Wilmington Savings Fund Society, FSB v. Universitas Education, LLC et al
ORDER denying 107 Motion for Reconsideration for the reasons set forth in the Decision attached. Signed by Judge Vanessa L. Bryant on 3/9/2017. (Hudson, C)
UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
WILMINGTON SAVINGS FUND SOCIETY,
FSB, as successor-in-interest to
Christiana Bank & Trust Company,
UNIVERSITAS EDUCATION, LLC, and
RIDGEWOOD FINANCE II, LLC, as
successor-in-interest to Ridgewood
CIVIL CASE NUMBER:
March 3, 2017
MEMORANDUM OF DECISION
The Court granted Universitas Education, LLC’s (“Universitas”) Motion to
Compel Arbitration between Universitas and Wilmington in a Memorandum of
Decision dated February 17, 2016. [Dkt. No. 105.] Wilmington Savings Fund
Society (“Wilmington”) timely moved for reconsideration. [Dkt. No. 107; Local R.
Civ. P. 7(c).] For the reasons set forth below, the Motion for Reconsideration is
The Court assumes the parties are familiar with the facts underlying this
case. For the purpose of this Decision, the Court briefly states the facts relevant
to the disputed arbitration agreement. Universitas’ arbitration demand asserts
that Holding Capital Group, Inc., a participating employer in a Multiple Employer
Welfare Arrangement (“MEWA”) named Charter Oak Trust (“COT”), purchased
two life insurance policies totaling $30 million for its chief executive officer, Sash
A. Spencer. [Dkt. No. 1-1 at ¶ 48.] Universitas also asserts Spencer selected
Universitas, the research and development arm of a charitable foundation, as his
insurance beneficiary. Id. at ¶¶ 9, 48. Spencer died in 2008, and the insurance
company tendered his death benefits to COT in 2009. Id. at ¶ 50. Universitas’s
demand for those benefits was unsuccessful. Id. at ¶ 51.
Wilmington agreed to serve as insurance trustee for what Wilmington
refers to as the Grist Mill COT.1 [Dkt. No. 31-5 (Appointment Agreement).] By the
terms of the Appointment Agreement, Wilmington agreed to arbitrate any and all
disputes relating to its performance of its duties as trustee of the purported Grist
Mill COT. [Dkt. No. 31-5 (Grist Mill COT).] As insurance trustee for the purported
Grist Mill COT, Wilmington opened a corporate trust account with the
identification number CH125161-0. [Dkt. Nos. 31-8 (Letter); 31-9 (New Account
Form).] One of the Spencer policies was placed in the trust account numbered
CH125161-0, opened by Wilmington incident to its appointment as insurance
trustee. [Dkt. Nos. 31-11 (Trust Vault Receipt); 31-12 (Account Statement).] Both
policies were monitored by Wilmington. Id.
In its Memorandum of Decision, the Court concluded from the
aforementioned evidence that Wilmington acted as insurance trustee for the
Spencer policies. [Dkt. No. 107-1 at 30-32.] The Court also concluded Wilmington
Wilmington asserts two separate trusts existed – the “Grist Mill COT” and
the “Nova COT” – and that Nova COT held the Spencer policies. The Court did not
determine in its Memorandum of Decision whether one or two trusts existed, nor
does it do so now, because there is no evidence demonstrating that a trust named
COT and sponsored by Nova held the Spencer policies.
agreed to arbitrate any and all disputes relating to its performance of its duties as
insurance trustee, as evidenced by the Appointment Agreement. Id. Wilmington
disputes this finding in its Motion for Reconsideration.
Statement of Law
In the Second Circuit, the standard for granting a motion for
reconsideration "is strict, and reconsideration will generally be denied unless the
moving party can point to controlling decisions or data that the court overlooked
- matters, in other words, that might reasonably be expected to alter the
conclusion reached by the court." Shrader v. CSX Transp., Inc., 70 F.3d 255, 257
(2d Cir. 1995). There are three grounds for granting a motion for reconsideration:
intervening change in controlling law, the availability of newly discovered
evidence or a need to correct a clear error or avoid manifest injustice. Virgin Atl.
Airways Ltd. v. National Mediation Board, 956 F2d. 1245, 1255 (2d Cit. 1992).
