ROBERT HOLMES BELL, District Judge.
This matter is before the Court on a motion filed by Plaintiffs Stryker Corporation ("Stryker") and Howmedica Osteonics Corporation, a subsidiary of Stryker, to amend or correct the final judgment pursuant to Rules 59(e) and 60(a) of the Federal Rules of Civil Procedure (Dkt. No. 1098), and Defendant XL Insurance America Inc.'s motion for relief from judgment pursuant to Rule 60(b)(6) of the Federal Rules of Civil Procedure (Dkt. No. 1114). Also before the Court is Defendant's motion to strike and objection to Plaintiffs' proposed bill of costs. (Dkt. No. 1111.)
This diversity action arises out of an insurance coverage dispute between Plaintiffs and Defendant. After Plaintiffs were sued by third-parties for injuries related to products manufactured and/or sold by Plaintiffs, Plaintiffs sought coverage from Defendant under a policy obligating Defendant to defend and indemnify Plaintiffs for all such claims arising out of the same
During the second stage of the litigation, the damages phase, Plaintiffs moved for a determination as to their entitlement to interest pursuant to the interest provisions of Michigan's Uniform Trade Practices Act, Mich. Comp. Laws § 500.2006. (Dkt. No. 1034.) In response, Defendant argued that Plaintiffs were not entitled to interest under that statute because: (1) § 500.2006 applies to a different type of insurance, one relating to property damage rather than a liability policy; (2) Plaintiffs did not provide a satisfactory proof of loss as required by § 500.2006(4); (3) the insurance claims were reasonably in dispute, and § 500.2006 does not permit recovery of interest on claims that are reasonably in dispute; and, (4) Plaintiffs are not entitled to interest accruing from the date that Defendant received notice of the first third-party claim in the same "batch" of claims; rather, interest should accrue, if at all, in relation to notice of each of the individual claims. (See Dkt. No. 1039, Def.'s Resp. to Mot. for Partial Summ. J.)
On December 15, 2008, 2008 WL 5235886, the Court granted Plaintiffs' motion, in part, and held that Plaintiffs are entitled to twelve percent interest under Mich. Comp. Laws § 500.2006 on the judgment, accruing in relation to the date of notice of each individual claim covered by the policy rather than the date of notice of the first claim in the "batch" of claims. (Dkt. Nos. 1055, 1056.) The Court rejected Defendant's arguments that § 500.2006 does not apply to liability policies and that Plaintiffs had not provided a satisfactory proof of loss. (Dkt. No. 1055, 12/15/2008 Op. at 9-12.)
As to Defendant's argument that § 500.2006 does not apply to claims that are reasonably in dispute, the Court held that, based on the Michigan Court of Appeals decision in Griswold Properties, L.L.C. v. Lexington Insurance Co., 276 Mich.App. 551, 741 N.W.2d 549 (2007) ("Griswold II"), and the Michigan Supreme Court's statements in Yaldo v. North Pointe Insurance Co., 457 Mich. 341, 578 N.W.2d 274 (1998), the Michigan Supreme Court would likely interpret the "reasonably in dispute" language in § 500.2006(4) to apply to third-party tort claimants, not the insured under the contract of insurance.
On October 7, 2009, 2009 WL 3256179, the Court entered an opinion, order, and final judgment against Plaintiffs in the amount of $13,903,660,
Plaintiffs and Defendant have both filed motions that address the extent to which Plaintiffs are entitled to interest under Mich. Comp. Laws § 500.2006. That statute allows a claimant under an insurance policy to recover twelve percent interest for the delay in payment of an insurance claim. See id. The purpose of the statute is to penalize dilatory action on the part of insurers and to encourage prompt payment of claims. Medley v. Canady, 126 Mich.App. 739, 337 N.W.2d 909, 911 (1983).
Plaintiffs' motion to amend the judgment seeks to add a calculation of interest in accordance with the Court's prior ruling that Plaintiffs are entitled to twelve percent interest under § 500.2006 on the amount of the final judgment. Depending upon the circumstances, post-judgment motions for interest on damages may be brought pursuant to Rule 59(e) or Rule 60(a) of the Federal Rules of Civil Procedure. Pogor v. Makita U.S.A., Inc., 135 F.3d 384, 388 (6th Cir.1998). "If the language of [the judgment to be amended] awards interest as required by law but leaves the actual calculations for later," a motion to add the interest is brought pursuant to Rule 60(a). Pogor, 135 F.3d at 388. However, "when a district court's original judgment does not mention an award of interest, then a later motion to fix interest would be governed by the rationale found in Osterneck," and assigned "to the dominion of Rule 59(e) . . . as the motion would amount to an original request for interest." Id. (referring to Osterneck v. Ernst & Whinney, 489 U.S. 169, 109 S.Ct. 987, 103 L.Ed.2d 146 (1989)).
Plaintiffs' motion for a calculation of interest under § 500.2006 is properly construed as a motion pursuant to Rule 60(a) because this Court indicated in its judgment that Plaintiffs are entitled to interest on the judgment pursuant to Mich. Comp. Laws § 500.2006, "accruing 60 days after the date that Defendant received notice of each claim covered by the insurance policy and continuing until the date of entry of this judgment." (Dkt. No. 1094.) Rule 60(a) allows a party to correct a "clerical mistake or a mistake arising form oversight or omission whenever one is found in a judgment, order, or other part of the record." Fed.R.Civ.P. 60(a). Generally, a motion to add a calculation of interest pursuant to Rule 60(a) does not "seek to alter or amend the judgment, but simply ask[s] the court to insert the omitted particulars of the prejudgment interest award." Pogor, 135 F.3d at 388.
