Wisdom et al v. Wells Fargo Bank NA

Filing 100

ORDER denying Plaintiffs' 94 Motion for Reconsideration. Signed by Judge G Murray Snow on 1/25/12.(REW)

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WO

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Don M. Wisdom and Eloise Wisdom,
husband and wife,

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Plaintiffs,
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vs.
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Wells Fargo Bank NA,

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Defendant.

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No. CV-10-2400-PHX-GMS
ORDER

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Pending before the Court is Plaintiffs’ Motion for Reconsideration. (Doc. 94). For
the reasons discussed below, the motion is denied.
BACKGROUND

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The facts in this case are set forth in the order granting Defendant Wells Fargo Bank’s

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Motion for Partial Dismissal. (Doc. 93). In that Order, the Court found that losses sustained

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by Stand World, Plaintiff Don Wisdom’s business entity, could not be recovered in a claim

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alleging violations under the Fair Credit Reporting Act (“FCRA”) because a business is not

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a “consumer” under the FCRA, and because Stand World is not a party to this action. (Id.).

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Plaintiff now claims that “Stand World and Don Wisdom operate as one entity,” that “[t]here

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isn’t any realistic separation of interests, finances or objectives,” and that “[n]one of the

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customary formalities are observed.” (Doc. 94 at 2–3). Plaintiff alleges that because he fails

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to observe the corporate formalities, “[a]ny losses suffered by Stand World were also direct

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losses to Don Wisdom” and should be recoverable as consumer losses under FCRA (Id.).

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DISCUSSION
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Legal Standard

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Under Rule 59(e), a motion for reconsideration may be granted only on one of four

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grounds, “1) the motion is necessary to correct manifest errors of law or fact upon which the

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judgment is based; 2) the moving party presents newly discovered or previously unavailable

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evidence; 3) the motion is necessary to prevent manifest injustice or 4) there is an intervening

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change in controlling law.” Turner v. Burlington N. Santa Fe R.R. Co., 338 F.3d 1058, 1063

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(9th Cir. 2003) (internal quotations and emphasis omitted). Motions for reconsideration are

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disfavored and are not the place for parties to make new arguments not raised in their original

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briefs and arguments. See Northwest Acceptance Corp. v. Lynnwood Equip., Inc., 841 F.2d

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918, 925-26 (9th Cir. 1988). Nor should such motions ask the Court to “rethink what the

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court has already thought through–rightly or wrongly.” See United States v. Rezzonico, 32

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F. Supp. 2d 1112, 1116 (D. Ariz. 1998) (quoting Above the Belt, Inc. v. Mel Bohannon

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Roofing, Inc., 99 F.R.D. 99, 101 (E.D. Va. 1983)).

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2.

Analysis

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Plaintiff cites case law allowing direct claims against the shareholders of corporations

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who fail to observe the corporate formalities, or in circumstances where a small number of

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shareholders “operated more as partners than in strict compliance with the corporate form.”

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Johnson v. Gilbert, 127 Ariz. 410, 412, 621 P.2d 916, 918 (App. 1980). Plaintiff does not

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allege that he operated Stand World more as a partnership than a corporation; he alleges that

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he failed to respect the corporate form at all. In his declaration, he acknowledges that he

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failed to appoint directors, failed to hold director or shareholder meetings, and co-mingled

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his personal funds with Stand World’s. He states, for example, that if Stand World is unable

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to pay the rent it owes Plaintiff as Plaintiff’s tenant, it simply does not pay, and “no

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accounting is made of delinquent rent.” (Doc. 94-1). Plaintiff acknowledges “loaning” money

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to and “borrowing” money from Stand World, although “[t]he loans are not ‘formalized’ by

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documents” and are only repaid, if at all, “to me and occasionally to Brandon as salary.”

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(Id.).

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If Plaintiff’s description of his business is accurate, he is undoubtedly correct that “if

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a judgment were entered against Stand World and Stand World could not pay the judgment,

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the creditor could collect from Don Wisdom in an alter ego claim.” (Doc. 94). Abuse of the

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corporate form grants creditors the right to recover from the abusing shareholder. Plaintiffs

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offer no authority, however, suggesting that an abusing shareholder has the right to recover

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the corporation’s losses as though they were personal losses. Plaintiff cannot recover Stand

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World’s losses based upon the theory that he has misused the corporate form. The motion for

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reconsideration is denied.

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IT IS THEREFORE ORDERED that Plaintiffs’ Motion for Reconsideration (Doc.
94) is denied.
DATED this 25th day of January, 2012.

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