Evidence is “newly discovered” for the purpose of a motion for reconsideration if
the movant “could not have discovered the new evidence earlier had he exercised
due diligence.” Patterson v. Bannish, 3:10-cv-1481, 2011 WL 2518749, at *1 (D.
Conn. June 23, 2011); Robinson v. Holland, 3:02-cv-1943, 2008 WL 1924971, at *1
(D. Conn. Apr. 30, 2008) (same). If the Court “overlooked controlling decisions or
factual matters that were put before it on the underlying motion,” reconsideration
is appropriate. Wiseman v. Greene, 204 F3d 393, 395 (2d Cir. 2000) (per curium).
Wilmington raises three arguments for reconsideration. Each fails to meet
any of the three grounds for granting a motion for reconsideration.
First, Wilmington disingenuously asserts the Court “ignore[d]” evidence
that Universitas admitted in a 2010 arbitration that Universitas has no arbitration
agreement with Grist Mill Capital. [Dkt. No. 107-1 at 8.] Wilmington supports this
argument with a letter from Universitas to an arbitrator in the matter Universitas
Education, LLC v. Nova Group, Inc., Wayne Bursey, Benistar Admin. Services,
Inc., Donald Trudeau, Grist Mill Capital, LLC and Daniel E. Carpenter, dated
August 19, 2010. [Dkt. No. 107-2.] In the letter, Universitas states “no arbitration
agreement exists between Universitas and Grist Mill Capital.” Id. The letter was
publicly filed on November 20, 2013 in a case pending in the Southern District of
New York. Id. However, Wilmington asserts it did not discover the letter until
January 2016. [Dkt. No. 107-1 at 4.] The letter was not filed with the Court in this
case and thus the Court could not have “ignore[d]” evidence that Universitas
admitted in the 2013.
The letter Wilmington offers to assert Universitas has no arbitration
agreement with Grist Mill is not “newly discovered” evidence for the purpose of a
motion for reconsideration, as Wilmington has not established why it “could not
have discovered the new evidence earlier had he exercised due diligence.”
Patterson, 2011 WL 2518749 at *1. Wilmington discovered the letter in 2016 on a
public docket, where it had been available since November 2013. Wilmington
does not indicate why it could not have discovered the letter sooner with due
diligence. Wilmington also asserts no intervening change in law or controlling
legal decisions which made the letter relevant after the Court rendered its
decision. Wilmington’s first argument for reconsideration fails.
Wilmington next argues the Court failed to resolve material factual disputes
in its Decision, including whether Wilmington agreed to act as insurance trustee
for the owner of the Spencer policies and whether any such agreement includes a
binding arbitration clause. [Dkt. No. 107-1 at 11.] In its Order compelling
arbitration, the Court addressed both of these issues.
First, the Court found that Wilmington “agreed to serve as insurance
trustee for the purported Grist Mill COT” based on (1) Wilmington’s Appointment
Agreement, (2) a New Account Form indicating Wilmington opened a corporate
trust account as “Grist Mill’s” trustee, and (3) trust vault receipts and account
statements showing Wilmington monitored the Spencer policies placed in that
trust account. [Dkt. No. 105 at 31 (citing Dkt. Nos. 31-5 (Appointment Agreement),
31-9 (New Account Form), 31-11 (Trust Vault Receipt, 31-12 (Account
Statement)).] The Court also found Wilmington “agreed to arbitrate any and all
disputes relating to the purported Grist Mill COT by virtue of its appointment as
insurance trustee,” as evidenced by the Appointment Agreement. [Dkt. No. 105 at
31 (citing Dkt. No. 31-5).] Based on those findings, the Court concluded that
“Wilmington acted as insurance trustee for the Spencer policies pursuant to the
appointment agreement in which it admittedly agreed to arbitrate any and all
disputes relating to its performance of its insurance trustee duties.” [Dkt. Nos.
105 at 32; 107-1 at 12.]
Wilmington raises no newly discovered evidence or overlooked evidence
presented in the initial briefing which would require the Court to reconsider its
findings. Wilmington asserts “the Grist Mill COT limited [Wilmington’s] authority
as the Insurance Trustee to only those policies that were controlled by Grist Mill
Capital.” [Dkt. No. 107-1 at 12.] However, Wilmington offers no evidence – new or
overlooked – establishing the Spencer policy placed in the Grist Mill COT was not
“controlled by” Grist Mill, rendering Wilmington its trustee.
