Yenidunya Investments v. Magnum Seeds, et al

Filing 29

ORDER signed by Judge William B. Shubb on 12/6/2011 ORDERING that the 25 Motion for Reconsideration is DENIED. (Duong, D)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 YENIDUNYA INVESTMENTS, LTD., a Cyprus, EU Corporation; NO. CIV. 2:11-1787 WBS CKD 13 Plaintiff, MEMORANDUM AND ORDER RE: MOTION TO RECONSIDER 14 v. 15 17 MAGNUM SEEDS, INC., a California Corporation; and GENICA RESEARCH CORPORATION, a Nevada Corporation; 18 Defendants. 16 / 19 ----oo0oo---On August 11, 2011, defendants filed a motion to 20 21 dismiss the Complaint on the ground that it was barred by the 22 statute of limitations. 23 the court issued an Order granting defendants’ motion to dismiss. 24 (Docket No. 23.) 25 motion for reconsideration of the court’s October 31, 2011, 26 Order. 27 28 (Docket No. 12.) On October 31, 2011, Presently before the court is plaintiff’s (Docket No. 25.) Reconsideration is an “extraordinary remedy” which should be used “sparingly in the interests of finality and the 1 1 conservation of judicial resources.” 2 of Bishop, 229 F.3d 877, 890 (9th Cir. 2000); see also Sch. Dist. 3 No. 1J, Multonomah Cnty. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th 4 Cir. 1993) (stating that reconsideration should only be granted 5 in “highly unusual circumstances”). 6 “should not merely present arguments previously raised, or which 7 could have been raised in the initial . . . motion.” 8 States v. Westlands Water Dist., 134 F. Supp. 2d 1111, 1130 (E.D. 9 Cal. 2001) (citing Backlund v. Barnhart, 778 F.2d 1386, 1388 (9th 10 Kona Enter., Inc. v. Estate A motion for reconsideration United Cir. 1985)). Rule 60(b) “provides for reconsideration only upon a 11 12 showing of (1) mistake, surprise, or excusable neglect; (2) newly 13 discovered evidence; (3) fraud; (4) a void judgment; (5) a 14 satisfied or discharged judgment; or (6) ‘extraordinary 15 circumstances’ which would justify relief.” 16 F.3d at 1263 (quoting Fuller v. M.G. Jewelry, 950 F.2d 1437, 1442 17 (9th Cir. 1991)). 18 only appropriate where the district court (1) is presented with 19 newly discovered evidence, (2) committed clear error or the 20 initial decision was manifestly unjust, or (3) if there is an 21 intervening change in controlling law. 22 Dist., 134 F. Supp. 2d at 1131. Sch. Dist. No. 1J, 5 Under Rule 60(b), reconsideration is generally See Westlands Water Plaintiff does not present the court with newly 23 24 discovered evidence, nor does it present any new caselaw that 25 would constitute an intervening change in controlling law. 26 Plaintiff argues that the court’s prior Order made a “clear 27 error” because plaintiff was not granted leave to amend its 28 complaint. (Mot. for Recons. at 1:8-10.) 2 Specifically, 1 plaintiff alleges that granting leave to amend would not be 2 futile in this case because, under the California Uniform 3 Commercial Code (“CUCC”), plaintiff’s retention of the Magnum 4 share certificates means that it is still a Magnum shareholder. 5 (Id. at 3:20-6:22.) 6 complaint in its opposition to the motion to dismiss, however, 7 plaintiff did not rely on the CUCC in arguing for leave to amend. 8 In fact, plaintiff did not raise the CUCC at all before filing 9 this motion. 10 A. Plaintiff did request leave to amend its Presentation of New Arguments The local rules for the Eastern District of California 11 12 present additional guidelines for parties wishing to seek a 13 motion for reconsideration. 14 requirements, the moving party must include: 15 See Local R. 230(j)(3). Among other (3) what new or different facts or circumstances are claimed to exist which did not exist or were not shown upon such prior motion, or what other grounds exist for the motion; and 16 17 (4) why the facts or circumstances were not shown at the time of the prior motion. 18 19 Id. These rules were intended to prevent litigants from bringing 20 motions for reconsideration based on facts and legal authority 21 that could have, and should have, been raised during the original 22 motion. 23 Plaintiff admits that “the application of the [CUCC] 24 was not explicitly raised” during the motion to dismiss. (Mot. 25 for Recons. at 3:1-2.) Indeed, plaintiff’s motion for 26 reconsideration reveals that the decision to not raise arguments 27 based on the CUCC was a deliberate strategic decision. 28 3 Plaintiff 1 admits that it “considered the issues surrounding the existence 2 of the contractual relationships to be more complex, and those 3 associated with the inherent nature of the certificated stocks to 4 be less open to interpretation; and focused accordingly in its 5 presentations to the Court.” 6 plaintiff assumed that the court would afford it a second bite at 7 the apple if its first legal strategy failed. 