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Lexington Insurance Co. v. MGA Entm't, Inc.

United States District Court, S.D. New York

August 7, 2013

LEXINGTON INSURANCE COMPANY, NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, AMERICAN INTERNATIONAL UNDERWRITERS INSURANCE COMPANY AND CHARTIS SPECIALTY INSURANCE COMPANY, Plaintiffs,
v.
MGA ENTERTAINMENT, INC., Defendant. MGA ENTERTAINMENT, INC., Counterclaimant,
v.
LEXINGTON INSURANCE COMPANY, NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, AMERICAN INTERNATIONAL UNDERWRITERS INSURANCE COMPANY, CHARTIS SPECIALTY INSURANCE COMPANY, AND CRUM & FORSTER SPECIALTY INSURANCE COMPANY, Counterdefendants

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For Lexington Insurance Company, National Union Fire Insurance Company of Pittsburgh, P A, American International Underwriters Insurance Company, and Chartis Specialty Insurance Company, Plaintiffs and Counterdefendants: Mark D. Sheridan, Esq., Mark C. Errico, Esq., Patton Boggs LLP, Newark, New Jersey.

For MGA Entertainment, Inc, Defendant and Counterclaimant: Michael J. Bidart, Esq., Ricardo Echeverria, Esq., Shernoff Bidart Echeverria Bentley LLP, Claremont, California.

For Crum & Forster Specialty Insurance Company, Counterdefendant: Susan J. Field, Esq., Musick, Peeler & Garrett LLP, Los Angeles, California.

OPINION

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MEMORANDUM OPINION AND ORDER

SHIRA A. SCHEINDLIN, U.S.D.J.:

I. INTRODUCTION

Lexington Insurance Company (" Lexington" ), National Union Fire Insurance

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Company of Pittsburgh, PA (" National Union" ), American International Underwriters Insurance Company (" AIU" ), and Chartis Specialty Insurance Company (" Chartis" ) (collectively, " Plaintiffs" ) brought this action seeking a declaration that they were not obliged to defend or indemnify MGA Entertainment, Inc. (" MGA" ) in connection with an action brought against MGA in this Court,[1] Bernard Belair v. MGA Entertainment, Inc . (" Underlying Action" ).[2] On July 10, 2013, I granted MGA's motion for summary judgment (" Summary Judgment Opinion" ) in part on the ground that National Union and Chartis (" the Umbrella Insurers" ) had the duty to defend MGA in the Underlying Action because the extrinsic evidence produced did not conclusively eliminate the potential for coverage under the National Union commercial umbrella policy (" 2001 Policy" ).[3] Specifically, the potential for coverage under the 2001 Policy could not be eliminated because a factual dispute exists regarding the first date of publication of the allegedly infringing Bratz material.[4] The Umbrella Insurers now move for reconsideration.[5]

The Umbrella Insurers make one basic argument in support of their motion for reconsideration, namely, that the Court " overlooked undisputed material facts which establish that the allegedly infringing Bratz materials were first published in 2000." [6] The Umbrella Insurers base this argument on three related arguments: First, that the Court's reliance on " evidence showing that the Bratz dolls were first sold in . . . 2001 and that Certificates of Registration from the Copyright Office reveal the date of publication . . . to be February 12, 2001 is misplaced" because such evidence does not " create an issue as to when the [allegedly infringing] sketches were first made known to the public for the purposes of the prior publication exclusion; " second, that the record " does not support the conclusion that Crum & Forster Specialty Insurance Company (" C& F" ) disputes when the allegedly infringing materials were first published; " and third, that MGA does not dispute that the first publication of the Bratz line took place in 2000.[7] For the following reasons, the Umbrella Insurers' motion is denied.

