Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

St. Marys Area Water Authority v. St. Paul Fire & Marine Insurance Co.

May 11, 2007


The opinion of the court was delivered by: William W. Caldwell United States District Judge


I. Introduction

Plaintiff, St. Mary's Area Water Authority, has filed a motion under Fed. R. Civ. P. 59(e), styled as a motion for reconsideration, to alter or amend our order of February 2, 2007. The February 2 order granted the motion of defendant, St. Paul Fire & Marine Insurance Co., for reconsideration of our order of October 27, 2006. The latter order had granted summary judgment in favor of the Authority and imposed liability on the defendant insurance company for property losses the Authority sustained when chlorine gas escaped from a pipe at its water-treatment facility. By its motion to alter or amend, the Authority wants us to reverse the reversal so that Defendant is once again obligated to provide coverage.

II. Standard of Review

The February 2 order was final because it ended the litigation in favor of the insurance company. A motion for reconsideration of a final order is used "'to correct manifest errors of law or fact or to present newly discovered evidence.'" Max's Seafood Café ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999)(quoting Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir. 1985)). Thus, a "party seeking reconsideration [must] show[ ] at least one of the following grounds: (1) an intervening change in the controlling law; (2) the availability of new evidence that was not available when the court granted the motion for summary judgment; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice." Id.

"A motion for reconsideration may not be used as a means to argue new facts or issues that were not presented to the court in the context of the matter previously decided." Worbetz v. Ward North America, Inc., 54 Fed. Appx. 526, 533 (3d Cir. 2002) (nonprecedential). A Rule 59(e) motion "cannot be used to introduce new evidence, tender new legal theories, or raise arguments which could have been offered or raised prior to entry of judgment." United States v. Metropolitan St. Louis Sewer Dist., 440 F.3d 930, 933 (8th Cir. 2006)(quoted case and internal quotation marks omitted); County of McHenry v. Ins. Co. of West, 438 F.3d 813, 819 (7th Cir. 2006)(Rule 59(e) cannot be used to advance arguments or theories that could have been raised before entry of judgment); Ross v. Marshall, 426 F.3d 745, 763 (5th Cir. 2005)(same); Waye v. First Citizen's Nat'l Bank, 846 F. Supp. 310, 314 (M.D. Pa. 1994)(same). The motion also cannot be used simply to reargue theories on which the court has already ruled. Fox v. American Airlines, Inc., 295 F. Supp. 2d 56, 59 (D.D.C. 2003).

III. Background

We provide sufficient detail here to resolve the Rule 59(e) motion. A fuller background is set forth in our memorandum accompanying the October 27, 2006, summary-judgment order in favor of Plaintiff, St. Mary's Area Water Auth. v. St. Paul Fire & Marine Ins. Co., 464 F. Supp. 2d 397 (M.D. Pa. 2006)(St. Mary's I), and the memorandum accompanying the February 2, 2007, reconsideration order in favor of Defendant, St. Mary's Area Water Auth. v. St. Paul Fire & Marine Ins. Co., 472 F. Supp. 2d 630 (M.D. Pa. 2007)(St. Mary's II).

The Authority suffered property damage when chlorine gas escaped from a pinhole leak in a pigtail pipe at its water-treatment facility. Plaintiff had an all-risk policy with St. Paul and filed this suit for breach of contract, alleging that St. Paul was obligated to pay for the loss under the policy's coverage for mechanical breakdown located in an endorsement added to the policy, the Equipment Breakdown Endorsement. St. Paul resisted payment by denying that the loss came within its mechanical-breakdown coverage. It also argued that, in any event, the following five exclusions precluded coverage: contamination, pollution, latent defect (in the pigtail), defects or errors (in the manufacture of the pigtail), and corrosion.

One of Plaintiff's arguments was that coverage for mechanical breakdown would be illusory if the exclusions for corrosion and defects (as well as for wear and tear, another exclusion in the policy) applied, and in those circumstances Pennsylvania courts would require Defendant to provide coverage for mechanical breakdown regardless of the exclusions.

A. St. Mary's I: the Memorandum Dealing With the Cross-motions for Summary Judgment

On cross-motions for summary judgment on the issue of coverage alone, we accepted Plaintiff's illusory-coverage argument. We began by noting that in 401 Fourth Street, Inc. v. Investors Ins. Group, 583 Pa. 445, 460 n.3, 879 A.2d 166, 174 n.3 (2005), the Pennsylvania Supreme Court indicated it would accept such an argument. We then looked to Schwartz v. State Farm Mut. Auto. Ins. Co., 174 F.3d 875 (7th Cir. 1999)(Indiana law), for a precise standard for evaluating when coverage is illusory. We stated:

An insurance provision is considered illusory if "a premium was paid for coverage which would not pay benefits under any Fidelity & Guaranty Ins. Underwriters, Inc. reasonably expected set of circumstances." v. Everett I. Brown Co., 25 F.3d 484, 490 (7th Cir. 1994). If a provision covers some risk reasonably anticipated by the parties, it is not illusory. See City of Lawrence v. Western World Ins. Co., 626 N.E.2d 477, 480 (Ind. App. 1993). If it does not, the illusory provision should be enforced in a way that protects the insured's reasonable expectations. Id.

St. Mary's I, supra, 464 F. Supp. 2d at 412 (quoting Schwartz, supra, 174 F.3d at 879). Closing, and again citing Schwartz, we stated, "If there is coverage for at least one risk, it is not illusory." Id.

We next decided that coverage was illusory, agreeing with Plaintiff that, given the exclusions for wear and tear, defects and corrosion, there was "no reasonably expected set of circumstances where the mechanical breakdown coverage would apply if there was no corrosion or defect, as defect is defined in the policy's exclusions." Id. at 412. In doing so, we rejected specific examples Defendant argued would be covered as mechanical breakdown not excluded as corrosion or defect.*fn1 Id.

Following Schwartz, we next considered whether providing coverage for mechanical breakdown protected the Authority's reasonable expectations. We decided that it did, reasoning as follows:

An insured would have considered a pipe springing a leak a mechanical breakdown for which it had purchased coverage under the equipment breakdown endorsement. We have also already discussed above how the small hole in the pipe fits within the mechanical breakdown coverage, using the dictionary definitions to define the meaning of the phrase "mechanical breakdown or failure." As noted, the pipe is mechanical because it is part of the machinery at the Plant or at least connected to the machinery. A breakdown occurred because the pipe failed to function when it ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.