Katt et al v. Riepe et al

Filing 145

ORDER granting in part and denying in part 140 Motion for Reconsideration ; denying 141 Motion for Reconsideration. Signed by Judge David G Campbell on 7/31/2015.(DGC, nvo)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Brian M. Katt, et al.,

No. CV-14-08042-PCT-DGC
Plaintiffs,

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v.

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ORDER

Jordan J. Riepe, et al.,

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Defendants.

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The parties have filed motions for reconsideration of the Court’s June 26, 2015

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order. Docs. 140, 141. For the reasons stated below, the Court will grant Defendants’

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motion in part and deny Plaintiffs’ motion.

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I.

Background.

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This lawsuit arises out of the sale of Plaintiffs Brian and Rachel Katt’s vehicle

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towing business, U.S. Metro. The ten count complaint named Jordan Riepe, Janette

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Riepe, J.A.R.R. Towing & Recovery LLC, Duane Weston, McCarthy Weston PLLC,

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Dominic Femia, WCI Brokers, Michael Shumaker, and BizDoc Inc. as Defendants.

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On December 10, 2014, Plaintiffs dismissed their claims against Jordan and

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JARR. Doc. 88. They also dismissed count eight – unjust enrichment – against Janette.

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Id. at 2. On January 6, 2015, Plaintiffs dismissed their claims against Femia and WCI

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Brokers. Doc. 95.

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In March 2015, Plaintiffs filed a motion for partial summary judgment (Doc. 102)

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and Defendants Janette Riepe, Duane Weston, and McCarthy Weston PLLC filed a

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motion for summary judgment (Doc. 113). Plaintiffs also filed a motion for default

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judgment against Michael Shumacher and BizDoc. Doc. 96. On June 26, 2015, the

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Court entered an order granting in part and denying in part Defendants’ motion for

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summary judgment, denying Plaintiffs’ motion for summary judgment, and denying

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Plaintiffs’ motion for default judgment. Doc. 138. Although several of Plaintiffs’ claims

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were dismissed, their claims for unjust enrichment, negligence, and tortious breach of the

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covenant of good faith and fair dealing survived the ruling. Id. at 18. Both parties ask

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the Court to reconsider its order.

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II.

Legal Standard.

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Motions for reconsideration are disfavored and should be granted only in rare

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circumstances. Collins v. D.R. Horton, Inc., 252 F. Supp. 2d 936, 938 (D. Ariz. 2003). A

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motion for reconsideration will be denied “absent a showing of manifest error or a

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showing of new facts or legal authority that could not have been brought to [the Court’s]

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attention earlier with reasonable diligence.” LRCiv 7.2(g)(1); see Carroll v. Nakatani,

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342 F.3d 934, 945 (9th Cir. 2003). Mere disagreement with an order is an insufficient

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basis for reconsideration. See Ross v. Arpaio, No. CV-05-4177-PHX-MHM, 2008 WL

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1776502, at *2 (D. Ariz. 2008). Nor should reconsideration be used to ask the Court to

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rethink its analysis. United States v. Rezzonico, 32 F. Supp. 2d 1112, 1116 (D. Ariz.

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1998); see N.W. Acceptance Corp. v. Lynnwood Equip., Inc., 841 F.2d 918, 925-26 (9th

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Cir. 1988).

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III.

Defendants’ Motion.

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Defendants argue that the Court should dismiss Plaintiffs’ remaining claims for

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unjust enrichment, negligence, and tortious breach of the covenant of good faith and fair

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dealing. They argue that Plaintiffs dismissed the unjust enrichment claim against Janette

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in December 2014. They also assert the Court’s factual findings mandate dismissal of the

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remaining tort claims.

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Defendants are correct that Plaintiffs dismissed their unjust enrichment claim

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against Janette. Count eight – unjust enrichment – was brought against Jordan, JARR,

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Janette, Femia, and WCI Brokers. Doc. 1 at 59. Each Defendant has been dismissed via

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stipulation. See Docs. 88, 95. This claim will be dismissed.

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Defendants’ remaining arguments, however, were not raised in their motion for

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summary judgment. Doc. 113. Motions for reconsideration “are not the place for parties

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to make new arguments not raised in their original briefs.”

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Rodgers Mech. Contr., 215 F.R.D. 581, 582 (D. Ariz. 2003). Nor is the Court obligated

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to make arguments for Defendants when ruling on motions for summary judgment. See,

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e.g., Weissman v. Weener, 12 F.3d 84, 86 (7th Cir. 1993) (noting that “judges should be

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hesitant to wander too far astray – in their search for the correct legal result – from the

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arguments presented to them by the parties”); First Fin. Bank v. CS Assets, LLC, 678 F.

