                 United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 12-1638
                        ___________________________

                        Curtis L. Nelson; Ethel A. Nelson

                      lllllllllllllllllllll Plaintiffs - Appellants

                                           v.

                      American Home Assurance Company

                       lllllllllllllllllllll Defendant - Appellee
                                      ____________

                    Appeal from United States District Court
                   for the District of Minnesota - Minneapolis
                                  ____________

                           Submitted: October 16, 2012
                             Filed: December 6, 2012
                                    [Published]
                                  ____________

Before RILEY, Chief Judge, COLLOTON and GRUENDER, Circuit Judges.
                              ____________

GRUENDER, Circuit Judge.

      Curtis and Ethel Nelson entered into a stipulated judgment with Metropolitan
Council (“Metro Council”) to recover damages sustained during a construction
project. The Nelsons then filed suit against Metro Council’s insurer, American Home
Assurance Company (“American Home”), to collect on the judgment. On cross-
motions for summary judgment, the district court1 entered judgment in favor of
American Home, holding that the Nelsons did not present evidence to establish that
Metro Council’s liability was covered by the American Home policy. The Nelsons
now appeal, arguing that the district court erred in requiring them to present evidence
of coverage. We affirm.

                                          I.

       In 2005, Metro Council, a state-chartered regional planning agency for the
Minnesota Twin Cities metropolitan area, announced plans to upgrade the Blue Lake
Interceptor Sewer System. Part of the project was to take place near Curtis and Ethel
Nelson’s home in Excelsior, Minnesota. Metro Council selected S.M. Hentges &
Sons, Inc. (“Hentges”) as its general contractor. Hentges obtained a general
commercial liability policy from American Home and named Metro Council as an
additional insured. American Home agreed to insure Hentges against “property
damage” that was caused by an “occurrence.” The policy defined “property damage”
as “physical injury to tangible property, including all resulting loss of use of that
property,” or “loss of use of tangible property that is not physically injured.” It
defined “occurrence” as “an accident, including continuous or repeated exposure to
substantially the same general or harmful condition.” Because Metro Council was
an “additional insured,” the policy limited its coverage to “liability arising out of
[Hentges’s] operations.”

       Construction began near the Nelsons’ home in the fall of 2007 and did not go
smoothly. In a March 25, 2008 letter, Metro Council acknowledged that the Nelsons
suffered property damages, and in an April 18, 2008 letter, it proposed to mitigate
those damages by repairing the property once the project was completed. In April


      1
      The Honorable Richard H. Kyle, United States District Judge for the District
of Minnesota.

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2010, the Nelsons sued both Metro Council and Hentges in Minnesota state court,
seeking to recover property damages under theories of strict liability, trespass,
nuisance, negligence, and indemnification. They also sued Metro Council alone for
breach of contract, claiming it failed to honor its promises to repair their property.
Metro Council tendered its defense to Hentges’s insurer, American Home, which
initially agreed to defend Metro Council as an additional insured, subject to a
reservation of rights. The parties began discovery, and Metro Council and Hentges
subsequently moved for summary judgment based on the statute of limitations.2 The
Nelsons asserted estoppel against Metro Council, arguing that they relied on the
letters Metro Council sent as promises to mitigate their property damages. The state
court subsequently granted Hentges’s motion for summary judgment but denied
Metro Council’s motion, finding a question of fact as to whether the Nelsons had
relied on the letters. After Hentges was dismissed from the case, American Home
notified Metro Council that it would deny coverage and would no longer provide
legal representation.

      The Nelsons settled with Metro Council, which agreed to pay the Nelsons
$250,000 and to stipulate to a Miller-Shugart judgment for $900,000.3 As part of the
judgment, Metro Council assigned all of its claims against American Home to the
Nelsons. The parties agreed that the settlement amounts were “all for claimed


      2
       See Minn. Stat. § 541.051 subd. 1(a) (requiring plaintiffs to bring claims
alleging damages based on services or construction to improve real property within
two years of discovering the injury). The Nelsons discovered their damages in March
2008 and filed suit in April 2010.
      3
        Under Minnesota law, a Miller-Shugart judgment allows the plaintiff in an
underlying action to pursue a direct claim against the defendant’s insurer. The
insured defendant assigns any claims it has against the insurer to the plaintiff, and the
plaintiff releases the insured defendant from further liability. Once the court enters
the stipulated judgment, the plaintiff proceeds in a garnishment action against the
insurer. See Miller v. Shugart, 316 N.W.2d 729 (Minn. 1982).

