PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

PACIFIC INSURANCE COMPANY,
Plaintiff-Appellee,

v.

AMERICAN NATIONAL FIRE INSURANCE
                                                                      No. 96-2468
COMPANY,
Defendant-Appellant,

RAIL LINK, INCORPORATED,
Defendant-Appellee.

Appeal from the United States District Court
for the Eastern District of Virginia, at Richmond.
Robert R. Merhige, Jr., Senior District Judge.
(CA-96-22)

Argued: May 7, 1998

Decided: July 7, 1998

Before ERVIN and HAMILTON, Circuit Judges, and BLAKE,
United States District Judge for the District of Maryland,
sitting by designation.

_________________________________________________________________

Affirmed by published opinion. Judge Hamilton wrote the opinion, in
which Judge Ervin and Judge Blake joined.

_________________________________________________________________

COUNSEL

ARGUED: William Henry Shewmake, SHEWMAKE, BARONIAN
& PARKINSON, Richmond, Virginia, for Appellant. Scott L. Carey,
BATES, MECKLER, BULGER & TILSON, Chicago, Illinois, for
Appellee Pacific Insurance; Gary Joseph Spahn, MAYS & VALEN-
TINE, L.L.P., Richmond, Virginia, for Appellee Rail Link. ON
BRIEF: Samuel Baronian, Jr., SHEWMAKE, BARONIAN & PAR-
KINSON, Richmond, Virginia, for Appellant. Monica T. Sullivan,
BATES, MECKLER, BULGER & TILSON, Chicago, Illinois; John
H. O'Brion, Jr., COWAN & OWEN, P.C., Richmond, Virginia, for
Appellee Pacific Insurance. Robert A. Angle, MAYS & VALEN-
TINE, L.L.P., Richmond, Virginia, for Appellee Rail Link.

_________________________________________________________________

OPINION

HAMILTON, Circuit Judge:

American National Fire Insurance Company (American National)
appeals the district court's entry of judgment in favor of Pacific Insur-
ance Company (Pacific) in this dispute involving which company's
insurance policy, issued to the insured, Rail Link, Inc. (Rail Link),
covers the settled claim of Charles Womack, a former employee of
Rail Link. Because we hold that the district court did not abuse its dis-
cretion in reversing its previous entry of judgment in American
National's favor and properly granted judgment on the pleadings to
Pacific, we affirm.

I.

Rail Link is a railroad company that provides switching operations
at various manufacturing plants. Rail Link also provides other railroad
services to some of the companies it serves, including leasing and
maintaining railroad engines, maintaining and repairing railroad
tracks, and cleaning boxcars. In addition to providing contractual
switching services for various companies and manufacturers, Rail
Link is also the parent of two wholly-owned subsidiary corporations
that operate "shortline" railroads. These subsidiaries operate short dis-
tance railroad connections in North Carolina and Virginia. Rail Link's
president, James Benz, and its general manager, William Jasper, are
the sole officers and directors of Rail Link's shortline subsidiaries.

                    2
At all times relevant to this litigation, Rail Link maintained three
liability insurance policies. First, Rail Link purchased a $500,000 lia-
bility policy from the Hartford Insurance Company (the Hartford Pol-
icy). Second, Rail Link purchased a $5 million comprehensive
railroad liability policy (the Pacific Policy) from Pacific. Third, Rail
Link purchased a $4 million excess liability policy (the American
National Policy) from American National.

Several provisions of the Pacific Policy and the American National
Policy are pertinent to this appeal. First, the Pacific Policy contains
an exclusion, known as Exclusion F, which states:

          This policy does not apply to:

          ...

          F. Any liability imposed on the Insured under any of the
          following:

          1. the Employees' Retirement Income Security Act
          (ERISA) of 1974 as now or hereafter amended;

          2. any uninsured motorists, underinsured motorists,
          automobile no-fault or first party personal injury law;

          3. any workers compensation, employers liability (but
          this does not apply to the Federal Employers' Liability
          Act; see Employers Liability definition), occupational
          disease, unemployment compensation, retirement or
          disability benefits law or statute; or

          4. any law similar to 1., 2., or 3. above.

(J.A. 49). The Pacific Policy also defines "Employer's Liability" as
"liability imposed on the Insured for Bodily Injury sustained by
employees of the Insured in the course of their employment under the
Federal Employers Liability Act, U.S. Code (1970) Title 45, Chapter
2, Sections 51-60 and as amended." (J.A. 63).

