Accident Ins. Co. v. U.S. Bank N.A.

Accident Insurance Company, Inc., a South Carolina Corporation, Plaintiff, v. U.S. Bank National Association, Defendant.

U.S. Bank National Association, Third-Party Plaintiff, v. Southport Lane Advisors, Southport Specialty Finance,Administrative Agency Services, and Alexander Chatfield Burns, Third-Party Defendants.

Civil Action No.: 3:16-cv-02621-JMC

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA COLUMBIA DIVISION

March 31, 2021

ORDER AND OPINION

Plaintiff Accident Insurance Company, Inc. ("Accident") filed this action against Defendant U.S. Bank National Association ("U.S. Bank") seeking monetary damages related to its allegedly deficient administration of a reinsurance trust account created pursuant to a written trust agreement. (ECF No. 154 at 21 ¶ 116-25 ¶ 141.)

This matter is before the court on Accident's Motion for a New Trial, Motion to Amend the Court's Finding of Facts and Conclusions of Law, and Motion to Alter or Amend Judgment pursuant to Rules 52 and 59 of the Federal Rules of Civil Procedure. (ECF No. 305.) U.S. Bank opposes Accident's Motion in its entirety. (ECF No. 308.) For the reasons stated below, the court DENIES Accident's Motion for a New Trial, Motion to Amend the Court's Finding of Facts and Conclusions of Law, and Motion to Alter or Amend Judgment.

I. RELEVANT BACKGROUND TO THE PENDING MOTION

In this matter, Accident alleged claims against U.S. Bank for breach of contract, breach of fiduciary duty, negligence/gross negligence, negligent misrepresentation, and civil conspiracy. (See ECF No. 154 at 21 ¶ 116-25 ¶ 141.) The parties' dispute centers on the provisions of their Trust Agreement, which provided in relevant part:

Paragraph 1(a): The Grantor hereby creates a trust account for the sole use and benefit of the Beneficiary pursuant to the terms of this Agreement [].

Paragraph 1(b): The rights and duties of the Grantor, the Beneficiary and the Trustee under this Agreement are not subject to any conditions or qualifications not set forth in the Agreement.

Paragraph 2(a): The Trustee shall receive Assets from the Grantor, deposit the Assets into the Trust Account and hold the Assets in the Trust Account for safekeeping, subject to the terms of this Agreement. All Assets of the Trust Account shall be held by the Trustee in physical or customary book entry form at the Trustee's offices in the United States. The Trustee shall notify the Beneficiary and Grantor within ten (10) days of any deposits into the Trust Account.

Paragraph 2(b): The Assets shall consist only of cash (United States legal tender) and Eligible Securities (as hereinafter defined). The Trustee shall have no duty or responsibility with respect to the qualification, character or valuation of the Assets deposited in the Trust Account, except to determine whether the Assets are in such form that the Beneficiary, or the Trustee upon direction by the Beneficiary, may whenever necessary negotiate any such Assets without consent or signature from the Grantor or any other person or entity.

Paragraph 3(a): Without notice to or the consent of the Grantor, the Beneficiary shall have the right, at any time, to withdraw from the Trust Account, upon written notice to the Trustee (a "Withdrawal Notice"), such Assets as are specified in the Withdrawal Notice . . . . The Beneficiary need present no statement or document in addition to a Withdrawal Notice in order to withdraw any Assets.

Paragraph 3(b): Upon receipt of a Withdrawal Notice, the Trustee shall immediately take any and all steps necessary to transfer absolutely and unequivocally to the Beneficiary or to its order all right, title and interest in the Assets being withdrawn, and shall deliver the physical custody of such Assets to or for the account of the Beneficiary as specified in the Withdrawal Notice. The Trustee shall notify the Grantor and Beneficiary within ten (10) days of any suchwithdrawal from the Trust Account. The Beneficiary shall acknowledge receipt of any withdrawn Assets within five (5) days of such receipt.

Paragraph 5(a): Following notice to the Beneficiary, the Trustee shall surrender for payment all maturing Assets and all Assets called for redemption and deposit the proceeds of any such payments into the Trust Account. All such proceeds shall be Invested, as instructed by the Grantor or its designated investment advisor in Eligible Securities satisfying the requirements of Applicable Law regarding the investment of Assets in the Trust Account. Any instruction or order concerning such investment of Assets shall be referred to as an "Investment Order". The Trustee shall execute each Investment Order and settle securities transactions by itself or by means of an agent or broker. The Trustee shall not be responsible for any act or omission, or for the solvency, of any such agent or broker.