8 that it “presumed that . . . it would be granted leave to amend 9 to clarify application of the [CUCC] to issues relating to the 10 (Id. at 7:17-20.) transfer of its stock certificate in Magnum.” It appears that Plaintiff states (Id. at 3:16-19.) If plaintiff felt that the CUCC provisions justified 11 12 amendment of the Complaint, plaintiff would have been better 13 served by informing the court of the application of the CUCC in 14 its opposition to the motion to dismiss.1 15 it raised the importance of possession of the share certificates 16 during oral argument, however this passing reference never 17 mentioned the applicability of the CUCC nor did it address how 18 possession of the share certificates functioned to extend the 19 statute of limitations. 20 Plaintiff claims that Plaintiff argues that the local rules and caselaw 21 regarding Rule 60(b) should be applied differently in this case 22 because the underlying Order was not made on the merits of the 23 case, but rather on statute of limitations grounds. 24 Opp’n to Mot. for Recons. at 1:9-18.) 25 underlying judgment is irrelevant and plaintiff presents no (Reply to The nature of the 26 27 28 1 Plaintiff had a second opportunity before oral arguments to raise the applicability of the CUCC because the court indulged plaintiff’s request to file a sur-reply. 4 1 authority suggesting otherwise. Plaintiff was presented with a 2 more than adequate opportunity to show why its claims were not 3 barred by the statute of limitations. 4 to be a rough draft for losing parties to take pot shots at. 5 Arguments raised for the first time in a motion for 6 reconsideration are deemed waived. 7 Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 1999) (finding 8 that a district court did not abuse its discretion when it 9 declined to address an issue raised for the first time in a A judgment is not intended See 389 Orange Street 10 motion for reconsideration). 11 plaintiff’s new arguments to show that amendment to the pleadings 12 remains futile. 13 B. 14 Nonetheless, the court will address Leave to Amend Plaintiff primarily argues that its motion for 15 reconsideration should be granted because it should have been 16 granted leave to amend its complaint. 17 be freely given, the court is not required to permit futile 18 amendments. 19 655, 658 (9th Cir. 1992); Klamath-Lake Pharm. Ass'n v. Klamath 20 Med. Serv. Bureau, 701 F.2d 1276, 1293 (9th Cir. 1983); Reddy v. 21 Litton Indus., Inc., 912 F.2d 291, 296-97 (9th Cir. 1990); Rutman 22 Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729, 738 (9th Cir. 23 1987). 24 to the provisions of the CUCC as they apply to certificated 25 securities. 26 address the application of the CUCC to the statue of limitations 27 in further detail in subpart C of this Order. 28 While leave to amend must See DeSoto v. Yellow Freight Sys., Inc., 957 F.2d Plaintiff argues that amendment would not be futile due (Mot. for Recons. at 2:24-28.) The court will Plaintiff requests leave to amend the complaint “to 5 1 clarify its pleadings to make clear that it retains ownership of 2 its stock certificate in Magnum and that the certificate was 3 never transferred under the provisions of the [CUCC].”2 4 for Recons. at 9:25-27.) 5 this amendment would make in a subsequent motion to dismiss based 6 upon the statute of limitations. 7 of the share certificates has never been questioned during these 8 proceedings and was directly discussed in the court’s Order. 9 (See Oct. 31, 2011, Order at 10:14-16 (“Defendants would like to (Mot. The court fails to see what difference Plaintiff’s physical possession 10 pay plaintiff for its shares and collect the shareholder 11 certificates . . . .”).) 12 acknowledges that it repeatedly informed the court that it 13 retained physical possession of the shares. 14 3:9-11 (“The facts as presented by the Plaintiff in the 15 Complaint, and in Plaintiff’s Opposition and Sur-Reply to the 16 Defendant’s Motion to Dismiss, consistently represent that the 17 Magnum stock certificate itself was never transferred from the 18 Plaintiff to either of the Defendants.”) (emphasis added).) 19 Plaintiff’s motion for reconsideration (Mot. for Recons. at This is not a case in which more specific pleading 20 would avoid the problems raised in the motion to dismiss. 21 Plaintiff is requesting leave to amend so that it may add a fact 22 that the court has already discussed and that arguably already 23 2 24 25 26 27 28 The Complaint does not explicitly state that plaintiff retains physical possession of the shareholder certificates. The Complaint, however, does state that “YENIDUNYA declined the offer to purchase its shares and never executed and delievered the Stock Purchase Agreement, or otherwise agreed to the terms and provisions of the proposed purchase of its MAGNUM shares of Common Stock.” (Compl. ¶ 13.) The court interpreted this statement to mean that since plaintiff refused to sell its shares, it never handed over its physical shareholder certificates. 6 1 appears on the face of the Complaint. 2 amounts to no more than a transparent attempt to use the liberal 3 amendment rules in order to employ a different legal strategy to 4 re-argue a motion it has lost. 5 the interest of justice nor judicial economy. 