Utah Reverse Exchange, LLC et al v. Donado et al

Filing 131

ORDER denying 129 Motion to Alter Judgment as set out herein. Signed by Chief Judge William H. Steele on 1/30/2017. (srd)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
UTAH REVERSE EXCHANGE, LLC,
et al.,
Plaintiffs,
v.
LINDA DONADO, et al.,
Defendants.

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) CIVIL ACTION 14-0408-WS-B
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ORDER
This matter is before the Court on the Rule 59(e) motion of the plaintiffs1 to
alter or amend the judgment. (Doc. 129). The defendants have filed a response,
(Doc. 130), and the motion is ripe for resolution.
Trial was bifurcated, with a jury deciding the claims regarding the Mexico
property and the Court resolving the claims regarding the Utah property. The
plaintiffs sought a declaration that they owed the defendants nothing, while the
defendants sought, under theories of breach of contract and promissory estoppel,
specific performance of a promise to transfer to them a 25% mineral interest in the
Utah property. The Court found that the defendants established their claim for
breach of contract but that recovery was barred because they failed to establish the
partial-performance exception to the Utah statute of frauds. The Court found that
the defendants established their claim for promissory estoppel, that the plaintiffs
preserved no statute-of-frauds defense as to that claim, and that they failed to
establish as an affirmative defense that the defendants’ recovery was barred for
want of a broker’s license. (Doc. 126).
1

The movants include Osprey, which is technically only a counterclaim
defendant, but for ease of reference both the movants and the Court include Osprey in the
term, “plaintiffs.”

As the plaintiffs acknowledge, (Doc. 129 at 8-9), “[a] Rule 59(e) motion
cannot be used to relitigate old matters, raise argument or present evidence that
could have been raised prior to the entry of judgment.” Arthur v. King, 500 F.3d
1335, 1343 (11th Cir. 2007) (internal quotes omitted). “The only grounds for
granting a Rule 59 motion are newly-discovered evidence or manifest errors of
law or fact.” Id. (internal quotes omitted). The trial court’s ruling on such a
motion is reviewable only for abuse of discretion. Id. As this Court has noted in a
related context, “[m]otions to reconsider serve a valuable but limited function.
They do not exist to permit losing parties to prop up arguments previously made or
to inject new ones, nor to provide evidence or authority previously omitted. They
do not, in short, serve to relieve a party of the consequences of its original, limited
presentation.” Nelson v. Whirlpool Corp., 668 F. Supp. 2d 1368, 1379 (S.D. Ala.
2009) (internal quotes omitted).
The plaintiffs assert that, in ruling in favor of the defendants on the
promissory estoppel claim regarding the Utah property, the Court committed
manifest errors of law and/or fact. The Court’s challenged rulings, however,
properly addressed the arguments the plaintiffs actually asserted at and after trial,
and their post-judgment effort to argue now what they failed to argue then is
precisely what is barred under Rule 59(e).
A. Promissory Estoppel Claim.
As noted, the Court found that the defendants established all elements of
this claim: (1) a promise, (2) which the promisor should have reasonably expected
to induce action or forbearance of a definite and substantial character, and (3)
which did in fact produce such action or forbearance by the promise, resulting in
(4) injustice that can be avoided only by enforcing the promise. (Doc. 126 at 1012). The Court then pointed out that the plaintiffs, rather than addressing the 2005
promise on which this claim was based, focused exclusively on a separate, vastly
different promise made in 2010, with the result that they “offer[ed] no relevant
2

response” to the defendants’ showing. (Id. at 12-13). The 2005 promise, made by
Breland on behalf of himself and all of the plaintiffs, was to transfer to the
defendants the 25% mineral interest in exchange for their work in acquiring the
Utah property. The 2010 promise, made by Breland on behalf of himself and all
of his entities, was to use all their assets to satisfy all his obligations to the
defendants (which included not only the 25% mineral interest but also money
related to transactions other than the Utah property), in exchange for the
defendants’ work in Breland’s bankruptcy proceedings and for their not filing a
claim in those proceedings.2
The plaintiffs now insist that, by addressing the 2010 promise, “they were
directing their arguments necessarily to the 2005 promise to transfer a 25%
mineral interest to the Donados because that promise was a part of the obligations
… that they claimed Breland owed them.” (Doc. 129 at 11). The question,
however, is not whether the two promises are completely unrelated but whether
the arguments the plaintiffs made regarding the 2010 promise have any relevance
to the 2005 promise. Patently, they do not.
The plaintiffs’ only argument regarding the 2010 promise was that the
defendants could not have relied to their detriment on that promise because: (1)
they were paid by Adrian Zajac for their work in trying to sell the Utah property to
his company out of the bankruptcy proceedings; and (2) they insist it was not
necessary for them to file a claim in Breland’s bankruptcy in order to pursue
2

