Hanover Insurance v. Corrpro Companies, Inc.

221 F.R.D. 458, 2004 U.S. Dist. LEXIS 9294, 2004 WL 1146472
CourtDistrict Court, E.D. Virginia
DecidedMay 18, 2004
DocketNo. 2:03CV882
StatusPublished
Cited by2 cases

This text of 221 F.R.D. 458 (Hanover Insurance v. Corrpro Companies, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hanover Insurance v. Corrpro Companies, Inc., 221 F.R.D. 458, 2004 U.S. Dist. LEXIS 9294, 2004 WL 1146472 (E.D. Va. 2004).

Opinion

[459]*459 OPINION AND ORDER

REBECCA BEACH SMITH, District Judge.

This matter is before the court on plaintiffs motion pursuant to Rule 59(e) of the Federal Rules of Civil Procedure to alter or amend the court’s Opinion and Dismissal Order entered April 6, 2004. For the reasons set forth below, plaintiffs motion is DENIED.

I. Factual and Procedural History

The above-captioned lawsuit arose out of a contract (“the Navy Contract”) between the United States Department of the Navy (“the Navy”) and Paint City Contractors, Inc. (“Paint City”) to repair and paint eight oil tanks owned by the Navy and located in Portsmouth, Virginia. As a condition of the Navy Contract and under the Miller Act, 40 U.S.C.A. §§ 3131-3133 (West.Supp.2003),1 Paint City was required to obtain a performance bond to ensure performance of the Navy Contract at the contract price. Plaintiff, The Hanover Insurance Company (“Hanover”), issued a performance bond guaranteeing Paint City’s performance under the Navy Contract. Also as a condition of the Navy Contract, Paint City was required to hire a quality assurance company. In August, 1999, Paint City hired defendant, Corrpro Companies, Inc. (“Corrpro”), to supply a quality assurance inspector.

On July 30, 2002, the Navy terminated Paint City’s right to proceed with the Navy Contract, allegedly for deficient performance. Hanover alleges that the Navy then made a demand on the performance bond, and that Hanover retained an expert to investigate the Navy’s claim, sought bids to correct the deficiencies, and tendered an alternate contractor to paint and repair the tanks. The difference between the cost of hiring the alternate contractor and the $900,000 unpaid balance of the contract price was allegedly $1,654,900.

On December 18, 2003, Hanover filed a three-count complaint in the above-captioned matter. Count one alleged that Corrpro negligently failed in its duty to Hanover and Paint City to ensure Paint City’s performance of the Navy Contract, and that failure caused Hanover to become obligated under the performance bond. Count two alleged that Corrpro breached its contract with Paint City and asserted that, as a third-party beneficiary of that contract, Hanover is entitled to recover for Corrpro’s alleged breach. Count three alleged that under indemnification principles, Hanover was entitled to recover from Corrpro the costs of satisfying its obligation under the performance bond.

On March 3, 2004, Corrpro filed a motion to dismiss the complaint for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), a memorandum in support of that motion, and attachments including a copy of the contract between Paint City and Corrpro. On March 17, 2004, Hanover filed a memorandum in opposition to the motion to dismiss and, in the alternative, a motion for leave to amend the complaint to state claims as Paint City’s subrogee. On March 24, 2004, Corrpro filed its reply brief.

On April 6, 2004, the court granted the motion to dismiss and denied plaintiffs motion for leave to amend. Leave to amend was not granted because equitable subrogation principles do not permit Hanover to “stand in the shoes” of Paint City to assert a cause of action against Corrpro. Amendment therefore would have been futile.

Hanover filed this motion for reconsideration under Rule 59(e) on April 16, 2004. In its motion, Hanover puts forth, for the first time, a novel legal basis for recovery. Hanover claims that, as a surety who has discharged its obligation to Navy, it is entitled to “stand in the shoes” of Navy and assert Navy’s claim against Corrpro as a third-party beneficiary of the contract between [460]*460Corrpro and Paint City. As a second basis for reconsidering the April 6, 2004 judgment, Hanover alleges, for the first time, that it had entered into a contractual indemnification agreement with Paint City in 1997 under which Hanover is entitled to assert all of Paint City’s rights against other parties arising out of the Navy Contract. A copy of the indemnity agreement is attached to the Hanover’s memorandum in support of the Rule 59(e) motion.

II. Standard of Review

In its entirety, Federal Rule of Civil Procedure 59(e) provides that “[a]ny motion to alter or amend a judgment shall be filed no later than 10 days after entry of the judgment.” Fed.R.Civ.P. 59(e) (2004). “Rule 59(e) permits a court to amend a judgment within ten days for three reasons: (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 prevent manifest injustice.” EEOC v. Lockheed Martin Corp., 116 F.3d 110, 112 (4th Cir.1997) (quoting Hutchinson v. Staton, 994 F.2d 1076,1081 (4th Cir.1993)). In other words, it is a means by which the district court can correct its own mistakes, thereby “sparing the parties and the appellate courts the burden of unnecessary appellate proceedings.” Pac. Ins. Co. v. Am. Nat. Fire Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998) (citation omitted). The decision of whether to grant relief under Rule 59(e) is discretionary. Lockheed Martin, 116 F.3d at 112.

More important in this case, however, are the purposes for which a Rule 59(e) motion cannot be used. First, Rule 59(e) motions cannot be used “to raise arguments which could have been raised prior to the issuance of the judgment, nor may they be used to argue a case under a novel legal theory that the party had the ability to address in the first instance.” Pac. Ins. Co., 148 F.3d at 403 (citing cases). Second, a party cannot claim Rule 59(e) relief on the basis of new evidence unless that party also puts forth a “legitimate justification for not presenting the evidence during the earlier proceeding.”Id. (citing Small v. Hunt, 98 F.3d 789, 798 (4th Cir.1996) (internal quotations omitted)). In other words, Rule 59(e) does not “enable a party to complete presenting his case after the court has ruled against him.” Id. (quoting Frietsch v. Refco, Inc., 56 F.3d 825, 828 (7th Cir.1995)). In general, “reconsideration of a judgment after its entry is an extraordinary remedy which should be used only sparingly.” 11 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2810.1, at 124 (2d ed.1995).

III. Analysis

Under the well-established standard for relief under Rule 59(e), Hanover’s motion should be denied.

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Bluebook (online)
221 F.R.D. 458, 2004 U.S. Dist. LEXIS 9294, 2004 WL 1146472, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hanover-insurance-v-corrpro-companies-inc-vaed-2004.