Rather, Wilmington raises a new legal argument that its possession of the
Spencer policies constituted a “constructive bailment . . . since [the Spencer]
policies were not owned by the Grist Mill COT and such possession was by
mistake or accident.” [Dkt. No. 107-1 at 13.] Wilmington cites one Connecticut
Superior Court case from 2008 for the premise that “constructive bailment arises
when possession of personal property passes from one person to another by
mistake or accident,” but offers no intervening change in controlling law
necessitating reconsideration of the Court’s Order. Id. (citing H.J. Kelly &
Assocs. v. Meriden, No. CV030285781, 2008 WL 496688, at *7 (Conn. Super. Ct.
Jan. 17, 2008). To the extent that Wilmington obtained the Spencer Policies
accidently, it dealt with the policies under the mistaken understanding that it had
authority to do so incident to the Appointment Agreement, thus making its
conduct subject to arbitration under the Appointment Agreement.
Wilmington's constructive bailment is not a proper argument to raise in a
motion for reconsideration. Wilmington did not raise a constructive bailment
argument at all in its initial briefing, the ruling on which it now seek
reconsideration. Wilmington raises no “intervening change in controlling law” or
“controlling decisions . . . hat were put before [the Court] on the underlying
motion.” Virgin Atl. Airways Ltd., 956 F2d. at 1255; Patterson, 2011 WL 2518749
at *1. Nor does Wilmington argue that some intervening law of bailment, not
relevant at the time its original motion, has emerged to warrant consideration of
this omitted theory on a motion for reconsideration. As a motion for
reconsideration is “not a vehicle for relitigating old issues, presenting the case
under new theories, securing a rehearing on the merits, or otherwise taking a
‘second bite at the apple,’” Wilmington’s second argument for reconsideration
fails. Analytical Surveys, Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir.
2012). To rule otherwise is inconsistent with the principles of fairness, finality,
and judicial efficiency. Were this not the law, every loosing party could scour
every obscure legal source to scrounge for arcane theories indefinitely and file
motions for reconsideration in perpetuity in hopes of either finding a winning
argument or either exhausting or bankrupting its opponent into capitulation.
Finally, Wilmington asserts “the best evidence as to which Charter Oak
declaration of trust (if any) owned the Spencer policies are the Spencer policies
themselves and their respective applications for insurance. [Dkt. No. 107-1 at 13.]
Wilmington asserts the policies state the owner of the policies was “Wayne
Bursey, Trustee of the Charter Oak Trust.” Id. at 14. From this evidence,
Wilmington concludes neither Grist Mill nor Nova owned the Spencer policies,
but rather a third, distinct trust called Charter Oak Trust owned the policies. Id.
Wilmington asserts it did not consent to act as trustee for the “Charter Oak
Trust.” Id. at 14-15. Wilmington asserts “there is no evidence before the Court as
to the identity of the owner of the Spencer policies.” [Dkt. No. 107-1 at 13.] These
Arguments are not only improper to raise on a motion for reconsideration, they
ignore the uncontested facts which the Court does know. They ignore the fact
that Wilmington acted as though it was the trustee of the trust which was entitled
to the Spencer Policies. They also ignore the fact that Wilmington failed in its
original briefing to identify any capacity, other than as trustee of the Grist Mill
COT, under which Wilmington would have acted in respect to the Spencer
Policies. While this Court will be the first to say the underlying facts are murky,
that in and of itself does not entitle Wilmington a second bite the apple it has
already devoured. Further, for the reason stated above, any attempt would be
Wilmington tacitly admits that it is attempting to re-litigate the matter by
admitting “none of the documents” on which Wilmington bases this argument
were presented to the Court with the Motion to Compel Arbitration. Id. at 13. This
is patently impermissible.
For the foregoing reasons, the Court DENIES Wilmington’s motion for
reconsideration of the Court’s Order Compelling Arbitration.
IT IS SO ORDERED.
Vanessa L. Bryant
United States District Judge
Dated at Hartford, Connecticut, March 9, 2017.
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