The Court did, and does, find the plaintiffs’ misdirected focus on the 2010
promise inexplicable, given that the joint pretrial document explicitly tied the promissory
estoppel claim to the 2005 promise, not the 2010 promise. (Doc. 88-1 at 8-9; Doc. 126 at
13). Even after the defendants’ post-trial brief reminded the plaintiffs that “[t]he promise
in question is not Breland’s promise to pay the Donados from the assets left after his
bankruptcy as plaintiffs contend, but Breland’s promise that plaintiffs would transfer 25%
of the Utah property’s mineral rights to the Donados, then participate with the Donados
in the development of the Utah property’s minerals,” (Doc. 109 at 2-3), the plaintiffs’
subsequent post-trial brief again completely ignored the 2005 promise and offered only
an essentially verbatim regurgitation of their motion for judgment on partial findings,
limited to the 2010 promise.
3

claims against Breland’s entities. (Doc. 108 at 13-16; Doc. 112 at 14-17). The
defendants’ detrimental reliance on the 2005 promise, as found by the Court,
consisted of mineral exploration activity on the Utah property, most or all of
which occurred before the 2010 promise was even made. (Doc. 126 at 11). The
plaintiffs’ arguments regarding detrimental reliance, which do not come within a
country mile of addressing the defendants’ reliance on the 2005 promise, are thus
irrelevant.
The plaintiffs appear to argue that, even if their arguments as to the 2010
promise are irrelevant to the 2005 promise (as they obviously are), the defendants
cannot prevail on their promissory estoppel claim without proving that they also
detrimentally relied on the 2010 promise. (Doc. 129 at 11-12). Their theory is
that the 2010 promise is the only promise by which Breland bound Osprey, the
entity that now holds the 25% mineral interest. (Doc. 129 at 11-12). The Court,
however, found that the 2005 promise was made on behalf of all the entity parties,
including Osprey. (Doc. 126 at 2 n.2, 3-5, 11). The plaintiffs posit that Breland’s
2005 promise was made only on behalf of “the four entities which had taken title
… to the Utah property in 2005,” (Doc. 129 at 11), but they identify no evidence
that would even support, much less compel, such a restrictive finding. They note
only that Osprey was formed in 2011, so perhaps they mean to suggest that
Breland did not or could not bind Osprey before it was formed. Even if that is
their point, they never raised it before judgment was entered,3 and it is far too late
to do so now. Nor, even now, do they endeavor to support such a position either
factually or legally.

3

The plaintiffs had endless opportunities to do so, including after the Court found
for the defendants. The Court provided the parties two weeks to confer and to file a
proposed final judgment. (Doc. 126 at 17). Rather than complain that Osprey could not
be compelled to transfer the mineral interest, the plaintiffs agreed with the defendants to
submit a proposed judgment (entered by the Court) entering judgment against Osprey and
awarding the defendants the 25% mineral interest. (Doc. 127-1 at 2).

4

Moreover, the plaintiffs’ arguments regarding the defendants’ detrimental
reliance on the 2010 promise are plainly meritless. Even if Zajac did pay the
defendants for their efforts in connection with his company’s bid to buy the Utah
property, that is not the benefit Breland promised in return for the defendants’
working on his bankruptcy and for not filing a claim therein, and it is both
counterintuitive and legally unsupported for the plaintiffs to suggest that there is
no injustice in stiffing the defendants simply because a third party provided some4
compensation.5
The plaintiffs’ other argument regarding detrimental reliance makes even
less sense. They say the defendants suffered no detriment in refraining from filing
a claim in Breland’s bankruptcy because they could still pursue claims against his
entities (none of which filed for bankruptcy).6 As this lawsuit demonstrates,
proceeding against the entities is fraught with peril that could have been avoided
had the defendants insisted that Breland personally make good on his debts and
used the power of the Bankruptcy Court to ensure that it happened.