Defendant filed its notice of appeal before Plaintiffs filed their motion, and the appeal has been docketed. However, the Court of Appeals has stayed the appeal pursuant to Rule 4(a)(4)(A) of the Federal Rules of Appellate Procedure. Rule 4(a)(4)(A) provides that if a party timely files a motion for relief under Rule 60 within ten days of the judgment, or a timely motion to alter or amend judgment under Rule 59, then the time to file an appeal "runs for all parties from the entry of the order disposing of the last such remaining motion." Fed. R.App. P. 4(a)(4)(A)(iv), (vi). Moreover,
Fed. R.App. P. 4(a)(4)(B) (emphasis added). Plaintiffs' motion, whether it is characterized as a motion to alter or amend judgment pursuant to Rule 59, or a motion pursuant to Rule 60 filed within ten days of the judgment, is a motion "listed in Rule 4(a)(4)(A)." See Fed. R.App. P. 4(a)(4)(A)(iv), (vi). Thus, by operation of Rule 4(a)(4) of the Federal Rules of Appellate Procedure, Plaintiff's notice of appeal is not effective, and the Court maintains jurisdiction in this matter until the Court disposes of the motions identified in Rule 4(a)(4)(A). See O'Sullivan Corp. v. Duro-Last, Inc., 7 Fed.Appx. 509, 519 (6th Cir. 2001) ("When a party has filed a timely motion to alter or amend a judgment after a notice of appeal has been filed, the district court still retains jurisdiction to consider the motion.").
Plaintiffs have provided a calculation of interest in accordance with the terms of the judgment, and Defendant raises the following objections: (1) interest should not begin to run with respect to defense costs until those costs were incurred by Plaintiffs; (2) interest on settlement costs should not begin to run until the settlement costs were fixed by settlement; and (3) interest should not apply to costs exceeding the limits of the policy. (Dkt. No. 1104.)
First, the Court must consider whether Defendant's objections are within the scope of matters to be considered on a motion pursuant to Rule 60(a). "The basic purpose of the rule is to authorize the court to correct errors that are mechanical in nature that arise from oversight or omission." In re Walter, 282 F.3d 434, 440 (6th Cir.2002). "The rule does not, however, authorize the court to revisit its legal analysis or otherwise correct an `error[ ] of substantive judgment.'" Id. (quoting Olle v. Henry & Wright Corp., 910 F.2d 357, 364 (6th Cir.1990)).
When Plaintiffs initially moved for an award of interest under § 500.2006, they moved for interest on the "full amount of the final judgment," running from the date that Plaintiffs first notified Defendant of the claims covered by the Policy (Dkt. No. 1034, Pl.'s Mot. for Partial Summ. J.), and the Court granted this motion in part, holding that interest runs sixty days after notice of each claim. (Dkt. No. 1055, 12/15/2008 Op.) The Court's opinion did not distinguish between interest on settlement
Defendant's objections (1) and (2) are outside the scope of matters to be considered under Rule 60(a) because they allege errors of substantive judgment rather than mechanical errors of oversight or omission, and they seek to alter Plaintiffs' substantive right to recovery of interest, namely, the time period in which interest on Plaintiffs' damages should accrue. These objections are procedurally improper because Defendant has not moved the Court to amend its judgment.
To the extent Defendant's response to Plaintiffs' motion could be construed as a motion to amend the judgment pursuant to Rule 59(e), it is not timely. Under the rules in effect at the time, a motion pursuant to Rule 59(e) had to be filed within ten (business) days after the entry of judgment. See Fed.R.Civ.P. 59(e)(2007). Defendant's response to Plaintiffs' motion (Dkt. No. 1104) was filed on November 4, 2009, four weeks after the Court entered judgment.
To the extent Defendant's response could be characterized as a motion for relief from judgment under one of the subsections in Rule 60(b), the Court declines to characterize it as such because Defendant's response provides no direction to the Court or notice to the parties as to the applicable basis in Rule 60(b) under which Defendant would seek such relief. The rule itself requires a party to make a "motion" for relief from judgment. See Fed.R.Civ.P. 60(b) (stating that a court can relieve a party from a judgment "[o]n motion"). The Court is not empowered to grant such relief sua sponte. Eaton v. Jamrog, 984 F.2d 760, 762 (6th Cir.1993).
Plaintiffs' motion pursuant to Rule 59(e) does not open up the Court's judgment to amendment in favor of Defendant because it addresses a different issue, namely, Plaintiffs' entitlement to interest under Mich. Comp. Laws § 600.6013(8). Cf. McNabola v. Chicago Transit Auth., 10 F.3d 501, 520-21 (7th Cir.1993) ("Although a timely postjudgment motion opens up the earlier judgment and even permits the court to enlarge on the issues delineated by the motion . . . the non-moving party may not then make its own untimely request for alteration of the judgment on a wholly independent ground.") (citations omitted). Therefore, notwithstanding any potential merit in Defendant's objections (1) and (2), the Court declines to consider them because they would require the Court to amend its earlier judgment, and Defendant has not timely moved the Court for such an amendment.
Defendant's objection (3) is arguably different from its other objections with respect to what may be considered under
When the Court awarded interest under § 500.2006, and later entered the final judgment, it did not consider whether the Pfizer Settlement would impose a limit on Plaintiffs' recovery of interest under § 500.2006, and the Court did not intend to award interest in an amount that exceeds what is permitted by that statute. Nevertheless, the Court concludes that Defendant's objection (3) also raises an issue that is not the proper subject of consideration on Plaintiffs' motion pursuant to Rule 60(a). Defendant's objection raises more than merely a mechanical or clerical mistake in the calculation of interest; rather, it questions Plaintiffs' substantive right to recovery under § 500.2006. The reason the Court did not consider this issue is because it was not raised by Defendant before the judgment issued, within the time period for amendment of the judgment permitted by Rule 59(e), or on motion pursuant to Rule 60(b). Plaintiffs' motion pursuant to Rule 60(a) is not the proper means for adjudicating Plaintiffs' substantive rights, or for amending substantive aspects of the Court's earlier judgment in favor of Defendant.
Even if the Court were to entertain Defendant's objection (3), it would not have the effect that Defendant suggests. Assuming arguendo that Defendant's policy limit is $15 million,
Accordingly, the Court finds that it lacks the power to consider Defendant's objections in connection with Plaintiffs' motion pursuant to Rule 60(a). The Court finds no fault in Plaintiffs' motion for calculation of interest under Mich. Comp. Laws § 500.2006 as such. However, the motion will be denied without prejudice because the amount must be calculated according to the limitations necessitated by Defendant's Rule 60(b)(6) motion, which is discussed in the next section.
Defendant filed its motion for relief from judgment pursuant to Rule 60(b)(6) of the Federal Rules of Civil Procedure on February 4, 2010. Defendant contends in its motion that Plaintiffs are not entitled to interest under Mich. Comp. Laws § 500.2006 because a recent decision of the Michigan Court of Appeals, Auto-Owners Insurance Co. v. Ferwerda Enterprises, Inc., 287 Mich.App. 248, ___ N.W.2d ___, 2010 WL 322986 (2010), has changed the law regarding the applicability of that statute.
