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American Motorists Insurance Company v. the Club At Hokuli`A

September 20, 2011

AMERICAN MOTORISTS INSURANCE COMPANY, PLAINTIFF,
v.
THE CLUB AT HOKULI`A, INC., A HAWAII NONPROFIT CORPORATION; HOKULI`A COMMUNITY ASSOCIATION, INC., A HAWAII NONPROFIT CORPORATION; 1250 OCEANSIDE PARTNERS, A HAWAII LIMITED PARTNERSHIP; TEXTRON FINANCIAL CORPORATION, A DELAWARE CORPORATION; RED HILL 1250, INC., A WASHINGTON CORPORATION; AND OCD, LLC, A HAWAII LIMITED LIABILITY COMPANY, DEFENDANTS.
THE CLUB AT HOKULI`A, INC., A HAWAII NONPROFIT CORPORATION; AND HOKULI`A COMMUNITY ASSOCIATION, INC., A HAWAII NONPROFIT CORPORATION, COUNTER AND CROSS- CLAIMANTS,
v.
AMERICAN MOTORISTS INSURANCE COMPANY, AN ILLINOIS CORPORATION, AND 1250 OCEANSIDE PARTNERS, A HAWAII LIMITED PARTNERSHIP, COUNTER AND CROSS- DEFENDANTS.



The opinion of the court was delivered by: Susan Oki Mollway Chief United States District Judge

ORDER DENYING THE CLUB AND HCA'S MOTION FOR RECONSIDERATION

I. INTRODUCTION AND FACTUAL BACKGROUND.

On August 25, 2011, Defendants and Counterclaimants The Club at Hokuli`a, Inc. ("The Club"), and Hokuli`a Community Association ("HCA") brought a motion for partial summary judgment as to Plaintiff and Counterdefendant American Motorists Insurance Company's ("AMICO") sixth cause of action. See The Club/HCA's Mot. Partial Summ. J. ("MPSJ") 1, ECF No. 202; Second Amended Compl. ("SAC") ¶ 110 & p.49, ECF No. 144. In its prayer for judgment on its sixth cause of action, AMICO sought a judicial declaration:

That the CLUB and HCA bonds are indemnity bonds that give AMICO the right but not the obligation to take over and complete the Project upon a default by OCEANSIDE. Should AMICO choose not to exercise that right, the CLUB and HCA must cause the Project to be completed and then seek reimbursement from OCEANSIDE and/or AMICO, subject to any other defenses AMICO may have to the claim brought by the CLUB and HCA.

SAC p.49. In their MPSJ, The Club and HCA asserted that, as a matter of law, AMICO was not entitled to a declaratory judgment "that the bonds require [T]he Club and HCA to first perform and then seek reimbursement." Mem. Supp. MPSJ 2, ECF No. 202-1. The Club and HCA relied on various documents, including the surety bonds themselves, the underlying agreements, and state and federal filings, to establish that the surety bonds did not require The Club and HCA to perform and then seek reimbursement. See Mem. Supp. MPSJ 17-18, 27.

Although AMICO disputed the relevance of these documents, it did not dispute the documents' contents or their authenticity. See AMICO's Obj. to The Club/HCA's Sep. Concise Stmt. Mat'l Facts Supp. MPSJ, ECF No. 256. Similarly, The Club and HCA did not dispute the additional facts AMICO presented to the court in opposition to The Club and HCA's motion, although they argued that the evidence--specifically, the issuance of certain bond riders and the fact that Oceanside, not AMICO, provided the surety bond language---was not relevant. See The Club/HCA's Obj. to AMICO's Concise Stmt. Facts Supp. AMICO's Opp. to MPSJ, ECF No. 290. The parties therefore presented the court with a dispute only as to law, a matter suitable for resolution via summary judgment. See Fed. R. Civ. P. 56(a); Wash. Mut. Inc. v. United States, 636 F.3d 1207, 1216 (9th Cir. 2011) ("Where, as here, the case turns on a mixed question of fact and law and the only disputes relate to the legal significance of undisputed facts, the controversy is a question of law suitable for disposition on summary judgment.").

The court agreed with The Club and HCA that resolution by summary judgment was appropriate based on the evidence provided, but rejected The Club and HCA's position, holding instead that the surety bonds unambiguously limited AMICO's obligation to reimbursement. See Order Denying The Club and HCA's Motion for Partial Summary Judgment Regarding AMICO's Ability to Satisfy Its Obligations Through Reimbursement, ECF No. 361 [hereinafter "August 11 Order"]. The court determined that the surety bonds obligated Oceanside to "assure completion" of the project, but did not bind AMICO to the same obligation. Id. at 10-14. Rather, the bonds bound AMICO jointly and severally with Oceanside to insure the various improvements for the amounts of the bonds' penal sums, but permitted AMICO to fulfill this obligation by reimbursement. Id. The court relied on language in the surety bonds stating that, if Oceanside defaulted on its obligations "to provide the funds necessary to assure completion of [the listed improvements] within the time specified" under the Amended Club Improvements Agreement, the Phase 1 Agreement, or the Phase 2 Agreement, "[The Club or HCA] may cause the same to be completed and recover the costs thereof from the principal and surety." See id. at 11-13; see, e.g., Amended Club Improvements Bond at 2, ECF No. 203-5.

The court also reviewed the other documents submitted by The Club and HCA, including the various Agreements between Oceanside and The Club or HCA. August 11 Order at 15-16. The court noted that these documents required Oceanside to assure completion of the project but did not set forth any duties on AMICO's part. Id. Similarly, none of Oceanside's filings pursuant to federal or state law indicated an agreement that AMICO would itself take over Oceanside's performance obligations upon default. Id.

The Club and HCA now try to carve out a middle ground, arguing that disputed questions of material fact prevented the court from issuing a legal ruling on the question of whether AMICO may fulfill its surety obligations through reimbursement, and that the court's failure to "revise" the August 11 Order to state that the bonds are ambiguous will deny The Club and HCA "their right to trial on the disputed meaning of the bonds, which would constitute a manifest injustice." See Mem. Supp. Mot. for Revision and/or Reconsideration of August 11 Order [Docket 361] ("Mem. Supp. Mot.") 8, ECF No. 385. This novel approach does not square with the facts and argument that The Club and HCA presented to the court on their MPSJ. Because The Club and HCA's motion for reconsideration presents no new facts, no intervening change in law, and no manifest error or law or fact, it is denied.

II. LEGAL STANDARD.

A motion for reconsideration of an interlocutory order

of this court, such as an order on a motion for partial summary judgment, is proper only on the following grounds: (1) discovery of new material facts not previously available; (2) an intervening change in the law; or (3) a manifest error of law or fact. See LR60.1; see also Oppenheimer v. L.A. County Flood Control Dist., 453 F.2d 895, 895 (9th Cir. 1972) (per curiam) (denial of motion for partial summary judgment is interlocutory). "Mere disagreement with a previous order is an insufficient basis for reconsideration." White v. Sabatino, 424 F. Supp. 2d 1271, 1274 (D. Haw. 2006). Nor may the reconsideration motion be "based on evidence and legal arguments that could have been presented at the time of the challenged decision." Comeaux v. Hawaii, Civ. No. 06-00341 SOM/BMK, 2007 WL 2300711, at *1 (D.

Haw. Aug. 8, 2007). "Whether or not to grant reconsideration is committed to the sound discretion of the court." White, 424 F. Supp. 2d at 1274 (citing Navajo Nation v. Confederated Tribes & Bands of the ...


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