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Walsh v. State Farm Fire and Casualty Co.

United States District Court, M.D. Tennessee, Nashville Division

August 17, 2017

JAMES WALSH and BELINDA WALSH, Plaintiffs,
v.
STATE FARM FIRE AND CASUALTY COMPANY, Defendant.

          MEMORANDUM & ORDER

          ALETA A. TRAUGER, United States District Judge

         Pending before the court is a Rule 59(e) Motion to Alter or Amend Judgment and/or in the Alternative Rule 60(b) Motion for Relief From Final Judgment (Docket No. 41) filed by the plaintiffs, James and Belinda Walsh (the "Homeowners"). For the reasons discussed herein, this motion will be denied.

         BACKGROUND & PROCEDURAL HISTORY

         This insurance dispute arises from allegations that the defendant, State Farm Fire & Casualty Company ("State Farm"), denied the Homeowners' insurance claim for damage to their property that was caused by sinkhole activity, despite the fact that the Homeowners had met all conditions of their insurance policy with State Farm and the policy covered sinkhole damage. (Docket No. 1-2.) A breach of contract action was initially filed by the Homeowners on June 19, 2015 against State Farm (Docket No. 1-2) and was removed to federal court on September 28, 2015 (Docket No. 1). An Initial Case Management Order was entered on December 22, 2015. (Docket No. 11 (the "CMO").) Among other deadlines, the CMO ordered that the Homeowners must identify and disclose all expert witnesses and reports by July 1, 2016; that all depositions of expert witnesses must be taken by October 1, 2016, and that all dispositive motions must be filed by October 1, 2016.

         On August 11, 2016, after the CMO deadline for the Homeowner's expert disclosures had passed, the parties filed a Joint Mediation Report, indicating that they were attempting to schedule mediation over the coming months. (Docket No. 12.) Then, on December 9, 2016, after the CMO deadline for the filing of dispositive motions had passed, the parties filed a joint Motion to Continue Trial Pending Mediation, indicating that the parties were in the process of mediating a settlement and would move for a new case management order in the event the mediation was unsuccessful and new deadlines were needed. (Docket No. 13.) The court granted this motion. (Docket No. 14.)

         On February 24, 2017, State Farm filed a Motion for Summary Judgment. (Docket No. 15.) Subsequently, the Homeowners filed a Motion for Extension of Time to Respond to Defendant's Motion for Summary Judgment, noting that depositions had been postponed during mediation efforts, and asking to extend the response deadline until thirty days after the Homeowners' deposition of State Farm's corporate representative in late March. (Docket No. 23.) The court entered an Order granting the Homeowners permission to respond to State Farm's Motion for Summary Judgment within 30 days after deposing State Farm's corporate representative and ordering the Homeowners to file notice with the court when the deposition was scheduled. (Docket No. 24.) On April 27, 2017, the Homeowners filed a Notice with the court stating that the deposition of State Farm's corporate representative had taken place on April 5, 2017. (Docket No. 28.) The following day, the court entered an Order requiring the Homeowners to respond to State Farm's pending Motion for Summary Judgment by May 5, 2017 and allowing State Farm to file a Reply by May 19, 2017. (Docket No. 29.) The parties filed their respective Response and Reply, briefing the merits of State Farm's Motion for Summary Judgment, in accordance with that Order. (Docket Nos. 30, 34.)

         Nowhere in their briefing on State Farm's Motion for Summary Judgment, or elsewhere in the record, did the Homeowners argue that State Farm's Motion for Summary Judgment should be denied as untimely pursuant to the CMO or indicate any objection to the court's considering the motion on the merits. Nor did the Homeowners ever indicate to the court that they needed additional time to develop the factual record prior to the consideration of the motion, beyond their initial request to extend the briefing schedule until the deposition of State Farm's corporate representative was concluded.[1]

         On July 17, 2017 the court granted State Farm's Motion for Summary Judgment on the merits. (Docket No. 37.) In the accompanying Memorandum, the court held that the Homeowners had failed to meet their burden of demonstrating a triable issue of fact as to whether State Farm had improperly denied their insurance claim. (Docket No. 36 (the "Prior Opinion").) In reaching this conclusion, the court first found that the expert report of Sonny Gulati of Florida Testing and Environmental, Inc. proffered by the Homeowners (Docket No. 16-1) and the Affidavit of Sonny Gulati (Docket No. 30-3) (collectively, the "Gulati Opinions") comprised the sole evidence to support the Homeowners' position but were inadmissible under Rule 26(a)(2)(B), Federal Rule of Evidence 702, and Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579, 589-90 (1993). The court's analysis regarding the admissibility of the Gulati Opinions is discussed more fully in the Prior Opinion but, briefly, the court found that Mr. Gulati did not properly explain his methodology for either his opinion that the damage to the Homeowner's property may have been caused by sinkhole activity or for his opinion that the experts retained by State Farm erred in concluding that the damage was not caused by sinkhole activity. On the same day, the Clerk filed an Entry of Judgment dismissing the case. (Docket No. 38.)

