reconsideration to demonstrate “what new or different

facts or circumstances are claimed to exist which did not exist

or were not shown upon such prior motion, or what other grounds

exist for the motion,” and “why the facts or circumstances were

not shown at the time of the prior motion.”

“Motions for reconsideration serve a limited function: to

correct manifest errors of law or fact or to present newly

discovered evidence. Such motions cannot in any case be employed

as a vehicle to introduce new evidence that could have been

adduced during pendency of the summary judgment motion.... Nor

should a motion for reconsideration serve as the occasion to

tender new legal theories for the first time.” Ayala v. KC

Envtl. Health, 426 F. Supp. 2d 1070, 1098 (E.D. Cal. 2006)

(emphasis in original) (internal citations omitted).

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4

 Mere dissatisfaction with the court’s order, or belief that

the court is wrong in its decision, are accordingly not grounds

for relief under Rule 59(e). Motions for relief from judgment

pursuant to Rule 59(e) are addressed to the sound discretion of

the district court. Turner v. Burlington N. Santa Fe R.R.,

supra, 338 F.3d at 1063.

ANALYSIS

The bulk of SGI’s reconsideration request revolves around

the contention that the Court’s ruling did not properly take into

account the distinction between various categories of insurance

premiums payable on policies issued by Western Heritage. 

Specifically, according to SGI, whether or not premiums were due

upon issuance of the policies, upon placement of endorsements, or

following policy audits makes a difference in determining whether

SGI owed premium amounts that affected its right to claim

expiration rights under the Western Heritage Agency Agreement. 

SGI asserts, for instance, that it had no obligation to collect

audit premiums generated after termination of its agency

agreement, explaining that its ability as a terminated agent to

collect such premiums would as a practical matter be severely

compromised. 

SGI’s argument misses the mark in justifying reconsideration

for several reasons. First, the distinction that SGI now

attempts to draw between so-called “pure” premium (due at policy

inception), “endorsement” premium and “audit” premium does not

amount to newly discovered evidence. 

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5

While SGI’s apparent reliance on this distinction surfaces almost

exclusively within the confines of this Motion for

Reconsideration, the differences between premium classifications

unquestionably existed prior to the time of the Court’s original

decision. Failure to make arguments in the original motion does

not convert arguments, and the evidence upon which they are

based, into newly discovered evidence. See, e.g., ACand S,

Inc., supra, 5 F.3d at 1263; see also Global Network Techs. v.

Regional Airport Auth., 122 F.3d 661 (8th Cir. 1997) (Rule 59(e)

motion may not be used to introduce new evidence that could have

been introduced during pendency of summary judgment motion).

Second, whether or not SGI should be responsible for

remitting audit premiums generated after termination does not

make a difference in determining the salient issue before the

Court with respect to premium payment; namely, whether SGI was

entitled to the use and control of Western Heritage expiration or

renewal rights because of the premiums it had paid at the time of

termination. Section 7.1 of the Western Heritage Agency

Agreement makes it absolutely clear that the right to such rights

depends on whether SGI had promptly accounted for and paid all

premiums owed “upon termination” of the Agreement. Nor does the

Agreement distinguish between various types of premium owed in

any event. To the contrary, the Agreement provides, at Section

4.1 that SGI shall be responsible for the payment of all premiums

“whether original, renewal or interim. 

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6

Even termination of the agency agreement does not alter this

responsibility unless Western Heritage elects, at its discretion,

to collect premium amounts directly from a producing sub-agent or

from the insured. See Western Heritage Agreement, Section 12.2.

Here, as explicated in the Court’s initial Order, it is

uncontroverted that premiums due to Western Heritage at the time

of SGI’s termination had not been paid, and indeed had not even

been properly accounted despite open recap requests made by

Western Heritage in April, May, and June of 2005, prior to the

August 1, 2004 effective date of termination. (Order, 5:8-13;

13:17-24). This disposes of SGI’s contention that it had a right

to policy expirations/renewals. SGI’s argument that it only was

obligated to remit monies actually collected or held, as opposed

to premium amounts due and unpaid, is unavailing. As indicated

in the Court’s Order, that argument runs counter to Section 4.2

of the Agreement, which early states that premiums are “deemed to

be payable” whenever a policy is issued. Moreover, the

“collected and held” language seized upon by SGI in this regard

also would appear to apply by its terms to “other monies and

securities” rather than “premiums” per se in any event.

SGI consequently cannot show that it is entitled to policy

renewal rights either on the basis of newly discovered evidence,

of which there is none, or any manifest injustice since the

Court’s ruling was based on the terms of the parties’ own Agency

Agreement. SGI also cannot make a viable argument that

reconsideration is mandated on grounds that additional contingent

commissions were owed but not paid at the time the Scottsdale

insurers terminated their agency agreements with SGI.

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7

There is no dispute that the agency agreements provide that

no further contingent commissions were due SGI following

termination of its agency agreements until all outstanding

liabilities on business placed by SGI, including loss reserves,

are satisfied. It is equally uncontroverted that all such

outstanding liabilities on SGI’s business have yet to be

satisfied. SGI nonetheless attempts to rehash its argument,

already rejected by the Court, that a contingent premium was due

on June 30, 2004, prior to the effective date of termination for

its agency agreements. No valid grounds for reconsideration have

been offered with respect to that issue. No newly discovered

evidence has been identified and no showing of manifest injustice

beyond that already argued has been cited. In addition, at no

point in its Motion does SGI contend that any intervening change

in controlling law has occurred that would warrant

reconsideration.

SGI’s remaining arguments can be disposed of just as easily. 

The Court’s reasons for declining to apply California Insurance

Code section 769(d) have already been fully explicated in its

initial Order. No error of law resulting in manifest injustice

has been identified. Similarly, SGI offers no new evidence or

any other valid justification for revisiting the Court’s

rejection of its fraud claim.

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 Because oral argument would not be of material assistance, 1

the Court orders this matter submitted on the briefs. E.D. Cal.

Local Rule 78-230(h).

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CONCLUSION

For all the foregoing reasons, SGI’s Motion for

Reconsideration is DENIED. The Court, however, DENIES Scottsdale 1

Parties’ request to assess attorney’s fees against SGI on grounds

that the Motion was entirely groundless, frivolous, and improper.

IT IS SO ORDERED.

Dated: October 12, 2007

_____________________________

MORRISON C. ENGLAND, JR.

UNITED STATES DISTRICT JUDGE

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