Paragraph 5(b): The Grantor may direct the Trustee to accept substitute Assets for other Assets held in the Trust Account.

Paragraph 5(c): The Grantor represents and warrants that each Investment Order or Asset substitution will involve an investment in Eligible Securities satisfying the requirements of Applicable Law regarding investments in the Trust Account. The Trustee has no responsibility for determining whether any Assets invested pursuant to an Investment Order or Asset substitution are made in Eligible Securities that comply with the requirements of Applicable Law regarding investments in the Trust Account.

Paragraph 8(a): The Trustee shall furnish to Grantor and Beneficiary an accounting of all Assets in the Trust Account upon its inception and thereafter at intervals no less frequent than as of the end of each calendar month. Such accounting shall include a statement of all Assets in the Trust Account and shall be given as soon as [] practicable, but in no event later than fifteen (15) days after such date.

Paragraph 8(b): Before accepting any Asset for deposit to the Trust Account, the Trustee shall determine that such Asset is in such form that the Beneficiary whenever necessary may, or the Trustee upon direction by the Beneficiary will, negotiate such Asset without consent or signature from the Grantor or any person or entity other than the Trustee in accordance with the terms of this Agreement.

Paragraph 8(g): Unless otherwise provided in this Agreement, the Trustee is authorized to follow and rely upon all instructions given by officers named in any authorized signers list furnished to the Trustee from time to time by the Grantor and the Beneficiary, respectively, and by attorneys-in-fact acting under written authority furnished to the Trustee by the Grantor or the Beneficiary, including, without limitation, instructions given by letter, facsimile transmission, telegram, teletype, cablegram or electronic media, if the Trustee believes such instructions to be genuine and to have been signed, sent or presented by the proper party orparties. The Trustee shall not incur any liability to anyone resulting from actions taken by the Trustee in reliance in good faith on such instructions.

Paragraph 8(i): The Trustee shall not be liable for any loss, liability, costs or expenses, (including reasonable attorney's fees and expenses) incurred or made arising out of or in connection with the performance of its duties hereunder in accordance with the provisions of this Agreement, unless such loss, liability, costs or expenses are caused by its own negligence, willful misconduct or lack of good faith.

Paragraph 12(b): The term "Applicable Insurance Law" shall mean the law of the State of New York."

Paragraph 12(f): The term "Eligible Securities" shall mean and include certificates of deposit issued by a United States bank and payable in United States legal tender and securities representing investments of the types specified in subsections (1), (2), (3), (4), (6), (8) and (10) of Section 1404(a) of [] New York Insurance Law; provided, however, that no such securities shall have been issued by a Parent or a Subsidiary of either the Grantor or the Beneficiary. Any deposit or investment direction by Grantor shall constitute a certification by Grantor to the Trustee that the Assets so deposited, or to be purchased pursuant to such investment directions, are Eligible Securities under Applicable insurance Law, and the Trustee shall be entitled to rely on Grantor's representation.

Paragraph 13: This Agreement shall be subject to and governed by the laws of the State of Delaware.

(Def. Ex. No. 89.) After denying U.S. Bank's Motion for Summary Judgment as to Accident's claims (see ECF Nos. 223, 232), the court conducted a bench trial at which the parties presented evidence and argument starting on July 8 through July 12, 2019, and concluding on July 15, 2019. (ECF Nos. 275, 277-281, 286-291.) Specifically, the court heard live testimony from thirteen (13) witnesses and was read the deposition testimony of one (1) witness. The parties also stipulated to the admission of the reports of three (3) expert witnesses in lieu of live testimony. (See ECF No. 265.) On April 20, 2020, the court filed its Findings of Fact, Conclusions of Law, and Order (the "April Order"), concluding that judgment should be entered in favor of U.S. Bank on all of Accident's claims; and for Accident on U.S. Bank's counterclaimfor contractual indemnification.¹ (ECF No. 303 at 52-53.) Additionally, the court's April 20, 2020 Judgment stated that neither party shall take from the other on their respective claims. (See ECF No. 304.)

On May 18, 2020, Accident filed the instant Motion for a New Trial, Motion to Amend the Court's Findings of Facts and Conclusions of Law, and Motion to Alter or Amend Judgment. (ECF No. 305.) On June 15, 2020, U.S. Bank filed a Response to Accident's Motions contending that the court should deny the Motions in all respects. (ECF No. 308.)

II. LEGAL STANDARD²

A. Motion for New Trial under Rule 59(a)

A motion for a new trial under Rule 59(a) may be granted "on all or some of the issues...