Because Defendant has filed a notice of appeal, the Court must consider whether it has jurisdiction to consider Defendant's motion. Unlike Plaintiffs' motion pursuant to Rule 59(e) and Rule 60(a), Defendant's motion is not listed in Rule 4(a)(4)(A) of the Federal Rules of Appellate Procedure as a motion that extends the time period for filing a notice of appeal. However, the Court concludes that it retains jurisdiction to consider Defendant's motion because Plaintiffs' motion is listed in Rule 4(a)(4)(A), and it remains pending. Rule 4(a)(4)(A) operates to extend the time for appeal "for all parties" when "a party" files a listed motion. Fed. R.App. P. 4(a)(4)(A). Moreover, Rule 4(a)(4)(B) states that the notice of appeal is not "effective" until the Court disposes of the last of the motions listed in Rule 4(a)(4)(A). Fed. R.App. P. 4(a)(4)(B). Thus, because Defendant's notice of appeal is not effective for all parties, jurisdiction lies with the Court to consider all timely-filed motions, not just the motions listed in Rule 4(a)(4)(A), until the Court disposes of the motions listed in that Rule.
At issue in Defendant's motion is whether Plaintiffs should be required to show that Defendant's liability for the insurance claims at issue was not reasonably in dispute in order to claim interest under Mich. Comp. Laws § 500.2006. That statute provides, in relevant part:
Mich. Comp. Laws § 500.2006(4) (emphasis added). According to the plain language of the statute, the "reasonably in dispute" limitation applies to a "third party tort claimant"; it does not apply to a claimant that is an "insured . . . directly entitled to benefits under the insured's contract of insurance." See id.; Griswold Properties, L.L.C. v. Lexington Ins. Co., 276 Mich.App. 551, 741 N.W.2d 549, 557 (2007) ("Griswold II") (adopting the conclusion of Griswold Properties, L.L.C. v. Lexington Ins. Co., 275 Mich.App. 543, 740 N.W.2d 659 (2007) ("Griswold I")). In other words, the insured under a contract of insurance is entitled to interest under § 500.2006 for late payment of claims, even if the underlying insurance claim was reasonably in dispute. Id.
Because this is a diversity action, the Court "applies the law of the forum state and, in the absence of direct state court precedent, must make its best prediction as to how the highest state court would resolve the issues presented." Travelers Prop. Cas. Co. of Am. v. Hillerich & Bradsby Co., Inc., 598 F.3d 257, 264 (6th Cir.2010); see also Garden City Osteopathic Hosp. v. HBE Corp., 55 F.3d 1126, 1130 (6th Cir.1995) (noting, for diversity cases, that if "the state's highest court has not decided the applicable law, then the federal court must ascertain the state law from `all relevant data,'" which includes "state appellate court decisions" and "the state's supreme court dicta" (quoting Bailey v. V. & O Press Co., 770 F.2d 601, 604 (6th Cir.1985))).
Following the rule stated in Yaldo and Griswold II, this Court previously concluded that, because Plaintiffs are insureds under the contract of insurance rather than third-party tort claimants, they are entitled to interest under § 500.2006 even if the insurance claims were reasonably in dispute. Defendant contends that the rule in Griswold II has been limited by Ferwerda. See Auto-Owners Ins. Co. v. Ferwerda Enters., Inc., 287 Mich.App. 248, ___ N.W.2d ___, 2010 WL 322986 (2010). For the reasons that follow, the Court agrees that Ferwerda clarifies the application of § 500.2006 and limits Plaintiffs' entitlement to interest, but does not agree that it disqualifies Plaintiffs from all relief under § 500.2006. Plaintiffs are entitled to accrual of interest under that statute from the time that they settled the third-party claims.
In Yaldo, the Supreme Court of Michigan posited that the "not reasonably in dispute" language in § 500.2006(4) applies to third-party tort claimants, not to the insured under the insurance policy. Yaldo v. North Pointe Ins. Co., 457 Mich. 341, 578 N.W.2d 274, 277 n. 4 (1998). At issue in that case was the applicability of another interest statute, Mich. Comp. Laws § 600.6013. See id. at 275. In response to the insurer's arguments regarding the interpretation of that statute, the court noted that the "express terms [of § 500.2006(4)] indicate that the [`reasonably in dispute'] language applies only to third-party tort claimants." Id. at 277 n. 4. The Court stated, "Where the action is based solely on contract, the insurance company can be penalized with twelve percent interest, even if the claim is reasonably in dispute." Id.
In Arco Industries Corp. v. American Motorists Insurance Co., 233 Mich.App. 143, 594 N.W.2d 74 (1998) ("Arco Industries IV"), the Michigan Court of Appeals
In Ferwerda, the Michigan Court of Appeals considered a dispute between the owner of a hotel ("Holiday Inn") and its liability insurer ("Auto-Owners"). Ferwerda, ___ N.W.2d at ___, slip op. at 2. After individuals staying at the hotel, the Bronkemas, were injured while using the hotel's facilities, they sued Holiday Inn for damages. Id. The insurer for that claim was Auto-Owners. After paying a portion of the Bronkemas' expenses, Auto-Owners brought a declaratory judgment action against Holiday Inn and the Bronkemas. Id. at ___, at 3. The trial court awarded judgment against Holiday Inn in favor of the Bronkemas for their damages claim. Id. Several months later, the court awarded a judgment in the same amount to Holiday Inn for its contract claim against Auto-Owners. Id. at ___, at 4. The court also awarded to Holiday Inn and the Bronkemas their attorney's fees for defending the declaratory judgment action, as well as interest under Mich. Comp. Laws § 500.2006 on the amount of the judgment. Id. After a remand from the Michigan Supreme Court, the Michigan Court of Appeals reversed the award of interest, reasoning:
Ferwerda, ___ N.W.2d at ___, slip op. at 7.