4

Zajac paid William $450,000. The plaintiffs offered no evidence that the value
of a 25% mineral interest in the Utah property is or ever was that small. On the contrary,
the evidence is that Breland purchased the Utah property for $13 million and that he
swapped a 10% cash payment for a 25% mineral interest as compensation for the
defendants. The evidence, then, is that the value of a 25% mineral interest approximated
$1.3 million.
5

Under the plaintiffs’ argument (and ignoring the FLSA), there is no injustice in
an employer refusing to pay his servers their promised wage, so long as customers tip the
servers.
6

The plaintiffs elsewhere argue that res judicata arising out of the bankruptcy
proceedings precludes the defendants from pursuing Breland’s non-bankrupt entities; the
Court has rejected their position. (Doc. 103).

5

B. Statute of Frauds.
As noted, the Court ruled that the statute of frauds barred the defendants
from prevailing on their claim for breach of contract. (Doc. 126 at 5-9).7 The
plaintiffs argue the Court committed a manifest error by not rejecting the
defendants’ promissory estoppel claim on the same basis. They cite a number of
cases for the proposition that, if a contract claim is barred by the statute of frauds,
a promissory estoppel claim based on the same promise is also barred by the
statute of frauds. (Doc. 129 at 12-15). That may or may not be a correct statement
of the law, but invoking it now cannot furnish grounds to alter the judgment.
The plaintiffs, like all litigants, have at all times been the masters of the
arguments they elect to assert. When it came to the statute of frauds, the plaintiffs
could not possibly have been more explicit. In both their motion for judgment on
partial findings and their post-trial brief, the plaintiffs included a section entitled,
“The Donados’ Breach of Contract Claim is Barred by the Utah Statute of
Frauds.” (Doc. 108 at 16; Doc. 112 at 17 (emphasis added)). Nowhere in either
brief did the plaintiffs assert that the statute of frauds had any application to the
claim for promissory estoppel. The only argument the plaintiffs raised in their
section addressing promissory estoppel was the detrimental reliance argument
discussed in Part A. (Doc. 108 at 13-16; Doc. 112 at 14-17). The Court in its
order pointed out that the plaintiffs “have explicitly limited their invocation of this
defense to the contract claim” and concluded that “the plaintiffs have preserved no
argument that the promissory estoppel claim is barred by the statute of frauds.”
(Doc. 126 at 15).
The plaintiffs, (Doc. 129 at 12), say they did not waive the statute of frauds
as a defense to the promissory estoppel claim because they included in the joint
pretrial document a statement that “an oral promise that is void by operation of the
7

For reasons set forth in its opinion, the Court rejects the defendants’ argument
that they satisfied the partial performance exception to the statute of frauds. (Doc. 130 at
3-5).
6

statute of frauds will not support an action against the promisor for promissory
fraud.” (Doc. 88-1 at 10). Assuming without deciding that “promissory fraud”
should be read as “promissory estoppel,”8 the quoted statement sufficed to
preserve the defense for trial, thus enabling the plaintiffs to invoke it during or
after trial if they so chose. But it did not compel the plaintiffs to do so, and it did
not excuse the plaintiffs from doing so. Because the plaintiffs did not ask the
Court to reject the promissory estoppel claim based on the statute of frauds, the
defense was as lifeless as that of laches, which the plaintiffs similarly preserved in
the joint pretrial document but ignored in their Rule 50 motion and post-trial brief.
As the Court ruled with respect to laches, the plaintiffs “have thereby forfeited any
argument they might (or might not) have regarding the timeliness of the plaintiffs’
claim.” (Doc. 126 at 16).9 The same holds equally for the statute of frauds
defense.
The plaintiffs find it “inconceivable” that the Court “would ignore
established Alabama precedent prohibiting its entry of judgment on the Donados’
promissory estoppel claim after finding their breach of contract claim barred by
the statute of frauds.” (Doc. 129 at 14-15). That is, they find it “inconceivable”
that the Court would not unilaterally research Alabama law and from that research
develop, articulate and rely on an affirmative defense that the plaintiffs themselves
elected not to present (much less brief) as a basis for either a judgment on partial
findings or a judgment following trial. There is no burden on the Court to act as
counsel for the litigants, and it is frankly inconceivable that the plaintiffs could
believe otherwise.

8

The defendants brought no claim for promissory fraud.

