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The Hartford Roman Catholic Diocesan, Corp. v. Interstate Fire and Casualty Co.

United States District Court, D. Connecticut

July 26, 2017



          Janet Bond Arterton, U.S.D.J.

         Plaintiff, Hartford Roman Catholic Diocesan Corporation (the "Archdiocese") brought suit in November 2012 against Defendant Interstate Fire and Casualty Company ("Interstate") for breach of contract (Count One), breach of the covenant of good faith and fair dealing (Count Two), and unfair trade practices in violation of the Connecticut Unfair Insurance Practices Act ("CUIPA"), Conn. Gen. Stat. § 38a-815 et seq., and the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn. Gen. Stat. § 42-110b (Count Three), arising from Interstate's failure to indemnify the Archdiocese for monies it paid in settlement to four victims of three of its priests' sexual abuse. On July 28, 2016, after a three-week bench trial, judgment entered in the Archdiocese's favor on Count One and in Interstate's favor on Counts Two and Three. (See Memorandum of Decision ("Decision") [Doc. # 250] at 2.)

         The Archdiocese now asks [Doc. # 256] that this Court, pursuant to Fed.R.Civ.P. 52(b), 59(a)(2), and 59(e), amend and/or make additional conclusions of law and findings of fact, and enter a new judgment in favor of the Archdiocese on Count Three, finding that Interstate violated CUIPA and is liable to the Archdiocese pursuant to CUTPA. (Pl.'s Mem. Supp. Mot. to Amend Judgment ("Pl.'s Mot. to Amend") [Doc. # 256-1] at 1.) For the following reasons, Plaintiffs Motion is denied.

         I. Discussion[1]

         Rule 59(e) allows a court to "alter or amend a judgment" on a party's motion. Fed.R.Civ.P. 59(e). Rule 52(b) permits a court, on a party's motion, to "amend its findings-or make additional findings-and... amend the judgment accordingly." Fed.R.Civ.P. 52(b).[2] The relief under the two Rules often overlaps "and the courts are not always consistent regarding which rule to apply, " however, 52(b) motions "permit a party to request clarification or supplementation of the facts found to aid the appellate court in understanding the factual issues at trial" even where the judgment will not be altered. Steven S. Gensler, Federal Rules of Civil Procedure, Rules & Commentary Rule 52 (2017); see also Hollis v. City of Buffalo, 189 F.R.D. 260, 262 (W.D.N.Y. 1999) ("Under Rule 52(b) a court may amend its findings of fact in order to . . . clarify the record for appeal.).[3] Despite the nuances between the Rules, courts within this circuit have reviewed motions under Rules 52(b) and 59(e) under the same standard. See e.g., Graham v. United States, No. CIV 3:01CV177 AHN, 2006 WL 3361752, at *1 (D. Conn. Nov. 16, 2006) (finding the same standard applies for both Rules and therefore instead of separately addressing the 52(b) motion, "consider[ed] it as part of [the] Rule 59(e) motion"); Bissell-Wisniowski v. Milford Council of Aging, No. 03-1252, 2004 WL 2634455, at *1 (D.Conn. Nov. 16, 2004) (considering Rules 52(b) and 59(e) under the same standard).

         Under both Rules 52(b) and 59(e) a court may "revisit a prior decision when there has been an intervening change in the law, new evidence becomes available, or there is a need to correct a clear error or prevent manifest injustice." Hollis, 189 F.R.D. at 262; see also United States v. Rice, 594 F.App'x 481, 485 (10th Cir. 2014). The Second Circuit has specifically approved a district court's authority under Rule 59(e) to "alter or amend [a] judgment to correct a clear error of law or prevent manifest injustice." Munafo v. Metro. Transp. Auth., 381 F.3d 99, 105 (2d Cir. 2004) (internal quotation marks and citations omitted). Plaintiff asserts that "[t]he purpose of [its] Motion [is] to correct errors in law and in fact, " which it argues require a new judgment in favor of Plaintiff on Count Three.[4] (Pl.'s Reply at 1.) "The standard for granting such ... motion is strict, and it will generally be denied unless the moving party 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." Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995) (articulating the standard in context of reviewing a Motion under Fed.R.Civ.P. 59(e)); see also Taylor v. Hous. Auth. of New Haven, No. 3:08CV557 (JBA), 2010 WL 2801895, at *1 (D. Conn. July 14, 2010) (applying same standard for Fed.R.Civ.P. 52(b)).

