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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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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----oo0oo----

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YENIDUNYA INVESTMENTS, LTD., a
Cyprus, EU Corporation;

NO. CIV. 2:11-1787 WBS CKD

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Plaintiff,

MEMORANDUM AND ORDER RE:
MOTION TO RECONSIDER

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v.
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MAGNUM SEEDS, INC., a
California Corporation; and
GENICA RESEARCH CORPORATION, a
Nevada Corporation;

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Defendants.

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/
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----oo0oo---On August 11, 2011, defendants filed a motion to

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dismiss the Complaint on the ground that it was barred by the

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statute of limitations.

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the court issued an Order granting defendants’ motion to dismiss.

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(Docket No. 23.)

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motion for reconsideration of the court’s October 31, 2011,

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Order.

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(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
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conservation of judicial resources.”

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of Bishop, 229 F.3d 877, 890 (9th Cir. 2000); see also Sch. Dist.

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No. 1J, Multonomah Cnty. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th

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Cir. 1993) (stating that reconsideration should only be granted

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in “highly unusual circumstances”).

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“should not merely present arguments previously raised, or which

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could have been raised in the initial . . . motion.”

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States v. Westlands Water Dist., 134 F. Supp. 2d 1111, 1130 (E.D.

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Cal. 2001) (citing Backlund v. Barnhart, 778 F.2d 1386, 1388 (9th

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Kona Enter., Inc. v. Estate

A motion for reconsideration

United

Cir. 1985)).
Rule 60(b) “provides for reconsideration only upon a

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showing of (1) mistake, surprise, or excusable neglect; (2) newly

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discovered evidence; (3) fraud; (4) a void judgment; (5) a

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satisfied or discharged judgment; or (6) ‘extraordinary

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circumstances’ which would justify relief.”

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F.3d at 1263 (quoting Fuller v. M.G. Jewelry, 950 F.2d 1437, 1442

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(9th Cir. 1991)).

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only appropriate where the district court (1) is presented with

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newly discovered evidence, (2) committed clear error or the

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initial decision was manifestly unjust, or (3) if there is an

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intervening change in controlling law.

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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

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discovered evidence, nor does it present any new caselaw that

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would constitute an intervening change in controlling law.

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Plaintiff argues that the court’s prior Order made a “clear

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error” because plaintiff was not granted leave to amend its

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complaint.

(Mot. for Recons. at 1:8-10.)
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Specifically,

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plaintiff alleges that granting leave to amend would not be

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futile in this case because, under the California Uniform

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Commercial Code (“CUCC”), plaintiff’s retention of the Magnum

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share certificates means that it is still a Magnum shareholder.

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(Id. at 3:20-6:22.)

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complaint in its opposition to the motion to dismiss, however,

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plaintiff did not rely on the CUCC in arguing for leave to amend.

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In fact, plaintiff did not raise the CUCC at all before filing

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this motion.

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A.

Plaintiff did request leave to amend its

Presentation of New Arguments
The local rules for the Eastern District of California

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present additional guidelines for parties wishing to seek a

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motion for reconsideration.

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requirements, the moving party must include:

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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

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(4) why the facts or circumstances were not shown at the
time of the prior motion.

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Id.

These rules were intended to prevent litigants from bringing

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motions for reconsideration based on facts and legal authority
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that could have, and should have, been raised during the original
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motion.
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Plaintiff admits that “the application of the [CUCC]
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was not explicitly raised” during the motion to dismiss.

(Mot.

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for Recons. at 3:1-2.)

Indeed, plaintiff’s motion for

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reconsideration reveals that the decision to not raise arguments
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based on the CUCC was a deliberate strategic decision.
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Plaintiff

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admits that it “considered the issues surrounding the existence

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of the contractual relationships to be more complex, and those

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associated with the inherent nature of the certificated stocks to

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be less open to interpretation; and focused accordingly in its

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presentations to the Court.”

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plaintiff assumed that the court would afford it a second bite at

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the apple if its first legal strategy failed.