Defendant argues that Plaintiffs' claims in this matter, like the claims in Ferwerda, involve the non-payment of third-party claims rather than failure to pay for the direct losses of the insured, and that Plaintiffs' breach of contract claim "is specifically tied to the underlying third-party tort
Ferwerda should be understood in light of the structure and purpose of § 500.2006 and the specific facts of that case. Ferwerda does not discuss in detail what it means for a claim to be "tied to" an underlying tort claim; however, it distinguishes the claim in that case from the claims at issue in Griswold. The claims in Griswold involved "failure to pay for the direct losses of the insured," to which the reasonably in dispute language does not apply, whereas Ferwerda involved "non-payment of a third-party claim." Id. This distinction is difficult to reconcile with § 500.2006 because that statute focuses on the identity of the "claimant" rather than the type of losses at issue. According to § 500.2006(4), the "reasonably in dispute" language applies to one type of claimant (a "third-party tort claimant"), and not another (the "insured or an individual or entity directly entitled to benefits under the insured's contract of insurance"). See Mich. Comp. Laws § 500.2006(4). The statute does not distinguish between claimants insured for third-party losses and claimants insured for first-party losses. According to the plain language of the statute, Plaintiffs are insured claimants "directly entitled to benefits under [their] contract of insurance." See id.
In Yaldo, the Michigan Supreme Court recognized that the legislature could impose a higher interest rate on contract claims compared to tort claims because "there is a preexisting relationship between two parties who have signed a written contract. Greater expectations regarding performance and payments are likely to exist when the parties have established their rights and responsibilities before a controversy arises." Yaldo, 578 N.W.2d at 278. This rationale could also apply to § 500.2006 to explain the higher burden on third-party tort claimants seeking an award of penalty interest from a recalcitrant insurer. When the insurer delays payment of a claim by a third party, the third party can bring its own action to recover penalty interest from the insurer under Mich. Comp. Laws § 500.2006. See, e.g., Medley v. Canady, 126 Mich.App. 739, 337 N.W.2d 909 (1983). When the third party brings its claim against the insured, that claim is "derivatively" a claim for benefits against the insurer for purposes of the statute. Id. at 911. But because an insurer is subject to lesser expectations regarding performance and payment with respect to third parties, it stands to reason that the statute does not penalize the insurer for delay affecting the third party, unless the insurer has acted in bad faith to delay payment of a claim that is not reasonably in dispute.
Defendant reads Ferwerda more broadly than is necessary, and its interpretation of that opinion fails to give full effect to the purpose of the statute and the rights of the insured under that statute. Significantly, when the trial court in Ferwerda awarded Holiday Inn penalty interest on the Bronkemas' claim, the Bronkemas had not been fully paid by anyone, either the insurer or the insured. The Michigan Court of Appeals noted that "[t]he trial court only granted a breach of contract claim award to Holiday Inn because [Auto-Owners] had not yet paid the judgment in the underlying tort claim." Ferwerda, ___ N.W.2d at ___, slip op. at 7. But instead of awarding Holiday Inn interest for Auto-Owners's failure to pay its insured, the court awarded interest to Holiday Inn for "non-payment of a third party." Id. In effect, Holiday Inn was awarded interest on behalf of the Bronkemas, but because the Bronkemas were third-party tort claimants rather than insureds under the
Ferwerda is distinguishable from the instant case because, unlike Holiday Inn, Plaintiffs have settled and paid the third-party claims, and those settlements are part of the judgment for which Plaintiffs seek an award of interest. The court in Ferwerda made a point of distinguishing the third-party losses in its case from the direct losses by the insured claimants in Griswold. However, when the insured pays the third party's claims, the third party's loss is transferred to the insured, and the insured suffers the consequences of continued delay by the insurer. If the purpose of § 500.2006 is to encourage prompt payment of claims, that purpose is met, in part, with respect to the third party when it receives payment from the insured. But the insurer continues to be obligated to pay the claim; the only difference is that the insured, the contracting party, is the party suffering the consequences of the insurer's continued delay. It would undermine the purpose of § 500.2006(4) to promote timely payment of claims if an insurer could, after its insured has paid the third party's claims, continue to delay payment to its insured and be subject to the bad faith standard applicable to third-party tort claimants, or be exempt entirely from a claim for interest by its insured.
Plaintiffs assert that they are entitled to interest on the settlements from the moment they notified Defendant of the third-party claims, but Plaintiffs' rule would also undermine the distinction in the statute between the obligations of an insurer to its insured and its obligations to third-party tort claimants. As long as the third party's claim remains unresolved, that party suffers the consequences of the insurer's delay. Ferwerda indicates that § 500.2006 does not penalize an insurer for delay in payment to a third party unless the insurer has acted in bad faith. Moreover, Plaintiffs' interpretation would potentially over-penalize the insurer by subjecting it to double-payment of interest under § 500.2006 on a claim by the insured and a separate claim by the third-party claimant.
In addition to the amounts paid by Plaintiffs to settle the third-party claims, the judgment in this matter also includes the costs of defense incurred by Plaintiffs for defending the third-party claims. The insurance policy required Defendant to provide a defense; thus, coverage for the cost of a defense is a "benefit" that Plaintiffs were "directly entitled" to receive under the insurance policy. See Alticor, Inc. v. Nat'l Union Fire Ins. Co. of Penn., 345 Fed.Appx. 995, 1001-02 (6th Cir.2009) (unpublished) (affirming award of interest under § 500.2006 on defense costs). Ferwerda does not change the date of accrual of interest for Plaintiffs' costs of defense because the "claimant" for this benefit is, for all purposes, the insured under the contract. No third-party claim is at issue. Accordingly, Ferwerda limits the accrual of interest under Mich. Comp. Laws § 500.2006, but only with respect to Plaintiffs' settlement costs.
Given that Ferwerda limits the extent to which Plaintiffs are entitled to interest, the Court must also consider whether Defendant's motion satisfies the requirements of Rule 60(b)(6) of the Federal Rules of Civil Procedure. A motion pursuant to Rule 60(b) must be made "within a reasonable time" after entry of the applicable judgment or proceeding. Fed.R.Civ.P. 60(c). Defendant's motion was filed on February 4, 2010, within a few months of the Court's judgment, and it relies upon the authority of a new decision of the Michigan Court of Appeals dated January 28, 2010. Thus, it was filed within a reasonable time.
