Braxton Avery, Plaintiff, v. << (2022)

ORDER DENYING MOTION FOR RECONSIDERATION, OR ALTERNATIVELY, FOR CERTIFICATION UNDER FED. R. CIV. P. 54(b)

[¶1] THIS MATTER comes before the Court on Fourth Party Defendant United Specialty Insurance Company's (“USIC”) Motion for Reconsideration, or Alternatively, for Certification under Fed. R. Civ. P. 54(b) filed on April 20, 2022. Doc. No. 166. Third-Party Defendant and Fourth-Party Plaintiff Equinor (“Equinor) filed a Response in Opposition on May 9, 2022. Doc. No. 172. USIC filed a Reply on May 31, 2022. Doc. No. 176. For the reasons stated below, the Motion is DENIED.

I. FACTS

[¶2] On December 7, 2018, Avery filed this suit, seeking damages for personal injuries he allegedly sustained on or around August 11, 2014, while working at an oil wellsite (hereinafter “Hilly Wellsite”) near Williston, North Dakota. Doc. No. 1. The Hilly Wellsite, including the wells, flowlines, and separator tank in question, was owned by Statoil, Equinor's predecessor in interest ¹ . Doc. No. 1, ¶16.

[¶3] Avery was part of a four-member Eklipse Resources, LLC (“Eklipse”) crew hired by Equinor to do preventative maintenance on the Hilly Wellsite in August of 2014. Doc. No. 81-1, ¶¶17-18. This included work on the flowlines and the separator tank at the well. Doc. No. 81-1, ¶¶17-18. Equinor itself had no employees at the Hilly Wellsite. Doc. No. 81-2, p. 162. Instead, Equinor hired E&M Services, LLC (“E&M”) to provide a consultant to assist the Eklipse crew and others at the Hilly Wellsite. Doc. No. 81-2, pp. 25, 163. It is undisputed the E&M consultant at the Hilly Wellsite on August 11, 2014, and other relevant times was Ted Baseler (“Baseler”). Doc. No. 81-2, p. 163.

[¶4] Avery alleges he was injured at the Hilly Wellsite when, as part of his job duties, he removed a clamp on the flowline to the well and it blew off due to substantial pressure-build-up, striking him in the face. Doc. No. 1. ¶29. Avery asserts the incident happened because E&M, specifically Baseler, failed to shut off the main valve at the well, causing the wellsite to flood and in turn causing a ball valve to fail by allowing pressure to build up in the flowline. Doc. No. 1, ¶¶24-28.

[¶5] While E&M filed an Answer on January 4, 2019, it subsequently filed a Third-Party Complaint against Equinor. Doc. No. 17. E&M sought to invoke provisions within the Master Service Agreement (hereinafter “E&M/Equinor MSA”) between E&M and Equinor wherein Equinor was responsible to defend and indemnify E&M for the claims and relief requested in Avery's Complaint. Id. at ¶5.

[¶6] It is undisputed E&M tendered the claims in the Complaint to Equinor for defense and indemnity on February 13, 2019. Doc. No. 17, ¶6. Equinor responded to the tender alleging it had a separate MSA with Eklipse, and Eklipse and/or its insurer had the obligation to indemnify E&M under pass through indemnity. Doc. No. 17, ¶7.

[¶7] On February 3, 2020, Equinor filed a Fourth-Party Complaint against Eklipse, asserting the MSA (hereinafter “Eklipse/Equinor MSA”) between the parties required Eklipse to defend and indemnify Equinor and its contractors, including E&M, from Avery's claims and prayers for relief. Doc. No. 21-2, ¶39. In particular, the relevant provisions of the Eklipse/Equinor MSA include:

Contractor's Indemnification of Company: Contractor shall release Company Group of any liability for, and shall protect, defend and indemnify Company Group 2 from and against all Claims of every kind and character, without limit and without regard to the cause or causes thereof of the negligence of any Party or Parties, arising in connection herewith, including during any ingress, egress, loading or unloading of personnel or cargo, arising out of any illness, bodily injury, death or loss or damage to property of any member of Contractor Group, Regardless of Fault.