9

The Court noted that, in the Eleventh Circuit, “[w]e have long held that an
appellant abandons a claim when he either makes only passing references to it or raises it
in a perfunctory manner without supporting arguments and authority.” Sapuppo v.
Allstate Floridian Insurance Co., 739 F.3d 678, 681 (11th Cir. 2014). (Doc. 126 at 16).
7

C. Broker’s License.
As noted, the Court ruled that the plaintiffs failed to establish as an
affirmative defense that the defendants’ recovery was barred for want of a Utah
broker’s license. (Doc. 126 at 13-15). The Court ruled that the defendants “did
not engage in activity that would trigger the license requirement.” (Id. at 14). The
plaintiffs argue this ruling constitutes manifest error. (Doc. 129 at 15-26).
On motion for judgment on partial findings, the plaintiffs devoted two
pages to this affirmative defense. (Doc. 108 at 21-22). All but three lines of this
argument was directed to the proposition that, given the defendants’ failure to
obtain a broker’s license, Alabama law would not permit any recovery. In their
post-trial brief, the plaintiffs repeated their previous argument essentially
verbatim, then added another two pages refuting the defendants’ assertions that
they were partners with Breland in developing the mineral resources of the Utah
property. (Doc. 112 at 110-14).
The entirety of the plaintiffs’ argument regarding the necessity of a
broker’s license reads as follows:
With respect to the Donados’ claim to be owed a commission
on the 2011 re-sale of the Utah property in the form of a 25% mineral
interest in the Utah property, Utah law requires a license. See Utah
Code § 61-2f-201 (Appendix A attached).
(Doc. 108 at 21; Doc. 1112 at 10). In describing the consequences of a failure to
obtain such a license (which they ascribed to Section 61-2f-405), the plaintiffs
asserted that the defendants’ “collection of any ‘valuable consideration’ as a real
estate commission is prohibited by Utah law and punishable as a criminal act.”
(Doc. 108 at 22; Doc. 112 at 11). Although placed in quotes, the plaintiffs did not
identify the source of their “valuable consideration” terminology.
Faced with this skeletal argument, the Court looked to Sections 61-2f-201
and 61-2f-405 – the only statutory provisions cited by the plaintiffs. The latter
section does provide for criminal penalties for violation of the licensing chapter,

8

but it does not employ the phrase, “valuable consideration.” The former section
does use that phrase, in subsection (2), which reads as follows:
(2)
Except as provided in Section 61-2f-202, an individual is
required to be licensed as a principal broker, associate broker, or a
sales agent if the individual performs, offers to perform, or attempts
to perform one act for valuable consideration of:
(a)
buying, selling, leasing, managing, or exchanging real
estate for another person; or
(b)
offering for another person to buy, sell, lease, manage,
or exchange real estate.
The Court construed this provision to require the defendants to obtain a
broker’s license only if they bought or offered to buy the Utah property for
Breland and/or his entities or offered or attempted to do so. The plaintiffs
identified no such evidence, and the Court found that the defendants did none of
the things listed in subsection (2). Therefore, the Court concluded, the defendants
were not required to obtain a broker’s license. (Doc. 126 at 14).
The plaintiffs express no disagreement with either the Court’s findings of
fact or its construction of Section 61-2f-201(2). Instead, the plaintiffs argue that
the Court should have analyzed their affirmative defense under different
provisions: Section 61-2f-201(1)(b) and Section 61-2f-102. Belatedly realizing
that three lines of opaque, unreasoned conclusion was suboptimal, they now
inundate the Court with eleven pages of argument addressing their new-found
argument. (Doc. 129 at 15-26). Under Section 61-2f-201(b), “[u]nless a person is
licensed under this chapter, it is unlawful for the person to … act in the capacity of
a principal broker ….” A “principal broker” is defined in Section 61-2f102(18)(a)-(j) in terms of conduct. According to the plaintiffs, a broker’s license
is required if the person acts in the capacity of a principal broker, and it was
incumbent on the Court to explore Section 61-2f-102 to determine what conduct
could constitute acting in the capacity of a principal broker.10 Had the Court done
10

