UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
THE CINCINNATI INSURANCE
COMPANY,
Plaintiff,
Civil Action No. 12-851 (CKK)
v.
ALL PLUMBING, INC. SERVICE, PARTS
INSTALLATION, et al.,
Defendants.
MEMORANDUM OPINION
(August 18, 2014)
Presently before the Court is Plaintiff’s [38] Motion for Reconsideration and
Clarification. Upon consideration of the pleadings, 1 the relevant legal authorities, and the record
as a whole, the Court GRANTS IN PART and DENIES IN PART Plaintiff’s motion.
Specifically, the Court DENIES Plaintiff’s request for reconsideration of the conclusions in its
previous Memorandum Opinion and Order. However, the Court clarifies two issues left
unaddressed by its previous Memorandum Opinion and Order. First, Plaintiff’s failure to
properly reserve its rights in the FDS action does not prevent it from asserting the $1,000
deductible with regard to Coverage A under the Primary Coverage Part of the Policy. Second,
even though it failed to properly reserve its rights under the Primary Coverage Part of the Policy,
1
The Court’s decision is based on the record as a whole, but the Court’s analysis focused
on the following documents, listed in chronological order of filing: Pl.’s Mot. for
Reconsideration and Clarification (“Pl.’s Mot.”), ECF No. [38]; Pl.’s Mem. in Supp. of its Mot.
for Reconsideration and Clarification (“Pl.’s Mem.”), ECF No. [38-1]; Def.’s Brief in Opp’n to
Pl.’s Mot. for Reconsideration and Clarification (“Def.’s Opp’n”), ECF No. [40]; Pl.’s Reply
Mem. in Supp. of its Mot. for Reconsideration and Clarification (“Pl.’s Reply”), ECF No. [41];
Pl.’s Notice of Supplemental Authority, ECF No. [42].
Plaintiff is not precluded from asserting coverage defenses under the Excess Coverage Part of the
Policy.
I. BACKGROUND
The Court draws the following facts from the Joint Stipulation of Facts filed by the
parties in conjunction with their cross-motions for summary judgment. See Joint Stipulation of
Facts (“Stip.”), ECF No. [27]. Cincinnati Insurance issued a commercial insurance policy to All
Plumbing effective from March 3, 2006, to March 3, 2007, providing general liability coverage
up to $1 million for each occurrence and $2 million in aggregate. Stip. ¶ 3. In September 2010,
Love the Beer, Inc., (“Love”) filed a putative class action against All Plumbing and Shafik in the
Superior Court of the District of Columbia (“Superior Court”) alleging that on or about
September 22, 2006, All Plumbing and Shafik sent unsolicited faxes to Love the Beer and others
in violation of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227. Id. at ¶ 6;
see Stip., Ex. B (Love the Beer Compl.).
The Love the Beer action was served on All Plumbing and Shafik on November 5, 2010.
Stip. ¶ 7. Cincinnati Insurance alleges that All Plumbing and Shafik never notified Cincinnati
Insurance of the Love the Beer action, but that counsel for Love contacted Cincinnati Insurance
on November 15, 2011, and asked Cincinnati Insurance to defend the action. Stip. ¶ 12. By
letter dated November 18, 2011, Cincinnati Insurance notified counsel for Love that coverage for
the Love the Beer action may be barred under the Policy, asserting that All Plumbing and Shafik
failed to comply with certain of the Duties in the Event of a Claim or Suit conditions of the
Policy. Stip. ¶ 14. On December 2, 2011, Cincinnati Insurance informed All Plumbing and
Shafik that it was assuming the defense of the Love the Beer action pursuant to a full and
complete reservation of rights. Stip. ¶ 15; see Stip., Ex. J (Reservation of Rights letter).
2
On December 2, 2011, FDS Restaurant filed a second putative class action against All
Plumbing and Shafik in Superior Court based on the same allegation of unsolicited faxes as at
issue in the Love the Beer action. Stip. ¶ 16; see Stip., Ex. K (FDS Restaurant Compl.). A few
weeks later, Cincinnati Insurance received a copy of the FDS complaint from FDS’ counsel – the
same counsel as in the Love the Beer action. Stip. ¶ 17. Cincinnati Insurance subsequently
chose and retained counsel to defend All Plumbing and Shafik in the FDS action. Stip. ¶ 23.
