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Huntsman Advanced Materials LLC v. Onebeacon America Insurance Company

February 13, 2012

HUNTSMAN ADVANCED MATERIALS LLC,
PLAINTIFF,
v.
ONEBEACON AMERICA INSURANCE COMPANY, AND SPARTA INSURANCE COMPANY, FORMERLY KNOWN AS AMERICAN EMPLOYERS' INSURANCE COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Honorable B. Lynn Winmill Chief U. S. District Judge

MEMORANDUM DECISION AND ORDER

INTRODUCTION

The Court has before it Defendants' Motion for Reconsideration of the Court's Denial of Their Motions for Summary Judgment and to Certify State Law Questions (Dkt. 104), Defendants' Motion to Lift Stay, or in the Alternative, for Reconsideration of Granting of Plaintiff's Motion to Stay Indemnity Portion of The Case (Dkt. 105), and Plaintiff Huntsman Advanced Materials LLC's Motion for Reconsideration (Dkt. 107). The Court heard oral argument on the motions on November 1, 2011, and now issues the following decision.

BACKGROUND

This is an insurance coverage case. It involves claims of environmental contamination resulting from the operation of a phosphate mine in Caribou County, Idaho called the North Maybe Mine. Huntsman is the successor in interest of commercial general liability insurance policies purchased from OneBeacon in the 1960s and 70s. The environmental contaminants in this case are selenium and other related elements which have been mobilized by surface mining of phosphate at the mine.

Procedurally, this case began when the U.S. Forest Service issued a February 27, 2004 letter to Huntsman identifying Huntsman as a potentially responsible party ("PRP"). In May 2008, Huntsman filed its complaint in this matter asserting a breach of contract and seeking a declaratory judgment that OneBeacon was obligated to provide a defense and indemnify Huntsman.

Due to the Court's busy calendar, the case was reassigned to Judge Downes as a visiting judge in the District of Idaho. In February 2010, Judge Downes issued a decision granting Huntsman's motion to stay the indemnity portion of the case. In July 2011, Judge Downes issued a decision denying OneBeacon's motion for summary judgment and motion to certify questions of law, and granting in part and denying in party Huntsman's motion for partial summary judgment. The case was then reassigned back to the undersigned District Judge following Judge Downes's retirement. Both parties now seek reconsideration of at least some portions of Judge Downes' orders.

LEGAL STANDARD

A motion to reconsider an interlocutory ruling requires an analysis of two important principles: (1) Error must be corrected; and (2) Judicial efficiency demands forward progress. The former principal has led courts to hold that a denial of a motion to dismiss or for summary judgment may be reconsidered at any time before final judgment. Preaseau v. Prudential Insurance Co., 591 F.2d 74, 79-80 (9th Cir. 1979). While even an interlocutory decision becomes the "law of the case," it is not necessarily carved in stone. Justice Oliver Wendell Holmes concluded that the "law of the case" doctrine "merely expresses the practice of courts generally to refuse to reopen what has been decided, not a limit to their power." Messinger v. Anderson, 225 U.S. 436, 444 (1912). "The only sensible thing for a trial court to do is to set itself right as soon as possible when convinced that the law of the case is erroneous. There is no need to await reversal." In re Airport Car Rental Antitrust Litigation, 521 F.Supp. 568, 572 (N.D.Cal. 1981)(Schwartzer, J.).

The need to be right, however, must co-exist with the need for forward progress. A court's opinions "are not intended as mere first drafts, subject to revision and reconsideration at a litigant's pleasure." Quaker Alloy Casting Co. v. Gulfco Indus., Inc., 123 F.R.D. 282, 288 (N.D.Ill.1988). "Courts have distilled various grounds for reconsideration of prior rulings into three major grounds for justifying reconsideration:

(1) an intervening change in controlling law; (2) the availability of new evidence or an expanded factual record; and (3) need to correct a clear error or to prevent manifest injustice." Louen v Twedt, 2007 WL 915226 (E.D.Cal. March 26, 2007). If the motion to reconsider does not fall within one of these three categories, it must be denied. Here, the parties seek reconsideration of portions of an earlier order in order to correct clear error or prevent manifest injustice, or, in the case of the stay, because new evidence warrants it.

ANALYSIS

1. Motion to Reconsider Stay

On February 19, 2010, Judge Downes, writing for this Court, granted Huntsman's motion to stay the indemnity portion of this case pending completion of the RI/FS. OneBeacon asks the Court to reconsider that decision.

Judge Downes correctly explained the standard for determining whether a stay is appropriate. It is generally committed to the discretion of the district court. Lackyer v. Mirant Corp., 398 F.3d 1098, 1109 (9th Cir. 2005). However, citing the Supreme Court's decision in Landis v. North American Co., 299 U.S. 248 (1936), the Ninth Circuit indicates that the Court should weigh the competing interests which will be affected by granting or refusing to grant a stay. Those interests include: (1) possible damage which may result from granting a stay; (2) the hardship or inequity a party may suffer if forced to proceed; (3) and the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay. Id. at 1110.

Judge Downes granted the stay for the following reasons: (1) Huntsman showed a clear case of prejudice in its ability to defend the North Maybe Mine claim; (2) there was a real potential for inconsistent results if the Court in the coverage case made decisions relating to the nature and extent of property damage at the site before those issues had been resolved in the underlying case; and (3) a stay would not prejudice OneBeacon.

OneBeacon now contends that new evidence supports lifting or reversing the stay. Specifically, OneBeacon contends that an expert's report on the Final West Ridge Operable Unite RI/FS Work Plan shows that the RI/FS will not determine when property damage occurred. OneBeacon therefore suggests that the RI/FS will not answer questions about "actual" insurance coverage, so the indemnity question should be addressed now.

Judge Downes did not base his decision on a finding that the RI/FS process would determine when property damage had occurred. Instead, Judge Downes decided that the RI/FS will likely determine whether there is evidence of contamination and the source thereof, which is critical to an educated resolution of the indemnity issue. Order at 7, Dkt. 81. The Court further decided that the stay would promote judicial economy because without a stay, if the indemnity issue is improperly determined in the coverage action, the Court would likely need to revisit the matter. Id. at p. 8.

At this point, Huntsman denies the Forest Service's allegation that its operations contaminated the site. Therefore, the crux of the stay is the difficult position Huntsman would be placed in if required to proceed with the indemnity portion of this case while denying the Forest Service's allegations against it. The Final Work Plan ...


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