                     3
With respect to the American National Policy, it specifically incor-
porates certain scheduled underlying policies, including the Hartford
Policy. The Hartford Policy and, therefore, the American National
Policy exclude claims brought pursuant to the Federal Employer's
Liability Act (FELA), 45 U.S.C. §§ 51-60, providing that "[t]his
insurance does not cover: . . . bodily injury to any person in work sub-
ject to the Federal Employer's Liability Act . . ., any other federal
laws obligating an employer to pay damages to an employee due to
bodily injury arising out of or in the course of employment, or any
amendments to those laws." (J.A. 114). The American National Pol-
icy also provides that American National is not required "to assume
charge of the settlement or defense of any claim, suit or proceeding
against [the insured]." (J.A. 76).

On January 14, 1995, Womack slipped from a railcar while per-
forming switching operations and suffered catastrophic injuries,
including multiple amputations. The injury occurred at a Lubrizol,
Inc. plant in Texas, and Womack subsequently filed suit against Rail
Link and others in a diversity action in the United States District
Court for the Southern District of Texas under the Texas Railroad
Liability Act (TRLA), Tex. Rev. Civ. Stat., Art. 6432-6443 (the
Underlying Action). Womack sought $52 million in damages under
the TRLA; Womack did not assert a claim under FELA. Rail Link
subsequently reported the claim to its insurers, including Pacific and
American National. Because the Hartford Policy was the primary pol-
icy, the defense of the Underlying Action was not tendered to either
Pacific or American National.

Rail Link and its insurers then attempted to negotiate a settlement
of Womack's claim. During the course of the settlement negotiations,
however, a dispute arose over which insurer's policy offered coverage
for the Underlying Action. As a result of this dispute, on January 19,
1996, Pacific filed this diversity action in the United States District
Court for the Eastern District of Virginia against Rail Link and Amer-
ican National, seeking a declaratory judgment as to which company's
policy covered the Womack accident. In its complaint, Pacific alleged
that it was not liable for covering the Underlying Action because it
did not provide any coverage for any accident arising under the
TRLA. American National filed an answer, maintaining that its policy
also did not provide coverage for the Womack incident.

                    4
In February 1996, the district court held a settlement conference in
which all of the parties to the Underlying Action participated, includ-
ing Womack's attorneys. Ultimately, the parties agreed to settle the
Underlying Action for $4.3 million. The entire employer's liability
limit of $500,000 under the Hartford policy was paid in connection
with the settlement, while American National and Pacific each agreed
to pay $1.86 million with a reservation of rights against the other to
litigate which insurer's policy covered the Underlying Action. The
terms of the settlement were recorded before the district court by a
court reporter, and in memorializing the reservation of rights agree-
ment between Pacific and American National, counsel for American
National stated:

           The payments by Pacific and American National Fire
          Insurance Company are made with the understanding and
          agreement between them that Pacific and American
          National agree that they are reserving their rights against
          each other and agree to litigate post the settlement in the
          Womack case as between themselves, that they will litigate
          the various issues of coverage under their respective poli-
          cies.

           Secondly, they agree that with respect to the applicability
          of exclusion under Pacific's policy, that issue would be pre-
          served, and if determined that that exclusion applies to Rail
          Link, Inc. for coverage for the Womack action in settlement,
          American National will be obligated to reimburse Pacific.

           Thirdly, the above-stated stipulation with regard to the
          exclusion would not apply if somehow American National
          was determined not to owe coverage to Rail Link for the
          Womack action in settlement.

           In the event that Pacific and American National were
          determined to both provide coverage to Rail Link for the
          Womack action and settlement, the issue of priority as
          between their coverage is agreed to be decided and agreed
          to effect a reimbursement to carry out the final judicial
          determination of that issue.

                    5
(J.A. 181-82).

After the settlement of the Underlying Action, Pacific amended its
complaint to incorporate the terms of the settlement agreement. In
response to Pacific's amended complaint, American National filed an
amended answer, a counterclaim against Pacific, and a cross-claim
against Rail Link, seeking a declaration that American National had
no obligation to indemnify Rail Link for liability in the Underlying
Action. Because Pacific and American National agreed not to seek
reimbursement from Rail Link, Rail Link remained only a nominal
party to the declaratory judgment action and had no active role in the
litigation.