                                          -3-
damages because of physical injury to tangible property of [the Nelsons], including
resulting loss of use of that property, caused by an accident, including continuous or
repeated exposure to substantially the same general harmful conditions, arising out
of Hentges’[s] operations.” This language closely tracks the language in the
American Home policy.

       Before the court entered judgment, Metro Council sent a copy of the proposed
judgment to American Home along with notice of a hearing, at which American
Home did not appear. The state court entered judgment on May 3, 2011. On May 4,
2011, the Nelsons filed suit in federal district court to collect its judgment from
American Home. On May 5, 2011, the Nelsons moved for partial summary judgment
on the issue of whether the policy covered their damages. In response, American
Home sought a continuance, requesting time for discovery so that it could evaluate
whether the policy covered Metro Council’s liability. See Fed. R. Civ. P. 56(d). It
argued, among other things, that coverage depended on whether there was an
“occurrence,” and it sought discovery into “the factual basis for the Miller v. Shugart
settlement’s assertion that the allocated damages result[ed] from physical injury to
Plaintiffs’ property ‘caused by an accident,’ which is relevant to the determination of
an ‘occurrence’ under the policy.” The Nelsons countered that no discovery was
needed because the Miller-Shugart judgment determined coverage. The district court
granted the continuance, noting the existence of “numerous threshold coverage
issues.”

        The parties subsequently filed cross-motions for summary judgment on the
coverage issue. American Home argued that its policy did not cover Metro Council’s
liability because the liability did not arise out of Hentges’s operations. Rather, it
claimed that the liability arose out of Metro Council’s own act of sending letters to
the Nelsons, in which Metro Council acknowledged the property damages and agreed
to be responsible for repairs. The Nelsons, on the other hand, argued that the Miller-
Shugart judgment alone proved coverage. The district court subsequently granted

                                         -4-
American Home’s motion, determining that the Nelsons had the burden to show that
American Home’s policy covered their damages in order to enforce the Miller-
Shugart judgment. The court held that the Nelsons’ claim failed because they did not
present any evidence to establish the existence of an “occurrence” within the meaning
of the policy. The Nelsons then filed a motion to reconsider, which the district court
denied, finding that the Nelsons failed to demonstrate the compelling circumstances
required to allow reconsideration. See D. Minn. R. 7.1(j). The Nelsons now appeal
the district court’s grant of summary judgment to American Home and the denial of
the motion to reconsider.

                                          II.

       “We review a grant of summary judgment de novo.”                    Woods v.
DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir. 2005). Summary judgment is
appropriate if “there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Hutson v.
Walker, 688 F.3d 477, 483 (8th Cir. 2012). The parties agree that we should apply
Minnesota’s substantive law.

        While a Miller-Shugart judgment settles the issue of the underlying defendant’s
liability to the plaintiff, it does not resolve the question of whether the insurance
policy provides coverage for that liability. Rather, coverage is a threshold issue that
the court must address before deciding whether the stipulated judgment is
enforceable. Corn Plus Co-op. v. Cont’l Cas. Co., 516 F.3d 674, 678-79 (8th Cir.
2008); Alton M. Johnson Co. v. M.A.I. Co., 463 N.W.2d 277, 279 (Minn. 1990) (“[I]f
there is found to be no coverage for the Miller-Shugart judgment, that ends the
matter.”). In Miller v. Shugart, the Minnesota Supreme Court noted that
notwithstanding the settlement between the plaintiff and the underlying defendant,
the insurer could still avoid a garnishment action if it prevailed on the issue of
coverage: “If the insurer ignores the ‘invitation’ to participate in the settlement

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negotiations, it may run the risk of being required to pay, even within its policy limits,
an inflated judgment . . . . Of course, the insurer escapes the risk if it should be
successful on the coverage issue, and, in that event, it is plaintiff who loses.” 316
N.W.2d at 734.

