The Charter Oak Fire Insurance Company v. American Capital, Ltd.
8:09-cv-00100
D. MarylandJul 1, 2016Background
- This is an insurance coverage/declaratory judgment dispute between insurers (Charter Oak and Travelers) and insured/investor defendants (American Capital and SPL) arising from underlying heparin-related lawsuits.
- After cross-motions for summary judgment, the court issued a February 17, 2016 memorandum opinion and an accompanying order resolving various coverage questions; Plaintiffs moved for reconsideration under Rule 54(b).
- Plaintiffs seek correction of a clerical error in the judgment (Count IX re: SPL), challenge the court’s ruling on the joint-venture exclusion, and request a declaration that Travelers has no duty to defend heparin suits that allege liability tied to the joint venture.
- The court analyzes reconsideration under the narrow Rule 54(b) framework (intervening law, new evidence, or clear error/manifest injustice) and declines relitigation of issues previously decided.
- The court grants reconsideration to correct the clerical error (entry as to Count IX for SPL), denies reconsideration on relitigating the joint-venture findings, and clarifies the scope of plaintiffs’ duty-to-defend holdings; it also grants unopposed motions to seal limited redactions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Clerical error re: Count IX (2006–2007 primary policy, SPL) | Court should correct the order to reflect the memorandum opinion that granted summary judgment for Plaintiffs on Count IX as to SPL | Opposing briefing effectively asks the court to revisit the underlying summary-judgment holding; also distinguishes American Capital from SPL | Court grants reconsideration limited to correcting the clerical error and enters judgment for Plaintiffs re: SPL on Count IX under the 2006–2007 primary policy |
| Joint-venture exclusion and duty to defend American Capital | Plaintiffs: evidence shows tainted heparin came only from the joint venture, so the joint-venture exclusion precludes a duty to defend | Defendants: record supports potential that contaminated heparin came from non-joint-venture sources; summary judgment for Defendants was proper | Court rejects relitigation; finds Plaintiffs’ evidentiary showing insufficient and holds the joint-venture exclusion does not categorically relieve Plaintiffs of a duty to defend where underlying suits potentially allege non-joint-venture conduct; Defendants entitled to summary judgment on that exclusion issue |
| Travelers’ duty to defend suits that identify the joint venture | Plaintiffs: where an underlying complaint identifies the joint venture as the source, Travelers has no duty to defend those suits | Defendants: duty to defend is impacted only if underlying pleadings seek liability solely based on joint-venture conduct; many complaints either don’t mention the joint venture or assert separate theories | Court clarifies its prior reasoning: plaintiffs do not owe a duty to defend lawsuits that present no potential for judgment unrelated to joint-venture-origin heparin; where complaints potentially permit non-joint-venture liability, duty to defend may remain |
| Motions to seal | Plaintiffs seek limited redactions of motion papers | Defendants concur; redactions are limited and unopposed | Court grants the three unopposed motions to seal, orders temporary sealing of the memorandum opinion, and directs joint proposed redactions within 14 days |
Key Cases Cited
- Fayetteville Investors v. Commercial Builders, Inc., 936 F.2d 1462 (4th Cir. 1991) (governs reconsideration of interlocutory orders under Rule 54(b))
- Am. Canoe Ass'n v. Murphy Farms, Inc., 326 F.3d 505 (4th Cir. 2003) (Rule 54(b) motions may be guided by standards in Rules 59(e) and 60(b))
- Akeva, LLC v. Adidas Am., Inc., 385 F. Supp. 2d 559 (M.D.N.C. 2005) (articulating narrow grounds for reconsideration of interlocutory orders)
- Maryland Cas. Co. v. Blackstone Intern. Ltd, 442 Md. 685 (Md. 2015) (insurer must defend if there is potential coverage; duty to defend broader than duty to indemnify)
- Penn. Nat’l Mut. Cas. Ins. Co. v. City Homes, Inc., 719 F. Supp. 2d 605 (D.Md. 2010) (duty to defend vs. duty to indemnify distinction)
- Greenlaw v. United States, 554 U.S. 237 (U.S. 2008) (cited regarding limitations on appellate/party-driven changes; noted as inapposite here)