On July 23, 1996, Pacific moved for judgment on the pleadings
pursuant to Federal Rule of Civil Procedure 12(c). In its motion and
memorandum in support of its motion, Pacific argued that the Pacific
Policy provided no coverage for the Underlying Action, while the
American National Policy did provide coverage, because the Underly-
ing Action was brought under the TRLA, rather than FELA, and the
Pacific Policy excluded all employers' liability claims except those
asserted under FELA. American National opposed Pacific's motion
and argued that, because of an ambiguity in the Pacific Policy, Pacific
was liable for Womack's TRLA claims asserted in the Underlying
Action. American National did not argue that the Underlying Action
could have been or should have been brought under FELA.

On August 21, 1996, the district court granted Pacific's motion for
judgment on the pleadings as to Count I of the complaint, agreeing
with Pacific that its policy excluded coverage because the Underlying
Action was brought under the TRLA. On September 13, 1996, the
district court held a hearing to clarify whether its August 21 order
granting Pacific's motion for judgment on the pleadings disposed of
the case. During that hearing, for the first time, American National
argued that FELA preempted Womack's claims under the TRLA,
making the Underlying Action a FELA case, not a TRLA case, and
rendering the Pacific Policy applicable and not the American National
Policy.1
_________________________________________________________________
1 Although American National briefly mentioned the applicability of
FELA at a hearing held on August 15, 1996 concerning Pacific's motion

                    6
On September 20, 1996, the district court entered an order holding
that its August 21 order granting Pacific judgment on the pleadings
as to Count I of the complaint mooted all other counts of the com-
plaint. The district court therefore dismissed the action.

In response to the district court's order, American National filed a
notice of appeal. In its notice of appeal, American National identified
the district court's failure to rule on the FELA question as one of the
appealable issues.

On October 3, 1996, Pacific filed a motion to amend the judgment
to request monetary damages consistent with the declaratory relief,
pursuant to Federal Rule of Civil Procedure 59(e). Specifically,
Pacific requested judgment in its favor in the amount of
$1,861,331.38, plus pre-judgment interest and allowable costs, repre-
senting the amount that American National had agreed to reimburse
Pacific once the coverage issues were resolved in Pacific's favor.

In response to Pacific's motion to amend the judgment, American
National argued that an award of damages to Pacific was inappropri-
ate because Pacific had not established that FELA did not preempt
Womack's TRLA claims, such that Pacific would be liable for cover-
age. American National asserted that Pacific's avenue for relief was
appeal and requested that Pacific's motion be denied. Alternatively,
American National requested that a trial on the merits on the applica-
bility of FELA to the Underlying Action be held by the district court.

In support of its opposition to Pacific's motion to amend the judg-
ment, American National filed the affidavit of its director of commer-
cial liability claims, James Danehy, who handled the Womack claim
on behalf of American National. In his affidavit, Danehy stated that
because American National did not approve of the way Rail Link was
handling the defense of the Womack claim, he agreed, on behalf of
American National, to enter into the settlement agreement on Febru-
ary 15, 1996. According to Danehy, under the terms of the agreement
_________________________________________________________________
for judgment on the pleadings, American National did not argue that
FELA preempted Womack's claims under the TRLA at that hearing or
at any time prior to the district court's entry of judgment on the pleadings
in favor of Pacific.

                    7
and in consideration for American National's payment of $1.86 mil-
lion, the parties agreed that the insurance carriers could litigate all
legal and factual issues concerning the insurance coverage, including
whether FELA applied to the Underlying Action and was therefore a
defense to coverage under the American National Policy. Danehy
stated further that this total reservation was important to American
National because it permitted American National to raise and pursue
defenses and issues that Rail Link and Hartford had no interest and/or
incentive in pursuing.

On December 16, 1996, the district court entered a memorandum
opinion and order denying Pacific's motion to amend the judgment
and ordering the parties to brief and argue the applicability of FELA
to the Underlying Action. In its memorandum opinion, the district
court stated that it had not fully settled the issue of liability when it
granted Pacific's motion for judgment on the pleadings and that if
FELA applied to preempt Womack's claim under the TRLA, the
American National Policy would not cover the liability, while the
Pacific Policy would. The district court stated further that after exam-
ining the language of the settlement conference and considering the
representations that the parties made during the various hearings
before the district court, it found that American National and Pacific
left all issues of coverage open, including whether FELA preempted
Womack's claim. The district court concluded that it would deny
Pacific's motion to amend the judgment and asked the parties to
address the FELA coverage issue in written briefs.

