Opinion
Civil Action No. 2:20-cv-2017-RMG
2022-03-24
KOPPERS PERFORMANCE CHEMICALS, INC., f/k/a Osmose Wood Preserving Co. of America, Inc. f/k/a Osmose Wood Preserving, Inc. f/k/a Osmose, Inc., Plaintiff, v. The TRAVELERS INDEMNITY COMPANY; Argonaut-Midwest Insurance Company d/b/a Argo Group; Insurance Company of North America d/b/a Chubb; Indemnity Insurance Company of North America d/b/a Chubb; Pacific Employers Insurance Company d/b/a Chubb; and Ace American Insurance Company d/b/a Chubb, Defendants.
Laura Figueroa Locklair, Boyle Leonard and Anderson PA, Fort Myers, FL, Robert H. Friedman, Pro Hac Vice, Friedman PA, Palm Beach, FL, for Plaintiff. Charles R. Norris, Whelan Mellen & Norris, LLC, Charleston, SC, Ezra S. Gollogly, Pro Hac Vice, Kramon and Graham PA, Baltimore, MD, Steven Klepper, Pro Hac Vice, Kramon and Graham PA, Annapolis, MD, for Defendant Travelers Indemnity Company.
Laura Figueroa Locklair, Boyle Leonard and Anderson PA, Fort Myers, FL, Robert H. Friedman, Pro Hac Vice, Friedman PA, Palm Beach, FL, for Plaintiff.
Charles R. Norris, Whelan Mellen & Norris, LLC, Charleston, SC, Ezra S. Gollogly, Pro Hac Vice, Kramon and Graham PA, Baltimore, MD, Steven Klepper, Pro Hac Vice, Kramon and Graham PA, Annapolis, MD, for Defendant Travelers Indemnity Company.
ORDER
Richard M. Gergel, United States District Judge
Before the Court is Defendant The Travelers Indemnity Corporation ("Travelers")’s motion for reconsideration (Dkt. No. 134). For the reasons set forth below, the Court grants in part the motion.
I. Background
This is a declaratory judgment action and breach of contract action filed by Plaintiff against various insurance companies including Travelers.
On February 23, 2022, the Court denied Travelers’ motion to strike, (Dkt. No. 125), granted Plaintiff's partial motion for summary judgment, (Dkt. No. 101), and granted in part and denied in part Travelers’ motion for summary judgment, (Dkt. No. 100). (Dkt. No. 133) (the "Prior Order").
On March 4, 2022, Travelers moved for reconsideration and for hearing. (Dkt. Nos. 134, 137). Plaintiff opposes. (Dkt. No. 136).
II. Legal Standard
Rule 54(b) governs the Court's reconsideration of interlocutory orders. Fed. R. Civ. P. 54(b). Where a district court issues an interlocutory order such as one for partial summary judgment "that adjudicates fewer than all of the claims," the court retains discretion to revise such an order "at any time before the entry of a judgment adjudicating all the claims." Fed. R. Civ. P. 54(b). Compared to motions to reconsider final judgments pursuant to Rule 59(e), Rule 54(b) ’s approach involves broader flexibility to revise interlocutory orders before final judgment as the litigation develops and new facts or arguments come to light. Carlson v. Boston Sci. Corp. , 856 F.3d 320, 326 (4th Cir. 2017).
The discretion Rule 54(b) provides is not limitless. Courts have cabined revision pursuant to Rule 54(b) by treating interlocutory rulings as law of the case. Carlson , 856 F.3d at 325 (citing Canoe Ass'n v. Murphy Farms, Inc. , 326 F.3d 505, 515-16 (4th Cir. 2003) ) (internal citations omitted). The law-of-the case doctrine provides that in the interest of finality, "when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case." Carlson , 856 F.3d at 325 (citing TWFS, Inc. v. Franchot , 572 F.3d 186, 191 (4th Cir. 2009) ) (internal citations omitted). Thus, a court may revise an interlocutory order under the same circumstances in which it may depart from the law of the case: (1) "a subsequent trial produc[ing] substantially different evidence;" (2) a change in applicable law; or (3) clear error causing "manifest injustice." Carlson , 856 F.3d 320. This standard closely resembles the standard applicable to motions to reconsider final orders pursuant to Rule 59(e), but it departs from such standard by accounting for potentially different evidence discovered during litigation as opposed to the discovery of "new evidence not available at trial." Carlson , 856 F.3d at 325 (citing Pac. Ins. Co. v. Am. Nat. Fire Ins. Co. , 148 F.3d 396, 403 (4th Cir. 1998) ).
III. Discussion
Travelers moves, inter alia, for reconsideration of the Court's denial of its motion to strike.