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that it “presumed that . . . it would be granted leave to amend

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to clarify application of the [CUCC] to issues relating to the

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(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

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amendment of the Complaint, plaintiff would have been better

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served by informing the court of the application of the CUCC in

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its opposition to the motion to dismiss.1

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it raised the importance of possession of the share certificates

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during oral argument, however this passing reference never

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mentioned the applicability of the CUCC nor did it address how

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possession of the share certificates functioned to extend the

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statute of limitations.

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Plaintiff claims that

Plaintiff argues that the local rules and caselaw

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regarding Rule 60(b) should be applied differently in this case

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because the underlying Order was not made on the merits of the

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case, but rather on statute of limitations grounds.

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Opp’n to Mot. for Recons. at 1:9-18.)

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underlying judgment is irrelevant and plaintiff presents no

(Reply to

The nature of the

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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.
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authority suggesting otherwise.

Plaintiff was presented with a

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more than adequate opportunity to show why its claims were not

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barred by the statute of limitations.

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to be a rough draft for losing parties to take pot shots at.

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Arguments raised for the first time in a motion for

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reconsideration are deemed waived.

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Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 1999) (finding

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that a district court did not abuse its discretion when it

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declined to address an issue raised for the first time in a

A judgment is not intended

See 389 Orange Street

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motion for reconsideration).

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plaintiff’s new arguments to show that amendment to the pleadings

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remains futile.

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B.

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Nonetheless, the court will address

Leave to Amend
Plaintiff primarily argues that its motion for

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reconsideration should be granted because it should have been

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granted leave to amend its complaint.

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be freely given, the court is not required to permit futile

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amendments.

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655, 658 (9th Cir. 1992); Klamath-Lake Pharm. Ass'n v. Klamath

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Med. Serv. Bureau, 701 F.2d 1276, 1293 (9th Cir. 1983); Reddy v.

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Litton Indus., Inc., 912 F.2d 291, 296-97 (9th Cir. 1990); Rutman

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Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729, 738 (9th Cir.

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1987).

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to the provisions of the CUCC as they apply to certificated

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securities.

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address the application of the CUCC to the statue of limitations

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in further detail in subpart C of this Order.

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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
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clarify its pleadings to make clear that it retains ownership of

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its stock certificate in Magnum and that the certificate was

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never transferred under the provisions of the [CUCC].”2

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for Recons. at 9:25-27.)

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this amendment would make in a subsequent motion to dismiss based

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upon the statute of limitations.

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of the share certificates has never been questioned during these

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proceedings and was directly discussed in the court’s Order.

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(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

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pay plaintiff for its shares and collect the shareholder

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certificates . . . .”).)

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acknowledges that it repeatedly informed the court that it

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retained physical possession of the shares.

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3:9-11 (“The facts as presented by the Plaintiff in the

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Complaint, and in Plaintiff’s Opposition and Sur-Reply to the

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Defendant’s Motion to Dismiss, consistently represent that the

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Magnum stock certificate itself was never transferred from the

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Plaintiff to either of the Defendants.”) (emphasis added).)

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Plaintiff’s motion for reconsideration

(Mot. for Recons. at

This is not a case in which more specific pleading

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would avoid the problems raised in the motion to dismiss.

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Plaintiff is requesting leave to amend so that it may add a fact

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that the court has already discussed and that arguably already

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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.
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appears on the face of the Complaint.

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amounts to no more than a transparent attempt to use the liberal

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amendment rules in order to employ a different legal strategy to

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re-argue a motion it has lost.

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the interest of justice nor judicial economy.

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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

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still legally a Magnum shareholder when it granted defendants’

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motion to dismiss.

Rather, the court’s prior Order held that the

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claims were barred by the statute of limitations and that the

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time for the court to make a determination on the underlying

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legal issues had passed.

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Plaintiff argues that, under the CUCC, its physical

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possession of the share certificates means that it is still a

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Magnum shareholder because no proper legal transfer has occurred.