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Supp. 2d 1216, 1241 n.37 (S.D. Ala. 2010) (“As stated repeatedly herein, the Court will

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not make or develop a party’s arguments for it on summary judgment.”). As a result, the

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Court correctly declined to grant summary judgment on Plaintiffs’ claims for negligence

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and breach of the covenant of good faith and fair dealing.

Motorola, Inc. v. J.B.

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Because the Court recognizes that Defendants’ failure to raise these argument may

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result in a waste of resources for the Court and all parties, the Court will permit

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Defendants to file a second motion for summary judgment on these claims. The motion

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shall be filed by August 7, 2015, and shall not exceed ten pages. Plaintiffs’ response

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shall be filed by August 21, 2015, and shall not exceed ten pages. Defendants’ reply

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shall be filed by August 28, and shall not exceed five pages. The parties shall not file

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separate statements of fact under LRCiv 56.1.

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IV.

Plaintiffs’ Motion.

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Plaintiffs challenge nearly every facet of the Court’s order. Most of the arguments

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were already addressed in the prior order and several merely disagree with the Court’s

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analysis. See Doc. 141 at 8-16. Those arguments will not be addressed. See Rezzonico,

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32 F. Supp. 2d at 1116 (“A motion for reconsideration should not be used to ask the court

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to rethink what the court had already thought through – rightly or wrongly.” (internal

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quotation marks omitted)). Plaintiffs do, however, raise a legitimate challenge to the

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Court’s analysis of their motion for default judgment.

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committed manifest error with respect to five findings of fact.

They also argue the Court

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A.

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Plaintiffs claim the Court committed error by finding Plaintiffs could not establish

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the proximate causation element of any of their claims against BizDoc and Shumacher.

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Doc. 141 at 17. They assert that proximate causation is a question for the jury. Plaintiffs

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also assert that an intervening cause alone is insufficient to relieve a defendant from

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liability unless it is also a superseding cause.

Default.

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“Proximate causation encompasses causation-in-fact and is generally a jury

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question.” Piper v. Bear Med. Sys., 883 P.2d 407, 411 (Ariz. Ct. App. 1993) (emphasis

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added). But proximate cause may be a question of law “when the facts are not only

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undisputed but are also such that there can be no difference in the judgment of reasonable

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men as to the inferences to be drawn from them.” Kavanaugh v. Kavanaugh, 641 P.2d

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258, 266 (Ariz. Ct. App. 1981). In order to be a superseding intervening cause, the act

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must be “both unforeseeable and extraordinary.” Ontiveros v. Borak, 667 P.2d 200, 206

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(Ariz. 1983).

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Here, the facts underlying proximate cause were undisputed: (1) Plaintiffs turned

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over the Bill of Sale and keys to Jordan with full knowledge that he had not received

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funding, (2) Plaintiffs extended Jordan a line of credit, (3) Plaintiffs breached the

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Purchase Agreement, (4) Jordan refused to return U.S. Metro to Plaintiffs even after he

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failed to remit the purchase price, and (5) Plaintiffs repeatedly failed to protect their

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interests by canceling the contract. Doc. 138 at 17. Therefore, a reasonable jury could

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not find proximate cause on any of Plaintiffs’ claims. Plaintiffs do not argue otherwise in

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their motion.

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To the extent the Court did not expressly identify the acts as “extraordinary,” it

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does so here. The five intervening acts were not only unforeseeable by BizDoc and

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Shumacher, but they reflected several remarkably poor business decisions by Plaintiffs in

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which they failed to protect their interests. Plaintiffs failed to cancel the contract several

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times when circumstances were questionable, and they committed several breaches of the

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contract themselves. What is more, Plaintiffs do not dispute these facts, nor do they

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argue that these events are insufficient intervening superseding causes. Consequently,

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the Court did not commit clear error and it will not reconsider its decision on this issue.

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B.

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Plaintiffs argue the Court erred in finding that the Bill of Sale was never delivered

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to Weston to hold in escrow. They cite the declaration of Brian Katt, which states:

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“Weston said that he was going to hold everything until after the vehicles were paid off.”

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Doc. 137, ¶ 1. Based on this statement, Plaintiffs claim a reasonable jury could find the

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Bill of Sale was delivered to Weston. But Brian’s recollection of this statement is not

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evidence that the Bill of Sale was delivered to Weston to hold in escrow. As the Court

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noted in its order, Plaintiffs failed to cite any evidence that the Bill of Sale was actually

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delivered to Weston or that any party instructed him to hold the Bill of Sale as the escrow

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agent. And the actual circumstances belie this claim, as it is undisputed that the Bill of

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Sale was immediately turned over to the Riepes without objection from the Katts. Brian

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did not protest until months later, after receiving advice from counsel:

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Summary Judgment.