6 C. Plaintiff’s request Such an attempt serves neither Application of the CUCC to the Statute of Limitations The court did not pass judgment on whether plaintiff is 7 8 still legally a Magnum shareholder when it granted defendants’ 9 motion to dismiss. Rather, the court’s prior Order held that the 10 claims were barred by the statute of limitations and that the 11 time for the court to make a determination on the underlying 12 legal issues had passed. 13 Plaintiff argues that, under the CUCC, its physical 14 possession of the share certificates means that it is still a 15 Magnum shareholder because no proper legal transfer has occurred. 16 Defendants contend that the CUCC provides exceptions to this 17 general rule and that the “drag along” provision in the Amendment 18 to the Buy-Out Agreement served to automatically transfer the 19 shares. 20 legal issue properly before the court it would be a matter of 21 first impression because no California court has ruled on whether 22 drag along provisions are enforceable. 23 Committee of the Business Law Section of the State Bar of 24 California on Selected Legal Opinion Issues in Venture Capital 25 Financing Transactions of November 2009, section IV(E)(3), at 21; 26 Opp’n to Mot. for Recons. at 11:1-7. 27 however, to determine whether plaintiff’s claims are barred by 28 the statute of limitations, not whether the underlying claims are (Opp’n to Mot. for Recons. at 10:9-11:16.) 7 Were this See Report of the The court has been asked, 1 valid. 2 The determination of whether plaintiff remains a legal 3 shareholder is irrelevant to the question of when the statute of 4 limitations began to run in this case. 5 when it argues that it would be “premature at this stage in the 6 litigation to determine whether” plaintiff waived its rights 7 under the CUCC, (Reply to Opp’n to Mot. for Recons. at 6:1-2), 8 because this determination goes to the legal issues in the case 9 and not the application of the statute of limitations. Plaintiff concedes this This 10 lawsuit and the request for declaratory relief regarding 11 defendants’ obligations to plaintiff as a shareholder stem from 12 Magnum’s March 2005 exercise of the Call Option in the Buy Out 13 Agreement. 14 determining whether that 2005 transaction was valid. 15 None of plaintiff’s claims can be resolved without Plaintiff knew, starting in March of 2005, that its 16 shareholder status was contested and that it was being denied its 17 rights as a shareholder. 18 however, the statute of limitations would never run on its suit. 19 Plaintiff has provided no authority, and the court has been 20 unable to find any, supporting its claim that the statute of 21 limitations may run indefinitely on a claim for declaratory 22 relief or that plaintiff’s retention of the share certificates 23 extends the statute of limitations. 24 statute of limitations for declaratory relief consistently holds 25 that the statute of limitations governing a request for 26 declaratory relief is identical to the statute of limitations for 27 an ordinary legal or equitable action based on the same claims. 28 See, e.g., Green Valley Corp. v. Caldo Oil Co., No. 5:09-CV- Under plaintiff’s interpretation, 8 Instead, caselaw on the 1 04028, 2011 WL 3501712, at *7 (N.D. Cal. Aug. 10, 2011); Maguire 2 v. Hibernia Savings & Loan Soc., 23 Cal. 2d 719, 733 (1944) 3 (rejecting the argument that the statute of limitations has not 4 run because there is “an actual, present controversy,” and 5 instead finding that the nature of the right sued upon determines 6 the applicable statute of limitations); Mangini v. Aerojet- 7 General Corp., 230 Cal. App. 3d 1125, 1155 (3d Dist. 1991). Plaintiff argues that the court’s finding that the 8 9 statute of limitations began to run in 2005 is incorrect because 10 of factual differences between the present case and those in 11 Maguire, upon which the court relied. 12 questions, for which these factual distinctions may be important, 13 are not relevant to the court’s reliance on Maguire to determine 14 the applicable statute of limitations. 15 the statute of limitations begins to run when plaintiffs have 16 notice of the relevant cause of action is directly relevant in 17 this case because plaintiff has known about the present 18 controversy for over six years and has only now decided to bring 19 suit. 20 The underlying legal Maguire’s holding that The American legal system relies on statutes of 21 limitation to bar otherwise valid claims because we believe that 22 at some point it is too late to commence litigation. 23 statute of limitations to have any relevance, there must be some 24 date after which a claim can no longer be brought. 25 not brought any additional authority to the attention of the 26 court suggesting that the court committed clear error in granting 27 the defendants’ motion to dismiss based upon the statute of 28 limitations. For the Plaintiff has Plaintiff has also failed to show that amendment of 9 1 the pleadings would function to make any substantive changes to 2 the Complaint. 3 motion for reconsideration. 4 Accordingly, the court will deny plaintiff’s IT IS THEREFORE ORDERED that plaintiff’s motion for 5 reconsideration be, and the same hereby is, DENIED. 6 DATED: December 6, 2011 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10

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