On December 22, 2011, Love, in the Love the Beer action, moved for leave to file an
amended complaint to eliminate the class action allegations from the Love the Beer action, limiting
the claims to those of the named plaintiff. Stip. ¶ 18. The Superior Court granted Love’s motion.
Stip. ¶ 19. The Superior Court docket indicates the action was never certified as a class action,
and was voluntarily dismissed by the plaintiff in advance of trial. Love the Beer, Inc. v. All
Plumbing Inc. Serv., Parts, Installation, No. 2010 CA 006880 (D.C. Sup. Ct. dismissed June 11,
2012).
By letter dated February 16, 2012, Cincinnati Insurance informed counsel for FDS that
coverage may be barred under the Policy due to the “terms, provisions, conditions and exclusions
of the Policy, including the insured’s failure to comply with the conditions requiring the prompt
reporting of offenses, claims and suits.” Stip. ¶ 21; see Stip., Ex. P. Cincinnati Insurance did not
send a separate letter or oral communication to All Plumbing and Shafik that the defense of the
FDS action that was being provided by Cincinnati Insurance was pursuant to a reservation of
rights. Stip. ¶ 22.
All Plumbing and Shafik removed the action to this court on March 9, 2012. FDS
Restaurant, Inc. v. All Plumbing, Inc., Serv., Parts, Installation, No. 12-394 (D.D.C. removed
Mar. 9, 2012). Before this court, defense counsel for All Plumbing and Shafik filed an answer to
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FDS’ complaint, see Defendant’s Answer, FDS Restaurant, Inc. v. All Plumbing, Inc., Service
Parts, Installation et al, No. 12-394 (D.D.C. March 19, 2012); an opposition to FDS’ Motion for
Class Certification, see Defendant’s Opposition to Plaintiff’s Amended Motion for Class
Certification, FDS Restaurant, Inc. v. All Plumbing, Inc., Service Parts, Installation et al, No.
12-394 (D.D.C. March 19, 2012); an opposition to FDS’ Motion to Remand the case to Superior
Court, see Defendant’s Opposition to Plaintiff’s Motion to Remand to State Court, FDS
Restaurant, Inc. v. All Plumbing, Inc., Service Parts, Installation et al, No. 12-394 (D.D.C. April
16, 2012); and agreed to stay the case pending resolution of FDS’ Motion to Remand, see FDS
Restaurant, Inc. v. All Plumbing, Inc., Service Parts, Installation et al, No. 12-394, Minute Order
(D.D.C. April 4, 2012). Judge Rosemary M. Collyer remanded the case to Superior Court on
September 14, 2012. FDS Restaurant, Inc. v. All Plumbing, Inc., Service, Parts, Installation, No.
12-394, Op. & Order (D.D.C. Sept. 14, 2012). The case was reopened by Superior Court in
December 2012. FDS’ Motion for Class Certification is now pending in Superior Court.
Amended Motion for Class Certification, FDS Restaurant v. All Plumbing Inc. Serv., Parts,
Installation, No. 2011 CA 009575 (D.C. Sup. Ct. Mar. 1, 2012). Cincinnati Insurance filed this
action on May 21, 2012, seeking a declaratory judgment that it has no duty to defend All
Plumbing and Shafik in the FDS Superior Court action. On May 9, 2013, the FDS action was
stayed in Superior Court pending resolution of this declaratory judgment action. FDS Restaurant
v. All Plumbing Inc. Serv., Parts, Installation, No. 2011 CA 009575, (D.C. Sup. Ct. May 9,
2013).
The parties subsequently filed Cross-Motions for Summary Judgment in this case. See
Pl.’s Mot. for Summ. J., ECF No. [30]; Def.’s Mot. for Summ. J., ECF No. [31], As part of its
motion for summary judgment, FDS contended that Cincinnati Insurance had waived any
4
defense that coverage is barred under the Policy by assuming control of All Plumbing and
Shafik’s defense without a proper reservation of rights. Def.’s Mot. for Summ. J., ECF No. [31]
at 32. In ruling on these cross-motions, the Court recognized that the question of whether
Cincinnati Insurance has waived its right to disclaim coverage of the FDS action was a threshold
question in this litigation. See Mem. Op., ECF No. [37] at 4. The Court concluded that
Cincinnati Insurance did not properly reserve its rights to disclaim coverage in the FDS action,
and therefore the Court did not address the parties’ other arguments. Id.