Q.

Now tell me what was said about this Asset Bill of Sale. Did
[Weston] offer to hold on to it?

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I don’t recall.

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He was not to give this to Jordan and Janette?

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A.

From my understanding, no, he was not supposed to.

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Q.

And what’s your understanding based on?

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I have spoken to my attorney and he advised me that this shouldn’t
have been given to Jordan and Janette until my money came.

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Doc. 111-5 at 29. Plaintiffs’ argument is without merit.

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Plaintiffs also claim the Court erred in finding that “neither Plaintiffs nor any

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Defendants contemplated, let alone instructed, Weston to hold the Bill of Sale.”

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Doc. 138 at 8. Again, they rely on Brian’s declaration. But Plaintiffs point to no

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evidence of any party instructing Weston to hold the Bill of Sale other than Brian’s

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declaration. In fact, Plaintiffs did not dispute this fact in their briefs. See Docs. 111, ¶¶

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33-35; 123, ¶¶ 33-35. And Brian testified at his deposition that he did not give Weston

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any such instructions. Doc. 111 at 28.

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Plaintiffs assert the Court erred in finding that the Purchase Agreement “required

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Plaintiffs to deliver the Bill of Sale directly to Jordan on July 2, 2013.” Doc. 138 at 8-9.

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They claim a jury could reasonably find that no such requirement existed, and that

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instead, delivery of the Bill of Sale was not required until the purchase price was paid.

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Doc. 141 at 6. But the Purchase Agreement explicitly stated: “Seller shall deliver to

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Buyer, at Closing of the sale, a Bill of Sale for all Assets . . . .” Doc. 105-7 at 10. And

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the First Amendment to the Purchase Agreement, which was executed on July 2,

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identified the closing date as July 1. Doc. 111-7 at 2 (“The transaction shall have an

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effective Closing Date of July 1, 2013.”). There is no testimony from any party that the

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actual closing would take place once the funds were physically transferred. Plaintiffs’

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arguments are directly contradicted by the evidence.

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Plaintiffs argue the Court erred in finding that “Plaintiffs signed the Bill of Sale

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with full knowledge that it would be immediately turned over to Jordan even though

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BizDoc had not funded the bridge loan.” Doc. 138 at 9. Plaintiffs again rely on Brian

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Katt’s declaration, in which he states: “It never occurred to me that the Weston

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Defendants would give the Bill of Sale to his client immediately[.]” Doc. 137, ¶ 1. But

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Brian testified at his deposition that he knew the bridge loan had not been funded and he

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did not object to Jordan taking the Bill of Sale after it was signed, nor did he instruct

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Weston to hold it in escrow. Doc. 111-5 at 31, 34. Brian’s declaration is directly

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contradicted by his earlier deposition testimony. And even if Plaintiffs’ claim of error

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was well-taken, this would not change the outcome as it is undisputed that Weston never

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received the Bill of Sale to hold in escrow. An escrow relationship was never created,

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and Brian Katt’s subjective understanding of the situation is irrelevant.

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Lastly, Plaintiffs assert that the Court erred in finding that “Weston’s offer to act

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as escrow agent did not come to fruition” and that “he never actually acted as escrow

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agent.” Doc. 138 at 9. Plaintiffs argue that a reasonable jury could find Weston did act

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as escrow agent. As the Court has already stated, “[t]here can be no escrow without the

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conditional delivery of the instrument to a third person as the depositary.” Doc. 138 at 7

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(citing cases in support). Plaintiffs failed to show that any funds or property were

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delivered to Weston to hold in escrow. This is fatal to several of Plaintiffs’ claims.

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Accordingly, Plaintiffs have failed to establish any manifest error in the Court’s
order. The motion will be denied.1

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IT IS ORDERED that Defendants’ motion for reconsideration is granted in part

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and denied in part. The unjust enrichment claim against Jeanette is no longer a part of

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this case. Plaintiffs’ motion for reconsideration (Doc. 141) is denied. Defendants may

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file a second motion for summary judgment and it shall be briefed on the schedule set

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forth above.

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Dated this 31st day of July, 2015.

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Plaintiffs also assert the Court committed clear error by failing to address their
request for a sur-reply. But the Court found Plaintiffs’ motion to strike adequately
addressed any additional arguments raised by Defendants in their reply brief. The request
was denied as moot. Doc. 138 at 17.
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