United States District Court, D. South Carolina, Charleston Division
C. NORTON, UNITED STATES DISTRICT JUDGE.
matter is before the court on defendant Kiawah Island
Utility, Inc.'s (“KIU”) motion to reconsider,
ECF No. 50, and KIU's motion for certificate of
appealability, ECF No. 51. For the reasons set forth below,
the court denies the motion to reconsider and denies the
motion for certificate of appealability.
case arises out of the construction of a pipeline running
from Kiawah Island to Johns Island (“the
Project”). KIU, the owner of the Project, entered into
a contract (“the Contract”) with plaintiff Mears
Group, Inc. (“Mears”) to construct the pipeline.
The Project consisted of using horizontal directional
drilling to bore an underground hole and then pulling pipe
through the hole. During this process, the pipe got stuck in
the borehole, and Mears's work was lost. As a result,
Mears had to drill a second borehole and install a new
section of pipeline.
presented a claim for the lost work to KIU to be submitted to
KIU's builder's risk insurance carrier. Mears
contends that the Contract required KIU to obtain
builder's risk insurance and name Mears as a loss payee.
KIU disputes whether the Contract required KIU to provide
builder's risk insurance for the Project, but regardless,
KIU submitted Mears's claim under a property insurance
policy held by KIU's parent, SouthWest Water Company.
That policy is supplied by Westport Insurance Corporation
(“Westport”). KIU also demanded that Mears submit
a claim to its own builder's risk insurance carrier,
which KIU claims that Mears still has not done. Westport
denied the claim. Mears alleges that as a result of KIU's
failure to procure builder's risk insurance, Mears was
not provided the builder's risk insurance coverage it
bargained for and has now suffered over $7 million of
damages, the amount of money it cost Mears to re-drill the
second borehole and obtain additional pipe.
dispute in this case centers around the Contract itself. The
parties used a standard Engineers Joint Contract Documents
Committee (“EJCDC”) form to draft the Contract.
The Contract consists of, among other documents, (1) General
Conditions, (2) Supplementary Conditions, and (3) Special
Conditions. The court's March 8, 2019 order (“the
Order”) provides greater detail on the contractual
clauses at issue here, but for the purposes of this order,
the court will briefly review the relevant clauses. The first
is Article 5.06 in the General Conditions, which requires KIU
to “purchase and maintain property insurance upon the
Work at the Site in the amount of the full replacement cost
thereof.” ECF No. 18-1 at 73. Article 5.06 further
requires that “[t]his insurance shall . . . be written
on a Builder's Risk ‘all-risk' policy form that
shall at least include insurance for physical loss or damage
to the Work . . . .” Id. Article 5.07 of the
General Conditions then states that “Owner and
Contractor intend that all policies purchased in accordance
with Paragraph 5.06 will protect Owner, Contractor . . . and
will provide primary coverage for all losses and damages
caused by the perils or causes of loss covered
thereby.” Id. at 74.
only Special Condition discussed by the parties, SC-7,
requires Mears to obtain certain insurance. The portions
relevant here state:
SC-7 CONTRACTOR'S AND SUBCONTRACTOR'S INSURANCE: The
Contractor shall not commence work under this contract until
obtaining all the insurance required under this paragraph and
such insurance has been accepted by the Owner, nor shall the
Contractor allow any Subcontractor to commence work on a
subcontract until the insurance required of the Subcontractor
has been so obtained and accepted.
a. Builder's Risk Insurance (Fire and Extended Coverage):
The Contractor shall have adequate fire and standard extended
coverage, with a company or companies acceptable to the
Owner, in force on the project. The provisions with respect
to Builder's Risk Insurance shall in no way relieve the
Contractor of its obligation of completing the work covered
by the Contract.