Cincinnati Insurance subsequently filed the present [38] Motion for Reconsideration and
Clarification. Plaintiff seeks reconsideration of this Court’s prior conclusions on two grounds.
First, Plaintiff argues that the Love the Beer action, which was brought as a putative class,
encompassed the claims of FDS, such that the reservation of rights in the Love the Beer action
also applies to the separate FDS action, also brought as a putative class action. Pl.’s Mem. at 2-
3. Second, Plaintiff contends that, even if it failed to properly reserve its rights in the FDS
action, the Court erred in concluding that there was prejudice to All Plumbing and Shafik from
Cincinnati Insurance’s assumption of the defense of the FDS action without a reservation of
rights, as this conclusion relied on disputed facts and/or adverse inferences from the stipulated
facts. Id. at 5. Plaintiff’s motion also seeks clarification as to two issues left unaddressed by the
Court’s prior Memorandum Opinion. First, Cincinnati Insurance seeks clarification that, even
despite its failure to properly reserve its rights, it is not barred from asserting the $1,000
deductible provision in Coverage A of the Primary Coverage Part of the Policy. Id. at 3.
Second, Cincinnati Insurance requests that the Court clarify that the Court’s previous rulings
does not preclude it from asserting coverage defenses under the Excess Coverage Part of the
Policy. Id. at 4-5.
5
II. LEGAL STANDARD
Although Cincinnati Insurance’s motion does not set explicitly out a legal basis for the
relief sought, the Court understands Plaintiff to be seeking relief under either Rule 59(e) or Rule
60(b). Federal Rule of Civil Procedure 59(e) permits a party to file “[a] motion to alter or amend
a judgment” within “28 days after the entry of the judgment.” Fed. R. Civ. P. 59(e). Motions
under Rule 59(e) are “disfavored” and the moving party bears the burden of establishing
“extraordinary circumstances” warranting relief from a final judgment. Niedermeier v. Office of
Baucus, 153 F.Supp.2d 23, 28 (D.D.C. 2001). Rule 59(e) motions are “discretionary and need
not be granted unless the district court finds that there is an intervening change of controlling
law, the availability of new evidence, or the need to correct a clear error or prevent manifest
injustice.” Firestone v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996) (internal quotation marks
omitted). Rule 59(e) does not provide a vehicle “to relitigate old matters, or to raise arguments
or present evidence that could have been raised prior to the entry of judgment.” Exxon Shipping
Co. v. Baker, 554 U.S. 471, 485 n. 5 (2008) (quoting 11 C. Wright & A. Miller, FEDERAL
PRACTICE AND PROCEDURE § 2810.1 (2d ed. 1995)).
Plaintiff also appears to be seeking relief under Rule 60(b). Rule 60(b) provides that the
Court “may relieve a party . . . from a final judgment, order, or proceeding” for various reasons.
Fed. R. Civ. P. 60(b). Plaintiff does not specify the portion of Rule 60(b) under which he seeks
relief. However, the case cited by Plaintiff in arguing that Rule 60(b) relief is appropriate here
involves relief pursuant to Rule 60(b)(6). See Pl.’s Reply at 2 (citing Good Luck Nursing Home,
Inc. v. Harris, 636 F.2d 572, 577 (D.C. Cir. 1980)). Accordingly, the Court will consider the
motion under this provision. Rule 60(b)(6) permits a court to grant relief from a final judgment
for “any other reason justifying relief.” Fed. R. Civ. P. 60(b)(6). Motions under this subsection
6
should not be granted unless the movant can show “‘extraordinary circumstances’ justifying the
reopening of a final judgment.” Salazar ex rel. Salazar v. Dist. of Columbia, 633 F.3d 1110,
1116 (D.C. Cir. 2011) (quoting Gonzalez v. Crosby, 545 U.S. 524, 534 (2005)). The D.C.