         On August 14, 2017, the Homeowners filed the currently pending Motion to Alter or Amend Judgment and/or in the Alternative Motion for Relief From Final Judgment, arguing that the final judgment against them should be set aside under Rule 59(e) or Rule 60(b)(1). (Docket No. 41.) The Homeowners argue for the first time that the court was wrong to have considered State Farm's Motion for Summary Judgment because it was untimely under the CMO. Alternatively, the Homeowners argue, also for the first time, that the court should have granted the Homeowners additional time to supplement the Gulati Opinions because the dismantling of the CMO in December of 2016 meant that no expert disclosure deadline had passed at the time the Motion for Summary Judgment was considered. Finally, the Homeowners argue that the court incorrectly reached the conclusion that Mr. Gulati's report is inadmissible and that summary judgment is proper. Attached to the Homeowners' Motion is the transcript of the May 9, 2017 deposition of Sonny Gulati (Docket No. 41-1) as well as the transcript of the March 24, 2017 deposition of Bernd T. Rindermann in a separate action (Docket No. 41-2).[2]

         LEGAL STANDARD

         Under Rule 59(e), a court may alter or amend a judgment based on: (1) a clear error of law; (2) newly discovered evidence; (3) an intervening change in controlling law; or (4) a need to prevent manifest injustice. Leisure Caviar, LLC v. U.S. Fish & Wildlife Serv., 616 F.3d 612, 615 (6th Cir. 2010). A motion under Rule 59(e) is not, however, a vehicle for presenting new legal arguments that could have been raised before a judgment was issued. Roger Miller Music, Inc. v. Sony/ATVPubl'g, LLC, Ml F.3d 383, 395 (6th Cir. 2007); Leisure Caviar, 616 F.3d at 616 (noting movant "cannot use a Rule 59 motion to raise arguments which could, and should, have been made before judgment issued"). In the Sixth Circuit, "[t]he grant or denial of a Rule 59(e) motion is within the informed discretion of the district court, reversible only for abuse." Beits v. Costco Wholesale Corp., 558 F.3d 461, 467 (6th Cir. 2009) (quoting Scotts Co. v. Central Garden & Pet Co., 403 F.3d 781, 788 (6th Cir. 2005)).

         Rule 60(b)(1) provides that relief from a final judgment may be granted due to "(1) mistake, inadvertence, surprise, or excusable neglect." The Sixth Circuit has stated that Rule 60(b)(1) "is intended to provide relief in only two situations: (1) when a party has made an excusable mistake or an attorney has acted without authority, or (2) when the judge has made a substantive mistake of law or fact in the final judgment or order." United States v. Reyes, 307 F.3d 451, 455 (6th Cir. 2002) (citation omitted). "[R]elief under Rule 60(b) is circumscribed by public policy favoring finality of judgments and termination of litigation." Ford Motor Co. v. Mustangs Unlimited, Inc., 487 F.3d 465, 468 (6th Cir. 2007) (citations and internal quotation marks omitted). Whether to grant a motion under Rule 60(b) is left to the sound discretion of the district court. Tyler v. Anderson, 749 F.3d 499, 509 (6th Cir. 2014).

         ANALYSIS

         The Homeowners, apparently dissatisfied with the court's granting of State Farm's Motion for Summary Judgment, have now raised for the first time the argument that the court should not have considered State Farm's Motion for Summary Judgment on the merits because it was untimely under the CMO or because the Homeowners had not yet had a full opportunity to develop the record. This argument is without merit. When the court granted the parties' jointly filed Motion to Continue Trial Pending Mediation in December of 2016, the court understood the parties to have made the mutual decision to disregard the CMO deadline for the filing of dispositive motions in light of their ongoing efforts to resolve this dispute through mediation. The parties had previously filed a Joint Mediation Report, bringing their mediation efforts to the court's attention, after the CMO deadline for the Homeowners' expert disclosures had passed but prior to the dispositive motion deadline. Once the court granted the parties' Motion to Continue Trial, the parties were no longer bound by the CMO deadlines, and it was the court's understanding that deadlines would be reset as needed to resolve this matter going forward. In February ...


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