City of Alameda, California et al v. Nuveen Municipal High Income Opportunity Fund et al

Filing 263


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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 United States District Court For the Northern District of California 10 IN RE NUVEEN FUNDS/CITY OF ALAMEDA SECURITIES LITIGATION, 11 12 / No. C 08-4575 SI; Related Case No. C 091437 SI ORDER VACATING HEARING AND DENYING PLAINTIFFS’ MOTION FOR LEAVE TO FILE MOTION FOR RECONSIDERATION 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Plaintiffs have filed a motion for leave to file a motion for reconsideration on the issue of California Government Code immunity. Plaintiffs wish to seek reconsideration of the Court’s ruling on summary judgment that plaintiffs’ state law securities fraud claims against defendant City of Alameda are barred by California Government Code § 818.8 immunity. Plaintiffs’ motion raises a new argument, never previously asserted by plaintiffs, that the City is not immune from liability pursuant to California Government Code § 814, which provides that “Nothing in this part affects liability based on contract or the right to obtain relief other than money or damages against a public entity of public employee.” Cal. Gov’t Code § 814. Plaintiffs’ motion for leave asserts that the Notes are contracts, and that plaintiffs’ securities fraud claims are “based on contract.” Plaintiffs also state that “[g]overnment immunity under Section 814 also appears to be an issue of first impression in the municipal bond context.” Motion for Leave at 3:21-22. The Court ordered supplemental briefing on the immunity question, and set September 2, 2011 for hearing on the request for reconsideration. The Court has now determined that this issue is suitable 1 for determination without oral argument, pursuant to Local Rule 7-1(b), and hereby VACATES the 2 hearing. 3 Defendant City of Alameda opposes plaintiffs’ motion on numerous grounds. Defendant argues 4 that plaintiffs have not shown that reconsideration is warranted under Civil Local Rule 7-9(b) because, 5 inter alia, plaintiffs have not shown reasonable diligence in raising this new argument for the first time 6 after summary judgment. Defendant also argues that plaintiffs cannot invoke § 814 because plaintiffs’ 7 First Amended Counterclaim does not allege any contract claims, nor does it allege the existence of a 8 contract. Defendant contends that plaintiffs are improperly attempting to assert entirely new “contract 9 based” theories that have never been alleged or litigated in this three year old case. United States District Court For the Northern District of California 10 The Court concludes that plaintiffs have not shown that reconsideration is warranted under Civil 11 Local Rule 7-9(b). A party seeking leave to file a motion for reconsideration “must specifically show” 12 the following: 13 (1) That at the time of the motion for leave, a material difference in fact or law exists from that which was presented to the Court before entry of the interlocutory order for which reconsideration is sought. The party also must show that in the exercise of reasonable diligence the party applying for reconsideration did not know such fact or law at the time of the interlocutory order; or 14 15 16 (2) The emergence of new material facts or a change of law occurring after the time of such order; or 17 18 (3) A manifest failure by the Court to consider material facts or dispositive legal arguments which were presented to the Court before such interlocutory order. 19 Civil Local Rule 7-9(b). Plaintiffs assert that the “immunity issue developed in an unusual manner” 20 because Alameda moved to dismiss the Osher action on immunity grounds, but did not assert immunity 21 in this case until summary judgment. Plaintiffs note that the Court originally rejected Alameda’s 22 immunity arguments when the Court denied the motion to dismiss in Osher, and plaintiffs attempt to 23 show reasonable diligence by asserting that “Section 814 was not researched or addressed when 24 Alameda raised the immunity issue against Nuveen because it appeared the arguments made by Osher 25 as reflected in the Court’s order on the motion to dismiss were still sound.” Motion for Leave at 3:19- 26 21. 27 It may be that the immunity issue developed in an unusual manner in this case. Nevertheless, 28 plaintiffs have not shown that they exercised diligence in raising Section 814, which was enacted in 2 1 1963. See Cal. Gov’t Code § 814 (Added by Stats.1963, c. 1681, p. 3267, § 1). The Court’s August 11, 2 2009 order denying Alameda’s motion to dismiss the Osher case on immunity grounds stated that the 3 application of § 818.8 to the California Corporate Securities Act appeared to be a novel question for 4 which California case law provided no established answer, that the parties had not fully briefed the 5 issues, and that “[u]nder all these circumstances, the Court is not persuaded at this time” that Alameda 6 was immune from securities fraud claims under § 818.8. Order Granting in Part and Denying in Part 7 Defendant’s Motion to Dismiss at 9:13 (Docket No. 25 in C 09-1437 SI). That order also stated, “In 8 the event defendant is able to make a further showing on this issue at a future date, it may renew its 9 argument at that time.” Id. at 9:27-28. United States District Court For the Northern District of California 10 Alameda renewed its immunity argument in its motions for summary judgment in Osher and this 11 case. Alameda’s motion for summary judgment (and supplemental summary judgment briefing 12 specifically on the immunity question)1 cited new authority in support of its argument that it was 13 immune under § 818.8. The issue was briefed extensively. As Alameda notes, plaintiffs were given 14 leave to file oversized summary judgment opposition briefs totaling 114 pages, and they never raised 15 Section 814. Although plaintiffs may have believed that the arguments as made by Osher and as 16 reflected in the Court’s August 2009 order “were still sound,” that does not explain why plaintiffs did 17 not present any argument based on Section 814 in opposition to summary judgment, nor does it establish 18 “reasonable diligence.” Indeed, plaintiffs did not raise Section 814 until July 27, 2011 when they filed 19 the motion for leave to file a motion for reconsideration, over two months after the Court’s summary 20 judgment order was filed and only two months before the October 4, 2011 trial date. 21 22 23 24 /// 25 26 27 1 28 See Docket No. 163 (Defendant’s Motion for Summary Judgment at 21:3-22:16) & Docket No. 163-3 (supplemental briefing on immunity). 3 1 2 Accordingly, plaintiffs have not demonstrated “reasonable diligence” and the motion is DENIED.2 Docket Nos. 245 & 256. 3 4 IT IS SO ORDERED. 5 6 Dated: September 1, 2011 SUSAN ILLSTON United States District Judge 7 8 9 United States District Court For the Northern District of California 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2 26 27 28 Further, even if plaintiffs had exercised diligence, it is far from clear that they could invoke § 814 in this case and at this juncture. Plaintiffs assert that municipal bonds are contracts, and that their securities fraud claims against Alameda are “based on contract.” However, as noted by Alameda, the 66 page FACC does not allege that plaintiffs’ claims are “based on contract.” Granting plaintiffs leave to seek reconsideration on § 814 grounds would necessarily lead to further motion practice on whether plaintiffs should be given leave to amend their counterclaims on the eve of trial. 4

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