Circuit has “similarly observed that Rule 60(b)(6) ‘should be only sparingly used’ and may not
‘be employed simply to rescue a litigant from strategic choices that later turn out to be
improvident.’” Kramer v. Gates, 481 F.3d 788, 792 (D.C. Cir. 2007) (quoting Good Luck
Nursing Home, 636 F.2d at 577). Further, claims under Rule 60(b)(6) must not be “premised on
one of the grounds for relief enumerated in clauses (b)(1) through (b)(5).” Liljeberg v. Health
Servs. Acquisition Corp., 486 U.S. 847, 863 (1988). “Rule 60(b)(6) does not provide an
opportunity to relitigate a motion brought unsuccessfully under one of the other provisions of
Rule 60(b).” Green v. American Federation of Labor, and Congress of Industrial Organizations,
287 F.R.D. 107, 109 (D.D.C. 2012) (citing Kramer, 481 F.3d at 792).
III. DISCUSSION
1. Grounds for Reconsideration
The Court first addresses Plaintiff’s two arguments seeking reconsideration of the Court’s
previous Memorandum Opinion and Order. First, Plaintiff argues that the Love the Beer action,
which was brought as a putative class, encompassed the claims of FDS, such that the reservation
of rights in the Love the Beer action also applies to the separate FDS action, also brought as a
putative class action. Pl.’s Mem. at 2-3. Second, Plaintiff contends that, even if it failed to
properly reserve its rights in the FDS action, the Court relied on disputed facts and/or adverse
inferences to find prejudice to All Plumbing and Shafik from Cincinnati Insurance’s assumption
of the defense of the FDS action without a reservation of rights. Id. at 5. For the reasons
discussed below, the Court concludes that neither argument justifies reversing the Court’s
7
previous rulings.
A. Relevance of Class Allegations
Cincinnati Insurance contends that, even though the Love the Beer action had not been
certified as a class action at the time it reserved its rights, Cincinnati Insurance was obligated to
accept the allegations in the Love the Beer action as true – including the existence of the putative
class alleged. Id. at 2. As an initial matter, the Court notes that Cincinnati Insurance previously
raised this argument and that it was rejected by the Court. See Mem. Op., ECF No. [37] at 7.
(“Cincinnati Insurance reasons that since FDS was a member of the putative class of persons
identified in the Love the Beer complaint and the complaint involved the same underlying TCPA
cause of action as alleged in the FDS action, the December 2, 2011, letter reserved its right as to
claims asserted on behalf of every member of the class, including FDS.”). As noted, Rule 59(e)
does not provide a vehicle “to relitigate old matters, or to raise arguments or present evidence
that could have been raised prior to the entry of judgment.” Exxon Shipping Co., 554 U.S. at 485
n. 5 (quoting 11 C. Wright & A. Miller, FEDERAL PRACTICE AND PROCEDURE § 2810.1 (2d ed.
1995)). Similarly, Rule 60(b)(6) relief is inappropriate where Plaintiff “merely reargue[s] the
theory he originally advanced.” Bailey v. U.S. Marshall Serv., Nos. 08-0283, 08-0754, 2009 WL
973197, at *2 (D.D.C. Apr. 2, 2009). The fact that Plaintiff is attempting to reargue a contention
addressed by the Court in its previous Memorandum Opinion is itself sufficient to deny
Plaintiff’s request for reconsideration. Nevertheless, the Court will reiterate its reasons for
rejecting this argument.
The Court agrees with Cincinnati Insurance that it was obligated to accept the well-
pleaded allegations in the Love the Beer action as true, but this conclusion does not compel the
result Cincinnati Insurance seeks. Under Cincinnati Insurance’s view, its reservation of rights in
8
the Love the Beer action, occurring well before any certification of the then-amorphous class of
plaintiffs, would operate as a one-time, universal reservation of rights, effective in any TCPA
action against All Plumbing and Shafik brought by anyone who received an unsolicited fax from
All Plumbing and Shafik from September 14, 2006 to September 14, 2010. Cincinnati Insurance
reasons that its reservation of rights with respect to the Love the Beer action effectively advised
All Plumbing and Shafik that any defense of the claims of the putative class, including the FDS
claims, was subject to the reservation of rights. In the Court’s opinion, this goes too far.
Certainly, the Court is willing to agree with Cincinnati Insurance that if the Love the Beer action
had ultimately been certified as a class action, Cincinnati Insurance would not have been
required to issue a new reservation of rights as to all members of the class other than Love the
Beer. This is the result of Cincinnati Insurance’s taking the putative class allegations pled in the
Love the Beer action as true. But in a situation such as this, where the class is never certified, the
reservation of rights cannot serve as an eternal and universal notice to All Plumbing and Shafik
that Cincinnati Insurance reserves its rights in any similar, but concededly separate, litigation.