On February 8, 2022, Travelers moved to strike various summary judgment materials filed by Plaintiffs. (Dkt. No. 125). Specifically, Travelers objected to declarations by Plaintiff's former in-house counsel Stephen Kifer and its litigation counsel Robert Friedman. As it regarded Kifer, Travelers noted that in response to Travelers’ motion for summary judgment Plaintiff submitted a declaration by Kifer wherein Kifer explained why, although the underlying lawsuit in this action had been filed in 2014, Plaintiff did not inform Travelers of said lawsuit until around August 2016. See (Dkt. No. 115-1) (explaining that when the underlying lawsuit was filed in 2014 Kifer did not believe the allegations in the complaint concerned exposure to a particular chemical from birth, that after the plaintiff in that lawsuit was deposed in March 2016 Kifer "endeavored to find out information concerning legacy insurers" and, eventually, located the pertinent Travelers’ policy with the help of Friedman). As to Friedman, Travelers argued that certain statements contained within his declaration contradicted the parties’ joint stipulations and relied on undisclosed witnesses. (Dkt. No. 125 at 3-4).
In its motion for reconsideration, Travelers more thoroughly explains its basis for moving to strike Kifer's declaration. Namely, Travelers notes that the information Kifer set forth in his declaration "consisted exclusively of evidence Koppers refused to disclose in discovery." (Dkt. No. 134 at 2) (emphasis removed). Travelers explains that Plaintiff refused to respond to its Interrogatories Nos. 5, 16, and its Document Request No. 6. As to Interrogatory No. 5—"Explain why you did not forward the Underlying Action to Travelers before the Tender Date"—Plaintiff objected that the request sought privileged information, that "Koppers responds that it tendered the claim to Travelers promptly after determining the potential availability of coverage," but that because Travelers ultimately denied its duty to defend, "any delay in notice was immaterial and non-prejudicial." (Dkt. No. 134-1 at 7). In response to Interrogatory No. 16—"State the date that you first determined that Travelers had an obligation to defend you in the Underlying Acton"—Plaintiff objected that the request sought privileged information, that the request was irrelevant "because the date that Koppers determined that Travelers had an obligation to defendant it in the Underlying Action is immaterial," but that Plaintiff tendered the claim "promptly after determining the potential availability of coverage." (Id. at 12-13); (Id. at 16-17) (similarly objecting to Travelers’ request for "documents relating to the time of your decision to tender the Underlying Action to insurers" and referring Travelers to its existing document production); (Dkt. No. 137 at 4-5) (noting said production did not include "documents relating to [Plaintiff's] 2016 search for 1970s and 1980s documents (later disclosed in Mr. Kifer's declaration)"). In the Prior Order, the Court found that Kifer's declaration created a dispute of material fact as to whether Plaintiff's "late notice" was justified. (Dkt. No. 133 at 9). Travelers moved to exclude Kifer's declaration pursuant to Fed. R. Civ. P. 37(c)(1). See (Dkt. No. 125).
Rule 37(c), FRCP is the enforcement mechanism for a violation of the disclosure requirements of Rule 26, FRCP. "[T]he basic purpose of Rule 37(c)(1) [is] preventing surprise and prejudice to the opposing party." Southern States Rack & Fixture, Inc. v. Sherwin-Williams Co. , 318 F.3d 592, 596 (4th Cir. 2003). It provides: "If a party fails to provide information ..., the party is not allowed to use that information ... to supply evidence on a motion, at a hearing, or at a trial[.]" Fed. R. Civ. P. 37(c)(1). "In addition to or instead of this sanction, the court, on motion and after giving an opportunity to be heard: (A) may order payment of the reasonable expenses, including attorney's fees, caused by the failure; (B) may inform the jury of the party's failure; and (C) may impose other appropriate sanctions, including any of the orders listed in Rule 37(b)(2)(A)(i)-(vi)." Id. If the court finds that the "failure was substantially justified or harmless ," Fed. R. Civ. P. 37(c)(1), it may allow the submitting party to rely on the information in its motion, at a hearing, or at trial. Id. (emphasis added).
In making a determination of harmlessness, the court enjoys broad discretion. Southern States , 318 F.3d at 597. "[I]n exercising its broad discretion ..., a district court should be guided by the following factors: (1) the surprise to the party against whom the evidence would be offered; (2) the ability of that party to cure the surprise; (3) the extent to which allowing the evidence would disrupt the trial; (4) the importance of the evidence; and (5) the nondisclosing party's explanation for its failure to disclose the evidence." Id. (The first four factors "relate mainly to the harmlessness exception, while the remaining factor ... relates primarily to the substantial justification exception.").
Travelers argues that the information contained in Kifer's declaration was wrongfully withheld in discovery and is subject to automatic exclusion. (Dkt. No. 134). For its part, Plaintiff does not explicitly deny it failed to produce any documents or discovery regarding the information referenced in Kifer's declaration. (Dkt. No. 136 at 3-4). Instead, Plaintiff claims Travelers was on notice that "Koppers tendered the claim to Travelers ‘after determining the potential availability of coverage’—a response completely consistent with the Kifer Declaration stating that Koppers tendered the claim to Travelers after it learned the period of alleged exposure went back further than initially indicated, and was able to identify the Travelers policy as a potentially applicable policy." (Id. ) (citing Response to Travelers’ Interrogatory No. 5). Contra, e.g. , (Dkt. No. 134-1 at 16) (objecting to RFP No. 6 requesting "all documents relating to the time of [Plaintiff's] decision to tender the Underlying Action to insurers"); (Dkt. No. 115-1 ¶¶ 4-9) (stating that after Kifer learned "Riley's period of alleged exposure went back further than initially indicated ... I endeavored to find out information concerning legacy insurers going back to the 1970s and 1980s," that it was a "time consuming process" because "the historic policies I was searching for were actually purchased" by a predecessor, that Kifer then reached out to "Osmose's general counsel" and Plaintiff's attorney Friedman to locate the Travelers policy from 1978-79); (Dkt. No. 137 at 5) (failing to produce any of the documents related to Kifer's declaration).