Rule 60(b)(6) permits the Court, in its discretion, to amend a judgment "in extraordinary circumstances." McDowell v. Dynamics Corp. of Am., 931 F.2d 380, 383 (6th Cir.1991). "A change in decisional law is usually not, by itself, an `extraordinary circumstance' meriting Rule 60(b)(6) relief." Blue Diamond Coal Co. v. Trs. of UMWA Combined Ben. Fund, 249 F.3d 519, 524 (6th Cir.2001). However, "an applicable change in decisional law, coupled with some other special circumstance" can warrant Rule 60(b)(6) relief. Id. "The decision to grant Rule 60(b)(6) relief is a case-by-case inquiry that requires the trial court to intensively balance numerous factors including the competing policies of the finality of judgments and the `incessant command of the court's conscience that justice be done in light of all the facts.'" Id. at 529 (quoting Griffin v. Swim-Tech Corp., 722 F.2d 677, 680 (11th Cir.1984)).
The Court considers Ferwerda to be the equivalent of a decisional change in Michigan law. Although Ferwerda tends to clarify rather than change Michigan law, Mich. Comp. Laws § 500.2006 lacks clarity with respect to the applicability of the reasonably-in-dispute limitation and the relationship between claims by third-party tort claimants and claims by the first-party insured, as evidenced by the conflict resolved in Griswold II. Moreover, decisional law from the Michigan Supreme Court, and from the Michigan Court of Appeals,
Plaintiffs contend that Ferwerda is not binding authority in Michigan because the Bronkemas' damages award against Holiday Inn had been vacated by the time that the court of appeals ruled on Auto-Owners's liability for interest on that claim, and it was no longer necessary for the court in Ferwerda to rule on the issue of interest. See id. at ___ n. 2, at 3 n. 2. But according to the opinion, the Bronkemas' damages claim against Holiday Inn was remanded for a new trial; thus, Auto-Owners's liability for interest was still at issue, even though the amount of liability for the underlying claim remained to be determined.
There are also special circumstances that favor relief under Rule 60(b)(6) in this matter. First, although an initial judgment has been entered, its execution has been stayed, and its finality has been suspended by operation of Plaintiffs' motion. See Overbee v. Van Waters & Rogers, 765 F.2d 578, 580 (6th Cir.1985) (extraordinary circumstances existed where the finality of the judgment had been suspended by a motion for a new trial). Only a few months have passed since judgment was entered. See Ritter v. Smith, 811 F.2d 1398, 1401-02 (11th Cir.1987) (finding it significant that the judgment had not been executed and that there was only "minimal delay" between the entry of judgment and the Rule 60(b)(6) motion). In addition, concerns about maintaining the finality of the Court's previous rulings is diminished because the amount of interest that is due to Plaintiffs has not yet been fixed in the judgment. Finally, because this is a diversity action, the Court must consider state decisional law as it exists at the time of entry of its orders. See Vandenbark v. Owens-Illinois Glass Co., 311 U.S. 538, 543, 61 S.Ct. 347, 85 L.Ed. 327 (1941). For the foregoing reasons, therefore, the Court finds that Defendant's motion is timely and that Defendant has satisfied the requirements for relief under Rule 60(b)(6). Accordingly, the Court will grant Defendant's motion, in part, and will apply Ferwerda in the manner stated herein.
Mich. Comp. Laws § 600.6013(8) allows the prevailing party to recover prejudgment interest on a money judgment. Id. The Court's previous judgment did not mention an award of interest, other than under Mich. Comp. Laws § 500.2006; thus, Plaintiffs' request for prejudgment interest under § 600.6013(8) is properly construed as a request to amend the judgment pursuant to Rule 59(e) of the Federal Rules of Civil Procedure. See Pogor v. Makita U.S.A., Inc., 135 F.3d 384, 388 (6th Cir.1998).
In their motion, Plaintiffs have provided a calculation of interest under § 600.6013(8) that runs from the date of the filing of the complaint until the date that interest begins to accrue under
Defendant apparently does not object to Plaintiffs' claim of entitlement to, or method of calculation of, interest under Mich. Comp. Laws § 600.6013(8). However, Plaintiffs must submit a revised calculation of interest under § 600.6013(8) because the Court has modified the time in which interest accrues under § 500.2006. Accordingly, Plaintiffs' motion will be granted, in part, with respect to Plaintiffs' entitlement to interest under § 600.6013(8), but will be denied without prejudice with respect to the amount. The Court will amend the judgment to reflect Plaintiffs' entitlement to interest under § 600.6013(8), but the judgment will not reflect an amount of interest under either § 500.2006 or § 600.6013(8) unless and until a revised calculation is submitted to the Court.
Finally, Plaintiffs have submitted a proposed bill of costs pursuant to Rule 54(d) of the Federal Rules of Civil Procedure, which provides that, "[u]nless a federal statute, these rules, or a court order provides otherwise, costs—other than attorney's fees—should be allowed to the prevailing party." On November 6, 2009, Plaintiffs filed their first proposed bill of costs. (Dkt. No. 1105.) On November 9, 2009, Plaintiffs were notified by the Clerk's office that, although the affidavit attached to Plaintiffs' bill of costs was signed electronically by Plaintiffs' counsel, the affidavit did not include a scanned copy of the manuscript signature as required by the Local Rules of Civil Practice and Procedure for the Western District of Michigan ("Local Rules") for all affidavits. See W.D. Mich. LCivR 5.7(d)(iii)(A). The Local Rules also require that, if the parties cannot agree on costs, a bill of costs must be filed with the Clerk within thirty days of the entry of judgment. W.D. Mich. LCivR 54.1. Though the initial bill of costs was filed within thirty days of the judgment, Plaintiffs filed a corrected bill of costs with the manuscript signature on November 9, 2009, more than thirty days after entry of the judgment. (Dkt. No. 1106.)
Notwithstanding Defendant's notice of appeal, the Court has jurisdiction to consider the bill of costs and objections thereto for the same reasons that it has jurisdiction to consider Defendant's motion pursuant to Rule 60(b)(6). See Section II.A(2), supra. Defendant argues, first, that Plaintiffs' motion should be stricken and/or rejected because it is not timely. However, Rule 54(d) does not specify a time limit for submitting a bill of costs. See Fed.R.Civ.P. 54(d). Plaintiffs' corrected bill of costs did not satisfy the timing requirements of the Local Rules, but the Court has authority to modify any time limit in the Local Rules "[i]n its discretion. . . with or without prior notice or motion." W.D. Mich. LCivR 7.1(c). Accordingly, because Plaintiffs filed a proposed bill of costs that was substantially in compliance with the Local Rules prior to the thirty-day deadline, and because the corrected bill of costs was filed shortly thereafter, the Court extends the thirty-day deadline in the exercise of its discretion and holds that Plaintiffs' corrected bill of costs was timely filed.
