Elliott Co. v. Liberty Mutual Insurance

239 F.R.D. 479, 2006 U.S. Dist. LEXIS 91598, 2006 WL 3505856
District Court, N.D. Ohio·Decided August 8, 2006·No. No. 1:05 CV 1387·Published·Cited by 4 cases

Opinion

Memorandum of Opinion and Order

GAUGHAN, District Judge.

INTRODUCTION

Currently before the Court is Plaintiff Elliott Company’s Motion for Rule 59 Reconsideration and in the Alternative to Certify Pursuant to Rule 54(b) or to Amend the May 10, 2006 Order Pursuant to 28 U.S.C. § 1292(b). (Doc. 51). The Elliott Company (“Elliott”) seeks reconsideration of the Court’s May 10, 2006 decision that it is not entitled to coverage under certain insurance policies. (Doc. 49). For the following reasons, the Court GRANTS Elliott’s Motion for [480]*480Reconsideration and DENIES the Alternative Motions to Certify and Amend.1

DISCUSSION

The Court’s May 10 Opinion and Order resolved various issues regarding Elliott’s right to coverage for asbestos-related claims under insurance policies issued by Liberty Mutual Insurance Company (“Liberty”) covering 1957-1963 and 1980-1986. The Court concluded that Elliott was not entitled to coverage under the 1957-1963 “Carrier Policies” and the 1980-1985 “UTC Policies.” Of the various issues decided by the Court, Elliott seeks reconsideration of the Court’s conclusion that coverage under the 1957-1963 Carrier Policies did not transfer to Elliott by contract. In the alternative, Elliott asks the Court to direct entry of final judgment as to all of the Carrier Policies and the 1980-1985 UTC Policies. As a second alternative, Elliott asks the Court to amend its Order to state that it involves a controlling question of law as to which there is a substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation under 28 U.S.C. § 1292(b).

The Court will first address the Motion for Reconsideration. The Federal Rules of Civil Procedure do not provide for motions for reconsideration. “Instead, such motions, if served within ten days of entry of judgment, are considered motions to alter or amend judgments pursuant to ... Rule 59(e).” Stubblefield v. Truck Stops Corp. of America, unreported, 117 F.3d 1421 (6th Cir. July 10, 1997) (citing Huff v. Metropolitan Life Ins. Co., 675 F.2d 119, 122 (6th Cir.1982)). “Generally, there are three major situations which justify a court reconsidering one of its orders: 1) to accommodate an intervening change in controlling law; 2) to account for new evidence not available at trial; or 3) to correct a clear error of law or to prevent a manifest injustice.” Hancor, Inc. v. Inter American Builders Agencies, 1998 WL 239283 (N.D.Ohio March 19, 1998) (citing In re Continental Holdings, Inc., 170 B.R. 919, 937 (Bankr.N.D.Ohio 1994)).

Elliott contends that the Court erred in concluding that coverage under the Carrier Policies did not transfer to Elliott by contract. Elliott merged with the Carrier Corporation (“Carrier”) in 1957 at which time it was dissolved and operated as a division of Carrier. The Elliott Division was covered by the Carrier Policies from 1957 through 1963. As the Court previously explained:

Carrier was purchased by third-party defendant United Technologies Corporation (“UTC”) in 1979. The Elliott Division continued as an unincorporated division of Carrier until August 21, 1981, when it was incorporated as Elliott Turbomachinery, Inc. (“Elliott Turbo”). Carrier, UTC and Elliott Turbo entered into “an Agreement and Plan of Reorganization and Corporate Separation” dated December 21, 1981 (the “Separation Agreement”). Elliott Turbo was assigned the liabilities of the Elliott Division. The Separation Agreement included the following provision relevant to the transfer of rights under the Carrier Policies to Elliott Turbo:
Carrier will ... assign, transfer and deliver to [Elliott Turbo] all the properties, assets, good will of every kind and description, both real and personal, tangible and intangible of said [Elliott Division], as set forth in Exhibit A hereto.
Despite a diligent search, Elliott has not been able to locate Exhibit A to determine if it includes the Carrier Policies.

(Doc. 49).

Elliott presented secondary evidence that Exhibit A included the Carrier Policies, including a Board resolution authorizing Carrier to transfer all of the assets of the Elliott Division to Elliott Turbo and a number of letters from UTC acknowledging that Elliott Turbo received all of the Elliott Division’s assets. Liberty responded, inter alia,2 that [481]*481a “later 1987 Stock Purchase specifically sets forth policies under which Elliott Turbo was an insured or a beneficiary.” It is in its consideration of this later 1987 agreement that Elliott believes the Court erred.

Elliott Turbo operated as a wholly owned subsidiary of UTC until 1987, when it was purchased by a group of outside investors as part of the 1987 Stock and Asset Purchase Agreement. The transaction was a sale of the shareholder’s (UTC’s) stock interest in its subsidiary (Elliott Turbo). Elliott notes that changes in the ownership of a corporation’s stock do not change the rights or obligations of that corporation. Smith Land Improvement Corp. v. Celotex Corp., 851 F.2d 86, 91 (3d Cir.1988). Accordingly, UTC had no right or title to Elliott Turbo’s assets. Dole Food, Co. v. Patrickson, 538 U.S. 468, 474-75, 123 S.Ct. 1655, 155 L.Ed.2d 643 (2003).

The Court’s Opinion referred to the 1987 transaction as a sale or assignment of assets. See Doc. 49 at pp. 4, 13. Elliott is therefore correct that it has identified “an error of apprehension” that justifies reconsideration of this aspect of the Court’s May 10 Opinion.3 However, the impact of the Court’s characterization of the transaction as an asset sale is somewhat different than Elliott contends. The Stock and Asset Purchase Agreement included a schedule setting forth “all of the policies of insurance of or under which [Elliott] is the owner, insured, beneficiary, or covering any of the property of [Elliott.]” The schedule did not include the Carrier Policies. Elliott argues that the Court read this provision as negating any prior transfer of coverage to Elliott. To the contrai'y, the reason the Court considered the Stock and Asset Purchase Agreement was to settle the “dispute over the missing contents of Exhibit A to the Separation Agreement”—i.e., whether Elliott ever received coverage under the Carrier Policies in the first place. The Stock and Asset Purchase Agreement was conclusive secondary evidence that Exhibit A did not include the Carrier Policies.

Nonetheless, the fact that the 1987 transaction was a stock sale does impact the weight it should be given as secondary evidence.

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Elliott Co. v. Liberty Mutual Insurance, 239 F.R.D. 479, 2006 U.S. Dist. LEXIS 91598, 2006 WL 3505856 (N.D. Ohio 2006).

239 F.R.D. 479 (Elliott Co. v. Liberty Mutual Insurance) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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