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ALLENDALE MUT. INS. CO. v. EXCESS INS. CO.

August 19, 1997

ALLENDALE MUTUAL INSURANCE COMPANY, Plaintiff, against EXCESS INSURANCE COMPANY, LTD. et al., Defendants.


The opinion of the court was delivered by: SCHEINDLIN

 SHIRA A. SCHEINDLIN, U.S.D.J.:

 In this diversity action, plaintiff Allendale Mutual Insurance Company ("Allendale") seeks to recover $ 7,000,000 in unpaid reinsurance, $ 5,000,000 in "loss adjustment expenses" and interest, and an unspecified amount for legal fees and expenses incurred in the defense of a prior action for declaratory relief brought by defendants against Allendale in England. On July 8, 1997, I dismissed plaintiff's claim for loss adjustment expenses pursuant to Rule 56 of the Federal Rules of Civil Procedure. See Allendale Mutual Ins. Co. v. Excess Ins. Co., Ltd., 992 F. Supp. 271, 1997 WL 379683 (S.D.N.Y. 1997) ("Allendale I "). Plaintiff now moves for reargument pursuant to Local Rule 6.3. For the reasons set forth below, plaintiff's motion for reargument is granted. However, after considering reargument of this issue and partially amending the July 8 Opinion and Order in light of such, I again find that plaintiff's claim for loss adjustment expenses must be dismissed pursuant to Rule 56 of the Federal Rules of Civil Procedure.

 I. Factual Background

 The factual and procedural history of this action were set forth in Allendale I, 992 F. Supp. 271, 1997 U.S. Dist. LEXIS 12505, 1997 WL 379683 at *1-*2, and familiarity with both will be presumed for purposes of this Opinion and Order.

 II. Motion for Reargument

 Local Civil Rule 6.3 states in pertinent part:

 
A notice of motion for reconsideration or reargument shall be served within ten (10) days after the docketing of the court's determination of the original motion and . . . shall be served with . . . a memorandum setting forth concisely the matters or controlling decisions which counsel believes the court has overlooked. . . . No oral argument shall be heard unless the court grants the motion and specifically directs that the matter shall be reargued orally. No affidavits shall be filed by any party unless directed by the court.

 Local Civil Rule 6.3. To satisfy this rule, the moving party must set forth a matter or controlling decision overlooked by the court in its initial review of the motion. See Farkas v. Ellis, 783 F. Supp. 830, 832 (S.D.N.Y.) ("The standard for granting a motion for reargument is strict in order to preclude repetitive arguments on issues that have already been considered fully by the court."), aff'd, 979 F.2d 845 (2d Cir. 1992). "The court must not allow a party to use the motion to reargue as a substitute for appealing from a final judgment." Fulani v. Brady, 149 F.R.D. 501, 503 (S.D.N.Y. 1993), aff'd, 35 F.3d 49 (2d Cir. 1994). If the court finds the motion for reargument is warranted, the court may either direct the parties to reargue their motions orally or rely on the submissions as made. See New York City Department of Finance, et al. v. Twin Rivers, Inc., 929 F. Supp. 172, 173 (S.D.N.Y. 1996). The decision to grant or deny a motion to reargue rests in the discretion of the district court. See Cohen v. Koenig, 932 F. Supp. 505, 507 (S.D.N.Y. 1996).

 Defendants now contend that plaintiff's motion for reargument must be denied as plaintiff has raised no factual matters or controlling decisions overlooked by the court. In one sense, defendants are correct: plaintiff's current arguments are but an expanded version of those initially raised in their memorandum of law submitted in opposition to defendants' motion. However, the July 8 Opinion and Order did not directly address these arguments, and it appears that they raise important legal questions that have yet to be addressed by any Court of Appeals. Accordingly, plaintiff's motion for reargument is granted in order to present a more thorough explanation of my decision to dismiss plaintiff's claim for loss adjustment expenses pursuant to Rule 56.

 A. The Question Presented

 As stated in the July 8 Opinion and Order, the viability of plaintiff's claim for loss adjustment expenses turns on a single legal question: can the follow-the-settlement clause *fn1" of the reinsurance agreement serve as a basis for Allendale to recover loss adjustment expenses in excess of the $ 7,000,000 cap set forth in the limit clause *fn2" ? Stated another way, the question presented ...


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