       Coverage is determined by the terms of the insurance policy. Wanzek Constr.,
Inc. v. Employers Ins. of Wausau, 679 N.W.2d 322, 327 (Minn. 2004). “While the
insured bears the initial burden of demonstrating coverage, the insurer carries the
burden of establishing the applicability of exclusions.” Travelers Indem. Co. v.
Bloomington Steel & Supply Co., 718 N.W.2d 888, 894 (Minn. 2006). “To establish
or trigger coverage under an occurrence-based policy, ‘an insured must demonstrate
that damage “occurred” while the policy was in effect.’” Parr v. Gonzalez, 669
N.W.2d 401, 406 (Minn. Ct. App. 2003) (quoting N. States Power Co. v. Fid. & Cas.
Co., 523 N.W.2d 657, 659-60 n.3 (Minn. 1994)).

      Despite bearing the burden of demonstrating coverage, the Nelsons submitted
no evidence in support of their motion for summary judgment to establish that the
damage to their home was caused by a covered occurrence; that is, they presented no
evidence that their property damage was caused by an accident arising out of
Hentges’s operations.4 While the Nelsons believe that the Miller-Shugart judgment
alone supplies adequate proof of coverage, Minnesota law makes clear that the
judgment only resolves Metro Council’s liability to the Nelsons. It is not conclusive
on whether the policy covers that liability. Contrary to the Nelsons’ argument, no


      4
       The Nelsons later did submit evidence relevant to coverage when they moved
for summary judgment on the separate issue of American Home’s duty to defend
Metro Council. However, that evidence was not before the district court when it
ruled on the cross-motions for summary judgment now before us, so we cannot
consider it. See ACLU of Minn. v. Tarek ibn Ziyad Acad., 643 F.3d 1088, 1095 (8th
Cir. 2011) (“Generally, we cannot consider evidence that was not contained in the
record below when the district court rendered its decision.”).

                                           -6-
Miller-Shugart case has made a finding of coverage without requiring the plaintiff to
produce some evidence that the loss was actually covered by the policy. See Corn
Plus Co-op. v. Cont’l Cas. Co., 444 F. Supp. 2d 981, 987-91 (D. Minn. 2006) (finding
coverage only after plaintiff submitted affidavits and other evidence supporting
coverage), aff’d 516 F.3d 674 (8th Cir. 2008); FDIC v. Gordinier, 783 F. Supp. 1181,
1182-86 (D. Minn. 1992) (enforcing Miller-Shugart judgment against insurer only
after extensive findings of fact regarding coverage), rev’d on other grounds sub nom.
FDIC v. St. Paul Fire & Marine Ins. Co., 993 F.2d 155 (8th Cir. 1993); Alton M.
Johnson Co., 463 N.W.2d at 278 (enforcing Miller-Shugart judgment against insurer
after a separate trial to establish coverage); Miller, 316 N.W.2d. at 732 (same). The
Nelsons presented no evidence that their damages were caused by an occurrence
arising out of Hentges’s operations, and therefore they did not create a question of
fact on the issue of coverage.5 See Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)
(holding that “where the nonmoving party will bear the burden of proof at trial on a
dispositive issue,” it must “designate ‘specific facts showing that there is a genuine
issue for trial’” to avoid summary judgment (quoting Fed. R. Civ. P. 56)).

       For the first time on appeal, the Nelsons also rely on two cases to argue that,
as a general principle, an insurer must provide coverage for its insured’s settlements
whether or not the plaintiff establishes coverage. See In re Silicone Implant Ins.
Coverage Litig., 667 N.W.2d 405 (Minn. 2003); Butler Bros. v. Am. Fid. Co., 139
N.W. 355 (Minn. 1913). Normally, we do not consider arguments raised for the first
time on appeal. See Trs. of Electricians’ Salary Deferral Plan v. Wright, 688 F.3d
922, 926 (8th Cir. 2012) (“[A] party cannot assert arguments that were not presented
to the district court in opposing summary judgment in an appeal contesting an adverse

      5
        The Nelsons argue that in American Home’s letter to Metro Council denying
coverage, it acknowledged that the Nelsons’ damages were caused by an occurrence
arising out of Hentges’s operations. That letter, however, merely summarized the
allegations in the Nelsons’ state court complaint. It provided no actual evidence of
an “occurrence.”