         Neither Rule is intended to provide a party with the opportunity to merely relitigate matters or present the case under new theories. See e.g., Wallace v. Brown, 485 F.Supp. 77, 78 (S.D.N.Y. 1979); Sims v. Mme. Paulette Dry Cleaners, No. 82 CIV. 5438 (MEL), 1986 WL 12511, at *1 (S.D.N.Y. Oct. 31, 1986). Thus, to serve the compelling interest of preserving finality of litigation, "a party who realizes, with the acuity of hindsight, that he failed to present his strongest case at trial, is not entitled to a second opportunity by moving to amend a finding of fact or a conclusion of law." Fontenot v. Mesa Petroleum Co., 791 F.2d 1207, 1220 (5th Cir.1986); see also 9 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2582 (1971).[5]

         The Archdiocese argues that the findings and conclusions of law in the Decision must be amended because the Court: (1) adopted the incorrect standard for proving a CUIPA general business practice, (2) overlooked admissions by Interstate that it always violated Conn. Gen. Stat. § 38a-816(6)(E) in addition to "facts that would increase the percentage of unfair claims settlement practices by Interstate, " and (3) failed to separately consider the claims made under Section 38a- 816(6)(G), which it claims the evidence establishes Defendant violated. (Pl.'s Mot. to Amend at 1- 2.) In opposition Interstate maintains that the Court properly rejected the CUTPA and CUIPA claims based on the Archdiocese's failure to prove Interstate engaged in a "general business practice, " arguing that the Archdiocese has pointed to no clear error as required for relief under Rules 52 and 59, but rather is attempting to offer new evidence or legal theories which were available at the time of trial, but which the Archdiocese chose not to make part of its case. (Def.'s Opp'n at 1.)

         A. The Standard the Court Used for Determining What Constitutes a "General Business Practice" was not Clearly Erroneous

         The Archdiocese first attacks the legal standard the Court used in making its determination that Interstate's claim handling practices did not rise to the level of a general business practice within the meaning of CUIPA, arguing that "[t]he Court's standard was too high, based on case law from Connecticut and sister states and based on the NAIC's [("National Association of Insurance Commissioners")] benchmarks for the percentage of unfair practices that warrant a finding of a general business practice." (Pl.'s Mot. to Amend at 4.) Thus, the Archdiocese argues that the Court abused its discretion because it premised its decision on an error of law. (Pl.'s Reply at 4 (citing, Inc. v. Dalal, 412 F.3d 315, 320 (2d Cir. 2005).)

         However, the Court used the definition adopted by the Connecticut Supreme Court in Lees v. Middlesex Ins. Co., 229 Conn. 842 (1994). (Memorandum of Decision at 92.) Looking to the dictionary for the words' common understanding, the Lees Court noted that "[g]eneral" is defined as "prevalent, usual [or] widespread" . . . and "practice" means "[performance or application habitually engaged in . .. [or] repeated or customary action." Lees, 229 Conn, at 849 n.8. Plaintiff does not explain how the Court's reliance on a controlling state supreme court decision constitutes clear error.

         1. Connecticut Courts and Federal District Courts

         It is undisputed that violation of Section 38a-816(6) "requires proof that the unfair settlement practices were 'with such frequency as to indicate a general business practice.'" Lees, 229 Conn, at 847-48 (quoting Mead v. Burns, 199 Conn. 651 (1986)). Still, the Archdiocese, relying on Lees and quoting Quimby v. Kimberly Clark Corporation, 28 Conn.App. 660, 671-72 (1992), argues that "more than a singular failure" involving only the policyholder-plaintiff suffices to establish a general business practice. (Pl.'s Mot. to Amend at 4.) Defendant counters that although "many cases have held that more than one act of misconduct is necessary ... the Archdiocese is twisting those holdings to mean that anything more than one instance is sufficient to prove a CUIPA violation." (Def.'s Opp'n at 8.)