Id. at 118. Finally, as a general matter, the
Contract indicates that it “is to be governed by the
law of the state in which the Project is located, ”
which is South Carolina. Id. at 116.
filed the instant suit on September 8, 2017 alleging KIU
breached the Contract by failing to obtain builder's risk
insurance and seeking a declaratory judgment that KIU failed
to comply with its insurance obligations. Mears subsequently
filed its motion for partial summary judgment on its claims
for declaratory judgment and breach of contract on August 3,
2018. ECF No. 18. KIU responded to the motion on August 31,
2018, ECF No. 21, to which Mears replied on September 14,
2018, ECF No. 26. KIU separately filed a cross-motion for
summary judgment on September 10, 2018. ECF No. 25. Mears
responded to KIU's cross-motion on September 24, 2018,
ECF No. 33, and KIU replied on October 4, 2018, ECF No. 36.
The court held a hearing on the summary judgment motions on
January 16, 2019.
court denied KIU's cross-motion for summary judgment and
granted in part and denied in part Mears's motion for
summary judgment. The Order denied Mears's motion as to
the breach of contract claim but granted the motion as to the
declaratory judgment claim, holding that the Contract
unambiguously required KIU to obtain primary builder's
risk insurance. As a result, KIU filed a motion for
reconsideration of the Order, ECF No. 50, and a motion for
certificate of appealability of the Order, ECF No. 51, on
March 18, 2019. Mears responded to both on April 1, 2019. ECF
Nos. 52-53. KIU did not file a reply in support of either
motion. Therefore, the motions are ripe for review.
Motion to Reconsider
54(b) states, in relevant part:
[A]ny 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 a judgment adjudicating all
the claims and all the parties' rights and liabilities.
motion brought under Rule 54(b) is judged by similar
standards as a motion brought under Rule 59(e), which may
only be granted for the following reasons: “(1) to
accommodate an intervening change in controlling law; (2) to
account for new evidence not available at trial; or (3) to
correct a clear error of law or prevent manifest
injustice.” Grayson Consulting, Inc. v.
Cathcart, 2014 WL 587756, at *1 (D.S.C. Feb. 14, 2014)
(quoting Pac. Ins. Co. v. Am. Nat'l Fire Ins.
Co., 148 F.3d 396, 403 (4th Cir. 1998)); Slep-Tone
Entm't Corp. v. Garner, 2011 WL 6370364, at *1 (W.D.
N.C. Dec. 20, 2011). The Fourth Circuit has “noted on
more than one occasion, ‘a prior decision does not
qualify for the third exception by being just maybe or
probably wrong; it must strike [the court] as wrong with the
force of a five-week-old, unrefrigerated dead fish. It must
be dead wrong.'” U.S. Tobacco Coop. Inc. v. Big
S. Wholesale of Virginia, LLC, 899 F.3d 236, 258 (4th
Cir. 2018) (quoting TFWS, Inc. v. Franchot, 572 F.3d
186, 194 (4th Cir. 2009)).
Certification of Interlocutory Appeal
U.S.C. § ]1292(b) provides a mechanism by which
litigants can bring an immediate appeal of a non-final order
upon the consent of both the district court and the court of
appeals.” Lynn v. Monarch Recovery Mgmt.,
Inc., 953 F.Supp.2d 612, 623 (D. Md. 2013) (quoting
In re Cement Antitrust Litig., 673 F.2d 1020, 1026
(9th Cir. 1982)). Pursuant to 28 U.S.C. § 1292(b), an
interlocutory appeal may be sought for an order that is not
otherwise appealable when the district court is “of the
opinion that such order involves a controlling question of
law as to which there is substantial ground for difference of
opinion and that an immediate appeal from the order may
materially advance the ultimate termination of the
litigation.” As such, a district court may certify an
order for interlocutory appeal when: “1) such order
involves a controlling question of law, 2) as to which there
is substantial ground for difference of opinion, and 3) an
immediate appeal from that order may materially advance the
ultimate termination of the litigation.” Mun.
Ass'n of S.C. v. Serv. Ins. Co., Inc., 2011 WL
13253448, at *3 (D.S.C. Sept. 21, 2011) (internal quotations
omitted). All three requirements must be met. Id.
addition, Rule 54(b) of the Federal Rules of Civil Procedure
permits a district court to “direct entry of a final
judgment as to one or more, but fewer that all, claims”
when an action involves multiple claims as long as “the
court expressly determines that there is no just reason for
delay.” “The burden is on the party endeavoring
to obtain Rule 54(b) certification to demonstrate that the