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Defendants contend that the CUCC provides exceptions to this

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general rule and that the “drag along” provision in the Amendment

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to the Buy-Out Agreement served to automatically transfer the

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shares.

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legal issue properly before the court it would be a matter of

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first impression because no California court has ruled on whether

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drag along provisions are enforceable.

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Committee of the Business Law Section of the State Bar of

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California on Selected Legal Opinion Issues in Venture Capital

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Financing Transactions of November 2009, section IV(E)(3), at 21;

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Opp’n to Mot. for Recons. at 11:1-7.

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however, to determine whether plaintiff’s claims are barred by

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the statute of limitations, not whether the underlying claims are

(Opp’n to Mot. for Recons. at 10:9-11:16.)

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Were this

See Report of the

The court has been asked,

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valid.

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The determination of whether plaintiff remains a legal

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shareholder is irrelevant to the question of when the statute of

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limitations began to run in this case.

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when it argues that it would be “premature at this stage in the

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litigation to determine whether” plaintiff waived its rights

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under the CUCC, (Reply to Opp’n to Mot. for Recons. at 6:1-2),

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because this determination goes to the legal issues in the case

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and not the application of the statute of limitations.

Plaintiff concedes this

This

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lawsuit and the request for declaratory relief regarding

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defendants’ obligations to plaintiff as a shareholder stem from

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Magnum’s March 2005 exercise of the Call Option in the Buy Out

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Agreement.

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determining whether that 2005 transaction was valid.

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None of plaintiff’s claims can be resolved without

Plaintiff knew, starting in March of 2005, that its

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shareholder status was contested and that it was being denied its

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rights as a shareholder.

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however, the statute of limitations would never run on its suit.

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Plaintiff has provided no authority, and the court has been

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unable to find any, supporting its claim that the statute of

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limitations may run indefinitely on a claim for declaratory

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relief or that plaintiff’s retention of the share certificates

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extends the statute of limitations.

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statute of limitations for declaratory relief consistently holds

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that the statute of limitations governing a request for

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declaratory relief is identical to the statute of limitations for

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an ordinary legal or equitable action based on the same claims.

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See, e.g., Green Valley Corp. v. Caldo Oil Co., No. 5:09-CV-

Under plaintiff’s interpretation,

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Instead, caselaw on the

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04028, 2011 WL 3501712, at *7 (N.D. Cal. Aug. 10, 2011); Maguire

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v. Hibernia Savings & Loan Soc., 23 Cal. 2d 719, 733 (1944)

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(rejecting the argument that the statute of limitations has not

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run because there is “an actual, present controversy,” and

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instead finding that the nature of the right sued upon determines

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the applicable statute of limitations); Mangini v. Aerojet-

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General Corp., 230 Cal. App. 3d 1125, 1155 (3d Dist. 1991).
Plaintiff argues that the court’s finding that the

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statute of limitations began to run in 2005 is incorrect because

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of factual differences between the present case and those in

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Maguire, upon which the court relied.

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questions, for which these factual distinctions may be important,

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are not relevant to the court’s reliance on Maguire to determine

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the applicable statute of limitations.

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the statute of limitations begins to run when plaintiffs have

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notice of the relevant cause of action is directly relevant in

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this case because plaintiff has known about the present

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controversy for over six years and has only now decided to bring

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suit.

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The underlying legal

Maguire’s holding that

The American legal system relies on statutes of

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limitation to bar otherwise valid claims because we believe that

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at some point it is too late to commence litigation.

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statute of limitations to have any relevance, there must be some

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date after which a claim can no longer be brought.

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not brought any additional authority to the attention of the

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court suggesting that the court committed clear error in granting

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the defendants’ motion to dismiss based upon the statute of

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limitations.

For the

Plaintiff has

Plaintiff has also failed to show that amendment of
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the pleadings would function to make any substantive changes to

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the Complaint.

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motion for reconsideration.

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Accordingly, the court will deny plaintiff’s

IT IS THEREFORE ORDERED that plaintiff’s motion for

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reconsideration be, and the same hereby is, DENIED.

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DATED:

December 6, 2011

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