Opinion ID: 2982336
Heading Depth: 2
Heading Rank: 1

Heading: Defendant’s motion for reconsideration

Text: Federal Rule of Civil Procedure 59(e) permits a party to file a motion to alter or amend a judgment. The Sixth Circuit has determined, however, that a motion to alter or amend judgment 5 No. 13-1752 may be granted only: “(1) to correct a clear error of law; (2) to account for newly discovered evidence or an intervening change in the controlling law; or (3) to otherwise prevent manifest injustice.” CGH Transp. Inc. v. Quebecor World, Inc., 261 F. App’x. 817, 823 (6th Cir. 2008) (citing GenCorp, Inc. v. Am. Int'l Underwriters, 178 F.3d 804, 834 (6th Cir. 1999)). It is well-settled that “parties cannot use a motion for reconsideration to raise new legal arguments that could have been raised before a judgment was issued.” Roger Miller Music, Inc. v. Sony/ATV Publ'g, 477 F.3d 383, 395 (6th Cir. 2007). Additionally, reconsideration motions cannot be used as an opportunity to re-argue a case. Furthermore, a party may not introduce evidence for the first time in a motion for reconsideration where that evidence could have been presented earlier. See, e.g., Sommer, 317 F.3d at 691; CGH, 261 F. App’x. at 824 (affirming denial of reconsideration and stressing: “It is hard to imagine how an affidavit from one of [plaintiff’s] own witnesses would have been previously unavailable to [plaintiff], and [plaintiff] has not explained why it failed to introduce this evidence in opposition to summary judgment.”). Defendant’s letter denied Plaintiff coverage based on two reasons: 1) the Electronic/Computer Systems Rider and 2) the “loan loss” provision in Section 2(e) of the Bond. Neither reason cited by Defendant in the denial letter mentioned the language contained in Agreement D of the Bond, mentioned the word “original,” or addressed in any manner whether a faxed instruction is covered by the Bond. Agreement D of the Bond, entitled “Forgery or Alteration,” guarantees coverage of any: “Loss resulting directly from the Insured having, in good faith, paid or transferred any Property in reliance on any Written Original. . . (4) Withdrawal Order [or] (6) instruction or advice purportedly signed by a customer of the Insured. . .which (a) bears a handwritten signature of any maker, drawer or endorser which 6 No. 13-1752 is a Forgery….” Defendant in its motion for reconsideration raised for the first time the argument that the Bond only covers losses resulting from reliance on a forged wire transfer if Plaintiff had actual physical possession of the “Original” instrument on which the forgery appeared. Defendant argues that it is undisputed that Plaintiff relied on a faxed wire transfer request. And since a fax is a reproduction of a document fed into a fax machine by the sender, it is by definition not an Original and thus not the first rendering or archetype of a document. Therefore, Defendant concludes that the faxed wire transfer request was not covered by the Bond. Defendant made no mention of this argument regarding the language contained in Agreement D in any of its pleadings prior to the district court’s entry of judgment. Defendant did not raise this issue in its Answer or in either of its two briefs in district court. Instead, Defendant focused solely on the “loan loss” exclusion in section 2(e) of the Bond as the reason the district court should deny Plaintiff coverage under the Bond. Not until the district court entered its judgment did Defendant raise a defense based on the language contained in Agreement D. As a result, the district court did not abuse its discretion when it refused to entertain this new argument which should have, and could have been raised earlier. In response, Defendant cites Carolina Casualty to support its contention that this Court should entertain this legal argument even if it was not raised earlier. Carolina Cas. Ins. Co. v. Canal Ins. Co., 13-3610, 2014 WL 114667 (6th Cir. Jan. 14, 2014). Defendant argues that this case holds that new legal arguments can be raised in this Court, even if those arguments were “not squarely presented” below. Id. at . Defendant is wrong because in Carolina Casualty this Court held that waiver did not apply when the lower court rested its holding on the new legal issue before the court. Id. In the instant case, however, the lower court did not rest its holding 7 No. 13-1752 on the fact that a fax was an Original within the meaning of the Bond. The lower court rested its holding on the fact that section 2(e) of the Bond did not preclude coverage of Plaintiff’s claim. Accordingly, this case can be distinguished from Carolina Casualty. In addition to federal rules, state law precludes Defendant from raising new legal arguments denying coverage on appeal. Michigan law holds that, “[a]s a general rule, once an insurance company has denied coverage to an insured and stated its defenses, the company has waived or is estopped from raising new defenses.” City of Warren, Mich. v. Int'l Ins. Co. of Hannover, Ltd., 524 F. App’x 254, 259 (6th Cir. 2013) (citing Lee v. Evergreen Regency Coop. & Mgmt. Sys., Inc., 390 N.W.2d 183, 185 (Mich.Ct.App.1986)). “Because waiver is an intentional relinquishment of a known right, an insurer will be held to waive a coverage defense if the insurer is aware of the facts supporting the defense.” Bristol W. Ins. Co. v. Whitt, 406 F. Supp. 2d 771, 781 (W.D. Mich. 2005) (citing S. Macomb Disposal Auth. v. Mich. Mun. Risk Mgmt. Auth., 526 N.W.2d 3, 4 (Mich.Ct.App.1994)); LeDuff v. Auto Club Ins. Ass'n, 536 N.W.2d 812, 815 (Mich.Ct.App.1995). Defendant’s letter denied Plaintiff coverage for two reasons, neither of which has anything to do with the language of Insuring Agreement D or mentions the word “original.” Defendant never addressed in its denial letter whether a faxed instruction is covered by the Bond. Rather, Defendant’s letter believed that Plaintiff’s loss would have been covered under the Bond and specified two reasons for denial: the Electronic/Computer Systems Rider and the “loan loss” exclusion in Section 2(e). Defendant as the insurer that drafted the policy is familiar with all of the nuances of its policy. It not only drafted the policy, but enforces it on a frequent basis. It was in possession of the policy and had the opportunity to fully review all of its terms prior to deciding whether to pay 8 No. 13-1752 or deny the claim. Defendant read the terms of the policy and decided that it had two bases upon which to deny the claim: 1) the Electronic/Computer Systems Rider and 2) the “loan loss” exclusion. From the denial letter to all its pleadings in district court, Defendant relied on these two arguments as to why Plaintiff’s claim was not covered by the Bond. It was only in its motion for reconsideration after the district court denied its motion for summary judgment and granted Plaintiff’s motion for summary judgment that Defendant introduced this new argument that the language contained in Agreement D excludes Plaintiff’s claim. Since Defendant used its motion for reconsideration as an opportunity to re-argue the case and introduce a new argument that could have been presented earlier, the district court did not abuse its discretion in denying Defendant’s motion for reconsideration.