“In order to conduct a complete and thorough analysis of this issue, the Court
should have examined the evidence showing what the Donados did to determine whether
9

so, the plaintiffs say, and had the Court researched and discovered the Utah and
non-Utah cases they now cite for the first time, it would have realized that the
defendants engaged in conduct satisfying four of the definitions of a principal
broker. (Doc. 129 at 20-25).
The problem, again, is that the plaintiffs did not make this argument or
even cite these provisions before judgment was entered.11 Again, the plaintiffs
insist it was the Court’s job to devise, develop and support an argument the
plaintiffs themselves never raised. In a word, no.
The plaintiffs suggest the Court took on this job because it quoted Section
61-2f-201(1). (Doc. 129 at 16). They fail to appreciate, however, why the Court
quoted it. The Court quoted subsection (2) as identifying the circumstances
triggering the requirement of a broker’s license and then quoted subsection (1) as
identifying the consequence of not obtaining such a license under the
circumstances described in subsection (2) – viz., the unlawfulness of acting as a
broker. Because the plaintiffs never argued or suggested that subsection (1)
constituted a second, non-identical statement of circumstances requiring a license,
requiring resort to Section 61-2f-201(18) to decipher, the Court did not so construe
it, and its mere citation to subsection (1) imposed no duty on the Court to assume
the plaintiffs’ burden of articulating and supporting arguments.

any of their conduct fell within the definition of the Utah statutory term, ‘principal
broker.’” (Doc. 129 at 19).
11

The plaintiffs did cite generally to Section 61-2f-201, but they did not cite
specifically to any subsection. Because they invoked the quoted term, “valuable
consideration” – a term that appears only in subsection (2) – the Court not merely
reasonably but inevitably relied on that subsection as the only one raised by the plaintiffs.
The “Appendix A” submitted by the plaintiffs included multiple sections of Title
61, Chapter 2f, including Section 61-2f-102(18). (Doc. 108 at 25-31; Doc. 112 at 25-31).
As noted in text, however, the plaintiffs never cited this section or asked the Court to
review it.

10

Even had the plaintiffs timely articulated their new, post-judgment
argument, it would have changed nothing. The plaintiffs argue the defendants
acted in the capacity of a principal broker under the “sells,” “buys,” “manages”
and “negotiation” subsections of Section 61-2f-102(18). (Doc. 129 at 20-23).12
None of these, however actually apply to the conduct for which the defendants
seek the “valuable consideration” of a 25% mineral interest in the Utah property.
As the Court has found, the 25% mineral interest was promised “based
solely on the defendants’ acquisition efforts.” (Doc. 126 at 8). Selling real estate
was not part of that acquisition.13 Buying is acquisition but, as the Court has
found, the defendants did not buy the Utah property, Breland did. (Doc. 126 at 14
& n.23). As for negotiation, the plaintiffs admit the evidence is equivocal whether
William did so, and they do not argue that Linda did so. (Doc. 129 at 21).14 More
importantly, this subsection is by its terms limited to negotiation “of a transaction
listed in Subsections (18)(a) and (e),”15 that is, negotiating the sale of real estate or
managing property owned by another; if William negotiated anything, it was the
purchase of the Utah property, not its sale.16 Finally, the management to which the

12

The plaintiffs assign these provisions to different subsections than does the
statute. (Doc. 129 at 16-17 n.5). The actual subsections are Section 61-2f-102(18)(a),
(b), (e) and (g).
13

The plaintiffs rely on Williams’ testimony regarding “another deal” addressing
the defendants’ post-acquisition compensation. (Doc. 129 at 20). Even if such a deal
existed, it is irrelevant to the plaintiffs’ affirmative defense.
14

Thus, Linda would be entitled to the 25% mineral interest even if William were
disqualified for lack of a broker’s license (which he is not, and which argument the
plaintiffs have forfeited in any event).
15

Utah Code § 61-2f-102(18)(g).

16

Subsection (g)’s failure to mention subsection (b) (which addresses the buying
of real estate) indicates that only negotiating for the seller is covered by subsection (g).
The Court has not researched this proposition, but – and this is the important point –
neither have the plaintiffs, who bear the burden on this affirmative defense. Once again,
they cannot shift to the Court their burden of showing that the defense applies.
11

plaintiffs point is management of the Utah property after its acquisition. (Doc.
129 at 22). Again, the Court has already found that post-acquisition services were
not part of the consideration for the 25% mineral interest, so any later management
activity is irrelevant to the plaintiffs’ affirmative defense.
CONCLUSION
Choices made in litigation have consequences, and neither regret over those
choices nor a desire to avoid their consequences furnishes grounds for relief under
Rule 59(e). For the reasons set forth above, the plaintiffs’ motion for such relief is
denied.
DONE and ORDERED this 30th day of January, 2017.
s/ WILLIAM H. STEELE
CHIEF UNITED STATES DISTRICT JUDGE

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