Johnson v. Cach, LLC et al

Filing 49

MEMORANDUM DECISION AND ORDER - IT IS ORDERED: 1. Plaintiffs Motion for Leave to Amend Complaint (Dkt. 28 ) is DENIED. 2. Plaintiffs Motion for Substitution (Dkt. 29 ) is GRANTED. 3. Plaintiffs Motion for Reconsideration (Dkt. 31 ) is DENIED. 4. P laintiffs Amended Motion for Reconsideration (Dkt. 32 ) is DENIED. 5. Plaintiffs motions to strike (Dkts. 40 & 47 ) are DEEMED MOOT. These motions relate to the briefing on the Motion for Reconsideration. However, the motion was without merit as it asked the Court to reconsider the same arguments. Accordingly, the court did not need to review additional briefing on the Motion for Reconsideration, and the motions to strike are moot. (Estate of Christopher E Johnson added. Christopher Johnson terminated) Signed by Judge B. Lynn Winmill. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
CHRISTOPHER E. JOHNSON,
Case No. 1:16-cv-00383-BLW
Plaintiff,

MEMORANDUM DECISION AND
ORDER

v.
CACH, LLC, and MANDARICH LAW
GROUP, LLP,
Defendants.

Earlier, Defendants asked the Court to dismiss Johnson’s claims or order the case
to arbitration. On December 16, 2016 the Court granted the motion in part by ordering all
claims to arbitration. Dkt. 27. Since then, Johnson has filed a number of motions, and
Defendant CACH, LLC has filed a notice of bankruptcy. Johnson asks the Court to
reconsider its order requiring arbitration. The motion originally asked the Court to
reconsider its entire decision, but later withdrew the motion as to CACH because of the
bankruptcy. Still, Johnson asks that the withdrawal be made without prejudice in case the
bankruptcy is dismissed or unsuccessful. In a separate motion, Johnson asks the Court to
allow him to amend his Complaint to remove CACH. These motions are somewhat at
odds with each other, but the Court believes that Johnson is essentially attempting to
move forward with its case against Mandarich, while possibly reserving its claims against
CACH pending resolution of the bankruptcy proceeding.

MEMORANDUM DECISION AND ORDER - 1

1.

Bankruptcy
On March 19, 2017, Defendant CACH filed a petition for Chapter 11 bankruptcy.

During informal discussions between the Court’s staff and counsel via email, counsel for
both sides appeared to agree that the Court may proceed with this case as to the nondebtor party – that the case is only stayed as to CACH. In order to apply an automatic
stay outlined in 11 U.S.C. § 362 to a non-debtor party, the bankruptcy court typically
must issue an extension of the stay under its jurisdiction. Boucher v. Shaw, 572 F.3d
1087, 1093 (9th Cir.2009). The bankruptcy of one defendant does not normally stay the
case as to non-debtor defendants absent unusual circumstances. Totten v. Kellog Brown &
Root, LLC, 152 F.Supp.3d 1243, 1268 (C.D. Cal 2016) (citing In re Chugach Forest
Products, Inc.), 23 F.3d 241, 246 (9th Cir.1994). Accordingly, the Court will address the
pending motions as they apply to the non-debtor defendant Mandarich.
2.

Motion to Reconsider
A motion to reconsider an interlocutory ruling requires an analysis of two

important principles: (1) error must be corrected; and (2) judicial efficiency demands
forward progress. The former principle has led courts to hold that a denial of a motion to
dismiss or for summary judgment may be reconsidered at any time before final judgment.
Preaseau v. Prudential Insurance Co., 591 F.2d 74, 79-80 (9th Cir. 1979). While even an
interlocutory decision becomes the “law of the case,” it is not necessarily carved in stone.
Justice Oliver Wendell Holmes concluded that the “law of the case” doctrine “merely
expresses the practice of courts generally to refuse to reopen what has been decided, not a

