Tenor Capital Partners, LLC v. GunBroker.com, LLC
Filing
129
OPINION AND ORDER denying #120 Motion for Reconsideration re #116 Order on Motion for Partial Summary Judgment, Order on Motion for Oral Argument, Order on Motion for Summary Judgment . Signed by Judge Thomas W. Thrash, Jr. on 1/11/2022. (jeh)
Case 1:20-cv-00613-TWT Document 129 Filed 01/11/22 Page 1 of 8
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
GUNBROKER.COM, LLC,
Plaintiff,
v.
CIVIL ACTION FILE
NO. 1:20-CV-613-TWT
TENOR CAPITAL PARTNERS, LLC,
Defendant.
OPINION AND ORDER
This is a securities action. It is before the Court on the Plaintiff’s Motion
for Reconsideration [120]. For the reasons set forth below, the Plaintiff’s
Motion for Reconsideration [120] is DENIED.
I.
Legal Standard
“The decision to alter or amend judgment is committed to the sound
discretion of the district judge and will not be overturned on appeal absent an
abuse of discretion.” American Home Assurance Co. v. Glenn Estess & Assocs.,
Inc., 763 F.2d 1237, 1238-39 (11th Cir. 1985) (citing Commodity Futures
Trading Comm'n v. American Commodity Grp. Corp., 753 F.2d 862, 866 (11th
Cir. 1984)). The Federal Rules of Civil Procedure do not specifically authorize
motions for reconsideration; nevertheless, such motions are common in
practice. Local Rule 7.2 provides that motions for reconsideration are not to be
filed “as a matter of routine practice,” but only when “absolutely necessary.”
Case 1:20-cv-00613-TWT Document 129 Filed 01/11/22 Page 2 of 8
LR 7.2(E), NDGa. A party may move for reconsideration only when one of the
following has occurred: “an intervening change in controlling law, the
availability of new evidence, [or] the need to correct clear error or prevent
manifest injustice.” Godby v. Electrolux Corp., No. 1:93-CV-0353-ODE, 1994
WL 470220, at *1 (N.D. Ga. May 25, 1994). A party “may not employ a motion
for reconsideration as a vehicle to present new arguments or evidence that
should have been raised earlier, introduce novel legal theories, or repackage
familiar arguments to test whether the Court will change its mind.” Brogdon
v. National Healthcare Corp., 103 F. Supp. 2d 1322, 1338 (N.D. Ga. 2000).
II.
Discussion
On November 3, 2021, the Court issued an order granting in part and
denying in part the Defendant Tenor Capital Partners, LLC’s (“Tenor”) and the
Plaintiff GunBroker.com, LLC’s (“GunBroker”) Motions for Partial Summary
Judgment. GunBroker.com, LLC v. Tenor Cap. Partners, LLC, No. 1:20-CV613-TWT, 2021 WL 5113200 (N.D. Ga. Nov. 3, 2021). Among its holdings, the
Court awarded summary judgment to Tenor on GunBroker’s Count III under
the Georgia Uniform Securities Act (“Georgia Securities Act”). Id. at *11. The
order explained that Tenor must be classified as a “federal covered investment
adviser” under the Georgia Securities Act because it is subject to the federal
Investment Advisers Act. Id. Accordingly, Tenor was not required to register
as an “investment adviser” with the state under O.C.G.A. § 10-5-32(a), and
GunBroker had no cause of action for restitution and litigation expenses under
2
Case 1:20-cv-00613-TWT Document 129 Filed 01/11/22 Page 3 of 8
O.C.G.A. § 10-5-58(e). Id. GunBroker now petitions the Court to reinstate its
Count III on two distinct grounds.
First, GunBroker reverses course from its summary judgment briefs to
argue that Tenor can only be considered an investment adviser, and not a
federal covered investment adviser, under state law. (Contra Pl.’s Br. in Supp.
of Pl.’s Mot. for Partial Summ. J., at 31 (arguing Tenor unlawfully failed to
register under O.C.G.A. § 10-5-34(a) as a federal covered investment adviser);
Pl.’s Br. in Opp’n to Def.’s Mot. for Partial Summ J., at 29 n.8 (same).) In
support of this new argument, GunBroker directs the Court—for the first
time—to the statutory definition of “federal covered investment adviser,”
which means “a person registered under the Investment Advisers Act[.]”
