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Metro Hospitality Partners, LTD v. Lexington Insurance Co.

United States District Court, S.D. Texas, Houston Division

July 25, 2017



          Lee'H. Rosenthal Chief United States District Judge

         I. Background[1]

         The insured, Metro Hospitality Partners, Ltd., owns a hotel in Houston, Texas. After a hailstorm damaged the hotel, Metro promptly notified its property insurer, Lexington Insurance Company. Lexington quickly responded, inspected, adjusted, paid part of the claim as an advance, and identified the amount of covered damage. Lexington approved $820, 649.42 and paid $585, 699.60 after subtracting the deductible and depreciation. The parties disputed whether more money was owed under the policy. Metro filed this suit alleging that Lexington owed more under the policy and that Lexington also violated extracontractual Texas common-law and statutory duties of good faith and fair dealing.

         Lexington moved for summary judgment that it had complied with its policy obligation. (Docket Entry No. 21). Lexington argued that Metro presented no evidence of any injury independent of the injuries it claimed resulted from Lexington's denial of the disputed covered loss and therefore Metro could not recover on its extracontractual good-faith and fair-dealing claims. This court agreed, following binding Fifth Circuit precedent construing the-then most recent Texas case law. (Docket Entry No. 27 at 8-9). After this court ruled, the Texas Supreme Court issued USAA Texas Lloyds Co. v. Menchaca, -S.W.3d -, 2017 WL 1311752 (Tex. Apr. 7, 2017). Metro contends that this opinion requires this court to alter or amend its holding on the extracontractual claims. Lexington contends that no change is required.

         Lexington also based its summary judgment motion on the ground that Metro had failed to cooperate with Lexington's investigation into the loss, relieving Lexington of any duty to pay more than the investigation supported. After Lexington paid and Metro demanded more based on newly claimed losses, Lexington asked for documents and information substantiating Metro's demand for additional payment. Metro refused. The policy required Metro to “assist and cooperate” with Lexington in the investigation and adjustment. Lexington invoked Metro's breach of the assist-and-cooperate clause and argued that the breach barred Metro from bringing this suit under the “no suits” clause.

         The court found that until Metro complied with the duty to cooperate in the claims investigation, Lexington had no obligation to pay any part of the additional disputed portion of the claim. Lexington also moved to strike Metro's experts, who had opined on the cause and amount of the additional damage the hotel incurred. The court denied Lexington's motion to strike experts without prejudice reasserting it depending on what documents and information Metro produced.

         Metro complied with Lexington's outstanding document requests. Lexington now reurges its motion to strike Metro's experts, Metro responded, Lexington replied, and Metro surreplied. (Docket Entry Nos. 20, 22, 24, 35, 36). After the court's summary judgment opinion was issued, Metro has also moved to alter or amend its judgment under Rule 59(e). (Docket Entry No. 28). Lexington responded, Metro replied, and Lexington surreplied. (Docket Entry Nos. 30, 34, 37).

         Based on a careful review of the motions, responses, replies; surreplies; the record; the relevant law; and the arguments of counsel, this court denies Lexington's motion to strike Metro's experts and denies Metro's motion to alter or amend the judgment. The reasons for these rulings are stated below.

         II. The Applicable Legal Standards

         A. The Legal Standard to Alter or Amend a Judgment under Rule 59(e)

         The Federal Rules of Civil Procedure do not specifically provide for motions for reconsideration. See St. Paul Mercury Ins. Co. v. Fair Grounds Corp., 123 F.3d 336, 339 (5th Cir. 1997) (“[T]he Federal Rules of Civil Procedure do not recognize a general motion for reconsideration.”). A court retains the power to revise an interlocutory order before entering judgment adjudicating the parties' claims, rights, and liabilities. Fed.R.Civ.P. 54(b). A Rule 59(e) motion “calls into question the correctness of a judgment.” Templet v. HydroChem Inc., 367 F.3d 473, 478-79 (5th Cir. 2004) (citing In re Transtexas Gas Corp., 303 F.3d 571, 581 (5th Cir. 2002)). A motion that asks the court to change an order or judgment is generally considered a motion to alter or amend under Rule 59(e). eTool Development, Inc. v. Nat'l Semiconductor Corp., 881 F.Supp.2d 745, 748-49 (E.D. Tex. 2012).

         A Rule 59(e) motion “‘must clearly establish either a manifest error of law or fact or must present newly discovered evidence' and ‘cannot be used to raise arguments which could, and should, have been made before the judgment issued.'” Rosenzweig v. Azurix Corp., 332 F.3d 854, 863-64 (5th Cir. 2003) (quoting Simon v. United States, 891 F.2d 1154, 1159 (5th Cir. 1990)). Changing an order or judgment under Rule 59(e) is an “extraordinary remedy” that courts use sparingly. Templet, 367 F.3d at 479; see also 11 Wright & Miller, Federal Practice & Procedure § 2810.1 at 124 (2d ed. 1995). The Rule 59(e) standard “favors denial of motions to alter or amend a judgment.” S. Constructors Grp., Inc. v. Dynalectric Co., 2 F.3d 606, 611 (5th Cir. 1993). A motion to reconsider may not be used to relitigate matters, raise arguments, or submit evidence that could have been presented before the judgment or order was entered. 11 Wright & Miller § 2810.1 at 127-28 (footnotes omitted). “Relief . . . is also appropriate when there has been an intervening change in the controlling law.” Schiller v. Physicians Res. Grp. Inc., 342 F.3d 563, 567(5th Cir. 2003); accord Arceneaux v. State Farm Fire & Cas. Co., No. 07-7701, 2008 WL 2067044, at *1 (E.D. La. May 14, 2008) (“To obtain relief under Rule 59(e), the movant must (1) show that its motion is necessary to correct a manifest error of law or fact, (2) present newly discovered or previously unavailable evidence, (3) show that its motion is necessary to prevent manifest injustice, or (4) show that its motion is justified by an intervening change in the controlling law.”) (citation omitted).

         B. The Legal Standard to Strike Testimony of Witnesses with Specialized Knowledge

         Federal Rule of Evidence 702 provides that a witness who is qualified by knowledge, skill, experience, training, or education may ...

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