Pacific and American National subsequently filed briefs on the
issue, while Rail Link responded only to discovery requests pro-
pounded by American National, in which Rail Link denied that it was
subject to FELA or that it had maintained its subsidiaries in an effort
to circumvent FELA.2 Without hearing oral argument on the matter,
_________________________________________________________________
2 In order to establish that FELA preempted Womack's claims under
the TRLA, American National had to establish that Rail Link could be
held liable under FELA as a common carrier by railroad through the
actions of its subsidiaries. See 45 U.S.C.§ 51. To this end, American
National argued that the shortline subsidiaries were the "alter-ego" of
Rail Link, such that their acts could be imputed to Rail Link, and that
Rail Link established the shortline subsidiaries in an effort to circumvent
FELA.

                     8
on July 30, 1997, the district court entered a memorandum opinion
and order in which it held that FELA applied to preempt Womack's
claim under the TRLA because Rail Link operated as a common car-
rier by railroad, engaged in interstate commerce, and Womack's
duties touched upon interstate commerce. With respect to the applica-
bility of FELA to Rail Link's operations, the district court found that
the activities of Rail Link's shortline subsidiaries could be imputed to
Rail Link because it owned and controlled the subsidiaries completely
and, therefore, Rail Link could be considered to be a common carrier.
The district court found further that Rail Link created the subsidiaries
in an effort to circumvent FELA, conduct prohibited by FELA.
Finally, the district court found that Womack's duties affected inter-
state commerce in that the Lubrizol plant, where Womack was work-
ing, received products from other states and shipped them out of the
state, such that Womack's duties touched upon interstate commerce.
The district court concluded that FELA preempted Womack's TRLA
claims in the Underlying Action and that because the Pacific Policy
included coverage for claims asserted under the FELA, Pacific was
liable in the amount of $1.86 million to American National.

On August 11, 1997, American National moved the district court
for pre-judgment interest. On August 13, 1997, Pacific filed a motion
pursuant to Federal Rule of Civil Procedure 59(e) to reconsider the
district court's July 30 order granting judgment in American Nation-
al's favor. In its Rule 59(e) motion, Pacific argued that the district
court should never have considered the FELA issue because the dis-
trict court was not permitted to look beyond the pleadings in the
Underlying Action to decide which policy covered the Womack inci-
dent and, since Womack asserted claims only under the TRLA, Rail
Link was only subject to liability under the TRLA when the claim
was settled. Although only a nominal party, on August 11, 1997, Rail
Link also filed a motion to alter or amend the judgment under Rule
59(e). In its motion, Rail Link argued that the district court's decision
was unsupported by the facts and the evidence and requested that the
district court exercise its discretion to vacate its order to enable the
parties to fully develop the factual record on the applicability of
FELA to Rail Link's operations.

On November 10, 1997, the district court entered another memo-
randum and order granting Pacific's motion to reverse its earlier order

                     9
of July 30, 1997 and entering judgment in favor of Pacific in the
amount of $1.86 million plus pre-judgment and post-judgment inter-
est. In its opinion, the district court noted, first, that one of the
grounds on which a Rule 59(e) motion could be granted was to cor-
rect a clear error of law or to prevent a manifest injustice. The district
court then held that it had made such a clear error of law, one which
would result in manifest injustice, when it considered and decided the
applicability of FELA to Womack's claim notwithstanding the judg-
ment already entered in Pacific's favor in September 1996. The dis-
trict court noted that the only motion before the court at the time it
decided to rule on the FELA issue was Pacific's motion to amend the
judgment to include a monetary award. The district court then held
that it should not have considered and decided the applicability of
FELA to the Underlying Action because it did not have before it any
pleading or motion upon which relief for American National could
have been granted. The district court also held that it had erred in ren-
dering judgment in favor of American National because in consider-
ing which company's policy covered the Underlying Action, the
district court should have confined itself to deciding whether the
claim as settled was covered by the policy, not the merit of the Under-
lying Action or the applicability of FELA to it, where the settled
claim was a claim pursued under the TRLA, not FELA. Finally, the
district court held that it had erred in holding that the parties reserved
the right to litigate the applicability of FELA to the Underlying
Action in the settlement agreement.