Indeed, taken to its logical conclusion, Cincinnati Insurance’s position could produce strange
results. Imagine a situation where, after an insurer issues a reservation of rights in a case
involving a putative class, class certification is denied. If the defendant in the original lawsuit
then faces numerous lawsuits from individual plaintiffs, and the insurer undertakes a separate
defense of each of these actions, it seems decidedly reductive to say that the original reservation
of rights lawsuit covers every single one of these lawsuits. As the Court noted in its previous
Memorandum Opinion, “[t]he entire purpose of a reservation of rights letter [is] to notify the
insured that the insurer may disclaim liability so the insured can make their own timely decision
about how they want to defend against the claim . . . .” Mem. Op., ECF No. [37] at 9. Here this
9
purpose could be defeated if an insurer were permitted to issue a global reservation of rights
letter to cover subsequently filed lawsuits by any and all potential members of a class. Yet this is
the result of Cincinnati Insurance’s position that its reservation of rights in the Love the Beer
action is effective in a subsequent action brought by any and all members of the putative class in
the Love the Beer action. Cincinnati Insurance points the Court to no case compelling a different
conclusion. Therefore, in the Court’s view, the better rule, certainly the clearer and simpler rule,
is the one set out in the Court’s previous Memorandum Opinion – a separate lawsuit requires a
separate reservation of rights. As the Court noted in its previous Memorandum Opinion,
“[d]espite the many similarities in the Love the Beer and FDS actions, they remain two distinct
lawsuits” and because “the Love the Beer action was never certified as a class action . . . FDS
was never even a party to the action.” 2 Mem. Op., ECF No. [37] at 8-9.
Cincinnati Insurance also argues that there is “an inherent inconsistency between the
Court’s conclusion that FDS was never even a party to the Love the Beer action and FDS’
reliance on the Love the Beer action for purposes of tolling the statute of limitations in the
underlying FDS action.” Pl.’s Mot. at 2-3. See also Crown, Cork & Seal Co. v. Parker, 462
U.S. 345, 353-54 (1983) (“the commencement of a class action suspends the applicable statute of
limitations as to all asserted members of the class who would have been parties had the suit been
2
In the portion of its Reply brief addressing this issue, Cincinnati Insurance argues that
treating the Love the Beer action and the FDS action as one lawsuit for purposes of Cincinnati
Insurance’s reservation of rights is “in keeping with the equities” because “there is no basis on
which to conclude that All Plumbing and Shafik did not know of coverage issues or were
prejudiced by Cincinnati’s assumption of the defense of the FDS action without a separate letter
reiterating those previously identified issues.” Pl.’s Reply at 4-5. Because this contention goes
more to Cincinnati’s separate argument for reconsideration that All Plumbing and Shafik were
not prejudiced by Cincinnati Insurance’s failure to properly reserve its rights in the FDS action,
the Court addresses this argument, infra, in its discussion of this alternative basis for
reconsideration.
10
permitted to continue as a class action.”) (quoting American Pipe & Const. Co. v. Utah, 414 U.S.
538, 554 (1974)). Cincinnati Insurance argues that if FDS’ claim was not part of the Love the
Beer action, then FDS should be precluded from relying on the Love the Beer action to establish
the timeliness of the FDS action, mooting the claim for coverage at issue in those proceedings.
The Court notes that the timeliness of the underlying FDS action is a question not before this
Court, but rather is a question to be addressed as part of the merits of the FDS action in the
Superior Court of the District of Columbia. Moreover, the fact that the Love the Beer action
tolled the statute of limitations for putative class members does not compel the result Cincinnati
Insurance seeks – that the two separate cases are in fact a single case for purposes of Cincinnati
Insurance’s reservation of rights. As the Court concluded in its previous Memorandum Opinion
and Order, the Love the Beer action and the FDS action are still two separate lawsuits, even if
similar in allegations. Cincinnati Insurance’s statute of limitations argument does not persuade
the Court that this conclusion was erroneous. Accordingly, the Court denies Cincinnati
Insurance’s request for reconsideration of this component of its previous Memorandum Opinion
and Order.
