Wentworth Group, Inc. v. Evanston Insurance Company

Background

The plaintiffs brought an insurance-coverage action seeking a declaration that Evanston Insurance Company had a duty to defend and indemnify them in an underlying New York state-court lawsuit involving breach-of-contract and indemnification claims. In an earlier decision, the district court adopted Magistrate Judge Cott’s report and recommendation. That decision granted the plaintiffs summary judgment declaring that Evanston had a duty to defend them, denied the plaintiffs’ request for summary judgment on the duty to indemnify as premature, and denied Evanston’s request for a declaration that it had no continuing duty to defend. The earlier decision found that the claims against FS Project Management and FirstService Residential were covered under the policy.

Motion for Reconsideration

Evanston moved for reconsideration, arguing that the court had overlooked allegations against FirstService Residential and the policy’s definition of “Wrongful Acts.” Evanston contended that the underlying claims were based on conversion, misappropriation, theft, or similar conduct excluded by the policy, and that the claims alleged only intentional conduct rather than negligence.

The court explained that reconsideration is an extraordinary remedy generally available only when the moving party identifies controlling law or important information the court overlooked, newly available evidence, an intervening change in controlling law, clear error, or a need to prevent manifest injustice. The court rejected Evanston’s motion because the earlier decision had specifically addressed the allegations and policy language. The court had found that the allegations did not bar coverage and that some remaining allegations fell within the policy’s definition of a covered “Wrongful Act.” Evanston therefore did not show that the court had overlooked relevant facts or contract language.

Certification for Interlocutory Appeal

Evanston alternatively asked the court to certify the earlier decision for an interlocutory appeal under 28 U.S.C. § 1292(b). Such certification requires a controlling legal question, substantial grounds for disagreement about that question, and a showing that an immediate appeal could materially advance the litigation. The court noted that interlocutory appeals are strongly disfavored and require exceptional circumstances.

Evanston argued that another Southern District of New York decision, Hunt Construction Group, Inc. v. Berkley Assurance Co., conflicted with the earlier decision because it involved similar policy language and denied coverage for intentional breaches of contract. The court found no conflict in controlling law. It explained that the result in Hunt rested on the factual record in that case, while the court and Magistrate Judge Cott had found here that the allegations did not involve exclusively intentional misconduct. The court concluded that the difference between the cases was factual, not a disagreement about controlling legal principles.

Disposition

Judge George B. Daniels denied Evanston’s motion for reconsideration and denied its request for certification of an interlocutory appeal. The court denied the motion in its entirety and directed the Clerk of Court to close the motion. The opinion did not resolve the previously premature duty-to-indemnify issue.