Therefore, the district court reversed its July 1997 judgment in
favor of American National and entered judgment in favor of Pacific
in the amount of $1.86 million plus pre- and post-judgment interest.
In addition, the district court held that Rail Link's motion to alter or
amend the judgment was moot, as was American National's motion
to amend the judgment. The district court then dismissed the action.

On December 5, 1997, American National filed an amended notice
of appeal. On appeal, American National argues: (1) that the district
court erred in granting Pacific's Rule 59(e) motion to alter or amend
the July 30, 1997 judgment entered in American National's favor; and
(2) that the district court erred initially when it granted Pacific's
motion for judgment on the pleadings, holding that the Pacific Policy

                     10
excluded coverage for liability imposed under the TRLA. We con-
sider each asserted error in turn.

II.

American National first argues that the district court erred in
reversing its July 30, 1997 judgment in favor of American National,
holding that it was procedurally improper for the district court to have
considered American National's FELA argument and ultimately to
have entered judgment in favor of American National in the absence
of any motion by American National requesting relief. We review a
district court's decision on a motion to alter or amend the judgment
under Rule 59(e) for abuse of discretion. See EEOC v. Lockheed Mar-
tin Corp., Aero & Naval Sys., 116 F.3d 110, 112 (4th Cir. 1997);
Collison v. Internat'l Chem. Workers Union, 34 F.3d 233, 236 (4th
Cir. 1994). A district court abuses its discretion when it fails to take
relevant factors intended to guide its discretion into account or when
it acts on the basis of "legal or factual misapprehensions" respecting
those factors. See James v. Jacobson, 6 F.3d 233, 242 (4th Cir. 1993).

Although Rule 59(e) does not itself provide a standard under which
a district court may grant a motion to alter or amend a judgment, we
have previously recognized that there are three grounds for amending
an earlier judgment: (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. See
Lockheed Martin Corp., 116 F.3d at 112; Hutchinson v. Staton, 994
F.2d 1076, 1081 (4th Cir. 1993). Thus, the rule permits a district court
to correct its own errors, "sparing the parties and the appellate courts
the burden of unnecessary appellate proceedings." Russell v. Delco
Remy Div. of Gen. Motors Corp., 51 F.3d 746, 749 (7th Cir. 1995).
Rule 59(e) motions may not be used, however, to raise arguments
which could have been raised prior to the issuance of the judgment,
nor may they be used to argue a case under a novel legal theory that
the party had the ability to address in the first instance. See Russell,
51 F.3d at 749; Concordia College Corp. v. W.R. Grace & Co., 999
F.2d 326, 330 (8th Cir. 1993); FDIC v. World Univ., Inc., 978 F.2d
10, 16 (1st Cir. 1992); Simon v. United States , 891 F.2d 1154, 1159
(5th Cir. 1990); see also In re: Reese, 91 F.3d 37, 39 (7th Cir. 1996)
("A motion under Rule 59(e) is not authorized`to enable a party to

                    11
complete presenting his case after the court has ruled against him.'")
(quoting Frietsch v. Refco, Inc., 56 F.3d 825, 828 (7th Cir. 1995)); 11
Wright et al., Federal Practice and Procedure § 2810.1, at 127-28
(2d ed. 1995) ("The Rule 59(e) motion may not be used to relitigate
old matters, or to raise arguments or present evidence that could have
been raised prior to the entry of judgment."). Similarly, if a party
relies on newly discovered evidence in its Rule 59(e) motion, the
party "must produce a `legitimate justification for not presenting' the
evidence during the earlier proceeding." Small v. Hunt, 98 F.3d 789,
798 (4th Cir. 1996) (quoting RGI, Inc. v. Unified Indus., Inc., 963
F.2d 658, 662 (4th Cir. 1992)). In general "reconsideration of a judg-
ment after its entry is an extraordinary remedy which should be used
sparingly." Wright et al., supra, § 2810.1, at 124.

In this case, the district court stated in its November 10, 1997 order
granting Pacific's second Rule 59(e) motion that it was relying on the
third ground for granting such a motion: to correct a clear error of law
or prevent manifest injustice. According to the district court, it had
clearly erred when it entered judgment in favor of American National
on July 30, 1997 because at the time it denied Pacific's first Rule
59(e) motion to amend the judgment to include a monetary award and
permitted American National to argue the applicability of FELA to
Womack's claims, there was no motion before the court requesting
such relief. The issue, then, is whether the district court abused its dis-
cretion in holding that the third basis for relief under Rule 59(e)--that
the district court had committed a clear error of law or that the judg-
ment would effect manifest injustice on the moving party--was satis-
fied. For two reasons, we do not believe that the district court abused
its discretion.