B. Lack of Prejudice to All Plumbing and Shafik
As an additional basis for reconsideration, Cincinnati Insurance argues that “assuming
arguendo that the denial of its motion was proper, it was error to grant the cross-motion for
summary judgment against it.” Pl.’s Mot. at 5. Cincinnati Insurance contends that the Court’s
previous ruling “relied on disputed facts and/or adverse inferences drawn from the stipulated
facts.” Id. Essentially, Cincinnati Insurance argues that the Court erred in concluding that there
was prejudice to All Plumbing and Shafik from Cincinnati Insurance’s assumption of the defense
of the FDS action without a reservation of rights.
11
The Court notes again, as it did in its previous Memorandum Opinion, that an insurer’s
assumption of the defense of an action creates a rebuttable presumption of prejudice. See
Athridge v. Aetna Cas. & Sur. Co., 604 F.3d 625, 630 (D.C. Cir. 2010) (“An insured may be
entitled to a rebuttable presumption of prejudice, depending on the amount of control the insurer
exercised over the defense.”); Nat’l Union Fire Ins. Co. of Pittsburgh v. Aetna Cas. & Sur. Co.,
384 F.2d 316, 318 (D.C. Cir. 1967) (“We consider an application of this [preclusionary] rule
abundantly justified whenever . . . the insurer has not demonstrated affirmatively that assumption
of the defense was nonprejudicial.”). Here, once the Court concluded that Cincinnati Insurance
had not properly reserved its rights in the FDS action, a rebuttable presumption of prejudice
attached. Although Cincinnati Insurance was the non-moving party as to this issue (as FDS was
arguing that summary judgment was appropriate because Cincinnati Insurance had failed to
reserve its rights), Cincinnati Insurance nevertheless was obligated to offer evidence rebutting
this presumption, and show that a genuine issue of material fact existed as to this point.
Cincinnati Insurance did not meet this burden at the summary judgment stage. As the Court
noted in its previous Memorandum Opinion, “Cincinnati Insurance’s only demonstration that its
assumption of the defense without a reservation of rights was nonprejudicial is that the FDS
action ‘was still in its infancy’ when it disclaimed coverage through its declaratory judgment
action.” Mem. Op., ECF No. [37] at 10 (quoting Pl.’s Opp’n to Def.’s Mot. for Summ. J., ECF
No. [32] at 41). Relying on the Joint Stipulation of Facts filed by the parties, the Court
concluded that this single argument was insufficient to rebut the presumption of prejudice. Id. R
10-11. The Court noted that in the approximately five-month period between assuming the
defense and disclaiming liability, defense counsel chosen and hired by Cincinnati Insurance
made tactical decisions on behalf of its clients, including filing an answer to FDS’ complaint,
12
moving to remove the action from Superior Court to federal court, filing an opposition to FDS’
motion for class certification, opposing FDS’ motion to remand the case to Superior Court, and
agreeing to stay the case pending resolution of FDS’ motion to remand. Id. These facts, agreed
to by the parties, belied Cincinnati Insurance’s blithe assertion of no prejudice on the basis that
the action was “still in its infancy” and therefore the Court concluded that Cincinnati Insurance
had “failed to rebut the presumption of prejudice . . . .” Id. at 12.
In its present motion, apparently recognizing that its previous argument as to this point
was plainly inadequate, Cincinnati seeks a second bite at the apple. For the first time, Cincinnati
Insurance argues that “[t]here were disputed material facts concerning, inter alia, All Plumbing
and Shafik’s knowledge of Cincinnati’s position concerning coverage and the existence of any
harm from conduct of the defense of the FDS action prior to the filing of the declaratory
judgment action.” Pl.’s Mot. at 5. Yet this new argument comes too late. A motion for
reconsideration cannot be used as “a vehicle for presenting theories or arguments that could have
been advanced earlier.” Estate of Gaither ex rel. Gaither v. District of Columbia, 771 F.Supp.2d
5, 10 (D.D.C. 2011). Importantly, Cincinnati Insurance does not contend that it cited these
allegedly disputed facts at the summary judgment stage in arguing for a lack of prejudice, only to
have the Court overlook them. Nor does Cincinnati Insurance offer any reason as to why these
arguments could not have been made earlier. Rather, in its summary judgment briefing,
Cincinnati Insurance failed to point to these allegedly disputed facts (or indeed any disputed
facts) in arguing that the presumption of prejudice had been rebutted. Accordingly, the Court
considered and rejected the only argument made for lack of prejudice, finding that Cincinnati
Insurance had failed to rebut the presumption that inheres from a failure to issue a reservation of
rights. Although Cincinnati Insurance now apparently believes there are other reasons
13
supporting its position, a motion for reconsideration is an improper means for correcting the
shortcomings of prior briefing.
