Nat'l Credit Union v. Cumis Ins. Soc'y, Inc.

NATIONAL CREDIT UNION, ADMINISTRATION BOARD,as Liquidating Agent of St. Paul Croatian Federal Credit Union, Plaintiff, v. CUMIS INSURANCE SOCIETY, INC., Defendant.

CASE NO. 1:11 CV 1739

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO EASTERN DIVISION

May 13, 2015

MAGISTRATE JUDGE GREG WHITE

MEMORANDUM OPINION & ORDER

This matter is before the Court upon the Plaintiff National Credit Union Administration Board, acting in its capacity as Liquidating Agent for St. Paul Croatian Federal Credit Union's (1) "Combined Motion for Relief Re:, or, Reconsideration of, Opinion & Order" (Doc. No. 105); and (2) Motion for Leave to Reply to Cumis' Memo in Opposition to Motion for Relief, Instanter (Doc. No. 110.) For the following reasons, Plaintiff's Motion for Leave to Reply Instanter (Doc. No. 110) is GRANTED, and Plaintiff's Combined Motion for Relief or Reconsideration (Doc. No. 105) is DENIED.

I. Background

On April 18, 2011, Plaintiff filed a Complaint against Defendant CUMIS Insurance Society, seeking a declaratory judgment that CUMIS owes coverage under a fidelity bond it issued to St. Paul for losses arising from employee or director dishonesty. (Doc. No. 1.) Afteran extensive discovery period, the parties filed cross motions for summary judgment on October 29, 2014. (Doc. Nos. 88, 90.) Briefs in Opposition were filed on December 5, 2014, and replies were filed on December 22, 2014. (Doc. Nos. 97, 98, 99, 100.)

Of particular relevance herein, the parties each moved for summary judgment in their favor with respect to the fidelity bond's Termination provision.¹ That provision provides, in pertinent part, as follows:

9. Termination Or Limitation Of Coverage For Employee Or Director

1. This Bond's coverage for an "employee" or "director" terminates immediately when one of your "directors," officers or supervisory staff not in collusion with such person learns of:

a. Any dishonest or fraudulent act committed by such "employee" or "director" at any time, whether or not related to your activities or of the type covered under this Bond; or

b. Any termination of bond coverage for such "employee" or "director" by any bonding company, which coverage was not reinstated.

2. At our sole option, we may terminate coverage for an "employee" or "director." Such termination will be effective 15 days after receipt by you, and by your state and federal supervisory authority if required by law, of written notice of such termination for us.

3. Termination of coverage for an "employee" or "director" under paragraphs 1. or 2. above terminates our liability for any loss resulting from any act or omission by that "employee" or "director" occurring after the effective date of such termination.

(Doc. No. 90-2 at 69-70.) CUMIS argued it was entitled to summary judgment in its favor under this provision because Mirjana Zovkic, the "office manager" of St. Paul's Eastlake branch, qualifies as "supervisory staff." It maintained that coverage terminated for St. Paul employee Anthony Raguz² no later than April 1, 2008 because, by that date, Ms. Zovkic knew Mr. Raguzwas falsifying loans and loan documents. (Doc. No. 88-1 at 7.) Because the claim was not made until April 2010 when Mr. Raguz was no longer covered by the bond, CUMIS asserted Plaintiff's claim for Mr. Raguz's dishonest acts is not covered.

Plaintiff emphasized that the term "supervisory staff" is not defined in the bond and argued that term should therefore be strictly construed against CUMIS. Citing a definition of the term "supervisor" taken from United States code provisions relating to National Labor Relations, Plaintiff argued Ms. Zovkic did not constitute supervisory staff because deposition testimony reveals she did not manage "staff" and had no supervisory responsibilities. Plaintiff also maintained there is no evidence Ms. Zovkic knew Mr. Raguz had committed any dishonest or fraudulent act prior to liquidation. Finally, Plaintiff asserted that "to the extent Ms. Zovkic is deemed to be 'supervisory staff' and did know of [Mr. Raguz's] dishonest acts, then she was in collusion with him by conducting the transactions that brought about the loss, failing to report the same to the authorities and generally assisting in the continuation of the scheme." (Doc. No. 98 at 25.)

On April 7, 2015, the Court issued a Memorandum Opinion & Order denying the parties' cross motions for summary judgment. (Doc. No. 102.) With respect to the Termination provision, the Court determined the term "supervisory staff" was ambiguous because it was not defined in the bond and was susceptible to more than one reasonable interpretation. Id. at 41. The Court then construed the term in favor of St. Paul (i.e., Plaintiff) by using the definition of the term "supervisor" set forth in Plaintiff's summary judgment motion. Id. at 42. Reviewing the conflicting deposition testimony regarding the nature and scope of Ms. Zovkic's responsibilities at St. Paul, the Court went on to conclude that a genuine issue of material fact exists regarding whether Ms. Zovkic qualifies as "supervisory staff." Id. at 43. The Court further found a genuine issue of material fact exists with respect to whether Ms. Zovkic "learn[ed] of" any "dishonest or fraudulent act" committed by Mr. Raguz. Id. at 43-44. Accordingly, the Court found that neither Plaintiff nor CUMIS were entitled to summary judgment in their favor on this issue. Id. at 45.

