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Cincinnati Ins. Co. v. Flanders Elec. Motor Serv., Inc.

Citation: 28 ELR 20339
No. 96-2778, 131 F.3d 625/(7th Cir., 12/04/1997)

The court holds that a company that is a potentially responsible party under the Comprehensive Environmental Response, Compensation, and Liability Act is not entitled to relief from a final judgment that conflicts with a later state supreme court decision. After the Seventh Circuit rendered a final decision in the original case holding that the phrase "sudden and accidental" in the company's insurance policy was clear and unambiguous and precluded coverage of the damage alleged, the Indiana Supreme Court determined that the words "sudden and accidental" in a pollution exclusion clause were ambiguous as a matter of law and should be interpreted to mean "unexpected" and "unintended." The court first holds that the decision of the court in the original case was a valid and well-reasoned effort under Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938). Moreover, the fact that the court's prediction — and the prediction of the district court — was contrary to the conclusion later reached by the Indiana Supreme Court does not constitute an extraordinary circumstance warranting the reopening of the case to achieve a similar result.

The court next holds that the company did not make a compelling showing of hardship and unfairness sufficient to demonstrate that the district court abused its discretion in denying the company relief under Fed. R. Civ. P. 60(b)(6). Any change in the law may leave one or more parties of earlier litigation with the feeling that they have been treated unfairly, but this must be balanced with the need for finality of litigation. Absent extraordinary circumstances creating a substantial danger that the underlying judgment was unjust, it is certainly a proper use of the district court's discretion to invoke the strong policy favoring the finality of judgments.

The court also holds that the judgment was not directed at some future event and, thus, does not meet the specific requirement under Fed. R. Civ. P. 60(b)(5) that the judgment be prospective in application in order to be set aside. The judgment declared duties and obligations existing at the formation of the insurance contracts, and the contractual interpretation was not a judgment compelling or ordering either party to perform a future act. The court further holds that the judgment in question cannot meet the other requirement of Fed. R. Civ. P. 60(b)(5) that the result of the judgment in question must be no longer equitable. The proposition that the judgmentin the original case is no longer equitable cannot prevail in light of the unextraordinary nature of any resulting inequities and the strong policy favoring finality of decisions.

Counsel for Plaintiff
Karl L. Mulvaney
Bingham, Summers, Welsh & Spilman
2700 Market Tower Bldg.
10 W. Market St., Indianapolis IN 46204
(317) 635-8900

Counsel for Defendant
Bruce D. Ryder
Thompson & Coburn
One Mercantile Ctr., St. Louis MO 63101
(314) 552-6000/621-8575

Before Pell and Wood, JJ.