Cincinnati Insurance’s newfound argument fails for an additional reason. Cincinnati
Insurance doesn’t actually specify the allegedly disputed facts showing prejudice in its motion,
which contains only a few brief sentences on this point. Pl.’s Mot. at 5. Rather, Plaintiff saves
the actual substance of its “lack of prejudice” argument for its reply brief, which, in contrast to
the single paragraph on this point in Plaintiff’s motion, contains pages of argument. Pl.’s Reply
at 11-14. Again, Cincinnati Insurance has raised its arguments too late. “As a general matter, it
is improper for a party to raise new arguments in a reply brief because it deprives the opposing
party of an opportunity to respond to them, and courts may disregard any such arguments.”
Performance Contracting, Inc. v. Rapid Response Const., Inc., 267 F.R.D. 422, 425 (D.D.C.
2010). As the Court previously concluded, Cincinnati Insurance failed to rebut the presumption
of prejudice at the summary judgment stage. It may not do so now through a motion for
reconsideration, or more accurately, a reply in support of such a motion. Accordingly, the Court
rejects this basis for reconsideration of its previous ruling.
2. Grounds for Clarification
In addition to the arguments discussed above seeking reconsideration of the Court’s prior
Memorandum Opinion and Order, Cincinnati Insurance seeks clarification regarding the scope of
the Court’s prior rulings. First, Cincinnati Insurance seeks clarification that, even despite its
failure to properly reserve its rights, it is not barred from asserting the $1,000 deductible
provision in Coverage A of the Primary Coverage Part of the Policy. Pl.’s Mot. at 2. Second,
Cincinnati Insurance requests that the Court clarify that the Court’s previous rulings do not
preclude it from asserting coverage defenses under the Excess Coverage Part of the Policy. Id. at
14
4-5. The Court addresses each of these issues below, and concludes that Cincinnati Insurance is
correct with respect to both of the clarifications sought.
A. The Effect of the Ruling on the Scope of Coverage and the Deductible
Cincinnati Insurance contends that even if it failed to properly reserve its rights, it is still
entitled to assert the deductible provision of a portion of the insurance policy at issue. Coverage
A of the Primary Coverage Part of the Policy provides that a $1,000 deductible applies on a per
claim, per claimant basis. Stip., Ex. A (Policy) at 102. Cincinnati Insurance requests
clarification from the Court that, despite the Court’s conclusion that Cincinnati Insurance failed
to properly reserve its rights as to the FDS action, the $1,000 per claim, per claimant deductible
still applies with regard to Coverage A under the Primary Coverage Part of the Policy.
The Court agrees with Cincinnati Insurance and hereby clarifies its previous
Memorandum Opinion and Order to note that Cincinnati Insurance’s failure to properly reserve
its rights in the FDS action does not prevent Cincinnati Insurance from asserting the $1,000
deductible with regard to Coverage A under the Primary Coverage Part of the Policy. A
deductible is “the portion of the loss to be borne by the insured before the insurer becomes liable
for payment.” BLACK’S LAW DICTIONARY 444 (8th ed. 2004). Here, FDS argues that Cincinnati
Insurance is prohibited from claiming this deductible because it failed to reserve its rights, and
thus may not assert defenses related to coverage. Def.’s Opp’n at 8-11. But as other courts have
concluded “[a] deductible endorsement is not a coverage defense or exclusion; it is a means of
shifting a portion of the risk from the insurer to the insured. Even where, as here, an insurer
assumes an insured’s defense unconditionally, the insurer does not waive the deductible
endorsement.” Western Heritage Ins. Co. v. Love, No. 4:13-cv-0034, --- F.Supp.2d ----, 2014
WL 2472267, at *9 (W.D. Mo. June 3, 2014). See also 14 Steven Plitt, Daniel Maldonado,
15
Joshua D. Rogers & Jordan R. Plitt, COUCH ON INSURANCE § 202:74 (3d ed. 2013) (“While the
defense of the action by an insurer without reservation of rights as to its defenses may constitute
a waiver of the insurer’s defenses, it does not rewrite the policy so as to remove the maximum on
the coverage provided.”); Chemstar, Inc. v. Liberty Mut. Ins. Co., 42 F.3d 1399 (9th Cir. 1994)
(“The mere fact that Liberty defended Chemstar without a reservation of rights did not cause
Liberty to waive, or to become estopped from asserting, its policy limits as a defense to
coverage.”). In light of this case law, consistently concluding that deductible limits may be
asserted even in the absence of a reservation of rights, the Court clarifies that Cincinnati
Insurance’s failure to properly reserve its rights does not preclude it from asserting the $1,000
deductible with regard to Coverage A under the Primary Coverage Part of the Policy.