Indemnity Obligation: Except as otherwise expressly limited in this Master Agreement, it is the intent of the Parties hereto that all releases, indemnity obligations and/or liabilities assumed by such Parties under terms of this Article 12, are limited to matters directly or indirectly arising out this Master Agreement but are otherwise without limit and without regard to the cause or causes thereof, including arising out of ingress, egress, loading or unloading of cargo or personnel, and including preexisting conditions, defect or ruin of premises or equipment, strict liability, regulatory or statutory liability, liability for damage to the environment (including but not limited to costs of remediation) products liability, breach of representation or warranty (express or implied), breach of duty (whether statutory, contractual or otherwise} any theory of tort, breach of contract, fault, strict liability, negligence (regardless whether such negligence is sole, contractual, joint or concurrent, active or passive, but expressly excluding Gross Negligence and willful misconduct of any Party or Parties, including the Party seeking the benefit of the release, indemnity or assumption of liability, or any other theory of legal liability (“Regardless of Fault”). The indemnities, and releases and assumptions of liability owed by Contractor under the provisions of this Article 12 shall inure to the benefit of and be enforceable by the members of Company Group, and the indemnities, and releases and assumptions of liability owed by Company under the provisions of this Article 12 shall inure to the benefit of and be enforceable by the members of Contractor Group. Except as otherwise provided herein, such indemnification and assumptions of liability shall not be deemed to create any rights to indemnification in any person or entity not a party to the Agreement, either as a third party beneficiary or by reason of any agreement of indemnity between one of the Parties hereto and another person or entity not a party to the Agreement.

Id. at ¶¶ 12.1, 12.3 (emphasis added).

[¶8] On March 6, 2020, Eklipse answered Equinor's Complaint, asserting the “conduct of E&M Services was grossly negligent, therefore expressly excluding E&M and Equinor from seeking the benefit of the indemnity obligations contained [in the MSA between Equinor and E&M].” Doc. No. 25, ¶13.

[¶9] On October 6, 2020, Equinor filed a Fourth Party Complaint against Eklipse's insurer, USIC. Doc. No. 55. In the Complaint, Equinor alleged Eklipse named Equinor (Statoil at the time) as an additional insured under a USIC policy between Eklipse and USIC (hereinafter “USIC Policy”). Doc. No. 55, p. 4. As a result, Equinor alleged USIC was in breach of contract for failing to defend Equinor in this matter and is obligated to pay any damages that may come from Avery's personal injuries. Doc. No. 55, p. 5.

[¶10] On December 31, 2020, USIC filed an Answer, generally alleging it did not have enough information to determine if Equinor was covered under the Eklipse Policy. Doc. No. 74. It also alleged a counterclaim against Equinor and cross-claims against E&M Services and Eklipse, seeking declarations as to the rights, duties, and obligations, if any, of USIC, Equinor, E&M, and Eklipse under the Elkipse Policy. Doc. No. 74, p. 16.

II. PROCEDURAL HISTORY

[¶11] The parties in this matter filed several motions for summary judgment. Equinor filed a Motion for Summary Judgment on March 11, 2021. Doc. No. 80. On April 1, 2021, Eklipse and Plaintiff filed Responses to the Motion for Summary Judgment. Doc. Nos. 82, 83. On April 15, 2021, Equinor filed a Reply in Support of the Motion. Doc. No. 86. The Court also granted Eklipse's Motion for Leave to File Supplemental Response in Opposition to Equinor's Motion for Summary Judgment on April 29, 2021. Doc. No. 93. Eklipse filed its Supplemental Response in Opposition to the Motion for Summary Judgment on June 9, 2021. Doc. No. 103. Equinor filed its Supplemental Reply in Support of its Motion for Summary Judgment on June 16, 2021. Doc. No. 105.

[¶12] The second Motion for Summary Judgment was filed by E&M on September 9, 2021. Doc. No. 118. Equinor responded to the Motion on September 23, 2021. Doc. No. 123. Eklipse responded to the Motion on October 8, 2021. Doc. No. 132. E&M filed its Reply on October 22, 2021. Doc. No. 136.

[¶13] The third Motion for Summary Judgment was filed by USIC on September 9, 2021. Doc. No. 120. Equinor filed a Response in Opposition on October 8, 2021. Doc. No. 130. Eklipse also filed a Response in Opposition on October 18, 2021. Doc. No. 135. USIC filed a Reply in Support on November 1, 2021. Doc. No. 137.

[¶14] On February 2, 2022, the Court granted Equinor and E&M's Motions for Summary Judgment and denied USIC's Motion for Summary Judgment (hereinafter referred to as “Summary Judgment Order”). Doc. No. 149. USIC has now moved this Court to reconsider the Summary Judgment Order in its favor or in the alternative certify the Order as a final order for purposes of Federal Rule of Civil Procedure 54(b) to allow it to immediately appeal to the Eighth Circuit. The Court declines to do either.