First, as noted above, at the time the district court denied Pacific's
first Rule 59(e) motion to amend the judgment in Pacific's favor to
include a monetary award on the basis that American National should
be permitted to argue the applicability of FELA to the Underlying
Action, American National had not filed any motion requesting relief
from the district court. Instead, American National had noted an
appeal from the district court's judgment in Pacific's favor and took
the position in its brief in opposition to Pacific's motion to amend that
the appropriate forum for Pacific's arguments was this court on
appeal, not the district court. While American National alternatively

                     12
argued in its opposition that it was entitled to a jury trial on the appli-
cability of FELA to the Underlying Action, it never filed a motion
requesting that relief. In granting American National relief, notwith-
standing the absence of a motion, the district court, in effect, treated
American National's opposition to Pacific's motion to amend as a
Rule 59(e) motion to alter or amend the judgment filed by American
National. Even if a district court could consider an opposition to a
Rule 59(e) motion to be a formal request for relief under Rule 59(e),
American National's opposition was not filed within ten days of the
September 20, 1996 order of judgment in favor of Pacific and, there-
fore, was not timely filed for purposes of the rule. See Fed. R. Civ.
P. 59(e) ("Any motion to alter or amend a judgment shall be filed no
later than 10 days after entry of the judgment.").

Second, the argument raised by American National relating to the
applicability of FELA to the Underlying Action could not be appro-
priately considered in the context of a motion to alter or amend the
judgment because it was not timely raised. As set forth above, Rule
59(e) may not be used to raise new arguments or present novel legal
theories that could have been raised prior to judgment. Throughout
the pendency of the action in the district court prior to judgment,
American National defended Pacific's action on the basis that the
Pacific Policy, in fact, afforded coverage of Womack's TRLA claims.
Despite Pacific's repeated statements acknowledging that the Pacific
Policy extended coverage to claims asserted under FELA, but not to
any other employer liability claims, at no time prior to the district
court's grant of judgment on the pleadings to Pacific on Count I of
the complaint did American National assert that FELA applied to the
Underlying Action. Indeed, the first time American National raised
the FELA issue at all was during a hearing on a motion to clarify the
district court's August 21, 1996 order granting Pacific's motion for
judgment on the pleadings. Although this hearing occurred prior to
the district court's September 20, 1996 dismissal of the action, it
occurred after the district court entered judgment in favor of Pacific
on Count I of the complaint, in which Pacific requested a declaration
that the American National Policy covered the Underlying Action, not
the Pacific Policy. Thus, all of the issues of coverage had effectively
been resolved, as the court subsequently declared in its September
1996 order of dismissal. In addition, American National failed to file
any written document containing its FELA argument until after the

                     13
district court entered final judgment in favor of Pacific on September
20, 1996.

Finally, we note that in opposing Pacific's motion to amend the
judgment to include a monetary award, American National submitted
and relied upon the affidavit of James Danehy, its director of com-
mercial liability claims. In his affidavit, Danehy stated that the parties
agreed in the settlement agreement that the insurance carriers could
litigate all legal and factual issues concerning the insurance coverage,
including whether FELA applied to the Underlying Action. As set
forth above, however, a party may not seek to alter a previously-
entered judgment by relying on new evidence, unless the party "pro-
duce[s] a `legitimate justification for not presenting' the evidence dur-
ing the earlier proceeding." Small, 98 F.3d at 798 (citation omitted).
Since American National did not produce a "legitimate justification"
for failing to submit the Danehy affidavit earlier, this evidence could
not provide the basis for the district court's decision to reconsider its
earlier judgment in favor of Pacific.