                                         -7-
grant of summary judgment.” (quoting Cole v. Int’l Union, 533 F.3d 932, 936 (8th
Cir. 2008))). Regardless, neither Silicone nor Butler deals with a Miller-Shugart
judgment, and neither case holds, as the Nelsons contend, that an insurer must
provide coverage for its insured’s settlements. Rather, each case required the insured
to prove coverage before determining the insurer had a duty to indemnify. See
Silicone, 667 N.W.2d at 415-17 (deciding whether the injuries leading to the
insured’s settlement triggered coverage under the insurance policy); Butler, 139 N.W.
at 360 (finding insurer had duty to indemnify only after “[p]laintiff proved that the
accident was within the terms of the policy”).

     Accordingly, we affirm the district court’s grant of summary judgment to
American Home.

                                         III.

       We also affirm the district court’s denial of the Nelsons’ motion to reconsider.
The Federal Rules of Civil Procedure do not account for “motions to reconsider.”
“However, we have determined that motions for reconsideration are ‘nothing more
than Rule 60(b) motions when directed at non-final orders.’” Elder-Keep v. Aksamit,
460 F.3d 979, 984 (8th Cir. 2006) (quoting Anderson v. Raymond Corp., 340 F.3d
520, 525 (8th Cir. 2003)). The Nelsons’ motion to reconsider was directed at a non-
final summary judgment order because that order resolved only part of their dispute
with American Home. See supra note 4; Auto Servs. Co. v. KPMG, LLP, 537 F.3d
853, 856 (8th Cir. 2008) (“[A]n order dismissing fewer than all claims or parties is
generally not a final judgment.”). Therefore, we consider the Nelsons’ motion to
reconsider as we would a Rule 60(b) motion. We review the denial of a Rule 60(b)
motion for an abuse of discretion. Minn. Supply Co. v. Raymond Corp., 472 F.3d
524, 534 (8th Cir. 2006). “Such a motion is to be granted only in exceptional
circumstances requiring extraordinary relief.” Id.



                                         -8-
       In their motion for reconsideration, the Nelsons cite expert reports created for
the underlying litigation and claim that they prove coverage. The Nelsons argue that
they did not provide the reports with their motion for summary judgment, however,
because they did not know that American Home would argue they had to prove
coverage and that the district court would expect them to present evidence of an
occurrence to prove coverage. But these reasons do not amount to exceptional
circumstances that warrant reconsideration. Rule 60 does allow the district court to
relieve a party from a judgment or order if the party offers “newly discovered
evidence.” Fed. R. Civ. P. 60(b)(2). However, the Nelsons did not attempt to offer
“newly discovered evidence” because, by their own admission, the expert reports that
they claim could establish coverage were available when they initially moved for
summary judgment on coverage. See Kaufman v. Van Santen, 696 F.2d 81, 83 (8th
Cir. 1983) (finding that the district court did not abuse its discretion in denying a Rule
60(b) motion when the proffered “new evidence” was “readily and equally” available
to the appellant prior to trial). In addition, the Nelsons’ claim of surprise is
disingenuous. Both American Home’s Rule 56(d) motion for a continuance and the
district court order granting the continuance put the Nelsons on notice that coverage
was indeed a threshold issue. When the Nelsons re-filed their motion after the
continuance, they again presented no evidence that would tend to prove an
occurrence. The district court acted within its discretion in denying the Nelsons’
motion to reconsider.

                                           IV.

     For the foregoing reasons, we affirm the grant of summary judgment to
American Home as well as the denial of the Nelsons’ motion to reconsider.
                    ______________________________




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