Freese v. Candler et al

Filing 20

ORDER: Appellant Matthew J. Freese's Motion for Rehearing (Doc. # 17 ) is DENIED. Signed by Judge Virginia M. Hernandez Covington on 7/21/2017. (DRW)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
IN RE:
ENVIRONMENTAL TECHNOLOGIES
INTERNATIONAL, INC.,
Debtor.
_____________________________/
MATTHEW J. FREESE,
Appellant,
v.

Case No. 8:17-cv-74-T-33
Bankr. No. 8:15-bk-6910-KRM
Adversary No. 8:15-ap-786-KRM

ASA W. CANDLER, III, et al.,
Appellees.
_____________________________/
ORDER
This matter comes before the Court upon consideration of
Appellant Matthew J. Freese’s Motion for Rehearing (Doc. #
17), filed on June 27, 2017. The Court invited Appellees Asa
W. Candler, III, and Steve Ostermann to file a response by
July 11, 2017, if they wished to be heard on the Motion. (Doc.
# 18). Appellees timely filed a response in opposition. (Doc.
# 19). For the reasons below, the Motion is denied.
I.

Background

A detailed recitation of facts is not needed for the
disposition of the instant Motion. Suffice it to say that

Freese appealed the entry of final judgment in favor of
Candler and Ostermann by the bankruptcy court. After being
fully briefed, this Court affirmed. Freese now moves for
rehearing.
II.

Standard

The pending Motion is brought pursuant to Federal Rule
of Bankruptcy Procedure 8022. (Doc. # 17). Rule 8022 provides
that “any motion for hearing by the district court . . . must
be filed within 14 days after entry of judgment on appeal.”
Fed. R. Bankr. P. 8022(a)(1). In addition, “[t]he motion must
state with particularity each point of law or fact that the
movant believes the district court . . . has overlooked or
misapprehended and must argue in support of the motion.” Fed.
R. Bankr. P. 8022(a)(2).
“Bankruptcy
regarding

the

Rule

standard

8022
for

(formerly
granting

a

8015)

is

silent

rehearing

motion.

Courts in the Eleventh Circuit have ‘applied the same standard
to motions for rehearing under Bankruptcy Rule 8015 as is
applied to motions for reconsideration under Federal Rule of
Civil Procedure 59(e).’” Tucker v. Mukamal, No. 13-mc-23425MARRA, 2015 WL 10986356, at *1 (S.D. Fla. Feb. 11, 2015)
(quoting In re Daniels, No. 12-CV-4181-WSD, 2014 WL 547176,
at *3 (N.D. Ga. Feb. 10, 2014)); see also In re Steffen, 405

2 

B.R. 486, 488 (M.D. Fla. 2009) (“The District Court for the
Middle District of Florida has previously applied the same
standard

to

motions

for

rehearing

under

Bankruptcy

Rule

[8022] as is applied to motions for reconsideration under
Federal Rule of Civil Procedure 59(e) or 60(b).”) (citation
omitted).
“The only grounds for granting a Rule 59 motion are
newly-discovered evidence or manifest errors of law or fact.”
Anderson v. Fla. Dep’t of Envtl. Prot., 567 Fed. Appx. 679,
680 (11th Cir. 2014) (quoting Arthur v. King, 500 F.3d 1335,
1343 (11th Cir. 2007)) (quotation marks omitted). Granting
relief under Rule 59(e) is “an extraordinary remedy to be
employed

sparingly

in

the

interests

of

finality

and

conservation of scarce judicial resources.” United States v.
DeRochemont, No. 8:10-cr-287-T-24MAP, 2012 WL 13510, at *2
(M.D. Fla. Jan. 4, 2012) (citation omitted). Furthermore, “a
Rule 59(e) motion [cannot be used] to relitigate old matters,
raise argument or present evidence that could have been raised
prior to the entry of judgment.” Michael Linet, Inc. v. Vill.
of Wellington, Fla., 408 F.3d 757, 763 (11th Cir. 2005).
III. Analysis
The
arguments

pending
Freese

Motion

for

previously

Rehearing
put

3 

forward

merely
that

rehashes
the

Court

rejected. For that reason, the Motion is denied. Id. The Court
will, however, address the crux of the argument advanced by
Freese: ETI’s failure to pay him a salary vitiated his
obligations under paragraph 9 of the employment agreement.
The employment agreement entered into between Freese and
ETI laid out the terms of Freese’s compensation (Doc. # 2-10
at ¶ 3), which was amended by the letter agreement (Doc. # 29 at ¶ 6(a)(ii)). The employment agreement further stated:
9. Inventions. Freese hereby sells, transfers, and
assigns to [ETI], all of the right, title, and
interest of Freese in and to all inventions, ideas,
disclosures, and improvements . . . made or
conceived by Freese, solely or jointly, or in whole
or in part, during the term hereof which:
(a) relate to methods, apparatus, designs,
products, processes, or devices sold, leased, used,
or under construction or development by [ETI] . .
.; or
(b) otherwise relate to or pertain to the
business, functions, or operations of [ETI] . . .;
or
(c) arise in whole or in part from the efforts
of Freese during the term hereof.
Freese shall communicate promptly and disclose to
[ETI] . . . all information . . . pertaining to the
aforementioned inventions, ideas, disclosures, and
improvements; and . . . Freese shall execute and
deliver to [ETI] such formal transfers and
assignments and such other papers and documents as
may be required of him to permit [ETI] . . . to
file and prosecute the patent applications . . . .
Any invention by Freese related to the technology
of the Corporation within five years following the