In light of the absence of a motion by American National request-
ing relief under Rule 59(e) and the overwhelming authority that a
party should not be permitted to raise new arguments or legal theories
of liability on a motion to alter or amend the judgment under Rule
59(e), the district court did not abuse its discretion in subsequently
holding that its decision to permit American National to raise the
FELA issue in the context of its opposition to Pacific's motion to
amend, after all issues of coverage had been considered and decided
by the district court, was clear error. Accordingly, the district court
did not abuse its discretion in granting Pacific's motion to alter or
amend the district court's July 30, 1997 judgment in favor of Ameri-
can National.3
_________________________________________________________________
3 Because we affirm the district court's grant of Pacific's Rule 59(e)
motion to alter or amend the July 30, 1997 judgment in American
National's favor on the basis that the district court did not abuse its dis-
cretion in holding that it had clearly erred as a matter of law in rendering
judgment in American National's favor, we need not address the district
court's other justifications for granting Pacific's motion: (1) that it erred
in entering judgment in favor of American National because the only rel-
evant issue was whether Womack's claims against Rail Link, as settled

                     14
III.

American National also argues on appeal that the district court
erred when it held, in response to Pacific's motion for judgment on
the pleadings pursuant to Rule 12(c), that the Pacific Policy excluded
coverage for all claims brought under the TRLA. We review a district
court's decision to grant a motion for judgment on the pleadings de
novo. See Gutierrez v. Peters, 111 F.3d 1364, 1368 (7th Cir. 1997);
see also Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997)
("We review de novo the district court's dismissal of the complaint.").

In interpreting the Pacific Policy, we begin with the language of the
contract itself. Thus, "[w]here an agreement is complete on its face
and is plain and unambiguous in its terms, the court is not at liberty
to search for its meaning beyond the instrument itself. This is so
because the writing is the repository of the final agreement of the
parties."4 Lerner v. Gudelsky Co., 334 S.E.2d 579, 584 (Va. 1985);
see also Schneider v. Continental Cas. Co., 989 F.2d 728, 731 (4th
Cir. 1993) (quoting Lerner and applying plain meaning rule in inter-
pretation of insurance policy). Virginia strictly adheres to the "plain
meaning" rule, entitling the parties to rely on the express terms of the
written agreement. See Lerner, 334 S.E.2d at 584. Language in a con-
tract is ambiguous "`when it may be understood in more than one way
or when it refers to two or more things at the same time.'" Granite
State Ins. Co. v. Bottoms, 415 S.E.2d 131, 134 (Va. 1992) (citation
omitted).

As set forth above, the Pacific Policy contained an exclusion of
coverage, known as Exclusion F, as follows:

        This policy does not apply to:
_________________________________________________________________

under the TRLA, were covered under the respective policies; and (2) that
it erred in entering judgment in favor of American National because the
parties did not reserve the right to litigate the FELA preemption issue in
the Settlement Agreement.

4 All parties agree that Virginia law applies to the interpretation of the
insurance policies.

                     15
          ...

          F. Any liability imposed on the Insured under any of the
          following:

          1. the Employees' Retirement Income Security Act
          (ERISA) of 1974 as now or hereafter amended;

          2. any uninsured motorists, underinsured motorists,
          automobile no-fault or first party personal injury law;

          3. any workers compensation, employers liability (but
          this does not apply to the Federal Employers' Liability
          Act; see Employers Liability definition), occupational
          disease, unemployment compensation, retirement or
          disability benefits law or statute; or

          4. any law similar to 1., 2., or 3. above.

(J.A. 49). American National argues that this exclusion is ambiguous
and, therefore, must be construed against Pacific. See Bottoms, 415
S.E.2d at 134 (ambiguous language in an insurance policy will be
construed to grant coverage, rather than withhold it). First, American
National argues that subsection (4) of Exclusion F operates to include
coverage of liability imposed under "any law similar" to FELA. In
reaching this conclusion, American National first notes, as Pacific
concedes, that subsection (3) of the exclusion specifically includes
coverage of any liability imposed on Rail Link, the insured, under
FELA. Because subsection (4) of the exclusion references "any law
similar" to the laws denoted in subsections (1), (2), or (3), American
National argues that subsection (4) has the effect of including within
coverage "any law similar" to FELA. Thus, American National would
exclude from the exclusion not only liability imposed on Rail Link
under FELA, but also, liability imposed on Rail Link under "any law
similar" to FELA.