O.C.G.A. § 10-5-2(8) (emphasis added). According to GunBroker, Tenor does
not meet this definition because it was never registered with the U.S.
Securities and Exchange Commission (“SEC”), and it was thus required to
register as an investment adviser with the state under O.C.G.A. § 10-5-32(a).
This is an argument that could and should have been presented to the
Court earlier—when Tenor moved for summary judgment as to the entirety of
GunBroker’s Count III. (Def.’s Br. in Supp. of Def.’s Mot. for Partial Summ. J.,
at 11.) The Court is not inclined to accept it now on reconsideration and, in the
process, relieve GunBroker “of the consequences of its original, limited
presentation.” Dyas v. City of Fairhope, No. 08-0232-WS-N, 2009 WL 5062367,
at *3 (S.D. Ala. Dec. 23, 2009); see also Lockard v. Equifax, Inc., 163 F.3d 1259,
3
Case 1:20-cv-00613-TWT Document 129 Filed 01/11/22 Page 4 of 8
1267 (11th Cir. 1998) (“Motions for reconsideration should not be used to raise
legal arguments which could and should have been made before the judgment
was issued.”); Lussier v. Dugger, 904 F.2d 661, 667 (11th Cir. 1990) (“A district
court’s denial of reconsideration is especially soundly exercised when the party
has failed to articulate any reason for the failure to raise an issue at an earlier
stage in the litigation.”); American Home Assurance Co., 763 F.2d at 1239
(“There is a significant difference between pointing out errors in a court’s
decision on grounds that have already been urged before the court and raising
altogether new arguments on a motion to amend; if accepted, the latter
essentially affords a litigant ‘two bites at the apple.’”) (citation omitted).
Nonetheless, the Court finds it appropriate to explain why GunBroker’s
new argument, even if allowed, would not change the outcome on summary
judgment. First, the Court agrees with GunBroker that the definition of
“federal covered investment adviser” under the Georgia Securities Act refers
only to people who are actually registered with the SEC, and not those who are
merely subject to federal registration requirements.1 However, it is ultimately
irrelevant whether Tenor is classified as a federal covered investment adviser
This conclusion follows not only from the definition of “federal covered
investment adviser” in O.C.G.A. § 10-5-2(8), but also from other sections of the
statute. For example, O.C.G.A. § 10-5-34(c) requires that a federal covered
investment adviser file a notice and a consent to service of process with the
state, as well as “such records as have been filed with the [SEC] under the
Investment Advisers Act[.]” Obviously, Tenor cannot provide any such records
since it has never been registered with the SEC.
4
1
Case 1:20-cv-00613-TWT Document 129 Filed 01/11/22 Page 5 of 8
or an investment adviser: the company is exempt from state registration
requirements either way because it had fewer than six clients in Georgia in the
12 months preceding the GunBroker agreement. Ga. Comp. R. & Regs. 590-44-.13(1)(b) (“The provisions of Sections 10-5-32(a) and 10-5-34(a) shall not
apply to . . . [a]ny investment adviser or federal covered investment adviser
who during the course of the preceding 12 months has had fewer than six
clients in this state[.]”). (Schnabl Decl. ¶ 3 (stating Tenor had four clients in
Georgia during the relevant time period).) 2 Therefore, GunBroker cannot
maintain an action against Tenor under O.C.G.A. § 10-5-58(e), and the Court
appropriately granted summary judgment for Tenor on that claim.
Next, GunBroker argues that its claim under O.C.G.A. § 10-5-58(f) should
survive because Tenor made no substantive argument concerning this provision.
In relevant part, O.C.G.A. § 10-5-58(f) provides:
[a] person that receives directly or indirectly any consideration for
providing investment advice to another person and that employs
a device, scheme, or artifice to defraud the other person or
engages in an act, practice, or course of business that operates or
would operate as a fraud or deceit on the other person is liable to
the other person.