III. LAW AND ANALYSIS

a. Reconsideration

[¶15] “The Federal Rules of Civil Procedure do not mention motions for reconsideration.” Karg v. Transamerica Corp., No. 18-CV-134-CJW-KEM, 2019 WL 9093998, at *2 (N.D. Iowa Nov. 7, 2019) (citing Broadway v. Norris, 193 F.3d 987, 989 (8th Cir. 1999)). “District courts have considerable discretion in deciding whether to grant a motion to reconsider an interlocutory order.” Id. “Depending on the circumstances, motions for reconsideration may be properly analyzed under Federal Rule of Civil Procedure 54(b), 59(e), or 60(b).” Id. The parties dispute which Federal Rule of Civil Procedure the Court should employ in its reconsideration analysis. USIC contends Rule 54(b) provides that avenue, while Equinor argues instruction is found in Rule 60(b). In any event, the Court determines USIC has not met its burden under either standard to persuade the Court to reconsider its prior Summary Judgment Order.

[¶16] Rule 54(b) provides that “any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties ․ may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and liabilities.” Fed. R. Civ. P. 54(b). “The exact standard applicable to the granting of a motion under Rule 54(b) is not clear, though it is typically held to be less exacting than would be a motion under Federal Rule of Civil Procedure 59(e), which is in turn less exacting than the standards enunciated in Federal Rule of Civil procedure 60(b).” Allstate Ins. Co. v. Weber, No. 1:05CV00039-WRW, 2007 WL 1427598, at *2 (E.D. Ark. May 11, 2007). Pursuant to a Rule 54(b) motion to reconsider, an order that does not dispose of the case “may be amended to correct ‘clearly’ or ‘manifestly’ erroneous findings of facts or conclusions of law.” Liquid Cap. Exch., Inc. v. BDC Grp., Inc., No. 20-CV-89 CJW-MAR, 2022 WL 499852, at *2 (N.D. Iowa Jan. 19, 2022). The Court does note, however, that a motion for reconsideration “is not a vehicle to identify facts or legal arguments that could have been, but were not, raised at the time the relevant motion was pending.” Julianello v. K-V Pharm. Co., 791 F.3d 915, 923 (8th Cir. 2015); SPV-LS, LLC v. Transamerica Life Ins. Co., 912 F.3d 1106, 1111 (8th Cir. 2019).

[¶17] Rule 60(b) requires a slightly higher standard. Rule 60 provides the Court “may 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.” Fed. R. Civ. P. 60(a). The Court may do so on its own or by motion, with or without notice, unless an appeal has been docketed, in which case a mistake can only be corrected with the appellate court's leave. Id. “Rule 60(b) provides for ‘extraordinary relief which may be granted only upon an adequate showing of exceptional circumstances.’ ” In re Levaquin Prod. Liab. Litig., 739 F.3d 401, 404 (8th Cir. 2014). Pursuant to Rule 60(b), “on motion and just terms” the Court may relieve a party from its final order for the following reasons:

(1) mistake, inadvertence, surprise, or excusable neglect;

(2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b);

(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party;

(4) the judgment is void;

(5) the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or

(6) any other reason that justifies relief.

Fed. R. Civ. P. 60(b)(1)-(6).

[¶18] USIC requests the Court reconsider the Summary Judgment Order to the extent the Court determined it is obligated to provide coverage to Eklipse for Eklipse's defense and indemnity obligations owed to E&M and Equinor through the Eklipse/Equinor MSA. USIC maintains the Court erred when it determined as a matter of law the “professional services” and “sole negligence” limitations can never apply to exclude E&M from coverage. USIC contends a jury was required to determine whether these limitations applied to E&M based on the facts that would be presented at trial and who was ultimately found negligent, if anyone. USIC maintains “reconsideration is necessary to correct this significant error given USIC under the present ruling is deprived of an opportunity to present evidence to the jury to determine as a matter of fact that one or both of these limitations to the Policy's ‘insured contract’ definition apply to result in no coverage for Eklipse's contractual liability to E&M.” Doc. No. 167, p. 6.

