United States District Court, D. South Carolina, Charleston Division
PATRICK MICHAEL DUFFY, UNITED STATES DISTRICT JUDGE
matter is before the Court on Defendants Beresford Commons
Homeowners Association, Inc., Joseph Constantini, and Susan
Constantini's motion to alter or amend the Court's
Order dated September 7, 2016. (ECF Nos. 33 & 30). For
the reasons stated herein, the HOA's motion is denied.
declaratory judgment action arises out of a construction
defect lawsuit brought by the HOA in state court against
Portrait Homes and its subcontractors, including Superior
Solution, LLC. Nationwide seeks a declaratory judgment that
it has no duty to defend or indemnify Superior or Peniel
Construction Group, LLC, in that underlying
litigation. Superior and Peniel have not appeared in
this case, so the clerk entered default against Superior on
July 11, 2016, and against Peniel on August 10, 2016.
Nationwide filed motions for default judgment against both
Superior and Peniel on August 10. The HOA filed a motion to
set aside the entries of default on August 10, and it
supplemented that motion with a memorandum the following day.
The Court issued an Order granting Nationwide's motions
and denying the HOA's motion on September 7. The HOA
filed the instant motion to alter or amend pursuant to Rule
59(e) of the Federal Rules of Civil Procedure on September
16, and Nationwide responded on September 30. Accordingly,
these matters are now ripe for consideration.
bases its Motion on Rule 59(e) of the Federal Rules of Civil
Procedure. However, because the prior Order was an
interlocutory order,  the HOA's motion is more appropriately
considered in the context of “the [C]ourt's
inherent power to reconsider and revise any interlocutory
order, as recognized by Rule 54(b).” Jensen v.
Conrad, 570 F.Supp. 91, 103 (D.S.C. 1983); see
Fed. R. Civ. P. 54(b) (“[A]ny order or other decision,
however designated, that adjudicates fewer than all the
claims . . . may be revised at any time before the entry of a
judgment adjudicating all the claims . . . .”).
Accordingly, the Court construes the Motion as one brought
under Rule 54(b).
interlocutory order is subject to reconsideration at any time
prior to the entry of a final judgment.”
Fayetteville Inv'rs v. Commercial Builders,
Inc., 936 F.2d 1462, 1469 (4th Cir. 1991); see also
See Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 12 (1983) (indicating that decision whether to
modify an interlocutory order is within district court's
discretion). Although the precise standard governing motions
to reconsider an interlocutory order is unclear, the Fourth
Circuit has stated that Rule 54(b) motions are “not
subject to the strict standards applicable to motions for
reconsideration of a final judgment.” Am. Canoe
Ass'n v. Murphy Farms, Inc., 326 F.3d 505, 514 (4th
Cir. 2003). Nevertheless, district courts in the Fourth
Circuit generally look to Rule 59(e)'s standards for
guidance. See, e.g., Joe Hand
Promotions, Inc., 2012 WL 6210334, at *2; Ruffin v.
Entm't of E. Panhandle, No. 3:11-CV-19, 2012 WL
1435674, at *3 (N.D. W.Va. Apr. 25, 2012); R.E. Goodson
Constr. Co. v. Int'l Paper Co., No.
4:02-cv-4184-RBH, 2006 WL 1677136, at *1 (D.S.C. June 14,
2006); Akeva L.L.C. v. Adidas Am., Inc., 385
F.Supp.2d 559, 565-66 (M.D. N.C. 2005). Therefore, a motion
to reconsider an interlocutory order may be granted for the
following reasons: “(1) to accommodate an intervening
change in controlling law; (2) to account for new evidence
not [previously] available . . .; or (3) to correct a clear
error of law or prevent manifest injustice.” Pac.
Ins. Co. v. Am. Nat'l Fire Ins. Co., 148 F.3d 396,
403 (4th Cir. 1998); see also Beyond Sys., Inc. v. Kraft
Foods, Inc., No. PJM-08-409, 2010 WL 3059344, at *2 (D.
Md. Aug. 4, 2010) (stating these standards “are not
applied with the same force when analyzing an interlocutory
order” (citation omitted)). A motion for
reconsideration is not, however, an opportunity to relitigate
issues already ruled upon simply because a party is
dissatisfied with the outcome. Joe Hand Promotions,
2012 WL 6210334, at *2 (citing R.E. Goodson Constr.
Co., 2006 WL 1677136, at *1). Further, such a motion may
not be used to raise arguments that could have been addressed
or presented previously. See Exxon Shipping Co. v.