While Tenor never cited O.C.G.A. § 10-5-58(f) in its summary judgment briefs,
it did argue that GunBroker’s Count III should fail in part because “there was
GunBroker argues that the Court should disregard the declaration of
Samuel Andrew Schnabl because it presents new evidence in response to a
motion for reconsideration. But this new evidence was made necessary by
GunBroker’s new argument regarding state registration requirements, so the
Court will allow and consider the declaration for that purpose.
5
2
Case 1:20-cv-00613-TWT Document 129 Filed 01/11/22 Page 6 of 8
no ‘fraud or deceit’ in any aspect of Tenor’s performance under the Letter
Agreement[.]” (Def.’s Br. in Supp. of Def.’s Mot. for Partial Summ J., at 11.)
The Court agreed and granted summary judgment on GunBroker’s fraudulent
inducement and negligent misrepresentation claims, finding no evidence of a
false statement by Tenor or justifiable reliance thereon by GunBroker.
GunBroker.com, 2021 WL 5113200, at *12-15. GunBroker does not seek
reconsideration of those holdings in this Motion for Reconsideration.
Instead, GunBroker argues that the Georgia Securities Act sounds in
principles of negligence rather than fraud and thus creates broader liability
than common law fraud. That argument is mistaken. The Georgia Court of
Appeals has recognized that “common law and securities fraud require the
same elements,” including a (1) misstatement or omission, (2) of material fact,
(3) made with scienter, (4) on which the plaintiff relied, (5) that proximately
caused his injury. Keogler v. Krasnoff, 268 Ga. App. 250, 254 (2004); GCA
Strategic Inv. Fund, Ltd. v. Joseph Charles & Assocs., Inc., 245 Ga. App. 460,
463 (2000).3 While GunBroker seizes on references to a “device, scheme, or
artifice” and an “act, practice, or course of business” in O.C.G.A. § 10-5-58(f),
Both Keogler and GCA involved securities fraud claims under
O.C.G.A. § 10-5-12(a) (now O.C.G.A. § 10-5-50), which contains the same
relevant language as O.C.G.A. § 10-5-58(f): that it is unlawful for a person to
“employ a device, scheme, or artifice to defraud” or to “engage in an act,
practice, or course of business that operates or would operate as a fraud or
deceit upon a person.” Compare Keogler, 268 Ga. App. at 253 n.4, with
O.C.G.A. § 10-5-58(f).
6
3
Case 1:20-cv-00613-TWT Document 129 Filed 01/11/22 Page 7 of 8
those terms do not create a lower hurdle for plaintiffs to prove securities fraud
compared to traditional fraud. The Court finds then that its previous holdings
on GunBroker’s fraudulent inducement and negligent misrepresentation
claims are directly applicable to its securities fraud claim.
GunBroker further argues that Tenor committed a fraudulent omission
in failing to disclose that it was not registered as an investment adviser with
the SEC or state. (See Am. Compl. ¶ 53-54.) This allegation is also not viable
under O.C.G.A. § 10-5-58(f) because there is no evidence that GunBroker ever
justifiably relied on Tenor’s (unstated) registration status. To show justifiable
reliance sufficient to constitute securities fraud, GunBroker must prove that
“with the exercise of reasonable diligence it still could not have discovered the
truth behind the fraudulent omission or misrepresentation.” GCA, 245 Ga.
App. at 464 (citation and alteration omitted). Here, the record shows that
GunBroker discovered Tenor’s lack of registration in February 2019 after
consulting outside counsel and then asking Tenor about its securities licenses
and, if none, applicable exemptions. GunBroker, 2021 WL 5113200, at *5.
GunBroker could have easily done the same research three months earlier
when the Parties executed the Letter Agreement. Because none of GunBroker’s
fraud allegations can withstand summary judgment, the Court denies the
Motion for Reconsideration as to its O.C.G.A. § 10-5-58(f) claim.
III.
Conclusion
For the reasons set forth above, the Court DENIES GunBroker’s
7
Case 1:20-cv-00613-TWT Document 129 Filed 01/11/22 Page 8 of 8
Motion for Reconsideration [120].
SO ORDERED, this
11th
day of January, 2022.
______________________________
THOMAS W. THRASH, JR.
United States District Judge
8
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?