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TRAVELERS INS. v. BUFFALO REINSURANCE

June 22, 1990

THE TRAVELERS INSURANCE COMPANY, PLAINTIFF,
v.
BUFFALO REINSURANCE COMPANY, FREMONT SYNDICATE, INC., MAIDEN LANE SYNDICATE, INC., PAN ATLANTIC INVESTORS, LTD., REPUBLIC INSURANCE COMPANY AND SOUTH PLACE SYNDICATE, INC., DEFENDANTS.



The opinion of the court was delivered by: Cannella, District Judge:

MEMORANDUM AND ORDER

Plaintiff's motion for reargument is granted. Local Civil Rule 3(j); Fed.R.Civ.P. 59(e). Upon reconsideration, the judgment is vacated and defendants' motion for summary judgment is denied. Fed.R.Civ.P. 56.

BACKGROUND

Plaintiff, The Travelers Insurance Company ["Travelers"], commenced the instant action for a declaration of rights under certain facultative reinsurance contracts issued by defendants Buffalo Reinsurance Company, Fremont Syndicate, Inc., Maiden Lane Syndicate, Inc., Pan Atlantic Investors, Ltd., Republic Insurance Company, and South Place Syndicate, Inc. [collectively, the "Reinsurers"]. In a Memorandum and Order dated February 9, 1990, the Court granted defendants' motion for summary judgment and directed the Clerk of the Court to enter judgment for defendants. See The Travelers Ins. Co. v. Buffalo Reinsurance Co., et al., 735 F. Supp. 492 (S.D.N Y 1990) [the "February 9 Order"]. Familiarity with the February 9 Order is assumed.

Pursuant to Rule 3(j) of the Civil Rules of the United States District Courts for the Southern and Eastern Districts of New York ["Local Civil Rule 3(j)"] and Rule 59(e) of the Federal Rules of Civil Procedure, Travelers now moves for an order: (1) vacating the judgment; (2) granting leave for reargument; and (3) denying defendants' motion for summary judgment.

DISCUSSION

I. Standards for Reargument

The standards governing motions for reargument are well established and do not require extensive discussion.*fn1 Local Civil Rule 3(j) provides that on a motion for reargument the moving party shall "set[] forth concisely the matters or controlling decisions which counsel believes the court has overlooked." Local Civil Rule 3(j) (emphasis added). Thus, in order to prevail on a motion for reargument, the moving party must demonstrate that the court has overlooked controlling decisions that may have influenced the earlier result had they been considered by the court. See Morser v. AT & T Information Sys., 715 F. Supp. 516, 517 (S.D.N.Y. 1989); Adams v. United States, 686 F. Supp. 417, 418 (S.D.N.Y. 1988); Bozsi Ltd. Partnership v. Lynott, 676 F. Supp. 505, 509 (S.D.N.Y. 1987). Alternatively, the moving party may establish that the court failed to consider "factual matters that were put before the court on the underlying motion." Ashley Meadows Farm, Inc. v. American Horse Shows Ass'n, Inc., 624 F. Supp. 856, 857 (S.D.N.Y. 1985). However, Local Civil Rule 3(j) precludes a party from advancing new facts, issues, or arguments not previously presented to the court. See Weissman v. Fruchtman, 124 F.R.D. 559, 560 (S.D.N.Y. 1989). Therefore, on a motion for reargument, it is improper to present new material because by definition material not previously presented cannot have been "overlooked" by the court. Consolidated Gold Fields, PLC v. Anglo American Corp. of South Africa Ltd., 713 F. Supp. 1457, 1476 (S.D.N.Y. 1989).

While the standard on a motion for reargument is "strict in order to dissuade repetitive arguments on issues that have already been considered fully by the court," Caleb & Co. v. E.I. DuPont de Nemours & Co., 624 F. Supp. 747, 748 (S.D.N Y 1985), the record supports reargument and a determination that summary judgment is not proper. Travelers bases its motion for reargument upon deposition testimony that it believes might reasonably have altered the entry of summary judgment had it been considered by the Court. In particular, Travelers contends that the Court overlooked important deposition testimony that reflects the custom and usage of the reinsurance industry with respect to the normal time ceding insurance companies provide reinsurers with notice of claims. The February 9 Order inadvertently failed to consider the custom and usage argument based on the deposition testimony in question. Therefore, on the basis of factual matters overlooked by the Court, reargument is granted.

II. Summary Judgment on Reargument*fn2

On reargument, Travelers relies upon the deposition testimony of (1) Melvin Mosgrove, a claims examiner for defendant Buffalo Reinsurance Company, (2) Richard Bessette, an underwriting manager for defendant Fremont Syndicate (3) Katherine Foran of defendants Maiden Lane Syndicate and South Place Syndicate and (4) Albert Stevens of defendants Pan Atlantic Investors and Republic Insurance Company. Travelers contends that the deposition testimony of these reinsurers demonstrates that reinsurers commonly get initial knowledge of a claim many months and even years after the claim occurs. In light of this custom and usage in the reinsurance industry, Travelers argues that whether its June 22, 1984 notice to O'Connor Associates ["O'Connor"], the reinsurance intermediary, was given within a reasonable time under the circumstances is a genuine issue of fact which precludes the entry of summary judgment.

Travelers asserts that the deposition testimony of the defendant reinsurers illustrates that prolonged delays are inherent in the reinsurance industry because of the manner in which notice is transmitted. Travelers points to the deposition testimony of Bessette, Stevens, and Foran to establish that it is normal custom and usage in the reinsurance industry for notice to pass from a ceding company to a reinsurance intermediary and then through an insurance exchange before finally arriving at the reinsurer's office. See Deposition of Richard Bessette, at 31, 147, 86 Civ. 3369 (JMC) (S.D.N Y Sept. 21, 1988); Deposition of Katherine Foran, at 109-10, 86 Civ. 3369 (JMC) (S.D.N.Y. Sept. 23, 1988); Deposition of Albert Stevens, at 39-41, 86 Civ. 3369 (JMC) (S.D.N.Y. Sept. 19, 1988). In further support of its position that reinsurers commonly get initial knowledge of a claim many months and even years after the claim occurs, Travelers focuses on the following deposition testimony of Mr. Mosgrove:

  Q: In your experience, have you noticed what
    period of time has elapsed from the date of the
    notice of loss from the ceding company and the
    date of ...

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