4 

termination of this Agreement shall be deemed to
fall within the provisions of this section unless
proved by Freese to have been first conceived and
made following such termination.
(Doc. # 2-10 at ¶ 9).
The employment agreement also provided that “a waiver by
the Corporation or Freese of a breach of any provision of
this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by the other
party.” (Id. at ¶ 15). And while the actual cause of action
in

the

underlying

adversary

proceeding

was

governed

by

Florida law (Doc. # 15 at 21), the employment agreement is
“construed in accordance with the laws of the State of North
Carolina

without

giving

effect

to

the

conflicts

of

provisions thereof.”
In his Motion for Rehearing, Freese argues:
Candler and Ostermann caused ETI to be in material
breach of the [employment agreement] month-by-month
as Freese’s salary became due, was invoiced, and
Candler and Ostermann refused payment right up
until the time that Freese was terminated in
October 2012 for his asserted breach of the
[employment agreement]. Candler and Ostermann
failed to comply with a Board of Directors
directive . . . long before and right up until the
time they voted as ESI Directors to terminate
Freese for breach of the very same agreement. By
the plain and straightforward terms of the
[employment agreement], Freese did not waive the
material breach by ETI when he refused to sign the
Acknowledgment of Assignment. Freese was not
obligated to perform under or comply with the

5 

law

[employment agreement] because ETI was in prior
material breach of the agreement at the time ETI
demanded his performance.
(Doc. # 17 at 8). Freese’s argument is unpersuasive.
Under

paragraph

15

of

the

employment

agreement,

a

party’s waiving one breach does not waive a second breach.
So, while Freese’s observation that he “did not waive the
material

breach

by

ETI

when

he

refused

to

sign

the

Acknowledgment of Assignment” is accurate in a sense, it does
not advance the notion that Freese was relieved of his
obligations under paragraph 9. The waiver resulted not from
Freese’s subsequent breach of the employment agreement, but
rather

from

Freese’s

self-noted

continued

work

for

ETI

despite ETI’s putative breach of paragraph 3, see, e.g. (Doc.
# 17 at 5) (“Despite their being in breach, Mr. Freese
continued to work diligently.”).
In addition, Freese’s related argument — that he was
relieved of all obligations under the employment agreement —
is unsupported by North Carolina law. As stated by the court
in Williams v. Habul,
[t]he general rule governing bilateral contracts
requires that if either party . . . commits a
material breach of the contract, the other party
should be excused from the obligation to perform
further. . . . However, “[f]ailure to perform an
independent promise does not excuse nonperformance
on the part of the other party.”

6 

724 S.E. 2d 104, 112 (N.C. Ct. App. 2012) (citation omitted).
A bilateral contract, like the employment agreement at issue
here,

contains

“reciprocal

promises,

so

that

there

is

something to be done or forborne on both sides,” Winders v.
Kenan, 77 S.E. 687, 689 (N.C. 1913); see also Irwin v. Fed.
Express Corp., No. 1:14-cv-00557, 2016 WL 7053383, at *4
(M.D.N.C. Dec. 5, 2017) (noting that “bilateral contracts are
based upon mutual promises”) (citation omitted).
Freese argues that ETI’s failure to pay him excused him
from complying with his obligations under paragraph 9. The
question is then: are paragraphs 3 and 9 independent or
dependent promises? To determine if covenants are dependent
or independent a court looks to “the intention of the parties
shown by the entire contract as construed in the light of the
circumstances of the case, the nature of the contract, the
relation of the parties thereto, and other evidence which is
admissible to aid the court in determining the intention of
the parties.” Williams, 724 S.E. 2d at 112-13 (citation
omitted).
The court in Williams looked to the language of the two
clauses alleged to be dependent covenants. Id. at 113. After
examining

the

contractual

language,

7 

the

Williams

court

concluded the covenants were independent because “[t]here
[was]

simply

no

nexus

between

the

promises

recited

in

Paragraph 5 and those recited in Paragraph 8 to permit
construction of the promises . . . as mutually dependent.”
Id.
A fair reading of the paragraphs at issue in this case
shows no connection between paragraphs 3 and 9 other than
that the respective obligations imposed by those paragraphs
occurred during the same time period. Otherwise, there is no
language tying payment of salary to assignment of rights or
vice versa. Indeed, paragraphs 3 and 9 never cross reference
each other. And, while there is language tying payment of
salary to “services rendered,” which are further expounded
upon in paragraphs 4 and 5, there is no cross reference
between paragraphs 4 and 5 and paragraph 9.
Notably,

paragraph

9

explicitly

contemplates

an

assignment after the term of the employment agreement, which
as defined in paragraph 2(c) could end as a result of a
material breach by ETI. Thus, the employment agreement’s
plain language demonstrates paragraph 3 is independent of
paragraph 9. Because paragraphs 3 and 9 are independent
covenants, even a breach by ETI of paragraph 3 would not have
excused Freese from complying with paragraph 9.

8 

Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
Appellant Matthew J. Freese’s Motion for Rehearing (Doc.
# 17) is DENIED.
DONE and ORDERED in Chambers in Tampa, Florida, this
21st day of July, 2017.

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