B. The Effect of the Ruling on Excess Coverage
Plaintiff’s second request for clarification involves the Excess Coverage Part of the
Policy. The policy at issue in this case is comprised of multiple parts, including a Primary
Coverage Part and an Excess Coverage Part. Cincinnati Insurance seeks clarification from the
Court that, even if it failed to properly reserve its rights under the Primary Coverage Part of the
Policy, it is not precluded from asserting coverage defenses under the Excess Coverage Part of
the Policy. On this point, Cincinnati Insurance points to the language of the Excess Coverage
Part of the Policy, which states that the insurer’s duty to defend the insured against suit arises
only “when the applicable limits of ‘underlying insurance’ and any other insurance have been
exhausted by payment of claims.” Stip., Ex. A (Policy) at 150. FDS does not contest Cincinnati
Insurance’s argument that it had no present duty to defend under the Excess Coverage part of the
Policy. Indeed, applicable case law supports Cincinnati Insurance on this point. See Nat’l Elec.
Mfrs. Ass’n v. Gulf Underwriters Ins. Co., 162 F.3d 821, 826 (4th Cir. 1998) (“While the District
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of Columbia courts have not authoritatively taken the position that an excess insurer’s duty to
defend is not triggered until primary insurance is exhausted, two federal courts applying District
of Columbia law have endorsed this view.”) (citing Liberty Mut. Ins. Co. v. Travelers Indem.
Co., 78 F.3d 639, 645 (D.C. Cir. 1996) and St. Paul Fire & Marine Ins. Co. v. Children’s Hosp.
Nat’l Med. Ctr., 670 F.Supp. 393, 402 (D.D.C. 1987)). And where a duty to defend arises under
a primary liability policy but not an excess policy, the insurer “ha[s] a duty to disclaim coverage
or reserve rights with respect to the primary liability policy” but “[i]t ha[s] no obligation with
respect to the other policies.” Children’s Hosp. Nat’l Med. Ctr., 670 F.Supp. at 402. “The duty
to disclaim coverage or to reserve rights is a part of the duty to defend.” Id. Here, Cincinnati
Insurance argues that “[s]ince there was no obligation to speak” with respect to the Excess
Coverage Part of the Policy, there “can be no implicit promise of coverage upon which to base
estoppel” to assert coverage defenses. Id.
FDS argues that Children’s Hospital is inapposite because in that case, even though the
insurer provided the insured with primary and excess coverage, this coverage was obtained
through two separate policies with different policy numbers. Def.’s Opp’n at 12-14. Here, by
contrast, Cincinnati Insurance issued a single policy providing various forms of coverage. Yet
Children’s Hospital is silent as to this distinction, and FDS points to no case reaching a contrary
result in a situation involving a single policy containing various types of coverage. In addition,
FDS does not contest Cincinnati Insurance’s argument that it had no present duty to defend
under the Excess Coverage part of the Policy. Accordingly, in light of the parties’ arguments as
to this issue, the Court clarifies that its previous Memorandum Opinion and Order do not
preclude Cincinnati Insurance from asserting coverage defenses under the Excess Coverage Part
of the Policy.
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IV. CONCLUSION
For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART Plaintiff
Cincinnati Insurance’s [38] Motion for Reconsideration and Clarification. The Court DENIES
Plaintiff’s request for reconsideration of the conclusions in its previous Memorandum Opinion
and Order. However, the Court clarifies that Plaintiff’s failure to properly reserve its rights in
the FDS action does not: (1) prevent it from asserting the $1,000 deductible with regard to
Coverage A under the Primary Coverage Part of the Policy, and (2) preclude it from asserting
coverage defenses under the Excess Coverage Part of the Policy. An appropriate Order
accompanies this Memorandum Opinion.
/s/
COLLEEN KOLLAR-KOTELLY
UNITED STATES DISTRICT JUDGE
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