On April 20, 2015, Plaintiff filed a "Combined Motion for Relief Re:, or Reconsiderationof, Opinion & Order." (Doc. No. 105.) Defendant timely filed a Brief in Opposition on May 8, 2015. (Doc. No. 109.)

II. Legal Standard

A motion for reconsideration is considered a motion to alter or amend judgment under Rule 59(e) of the Federal Rules of Civil Procedure. See Inge v. Rock Fin. Corp., 281 F.3d 613, 617-618 (6^th Cir. 2002); Smith v. Hudson, 600 F.2d 60, 62-63 (6th Cir. 1979); Kauffman v. Medina County Clerk of Courts, 2014 WL 1051026 at * 2 (N.D. Ohio March 24, 2014). Such a motion is extraordinary and sparingly granted. See Cequent Trailer Products, Inc. v. Intradin (Shanghai) Machinery Co., Ltd., 2007 WL 1362457 at * 2 (N.D. Ohio May 7, 2007); Plaskon Elec. Materials, Inc. v. Allied-Signal, Inc., 904 F.Supp. 644, 669 (N.D. Ohio 1995). A court may grant a motion to amend or alter judgment if there is a clear error of law, newly discovered evidence, an intervening change in controlling law, or to prevent manifest injustice. See Heil Co. v. Evanston Ins. Co., 690 F.3d 722, 728 (6^th Cir. 2012); Gencorp, Inc. v. Am. Int'l Underwriters, 178 F.3d 804, 834 (6th Cir. 1999). "It is not the function of a motion to reconsider either to renew arguments already considered and rejected by a court or 'to proffer a new legal theory or new evidence to support a prior argument when the legal theory or argument could, with due diligence, have been discovered and offered during the initial consideration of the issue.'" McConocha v. Blue Cross & Blue Shield Mut. of Ohio, 930 F.Supp. 1182, 1184 (N.D. Ohio 1996). See also Gascho v. Global Fitness Holdings, LLC, 918 F.Supp.2d 708, 715 (S.D. Ohio Jan. 16, 2013) ("A motion for reconsideration or to alter or amend is not a vehicle to reargue the case or to present evidence which should have been raised in connection with an earlier motion."); 11 Charles Alan Wright, Arthur Miller and Mary Kay Kane, Federal Practice and Procedure, § 2810.1 (2d ed. 1995) (motions to alter or amend judgment cannot be used to "relitigate old matters, or to raise arguments or present evidence that could have been raised prior to entry of judgment.").

Plaintiff herein also seeks relief from the Court's Opinion & Order pursuant to Fed. R. Civ. P. 60. "The standard for granting a Rule 60 motion is significantly higher than the standard applicable to a Rule 59 motion." Feathers v. Chevron U.S.A., Inc., 141 F.3d 264, 268 (6^th Cir.1998). See also Board of Trustees of Toledo Roofers Local No. 134 Pension Plan v. Enterprise Roofing & Sheet Metal Co., 2014 WL 988851 at * 2 (N.D. Ohio March 13, 2014). Rule 60(a) provides, in relevant part, that "[t]he court may correct a clerical mistake arising from oversight or omission whenever one is found in a judgment, order, or other part of the record." Fed.R.Civ.P. 60(a). "Subdivision (a) deals solely with the correction of errors that properly may be described as clerical or arising from oversight or omission. Errors of a more substantial nature are to be corrected by a motion under Rules 59(e) or 60(b)." 11 Wright, Miller & Kane, Federal Practice and Procedure: Civil 2D § 2854, at 240 (1995). Rule 60(a) "does not ... authorize the court to revisit its legal analysis or otherwise correct an error of substantive judgment." Pruzinsky v. Gianetti, 282 F.3d 434, 440 (6th Cir. 2002) (citation omitted).

In contrast, a court may provide relief under Rule 60(b)(1) in instances of "mistake, inadvertence, surprise, or excusable neglect." Fed.R.Civ.P. 60(b)(1). The Sixth Circuit has explained that a motion for relief under Rule 60(b)(1) is intended to provide relief to a party in only two instances: "(1) when the party has made an excusable litigation mistake or an attorney in the litigation has acted without authority, or (2) when the judge has made a substantive mistake of law or fact in the final judgment or order." Cacevic v. City of Hazel Park, 226 F.3d 483, 490 (6th Cir. 2000). Therefore, a "claim of legal error in the underlying judgment falls within the definition of mistake under Rule 60(b)(1)." United States v. Reyes, 307 F.3d 451, 456 (6th Cir. 2002) (citing Pierce v. United Mine Workers of Am., Welfare & Ret. Fund for 1950 & 1974, 770 F.2d 449, 451 (6th Cir. 1985)). See also Barrier v. Beaver, 712 F.2d 231, 234-35 (6th Cir. 1983) (allowing a motion for reconsideration to correct a court's mistake of law and recognizing that Rule 60(b)(1) allows for correcting the court's mistakes or errors).

Alternatively, a court may apply Rule 60(b)(6) to provide relief...