Baker, 554 U.S. 471, 485 n.5 (2008); City of
Charleston v. Hotels.com, LP, 586 F.Supp.2d 538, 541
(D.S.C. 2008) (citing Pac. Ins. Co., 148 F.3d at
prior Order, the Court held that the HOA's failure to
demonstrate a meritorious defense was sufficient reason to
deny the HOA's motion to set aside the entries of
default. For that same reason, the Court granted
Nationwide's motions for default judgments against
Superior and Peniel. The HOA advances three arguments in
support of its motion to alter or amend. First, the HOA
asserts that the Court should have concluded that the
HOA's assertion of first-party claims against Nationwide
constituted a meritorious defense. Second, the HOA argues
that it did not have sufficient time to respond to
Nationwide's motions for default judgments. Finally, the
HOA states that the sixth amended complaint from the
underlying litigation was attached as an exhibit to
Nationwide's complaint in this action. The HOA contends
that the underlying complaint demonstrates that Superior was
covered for the damage its work allegedly caused. As a
result, the HOA states, the facts of the underlying case
remain in dispute and should be presented to the Court before
it makes a coverage determination-necessitating that the
Court grant its motion to alter or amend.
Court first addresses the issue of inadequate time. Although
the HOA rightly points out that timeliness is a factor the
Court must consider in determining whether to lift the entry
of default, nothing prevented the HOA from seeking additional
time to respond to Nationwide's motions for default
judgments. The HOA states that the Court ruled on
Nationwide's motion for entry of default almost
simultaneously, thereby justifying its belief that it needed
to file a rapid response. However, entry of default, governed
by Rule 55(a) of the Federal Rules of Civil Procedure, is a
ministerial function the clerk performs when Rule 55(a)'s
criteria are met. Because those criteria were met in this
case, the clerk entered the defaults. In contrast, pursuant
to Rule 55(b)(2), a default judgment concerning insurance
coverage must be entered by the Court. See Fed. R.
Civ. P. 55(b)(2). Accordingly, the HOA could have sought an
extension from the Court that, if granted, would have
assuaged its fear that a default judgment would be entered
before it responded to Nationwide's motion. Thus, the
extreme urgency apparently felt by the HOA was entirely of
its own creation.
Court addresses the HOA's remaining arguments together.
At this juncture, the Court notes that a Rule 59(e) motion is
not the time to advance arguments that could have been made
before the judgment was entered. See Hill v.
Braxton, 277 F.3d 701, 708 (4th Cir. 2002).
Additionally, “[a] meritorious defense requires
‘a proffer of evidence which would permit a finding for
the defaulting party or which would establish a valid
counterclaim.'” Vick v. Wong, 263 F.R.D.
325, 329 (E.D. Va. 2009) (quoting Augusta Fiberglass
Coatings, Inc. v. Fodor Contracting Corp., 843 F.2d 808,
811-12 (4th Cir. 1988)).
emphasizes that it received first-party claims as a result of
a settlement, and that those claims alone demonstrate that
the HOA has a meritorious defense that warrants
reconsideration. However, the HOA does not specify what
claims it has received, nor does it explain who assigned away
those claims. Additionally, the HOA notes that Nationwide
attached the underlying complaint to its complaint in this
action, and it argues that the underlying complaint
constitutes sufficient evidence of a meritorious defense. The
Court disagrees on both counts.
the HOA's brief mention of its first-party claim in the
procedural history portion of its motion to set aside entry
of default is an insufficient proffer of evidence
demonstrating a meritorious defense. The HOA points to the
Court's failure to consider those first-party claims as a
reason to alter or amend the prior Order. However, the HOA
simply mentions the first-party claim in the instant motion,
and provides no further explanation.
Nationwide's attachment of the underlying complaint to
its complaint in this action also does not satisfy the
proffer requirement. In order to establish that there is a
meritorious defense on the issue of coverage, the underlying
facts must be examined in conjunction with the provisions of
the policy. See Penn. Nat'l Mut. Cas. Ins. Co. v.
Lewis,105 F.Supp.3d 573, 583 (D.S.C. 2015). Here, the
HOA failed to do any such analysis in its motion to set aside
the entry of default. As discussed above, the HOA could have
requested additional time to prepare its motion. It chose not
to. While the HOA's motion to alter or amend does examine
some of the underlying facts, it fails to apply them to the
policy provisions in any way. Most critically, matters that
could have ...