As recognized by the district court in its August 21, 1996 opinion
granting Pacific's motion for judgment on the pleadings, this interpre-
tation of the exclusion is not plausible. The plain meaning of subsec-
tion (3) of the exclusion is that it generally excludes from coverage

                    16
any liability imposed on Rail Link under employers' liability laws.
Contained within the parentheses, however, is a specific exception to
this exclusion for liability imposed under FELA. Thus, subsection (3)
permits coverage of liability imposed under FELA but excludes cov-
erage for liability imposed under any other employers' liability law.
Subsection (4), in referring to "any law similar to 1, 2, or 3 above,"
excludes from coverage liability imposed under any law that is similar
to the categories of laws listed in subsections (1), (2), or (3). In argu-
ing that this language also refers to the language in subsection (3)
contained within the parentheses and, therefore, permits coverage of
"any law similar" to FELA, American National ignores the fact that
subsection (3) generally excludes liability imposed under employers'
liability laws with the language contained within the parentheses spe-
cifically excepting from the exclusion liability imposed under FELA.
To read subsection (4) as including coverage of liability imposed
under any law similar to FELA renders the exception and, therefore,
the parentheses denoting the exception meaningless because the effect
would be to include within the coverage liability imposed under all
employers' liability laws. The district court, then, was correct in hold-
ing that the plain language of this provision excludes from coverage
all claims of employers' liability but specifically includes coverage
for claims brought pursuant to FELA for bodily injury of an employee
that occurs during the course of employment.

American National alternatively argues that the policy's failure to
define "employers' liability," while defining"Employers' Liability,"
makes the exclusion ambiguous. We disagree. By defining "Employ-
ers' Liability" to refer specifically to claims for bodily injury under
FELA, the Pacific Policy has defined one type of employers' liability
claim and made that particular type of claim a defined term for pur-
poses of the contract. However, its definition of one particular type
of claim as a term of art does not require Pacific to define more spe-
cifically the more general category of "employers' liability" claims.

In arguing in favor of finding an ambiguity, American National
relies on several Virginia cases, which hold that particular language
contained in insurance policies was too ambiguous to constitute the
clear exclusion required under Virginia law. These include, for exam-
ple, American Reliance Ins. Co. v. Mitchell, 385 S.E.2d 583 (Va.
1989), in which the court held that the term "employee" was ambigu-

                     17
ous, where the insurer argued that a part-time employee constituted
an "employee" for purposes of an exclusion pertaining to bodily
injury to any "farm employee." See id. at 584, 586. Similarly, in
Caldwell v. Transportation Ins. Co., 364 S.E.2d 1 (Va. 1988), the
court held that language in an insurance policy purporting to exclude
"similar operations" to "mining" and"tunneling" was too ambiguous
to permit the exclusion where both similarities and differences were
earnestly argued between mining and tunneling, on the one hand, and
the activity sought to be excluded, well-drilling, on the other. See id.
at 3. Finally, in Smith v. Allstate Ins. Co., 403 S.E.2d 696 (Va. 1991),
the court held that the term "incidental business activity" was ambigu-
ous and precluded an interpretation of the contract in the insurer's
favor with respect to the exclusion at issue. See id. at 697.

These cases, however, differ from this case in that in each of the
cases cited, there was particular language that was difficult to con-
strue because it had more than one meaning in the context of the fac-
tual circumstances of the case. In this case, the plain language of the
exclusion refers to a broad category of employers' liability laws and
excludes any claims brought under those laws, with the exception that
claims brought under one employers' liability law, FELA, are
included and these claims are then specifically defined as "Employ-
ers' Liability" claims. That "employers' liability" refers to more than
one type of law does not make it ambiguous as applied to this case
because American National cannot contend that the TRLA does not
constitute an employers' liability law, for purposes of the general cat-
egory, and Pacific's definition of the more specific category as refer-
ring to FELA only renders the exclusion plain and unambiguous.
Therefore, we reject American National's argument that the exclusion
for all claims arising out of employers' liability laws is ambiguous
and must be construed in favor of coverage. In addition, under the
plain terms of the contract, we agree with the district court that the
exclusion contained in the Pacific Policy excludes coverage for liabil-
ity imposed under the TRLA.

IV.

In sum, we hold that the district court did not abuse its discretion
in granting Pacific's Rule 59(e) motion to alter or amend the July 30,
1997 judgment rendered in favor of American National in its order of

                    18
November 10, 1997. Additionally, we hold that the district court
properly held, in granting Pacific's motion for judgment on the plead-
ings as to Count I of the complaint, that the Pacific Policy excludes
coverage for liability imposed under the TRLA. Accordingly, the dis-
trict court's judgment is affirmed.

AFFIRMED

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