The Court finds that the information contained in Kifer's declaration was responsive to Travelers’ RFP No. 6 and its Interrogatories Nos. 5 and 16. Further, the information requested was within the scope of discovery as stated in Rule 26(b)(1), FRCP. Therefore, Plaintiff should have produced said discovery when it responded to Travelers’ discovery requests.
The Court further agrees with Travelers that the failure was not justified but ultimately finds the failure harmless as it is possible to cure. Namely, the information contained in the Kifer declaration was a surprise to Travelers as Plaintiff had before objected the very same information was "immaterial" or privileged. The information would disrupt trial as Travelers would be cross-examining Kifer without knowing what details he would give or on what materials he is basing his testimony. Further, the material is important given it speaks to whether Plaintiff's notice of the lawsuit to Travelers was timely. Moreover, Plaintiff has put forth no real explanation for its failure to disclose. See (Dkt. No. 136 at 3-4) (arguing Travelers had "ample opportunity to seek clarification or additional information from Koppers" and that Travelers declined to participate in the 30(b)(6) deposition of Koppers). Thus factors 1, 3, 4, and 5 all weigh in Travelers’ favor. See (Dkt. No. 134 at 4-5). However, the Court finds that it would be possible to cure the nondisclosure. Namely, the Court will reopen discovery to allow Travelers to obtain discovery on the issues raised in Kifer's declaration—including deposing Kifer and/or Friedman on the issues raised in Kifer's declaration. See (Dkt. No. 137 at 6) (stating that if Travelers’ motion for reconsideration was denied it would move to compel disclosure from Plaintiff); Bresler v. Wilmington Trust Co. , 855 F.3d 178, 194 (4th Cir. 2017) (no abuse of discretion under Rule 37(c)(1) where trial court declined to exclude late disclosed expert testimony because surprise was minimal and defendant had two months pre-trial to cure by deposing expert); UFP E. Div., Inc. v. Selective Ins. Co. of S.C. , No. CV 4:15-2801-RMG, 2017 WL 1293446, at *4 (D.S.C. Apr. 6, 2017) (striking witness pursuant to Rule 37(c)(1) where jury had already been empaneled as there "[was] no ability to cure" but noting the court was "highly reluctant" to do so as "Mr. Gagnon may be an important witness. That factor advises against UFP's motion to strike"); Western Alliance Bank v. Jefferson , 119 F. Supp. 3d 961 (D. Ariz. 2015) (failure to comply with expert disclosure requirements cured by reopening discovery for limited purpose of allowing opposing party to retain an expert witness—"As noted above, Rule 37(c)(1), on which Bank and Kritza primarily rely, authorizes the court to exercise its discretion to impose sanctions other than exclusion of evidence."); Glass Dimensions, Inc. ex rel. Glass Dimensions, Inc. Profit Sharing Plan and Trust v. State Street Bank & Trust Co. , 290 F.R.D. 11 (D. Mass. 2013) (proper sanction for untimely disclosure of an expert report was to give opposing parties on month to supplement one of their expert reports and noting "[p]reclusion is not automatic or mandatory") (citing Santiago-Diaz v. Laboratorio Clinico Y De Referencia Del Este , 456 F.3d 272, 276 (1st Cir. 2006) ("Still, preclusion is not a strictly mechanical exercise; district courts have some discretion in deciding whether or not to impose that onerous sanction.")); Richardson v. Korson , 905 F. Supp. 2d 193 (D.D.C. 2012) (The late submission of an expert's supplemental report did not warrant preclusion of the report. Instead, discovery would be reopened); Power Home Solar, LLC v. Sigora Solar, LLC , 339 F.R.D. 64, 88 (W.D. Va. 2021) (noting that "[p]reclusion of testimony" or other evidence is an "extreme sanction").
Because the Court vacates its Prior Order, the Court need not consider Travelers’ other grounds for reconsideration.
IV. Conclusion
For the reasons stated above, the Court GRANTS IN PART Travelers’ motion for reconsideration. (Dkt. No. 134). The motion is granted to the extent that discovery is reopened to allow Travelers to obtain discovery on the issues raised in Kifer's declaration. Accordingly, the Court VACATES its Prior Order (Dkt. No. 133). The limited discovery noted above shall be completed on or before April 19, 2022. Travelers and Plaintiff may then refile motions for summary judgment on or before May 3, 2022 . Responses to said motions must be filed on or before May 17, 2022 and replies, if any, are due on or before May 24, 2022 .
AND IT IS SO ORDERED .