Liberty Mutual Fire Insurance Company v. J&S Supply Corp.
1:13-cv-04784
S.D.N.Y.Sep 29, 2017Background
- Liberty Mutual (LMFIC and LMIC) sued J&S Supply seeking pro rata reimbursement for settlement payments in the underlying Kestenbaum action for years J&S was uninsured.
- The Court granted Liberty Mutual partial summary judgment in a June 29, 2015 order, holding the SMP Policy allocates liability pro rata based on insurer time on the risk.
- J&S moved for reconsideration (Sept. 2016), arguing the SMP Policy requires an all-sums allocation or is ambiguous and therefore reconsideration or remand is appropriate.
- J&S relied on In re Viking Pump and the Second Circuit’s Olin decision as intervening law supporting its position; Liberty Mutual opposed reconsideration.
- The Court determined Viking Pump and Olin did not change the governing rule here because both confirm that policy contract language controls allocation and the SMP Policy lacks the non-cumulation/prior-insurance clauses that triggered all-sums treatment in those cases.
- The Court denied J&S’s motion for reconsideration, finding no intervening change in controlling law, no clear error, and no manifest injustice warranting reversal of the June Order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper allocation method under the SMP Policy: pro rata vs. all sums | Liberty Mutual: SMP Policy provides for pro rata allocation based on time on risk. | J&S: SMP Policy requires all-sums allocation or is ambiguous so dispute should proceed as to each policy. | Court: Pro rata allocation affirmed; SMP Policy lacks non-cumulation/prior-insurance language that would require all sums. |
| Whether Viking Pump is an intervening change of law requiring reconsideration | Liberty Mutual: Viking Pump reaffirms contract-language rule and does not disturb the June Order. | J&S: Viking Pump supports reconsideration and all-sums allocation. | Court: Viking Pump is not an intervening change here; it distinguishes Consolidated Edison on facts and focuses on contract language. |
| Whether Olin controls and mandates a different result | Liberty Mutual: Olin confirms ordinary contract interpretation applies and is consistent with the June Order. | J&S: Olin supports all-sums where prior-insurance/non-cumulation clauses exist. | Court: Olin is consistent with June Order; policies in Olin had clauses not present here. |
| Whether relief is warranted under Rule 54(b) (clear error/manifest injustice) | Liberty Mutual: No clear error or injustice; strong presumption against reopening orders. | J&S: Reconsideration needed to avoid manifest injustice and correct error. | Court: No clear error or manifest injustice; motion for reconsideration denied. |
Key Cases Cited
- Olin Corp. v. OneBeacon Am. Ins. Co., 864 F.3d 130 (2d Cir. 2017) (ordinary contract interpretation decides allocation question)
- Consolidated Edison Co. of N.Y. v. Allstate Ins. Co., 746 N.Y.S.2d 622 (N.Y. 2002) (policy language controls allocation; distinguishable facts can change outcome)
- In re Viking Pump, 33 N.Y.S.3d 118 (N.Y. 2016) (reaffirmed contract-language rule; non-cumulation/prior-insurance clauses can mandate all-sums)
- Christianson v. Colt Indus. Operating Corp., 486 U.S. 800 (U.S. 1988) (courts may revisit prior decisions but should be reluctant absent extraordinary circumstances)
- Bergerson v. N.Y. State Office of Mental Health, 652 F.3d 277 (2d Cir. 2011) (strong presumption against amending prior orders)
- Official Comm. of Unsecured Creditors of Color Tile, Inc. v. Coopers & Lybrand, LLP, 322 F.3d 147 (2d Cir. 2003) (reconsideration normally inappropriate without extraordinary circumstances)