Description Cost Fees of the clerk $ 200.00 Fees of court reporters $49,869.12 Fees and disbursements for $ 6,039.93 printing and witnesses Fees for exemplification: Preparation and display $156,565.30 of electronic evidence Preparation of non-electronic $ 2,329.38 evidence ___________TOTAL: $215,003.73
Defendant objects to taxation of the following items in Plaintiffs' bill of costs: (1) $3,929.33 in transcript costs for the depositions of John J. Coen, M.D., Bruce Laubacher, and Alan Lewis Schiller, M.D.; (2) $156,565.30 for preparation and display of electronic evidence; and (3) $544.07 in costs for preparation of an exhibit notebook for trial, to the extent that it duplicates the electronic evidence. (Dkt. No. 1112.)
The Supreme Court has held that 28 U.S.C. § 1920 defines the term "costs" as used in Rule 54(d). Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441, 107 S.Ct. 2494, 96 L.Ed.2d 385 (1987). Section 1920 enumerates six categories of costs that may be taxed: (1) fees of the clerk and marshal; (2) fees for printed or electronically recorded transcripts necessarily obtained for use in the case; (3) fees and disbursements for printing and witnesses; (4) fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case; (5) docket fees under 28 U.S.C. § 1923; (6) compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under 28 U.S.C. § 1828.
"The court has broad discretion in allowing or disallowing the particular items listed in § 1920 as costs." BDT Prods., Inc. v. Lexmark Int'l, Inc., 405 F.3d 415, 419 (6th Cir.2005). Courts are bound by the limitations in § 1920, but they may interpret the meaning of the items listed therein. Id. The party opposing taxation of costs—in this case, Defendant—bears the burden of persuading the Court that the expenses are either not allowable under § 1920, or that they are not "necessarily obtained for use in the case," if such necessity is required. Id. at 420.
Section 1920(2) allows recovery of "[f]ees for printed or electronically recorded transcripts necessarily obtained for use in the case." 28 U.S.C. § 1920(2). Plaintiffs originally sought recovery of $49,869.12 in such fees, and Defendant objects to the fees for transcripts of the depositions of Coen, Laubacher, and Schiller. In response, Plaintiffs have withdrawn their request for fees related to these three deponents. (Dkt. No. 1113, at 10.) Accordingly, the Court will award Plaintiffs' $45,939.79 in such fees. (See id.)
Section 1920 of title 28 also allows recovery of "[f]ees for exemplification and the costs of making copies of any materials where the materials are necessarily obtained for use in the case." 28 U.S.C. § 1920(4). The bulk of the costs requested by Plaintiffs are fees paid to Plaintiffs' third-party consultant to assist Plaintiffs in the preparation and presentation of electronic evidence and electronic presentations for use at trial and in connection with motions practice.
Plaintiffs' bill of costs includes fees for preparing presentations for the jury trial originally scheduled for September of 2005, the bench trial in 2007, and argument in connection with motions filed in 2007 through 2009. (Dkt. No. 1106, at 7-8.) In response to Defendant's objections, Plaintiffs have provided copies of invoices from the consultant showing the work performed, the hours, and the amounts billed. (See Dkt. No. 1113, Ex. 1.) According to the invoices, the consultant charged an hourly rate of approximately $125 to $175 per hour for its services, which included inter alia: editing multiple versions of a PowerPoint presentation with graphics and animation, designing a timeline, meeting with attorneys to discuss the presentations, trimming and editing video clips, scanning, formatting, barcoding, and uploading exhibits, programming a CD/DVD, conducting a "courtroom survey" and "court rehearsal," "visiting [the] courtroom," and meeting with the "ba[i]liffs," "setup of equipment in court", and "[i]n court presentation." (Id.)
The Sixth Circuit addressed exemplification costs in BDT Products, Inc. v. Lexmark International, Inc., 405 F.3d 415 (6th Cir.2005), wherein it affirmed a district court's decision to tax costs for "electronic scanning and imaging of documents" as exemplification costs. Id. at 420. The court also affirmed as part of transcript costs "charges for video services, rough disk, interactive realtime, video tapes, and the synchronization of the video and deposition transcripts." Id. at 419-20. Though the court allowed taxation of the costs for converting non-electronic evidence into electronic form, it did not address the kinds of costs sought by Plaintiffs, which include the creation of animations, diagrams and images for electronic presentations, and assistance with the setup and use of equipment for such presentations in the courtroom.
Plaintiffs' proposed bill of costs for exemplification of electronic evidence is problematic in several respects. First, it appears that Plaintiffs' consultant performed work that falls outside the scope of what is permitted or intended by § 1920(4). The Court distinguishes between costs incurred to allow a party to present non-electronic evidence electronically, such as scanning, imaging, and conversion of non-electronic materials, the type of costs allowed in BDT Products, and costs incurred to improve the format and design of electronic evidence, including costs to create graphics, animations, and stylized presentations. The latter costs tend to serve a party's aesthetic preferences rather than exemplification of evidence; they have "less to do with conveying information to judge and jury than . . . with an effort to wow them." Cefalu v. Village of Elk Grove, 211 F.3d 416, 428 (7th Cir.2000). Courts recognize that the losing party is not required to pay for the prevailing party's "glitz." Id. (quoting BASF Corp. v. Old World Trading Co., No. 86 C 5602, 1992 WL 229473, at *3 (N.D.Ill. Sept. 11, 1992)). Plaintiffs' invoices include many charges suggesting "glitz" rather than costs reasonably necessary
In addition, it appears that a substantial portion of the charges relate more to the internal organization and management of Plaintiffs' evidence for use in the case, such as bar-coding exhibits, importing them into "Trial Director" software, uploading materials to Plaintiffs' servers, and "marking trial exhibits as withdrawn or admitted," rather than the act of obtaining, creating, or preparing materials for exemplification purposes. (See id. at 34.) Further removed from the scope of § 1920(4) are costs incurred by Plaintiffs for their consultant to become familiar with the courtroom and meet with court staff, to practice with equipment, to rehearse a presentation, to meet with Plaintiffs' counsel, and to observe or assist with "[i]n court presentation." (See id. at 29, 36.) However worthy or useful such activities may have been for Plaintiffs or their consultant, § 1920(4) does not require the losing party to pay for rehearsals and preparatory activities, meetings, and what appear to be legal and technology support services.