II. MOTION FOR RECONSIDERATION STANDARD

Motions for reconsideration are governed by Local Rule 6.3 and are committed to the sound discretion of the district court.[8] " '[R]econsideration will generally be denied unless the moving party

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can point to controlling decisions or data that the court overlooked -- matters, in other words, that might reasonably be expected to alter the conclusion reached by the court.'" [9] " Typical grounds for reconsideration include 'an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice.'" [10] Because " the purpose of Local Rule 6.3 is to 'ensure the finality of decisions and to prevent the practice of a losing party examining a decision and then plugging the gaps of a lost motion with additional matters,'" [11] the Rule must be " narrowly construed and strictly applied so as to avoid repetitive arguments on issues that have been considered fully by the Court." [12] Such motions should not be made reflexively to reargue " 'those issues already considered when a party does not like the way the original motion was resolved.'" [13] A motion for reconsideration is not an " opportunity for making new arguments that could have been previously advanced," [14] nor is it a substitute for appeal.[15]

III. DISCUSSION

The Umbrella Insurers' motion fails because they have not demonstrated that this Court committed clear error or overlooked facts or controlling precedent that would have altered the outcome of the Summary Judgment Opinion. Because each of the three grounds asserted by the Umbrella Insurers is based on the same argument -- that this Court overlooked dispositive facts demonstrating that the first publication of allegedly infringing Bratz material was in 2000 -- I address their argument in a single discussion in order to avoid repetition.

In finding a dispute regarding the first date of publication of the allegedly infringing Bratz material, the Umbrella Insurers argue that this Court mistakenly relied upon evidence showing that (1) Bratz dolls were first sold in the United States in 2001 and that (2) the sketches made by Carter Bryant (" Carter Bryant Sketches" ) bare a publication date of February 12, 2001.[16] Such reliance was not mistaken. As the Summary Judgment Opinion recognizes, under California law, the Umbrella Insurers could only defeat MGA's motion " by producing undisputed extrinsic evidence conclusively eliminating the potential for coverage under the policy." [17] As such, the Umbrella Insurers were required to produce undisputed extrinsic evidence conclusively

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showing that the first date of publication of the allegedly infringing Bratz products was 2000 and not 2001. The Umbrella Insurers argue that they did so because all of the evidence from 2000 -- e.g., that the Carter Bryant Sketches bare a publication date of February 12, 2001, and the December 2000 email to the Walmart buying agent (" 2000 Email" ) makes clear that the Carter Bryant Sketches were not meant to be made known to the public at that time -- is " irrelevant" for purposes of the prior publication exclusion.[18] Tellingly, the Umbrella Insurers do not explain why this evidence is irrelevant, instead simply insisting that such evidence does not " create a dispute as to when the Carter Bryant [S]ketches . . . were first made known to the public" [19] for purposes of the prior publication exclusion.

But such evidence does create a dispute. First, contrary to the Umbrella Insurers' assertions, it is not " undisputed" that the Carter Bryant Sketches were first published in 2001. In its motion for summary judgment against C& F, MGA based its argument that the prior publication should not bar coverage on the assumption that the " first publication of a Bratz image [was] in 2001." [20] Second, the evidence not disputed by MGA from the year 2000[21] does not conclusively establish that the first publication of Bratz material was in that year, even using the Umbrella Insurers' definition of " publication" -- i.e., to make known to the public. The evidence that was undisputed by MGA includes the following: (1) that the Bratz drawings were " first exhibited" in the United States in November 2000, when they were shown to " four or five" retailers; [22] (2) that an MGA employee emailed several of the Carter Bryant Sketches to a Walmart buying agent in 2000, explaining to the agent that they were for that agent's " reference only; " [23] and (3) that a then-MGA employee sent a Bratz sculpt to an outside vendor in 2000 in order to " pour a mold" of that sculpt.[24]

The Court did not overlook this evidence; rather, the Court disagreed with the Umbrella Insurers' argument that such evidence constitutes conclusive proof of a 2000 first publication date for purposes of the prior publication exclusion.[25] And rightfully so. To argue that Bratz material was " made known to the public" in 2000 because they were shown to a handful of retailers, emailed to a buying agent for that agent's reference, and sent to a vendor to have a " mold" made, is a

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stretch. Indeed, in the prior publication cases relied upon by this Court, material was considered first " published" when that material was distributed widely to the public -- not when it was in its development phase.[26] As such, the fact that the evidence from 2000 was undisputed by MGA is irrelevant, because that evidence does not conclusively eliminate the possibility that the first date of publication was 2001. Accordingly, the Umbrella Insurers did not meet their burden of " producing undisputed extrinsic evidence conclusively eliminating the potential for coverage under the [2001 Policy]." [27]

IV. CONCLUSION

For the reasons stated above, the Umbrella Insurers' motion for reconsideration is denied. The Clerk of the Court is directed to close the motion (Dkt. 133).

SO ORDERED:


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