[¶19] As to the professional services, the Court again finds the facts provided in the record by the parties would only lead a reasonable juror to conclude Ted Baseler, E&M's employee, was providing more than professional and consulting services at the Hilly Wellsite. As noted by USIC itself, the Eighth Circuit has said the Court should “look at the act or omission itself and not the title or character of the party who performs or fails to perform the act to determine whether a particular service or treatment is professional in nature.” Am. Econ. Ins. Co. v. Jackson, 476 F.3d 620, 625 (8th Cir. 2007) (emphasis added). While Baseler's title may have been “consultant” this itself does not automatically equate to the finding that he was only providing consulting and professional services. Multiple parties testified Ted Baseler provided hands on work at the site in question. This exclusion does not apply.

[¶20] In addition, USIC's “sole negligence” argument for policy exclusion is once again not convincing. USIC contends only E&M and Avery himself will be liable for the tort liability alleged by Avery. This is simply not the case. The facts in the record show that a reasonable juror is likely to find all parties liable in some respect for the negligence. E&M's expert's report indicates Elkipse was at fault for the incident, Avery has contended E&M and Equinor were at fault, and all parties indicate Avery played some role in the negligence himself. The sole negligence exclusion does not apply here.

[¶21] USIC also argues the Court erred in determining the “insured contract” exception to the Contractual Liability Exclusion in the USIC Policy applied to restore coverage for Eklipse's defense and indemnity liability. USIC concedes the Equinor/Eklipse MSA obligates Eklipse to defend and indemnify Equinor for tort liability. However, it contends in this situation, there is no claim for tort liability asserted against Equinor. Instead, USIC asserts Equinor's claim against Eklipse seeks to impose liability on Eklipse for Equinor's contractual liability to E&M. USIC maintains Equinor “seeks to impose defense and indemnification liability on Eklipse for Equinor's contractual liability to E&M” Doc. No. 167, p. 13.

[¶22] In regard to the ‘insured contract” argument, the Court once again finds the insured contract exception applies here. Avery asserted a tort claim, negligence, against E&M.³ Doc. No. 1. E&M is a contractor of Equinor. The Eklipse/Equinor MSA mandates Eklipse will defend and indemnify Equinor and its contractors for any claims “arising out of ․ any theory of tort, breach of contract, fault, strict liability, negligence (regardless whether such negligence is sole, contractual, joint or concurrent, active or passive, but expressly excluding Gross Negligence and willful misconduct ․” Doc. No. 21-2, ¶¶ 12.1, 12.3 (emphasis added). Eklipse expressly assumed the tort liability of Equinor and E&M, Equinor's contractor, through the Equinor/Eklipse MSA. This meets the exact definition of an insured contract: “that part of any other contract or agreement pertaining to your business ․ under which you assume the tort liability of another party to pay for ‘bodily injury’ or ‘property damage’ to a third person or organization.” Doc. No. 55-1, p. 46. E&M sought defense and indemnification for the tort liability from Equinor, its principle, who had a plan in place with Eklipse that if Equinor or its contractors were sued for tort liability, Eklipse would shoulder the burden of defense and indemnification. The parties clearly thought out this scenario, and the Court will not bypass the parties’ intention to reach the result USIC wishes. The Court will not reconsider its previous finding.

b. Rule 54(b) certification

[¶23] USIC's motion is made pursuant to Rule 54(b) of the Federal Rules of Civil Procedure, which provides, in relevant part:

(b) Judgment On Multiple Claims or Involving Multiple Parties

When an action presents more than one claim for relief—whether as a claim, counterclaim, crossclaim, or third-party claim—or when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay. Otherwise, any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of judgment adjudicating all the claims and all the parties’ rights and liabilities.

Fed. R. Civ. P. 54(b).

[¶24] It is well-established that orders disposing of fewer than all claims are not immediately appealable. Review must generally await a final judgment disposing of all claims. See Interstate Power Co. v. Kansas City Power & Light Co., 992 F.2d 804, 807 (8th Cir. 1993) (“A Rule 54(b) determination should not be made routinely; it is only the ‘special case’ that warrants an immediate appeal from a partial resolution of the lawsuit.”). The policy of all courts is to avoid piecemeal and interlocutory appeals. See Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 8 (1980) (“Consideration of [judicial administrative interests] is necessary to assure that application of the Rule effectively ‘preserves the historic federal policy against piecemeal appeals.’ ”). As a result, Rule 54(b) certification is not granted routinely, but is reserved only for those rare cases that warrant an immediate appeal from a partial resolution of a lawsuit. Id. at 10 (“Plainly, sound judicial administration does not require that Rule 54(b) requests be granted routinely.”). The decision regarding certification under Rule 54(b) rests in the discretion of the district court. Downing v. Riceland Foods, Inc., 810 F.3d 580, 585 (8th Cir. 2016).