The inclusion of charges that are outside the scope of § 1920(4) is particularly problematic because Plaintiffs' invoices tend to bill for multiple activities within one block of time. For example, one invoice bills thirteen hours for "Trial prep; work on exhibits, video designations, changes to PowerPoint w/Gass, Root." Even if § 1920(4) could be interpreted to include some activities within this block (e.g., "work on exhibits"), the Court cannot separate these services from those that are more likely to fall outside the scope of § 1920 (e.g., "Trial prep") (Id.).
Moreover, as Defendant notes, Plaintiffs' invoices generally lack specificity sufficient to allow Defendant or the Court to evaluate the nature and necessity of the specific charges that Plaintiffs seek to tax. The invoices often describe the consultant's work in general terms (e.g., "work on exhibits" (see id.)), without specifying the work product, or the particular presentation or exhibits that were prepared. Plaintiffs have withdrawn their request for some of the transcript fees initially requested for some deponents; the Court suspects that similarly unnecessary costs may lurk in Plaintiffs' requested exemplification costs, but it is impossible to tell from the generic descriptions of work in Plaintiffs' invoices.
In addition, judging from the evidence presented to the Court, the Court is of the general impression that Plaintiffs went above and beyond what was reasonably necessary to prepare and present their case in a cost-effective manner, both with respect to the volume of evidence and the manner in which it was presented. The proceedings in this matter were conducted entirely before a judge rather than a jury. Though parties are encouraged to use electronic equipment to present evidence and electronic presentations, the necessity for doing so is diminished where, as in this case, the parties' exhibits were presented to the Court in non-electronic form, and where the deliberation and consideration of that evidence was not confined by the time constraints of jury proceedings. The Court is concerned that costs for scanning exhibits and printing electronic copies thereof are duplicative of the costs separately taxed for preparing the materials presented in the exhibit books provided to the Court.
Therefore, considering the evidence provided by Plaintiffs in response to Defendant's objections to the bill of costs, the complexity of this action throughout each stage of the proceedings, the nature of the proceedings before the Court, and the evidence presented to the Court throughout these proceedings, the Court cannot conclude that all of the charges requested by Plaintiffs under § 1920(4) fall within the scope of that provision. The Court will reduce Plaintiffs' amount of requested costs for electronic evidence to $30,000, which reflects a portion of the costs for scanning and imaging non-electronic materials, preparing and editing video clips of deponents, and creating electronic presentations. However, the Court will disallow the remainder of the costs for exemplification of electronic materials because Plaintiffs' request lacks specificity, and because the costs requested are duplicative of other charges or are outside the scope of § 1920(4).
Therefore, the Court will grant deny Defendant's motion to strike, but will grant Defendant's objections in part, and will allow taxation of costs as follows:
Description Cost Fees of the clerk $ 200.00 Fees of court reporters $ 45,939.79 Fees and disbursements for $ 6,039.93 printing and witnesses Fees for exemplification: Preparation and display $ 30,000.00 of electronic evidence Preparation of non-electronic $ 2,329.38 evidence ___________TOTAL: $84,509.10
For the foregoing reasons, therefore, the Court will grant Defendant's motion for relief from judgment, and will deny Plaintiffs' motion to amend the judgment, in part. Plaintiffs' motion will be denied with respect to the calculation of the amount of interest due under § 500.2006 and § 600.6013(8). The Court finds no fault in Plaintiffs' method of calculation of interest § 600.6013(8), except that the amount must be modified to account for the change in the dates on which interest begins to run under Mich. Comp. Laws § 500.2006. Finally, the Court will deny Defendant's motion to strike the proposed bill of costs, but will grant Defendant's objections in part and allow costs to be taxed in the amount set forth herein.
An order and amended judgment consistent with this opinion will be entered.
This matter is before the Court on a motion filed by Plaintiffs Stryker Corporation ("Stryker") and Howmedica Osteonics Corporation, a subsidiary of Stryker, to amend or correct the amended final judgment pursuant to Rules 59(e) and 60(a) of the Federal Rules of Civil Procedure. (Dkt. No. 1125.)
This diversity action arises out of an insurance coverage dispute. On October 7,
On June 24, 2010, the Court granted Plaintiffs' motion in part, and Defendant's motion in part. (Dkt. No. 1123.) The Court allowed additional prejudgment interest under § 600.6013(8), but determined that Plaintiff's proposed calculation of interest under § 500.2006(4) was not acceptable in light of the law raised by Defendant in its motion. (Dkt. No. 1122.) Since Plaintiff's calculations were rejected, the Court entered an amended final judgment that once again did not include a calculation of prejudgment interest. (Dkt. No. 1124, Am. Final J.) The amended final judgment states that prejudgment interest would accrue "until October 7, 2009, the date of the Court's original judgment." (Id. at 2.)
On July 22, 2010, Plaintiffs filed their motion to amend the judgment to include a calculation of interest pursuant to Rule 60(a) of the Federal Rules of Civil Procedure. (Dkt. No. 1125.) Plaintiffs include in their motion a revised calculation of prejudgment interest accumulated through October 7, 2009, the date of the original judgment. However, Plaintiffs also move under Fed.R.Civ.P. 59(e) to extend prejudgment interest beyond October 7, 2009 to the date of this final amended judgment. (Id.) The Sixth Circuit continues to hold the appeal in abeyance because Plaintiffs' motion suspends the effectiveness of Defendant's notice of appeal. (Dkt. No. 1127.) See Fed. R.App. P. 4(a)(4). Jurisdiction remains with the district court until the motion is resolved. See id.
Fed.R.Civ.P. 60(a) allows a party to correct a "clerical mistake or a mistake arising from oversight or omission whenever one is found in a judgment, order, or other part of the record." Generally, a motion to add a specific calculation of interest pursuant to Rule 60(a) does not "seek to alter or amend the judgment, but simply ask[s] the court to insert the omitted particulars of the prejudgment interest award." Pogor v. Makita U.S.A., Inc., 135 F.3d 384, 388 (6th Cir.1998).