MEMORANDUM DECISION AND ORDER - 2

limit to their power.” Messinger v. Anderson, 225 U.S. 436, 444 (1912). “The only
sensible thing for a trial court to do is to set itself right as soon as possible when
convinced that the law of the case is erroneous. There is no need to await reversal.” In re
Airport Car Rental Antitrust Litigation, 521 F.Supp. 568, 572 (N.D. Cal. 1981)
(Schwartzer, J.).
The need to be right, however, must co-exist with the need for forward progress. A
court's opinions “are not intended as mere first drafts, subject to revision and
reconsideration at a litigant's pleasure.” Quaker Alloy Casting Co. v. Gulfco Indus., Inc.,
123 F.R.D. 282, 288 (N.D. Ill. 1988). Reconsideration of a court’s prior ruling under
Federal Rule of Civil Procedure 59(e) is appropriate “if (1) the district court is presented
with newly discovered evidence, (2) the district court committed clear error or made an
initial decision that was manifestly unjust, or (3) there is an intervening change in
controlling law.” S.E.C. v. Platforms Wireless Int'l Corp., 617 F.3d 1072, 1100 (9th Cir.
2010) (citation omitted). If the motion to reconsider does not fall within one of these
three categories, it must be denied.
Here, Plaintiff argues that the Court committed clear error. However, the motion
essentially just asks the Court to reconsider its earlier decision based on the same
arguments Plaintiff initially made. The Court explained its earlier reasoning in detail, and
nothing in the motion to reconsider changes the Court’s mind. Accordingly, the motion to
reconsider will be denied.

MEMORANDUM DECISION AND ORDER - 3

3.

Motion to Amend and Motion for Substitution
Plaintiff asks the Court to amend the Complaint to remove defendant CACH and

any claim brought under North Carolina law. Plaintiff suggests leave should be freely
given under Rule 15(a)(2). However, that rule requires that leave be freely given when
“justice so requires.” Fed.R.Civ.P. 15(a)(2). Here, justice does not so require.
First and foremost, the case is stayed as to defendant CACH. Thus, pursuant to 11
U.S.C. § 362, the Court cannot address the motion if it affects CACH. Second, the Court
has already ordered all claims to arbitration in a detailed Order. Dkt. 27. Moreover, as
explained above, the Court will deny the request to reconsider that Order. The Court also
notes that Plaintiff attempts to amend the Complaint to remove CACH as a defendant, but
with leave to essentially add CACH back to the case depending on the outcome of the
bankruptcy. This creates a moving target and may lead to serious judicial inefficiencies.
Under these circumstances, justice requires that the Court not amend the Complaint to
remove CACH at this point. Accordingly, the Court will deny the motion to amend.
Regarding the motion to substitute, Plaintiff asks to substitute the Estate of
Johnson for Johnson as the plaintiff because Johnson recently passed away. The parties
go back and forth on whether the substitution is proper given the class action allegations
in the Complaint. But class action certification is not before the Court at this point, and it
has no bearing on the motion to substitute. Although the case was pled as a class action,
no class has been certified, no motion to certify has been filed, and the case has been
ordered to arbitration. Thus, nothing stands in the way of substituting the Estate of

MEMORANDUM DECISION AND ORDER - 4

Johnson for Plaintiff Johnson, or the case proceeding to arbitration as ordered by the
Court. Accordingly, the motion will be granted.
ORDER
IT IS ORDERED:
1.

Plaintiff’s Motion for Leave to Amend Complaint (Dkt. 28) is DENIED.

2.

Plaintiff’s Motion for Substitution (Dkt. 29) is GRANTED.

3.

Plaintiff’s Motion for Reconsideration (Dkt. 31) is DENIED.

4.

Plaintiff’s Amended Motion for Reconsideration (Dkt. 31) is DENIED.

5.

Plaintiff’s motions to strike (Dkts. 40 & 47) are DEEMED MOOT. These
motions relate to the briefing on the Motion for Reconsideration. However,
the motion was without merit as it asked the Court to reconsider the same
arguments. Accordingly, the court did not need to review additional
briefing on the Motion for Reconsideration, and the motions to strike are
moot.
DATED: September 25, 2017
_________________________
B. Lynn Winmill
Chief Judge
United States District Court

MEMORANDUM DECISION AND ORDER - 5