         This Court agrees with Defendant. While both Quimby (reviewing superior court's grant of defendant's motion to dismiss) and Lees (reviewing superior court's grant of summary judgment) found that "isolated" or "singular" instances of insurer misconduct were not sufficient to satisfy the "general business practice" requirement where the respective plaintiffs failed to either allege facts or present evidence of misconduct by the defendant in processing any other claims, both cases noted the necessity for a plaintiff to show the practice was engaged in with some "frequency." Quimby, 28 Conn.App. at 672; Lees, 229 Conn, at 849. As discussed above, the Lees court further expanded on the dictionary definitions of the words "general" and "practice, " which is the standard this Court used in determining whether Plaintiff proved that Interstate engaged in a general business practice. Plaintiff has pointed to no clear error in the Court's interpretation of Connecticut law on what qualifies as a general business practice.

         Plaintiff recognizes that decisions from other states are not binding but urges that they nonetheless "provide guidance" because CUIPA is based on a model act. (Pl.'s Mot. to Amend at 8.)[6] It thus argues that the Court should have followed Connecticut superior court cases and other federal district courts, which it believes employ a lower standard. However, because the decisions of the Connecticut superior courts and other district courts either within or outside of the Second Circuit are not binding, even if such "guidance" might potentially have been persuasive at the trial stage, the cases Plaintiff cites do not provide a basis for altering or amending this Court's findings or resulting judgment.[7] See Shrader, 70 F.3d at 257.

         2. The NAIC Market Regulation Handbook and Conn. Gen. Stat. § 38a-15

         Plaintiff urges this Court to follow the Market Regulation Handbook that the NAIC provides to state insurance departments for their audits of insurers' claims handling practices, which presumes that misconduct is a general business practice if more than seven percent of the claims sampled are found to involve the same type of misconduct. (Pl.'s Mot. to Amend at 10.) Additionally, Plaintiff argues that the Court should consider Conn. Gen. Stat. § 38a-15, which was amended effective October 1, 2016 to specifically authorize use of the procedures and definitions in NAIC's Market Regulation Handbook.[8] (Id. at 14.) Defendant responds that notwithstanding the fact that the statute was not effective until October 1, 2016, "per the express terms of the amendment, the 'procedures and definitions' set forth in the Market Regulation Handbook are not even controlling on the insurance commissioner when performing an administrative audit, let alone a federal district court assessing a party's civil liability under CUIPA." (Def.'s Opp'n at 13.)

         The NAIC Handbook was published in 2006 and therefore was clearly available to Plaintiff at the time of trial, but was not incorporated in Plaintiffs evidence, proposed conclusions of law or argument at trial. While the Handbook might have had a persuasive impact when the Court initially made its decision, it lacks that impact upon reconsideration given that it is not controlling or binding and failure to consider it does not constitute clear error. Further, the amendment to Section 38a-15, although not in effect when the judgment was entered, does not change this analysis, because it too is advisory only. Accordingly, reconsideration of the standard utilized in the Decision to determine whether Plaintiff proved a "general business practice" is not warranted.

         B. The Court's Finding that Interstate Violated Conn. Gen. Stat. § 38a-816(6)(E) in More Than Nine to Eleven Percent of Similar Claims was not Clearly Erroneous

         The Court made its determination that Interstate violated subsection E in 9-11% of similar claims based upon the Archdiocese's arguments and presentation of the evidence at trial. In its proposed conclusions of law, the Archdiocese referenced the evidence regarding four other dioceses (located in Portland, Manchester, Seattle, and Phoenix) to support its assertion that, in violation of subsection E, "Interstate failed to affirm or deny coverage within a reasonable time after proofs of loss ha[d] been completed" with such frequency as to indicate a general business practice.[9] (Pl.'s Concl. of Law [Doc. # 171-3] at ¶ 48.) Two of the four identified dioceses had multiple claims, with five claims in Seattle (BB, GK, CM, RH and John Doe) and four claims in Manchester (John Doe I, II, III, and KJKM).

         Trial evidence about each of these eleven claims was examined, as was one additional claim in the Diocese of Sacramento, in determining whether there was proof of an unreasonable delay between Interstate's receipt of completed proofs of loss and its coverage determinations. Ultimately out of the twelve claims, the Court identified three which it determined could be considered "unreasonable delay"-one claim in Portland (eight and a half months), the CM claim in Seattle (five and a half months), and one in Phoenix (six months), [10] (Memorandum of Decision at 77-78, 85-87, 88-89) as well as three claims (the GK, RH and John Doe claims in Seattle) where there was potential support for the Archdiocese's claims ...

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