The opinion of the court was delivered by: ROBERT CARTER, Senior District Judge
Park Place Entertainment, Corp. ("Park Place") originally
brought this action, seeking reimbursement of defense costs and
indemnification from its liability insurer, Transcontinental
Insurance Company ("Transcon"). Presently before the court is
Transcon's renewed motion for summary judgment on the sole
remaining issue of defense costs incurred after June 9, 2005.
Park Place and Transcon executed a general commercial liability
policy on July 10, 2000. Ewing Aff. Ex. 10. Upon submission of a
claim under that policy, Transcon denied liability and defense
coverage to Park Place in three related lawsuits (the
"lawsuits").*fn1 The lawsuits were all related to Park
Place's alleged interference with business relations between
various tribal governments and other casino operators.*fn2
The court, in an earlier opinion, denied Transcon's motion for
summary judgment, holding that the insurer had not demonstrated
that the basis of the lawsuits fit entirely within a policy
exclusion. Park Place Entm't. Corp. v. Transcon. Ins. Co., 225 F.Supp.2d 406 (S.D.N.Y. 2002) (Carter, J.) (hereinafter "Park
After further developments in the lawsuits, Transcon made a
renewed motion for summary judgment. While this motion was sub
judice, the parties settled many of Park Place's claims.
Stipulation of the Parties, July 29, 2005. All that remains is
the issue of whether Transcon is liable for the defense costs
incurred after June 9, 2005, in one of the three lawsuits. The
remaining lawsuit was brought by Catskill Development L.L.C.
("Catskill.") See Catskill Dev., L.L.C. v. Park Place Entm't
Corp., 345 F. Supp. 2d 360 (S.D.N.Y. 2004) (McMahon, J.)
(hereinafter the "Catskill lawsuit.")
Park Place argues that in denying Transcon's earlier motion for
summary judgment (Park Place I, 225 F.Supp.2d at 412), the
court held that Transcon has an ongoing duty under the insurance
policy to fund Park Place's legal defense. Park Place asserts
that this ongoing duty is "the law of the case." Pls.' Mem. 8-10;
See generally 1B J. Moore, J. Lucas & T. Currier, MOORE'S
FEDERAL PRACTICE ¶ 0.404, at 117 (1991). However, Park Place
has misconstrued the court's ruling. The court only held that
Transcon had not established that they had no presently existing
duty to fund Park Place's defense of the lawsuits. Transcon's new argument that developments in the Catskill lawsuit relieved
them of the duty to defend or indemnify Park Place as of July 9,
2005 is consistent with the court's earlier opinion.
At the time the court ruled on Transcon's earlier motion for
summary judgment, Catskill was not yet precluded from raising a
claim for defamation at trial, despite the fact that their
complaint had not included one. Because there was a possibility
that such a claim would be raised, the insurer was required to
provide a defense to the Catskill lawsuit.
The question of whether Transcon's duties to Park Place might
end before the final disposition of the lawsuits was not decided
in Park Place I. Accordingly, there has been no attempt to
relitigate any issue. Park Place's invocation of law of the case
doctrine is inapposite. See 18 C. Wright, A. Miller & E.
Cooper, Federal Practice & Procedure § 4478, at 788 (1981).
At the time the earlier motion was decided, Catskill would
still have been able to raise a claim of defamation at trial
because their complaint contained accusations that employees of
Park Place had made defamatory remarks. Because these allegations
could have provided the basis for a claim of defamation, Catskill
could have moved to amend their complaint accordingly. F.R. Civ.
P. 15(a); see Ricciuti v. N.Y.C. Transit Authority,
941 F.2d 119, 123 (2d Cir. 1991).
At the time of the court's ruling in Park Place I, it was not
yet clear that all the claims to be raised at trial would fall
outside of Park Place's insurance policy. However, Catskill later waived their right to raise a defamation claim, by making
concessions before trial. In their reply memorandum offered in
further support of a motion in limine, Catskill disavowed the
allegation that Park Place employees had made any defamatory
statements. Catskill Dev., L.L.C. v. Park Place Entm't Corp.,
217 F.Supp.2d 423, 436 (S.D.N.Y. 2002) (McMahon, J.).
Furthermore, the trial court ruled that Catskill had not
"challenge[d] Park Place's argument that there is not evidence of
the other alleged derogatory statements listed above." Id. By
conceding that no evidence of defamation would be offered,
Catskill foreclosed the possibility of adding such a claim to the
The claim of defamation was clearly related to the series of
connected transactions that were the subject of the Catskill
lawsuit. Since this transactionally related claim of defamation
was abandoned and is barred after a decision was reached on the
merits, Catskill is precluded from raising any such a claim of
defamation in the future.*fn3 Woods v. Dunlop Tire Corp.,
972 F.2d 36, 38 (2d Cir. 1992); see also RESTATEMENT (SECOND)
OF JUDGMENTS § 19, 24 (1991).*fn4
"An insurer may withdraw from an ongoing defense if it becomes
clear that the claim is wholly outside the indemnification
agreement." International Bus. Machs. Corp. v. Liberty Mut. Ins.
Co., 363 F.3d 137, 144 (internal citations omitted). As such, Transcon could withhold support for Park
Place's defense to the Catskill lawsuit, by the time of the
settlement if either the complaint or extrinsic evidence had
established that all of the claims raised were outside of the
policy coverage. Id. at 148.
The preclusive effect of the final judgment prevents any future
lawsuit on the basis of the alleged defamation that would require
Transcon to provide a defense. Consequently, as of the date of
the settlement agreement, extrinsic evidence had established that
Catskill's claims were wholly outside of Park Place insurance
coverage.*fn5 Transcon's withdrawal from the defense of the
lawsuit was ...