[¶25] The Eighth Circuit Court of Appeals has established a two-step analysis to determine whether certification of an order as final under Rule 54(b) is appropriate:

A district court must first determine that it is dealing with a final judgment ․ in the sense that it is an ultimate disposition of an individual claim. Then: In determining that there is no just reason for delay, the district court must consider both the equities of the situation and judicial administrative interests, particularly the interest in preventing piecemeal appeals.

Outdoor Cent., Inc. v. GreatLodge.com, Inc., 643 F.3d 1115, 1118 (8th Cir. 2011) (citation and quotation omitted).

[¶26] Certification under Rule 54(b) is granted only if there exists “some danger of hardship or injustice through delay which would be alleviated by immediate appeal.” Hayden v. McDonald, 719 F.2d 266, 268 (8th Cir. 1983) (quoting Brunswick Corp. v. Sheridan, 582 F.2d 175, 183 (2d Cir. 1978)). The Eighth Circuit identified several factors to consider in determining whether danger or hardship through delay exists:

(1) The relationship between the adjudicated and the unadjudicated claims; (2) the possibility that the need for review might or might not be mooted by future developments in the district court; (3) the possibility that the reviewing court might be obliged to consider the same issue a second time; (4) the presence or absence of a claim or counterclaim which could result in setoff against the judgment sought to be made final; (5) miscellaneous factors such as delay, economic and solvency considerations, shortening the time of trial, frivolity of competing claims, expense, and the like.

Id. (quoting Allis-Chalmers Corp. v. Philadelphia Elec. Co., 521 F.2d 360, 364 (3d Cir. 1975)).

[¶27] The Summary Judgment Order is not a final order in this matter. “A ‘final decision’ is one that ‘ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.’ ” United States ex rel. Cairns v. D.S. Med. LLC, 42 F.4th 828, 832 (8th Cir. 2022). The Court has ruled USIC is obligated to defend and indemnify Eklipse's obligations to Equinor and E&M. However, the Court has left open the question of defense expenses throughout this matter, and the conclusion of the trial will determine indemnity amounts, if any. These open questions preclude a finding that the Summary Judgment Order in regard to USIC is a final order.

[¶28] Additionally, in the instant case, trial is set for February 13, 2023. This case has been pending since 2018. The underlying claim in this case is a claim of negligence, which is set and ready to proceed to trial. The Court finds it more efficient and appropriate for USIC to proceed with an appeal of indemnity obligations at the same time as a possible appeal of the underlying tort liability findings in the trial. In fact, this is the favored route in the Eighth Circuit, where the Circuit has expressed disapproval of immediate appeals of indemnity questions. See Interstate Power Co. v. Kansas City Power & Light Co., 992 F.2d 804, 807-08 (8th Cir. 1993) (“[J]uridical concerns counsel against the immediate appeal of a question of indemnity apart from or, at least, prior to the consideration on appeal of the question of whether any liability exists ․ [B]y its very nature indemnity is collateral to and dependent upon a finding of liability[.]”). The facts underlying this case as a whole and the indemnification claims are undeniably intertwined, and an immediate appeal would likely require the Eighth Circuit to familiarize itself more than once with the case. In the interests of judicial resources and time and to prevent piecemeal appeals, USIC's appeal should come after the conclusion of the case.

IV. CONCLUSION

[¶29] The Court DENIES [Doc. No. 166] the Motion for Reconsideration, or Alternatively, for Certification under Fed. R. Civ. P. 54(b).

[¶30] IT IS SO ORDERED.

FOOTNOTES

1.   At the time of the incident, Statoil was the functioning entity in the contractual relationship with E&M. Most actions undertaken at the time of the incident were taken by Statoil, not Equinor. However, for clarity, the Court will refer to Equinor throughout this Motion, with the understanding that Statoil was the acting entity at the time of most events.

2.   “Company Group” is defined in the MSA to include “contractors and subcontractors of every tier.” Doc. No. 21, Ex. 2, p. 6.

3.   The Court also granted Avery the opportunity to file an Amended Complaint to allege a direct negligence claim against Equinor. However, Avery has not filed the Amended Complaint to date. Nonetheless, Eklipse, Equinor, E&M, and even Avery will all be listed on the special verdict form as possible contributors of the negligence allegedly suffered by Avery.

Daniel M. Traynor, District Judge United States District Court