Plaintiffs have presented a new set of prejudgment interest calculations in accord with this Court's June 24, 2010, amended judgment, and Defendant does not object to these calculations as such. (Dkt. No. 1130) Defendant concedes that Plaintiff's calculations of prejudgment interest through October 7, 2009, the date of the original judgment, are consistent with this Court's prior rulings. (Dkt. No. 1130) Thus, there is no dispute concerning Plaintiff's proposed calculation of interest through the date of the original final judgment.
At issue is Plaintiffs' separate motion to extend the calculation of prejudgment interest
Defendant argues that Plaintiff's 59(e) motion to extend prejudgment interest is untimely because it attempts to modify both the June 24, 2010, amended judgment and the Court's original October 7, 2009, judgment. The Court agrees. A timely Rule 59(e) motion must be filed "`not later than 10 days after entry of the judgment' it seeks to alter or amend." Winston Network, Inc. v. Ind. Harbor Belt R.R. Co., 944 F.2d 1351, 1362 (7th Cir. 1991) (quoting Fed.R.Civ.P. 59(e)). When a Rule 59(e) motion is filed in the wake of an amended judgment, "the motion must challenge the altered and not the original judgment." McNabola v. Chi. Transit Auth., 10 F.3d 501, 521 (7th Cir.1993). Although parties aggrieved by the alteration of an original judgment in an amended judgment may respond with a successive 59(e) motion, Charles v. Daley, 799 F.2d 343, 348 (7th Cir.1986), the motion "must bear some relationship to the district court's alteration of the first judgment. . . ." McNabola, 10 F.3d at 521 (emphasis added). Otherwise, parties could "continually file new motions," making a "joke" of the 10 day time limitation and "preventing the judgment from becoming final." Charles, 799 F.2d at 347.
With respect to the terminal date of prejudgment interest, the June 24, 2010, amended judgment did not in any way alter the judgment. The October 7, 2009, original judgment granted prejudgment interest accruing to the date of "this judgment." (Dkt. No. 1094.) The June 24, 2010, amended judgment reinforced that cut off date, stating, "Plaintiffs are entitled to prejudgment interest . . . running until October 7, 2009, the date of the Court's original judgment." (Dkt. No. 1124.) Plaintiff's Rule 59(e) motion does not address an alteration of the original judgment; it seeks to change a term of the judgment that was fixed nearly a year ago on October 7, 2009. Because Plaintiffs' 59(e) motion is directed at the original October 7, 2009 judgment and not at any alteration effectuated by the June 24, 2010, amended judgment, the motion is untimely.
Even if Plaintiffs' Rule 59(e) motion were timely, it would still fail on the merits. Plaintiffs rely entirely on Scotts Co. v. Central Garden & Pet Co., 403 F.3d 781, 792 (6th Cir.2005), to support their motion. In Scotts, the Sixth Circuit considered a case in which the district court entered judgment on a jury verdict on May 16, 2002. Id. at 793. The judgment awarded $22.5 million to the plaintiff on its claims, and $12.075 million to the defendant on its counterclaims. Id. at 783. The district court later entered an amended judgment on September 30, 2002, which changed some language from the jury's verdict. The parties then moved for prejudgment
The Sixth Circuit reversed the district court on equitable grounds, holding that the date of the final amended judgment was the appropriate terminal date for accrual of prejudgment interest in that case. The court reasoned that because the rate of prejudgment interest was significantly higher than the rate of post-judgment interest, stopping prejudgment interest on the date of the earlier judgment granted an "unjustified benefit" to the defendant, the losing party in the case. Id. at 793.
As in Scotts, the issue here is the correct terminal date for prejudgment interest. However, Scotts is distinguishable from the present case. The district court in the Scotts litigation did not even award prejudgment interest, let alone specify a terminal date for interest accrual, until it issued its final amended judgment on September 22, 2003. Id. at 783, 786-88. The original May 16, 2002, judgment made no mention whatsoever of prejudgment interest. It was also substantially modified by later amendment, including a $750,000 reduction in the defendant's counterclaim award, revised language concerning damages, and the awarding of prejudgment interest to the Plaintiff. Id. at 783. In shifting the terminal date for prejudgment interest to September 22, 2003, the Sixth Circuit merely aligned the accrual of prejudgment interest with the date that prejudgment interest was first awarded.
In the present case, October 7, 2009, has always been the clearly stated terminal date for prejudgment interest. The original judgment granted prejudgment interest and made the terminal date explicit. (Dkt. No. 1094.) Furthermore, no substantive changes to the judgment have been made; the matter remains before this Court merely to calculate the dollar amount of prejudgment interest already granted in the original judgment. In this, the present case closely resembles Venture Industries Corp. v. Autoliv Asp, Inc., No. 99-75354, 2007 WL 3202821 (E.D.Mich. Oct.30, 2007); aff'd., 283 F. App'x. 808, (Fed.Cir.2008), decided by Judge Avern Cohn, who was a member of the Scotts panel. Judge Cohn found that, where litigation history and court language "clearly implies that the dividing line for pre and postjudgment interest has always been contemplated to be [the date of the original judgment]," that date should stand. Id. at *6.
The purpose of the Sixth Circuit's holding in Scotts was to avoid an inequitable result. 403 F.3d at 793. Where equity does not support using the date of a final amended judgment to calculate prejudgment interest, Scotts offers no iron rule. Venture, 2007 WL 3202821, at *6. In the present case, equity favors the October 7, 2009, original judgment as the appropriate date for calculating prejudgment interest. Both the original and amended judgments explicitly designate October 7, 2009, as the terminal date for prejudgment interest accrual. Plaintiffs had an opportunity to object to the language of the original opinion in their initial Rule 59(e) motion, and failed to do so. In fact, in their motion to amend the judgment, Plaintiffs explicitly agreed that October 7, 2009, was the settled cut-off date for prejudgment interest. (Dkt. No. 1099) ("All that remains to be done is calculate the interest due under [M.C.L. § 500.2006] up to the date of the final judgment."). Allowing Plaintiffs to extend prejudgment interest at this late hour would reward Plaintiffs for failing to raise the matter in their initial motion to
An order and amended judgment consistent with this opinion will be entered.
