RS-ANB Fund, LP v. KMS SPE LLC et al

Filing 112

MEMORANDUM DECISION AND ORDER denying 80 Motion to Reconsider. 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 cjm)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

RS-ANB FUND, LP,

Lead Case No. 4:11-cv-00175-BLW

Plaintiff/Counterdefendant,
v.
KMS SPE LLC, LIZ AIR 6 L.L.C.,
JERALD M. SPILSBURY, KINGSTON
PROPERTIES L.P., MIKE KINGSTON,
PAUL E. AVERY, BERT BOECKMANN
AND JANE BOECKMANN, TRUSTEES
OF THE BOECKMANN FAMILY
REVOCABLE TRUST, ANDARY
INVESTMENTS 2 LLC and RGRCM LLC,

MEMORANDUM DECISION AND
ORDER

Defendants/Counterclaimants.

KMS SPE, LLC
Plaintiff/Counterdefendant,
v.
RS-ANB Funds, LP,
Defendant/Counterclaimant.
MEMORANDUM DECISION AND ORDER - 1

Consolidated Case No. 4:11-cv-00179BLW

RS-ANB Funds, LP,

Consolidated Case No. 4:11-cv-00179BLW

Plaintiff,
v.
DAVID ORVILLE KINGSTON,
Defendant.

INTRODUCTION
The Court has before it Kingston Properties, LP’s Motion to Reconsider (Dkt. 80).
Kingston Properties asks the Court to reconsider its decision entered on September 7,
2011, finding the Participation Agreement unambiguous (Dkt. 79). Kingston Properties
argues that the Court adopted a construction that it mistakenly believed harmonized
several inconsistent provisions contained in the Participation Agreement.
ANALYSIS
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 principal 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
MEMORANDUM DECISION AND ORDER - 2

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 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). “Courts have distilled various grounds for
reconsideration of prior rulings into three major grounds for justifying reconsideration:
(1) an intervening change in controlling law; (2) the availability of new evidence or an
expanded factual record; and (3) need to correct a clear error or to prevent manifest
injustice.” Louen v Twedt, 2007 WL 915226 (E.D.Cal. March 26, 2007). If the motion
to reconsider does not fall within one of these three categories, it must be denied.
Kingston Properties argues that the Court committed clear error by finding that the
Payments Section of the Participation Agreement could be reconciled with the provisions
MEMORANDUM DECISION AND ORDER - 3

stating that RS-ANB Funds, LP only purchased a 25% interest in the loan portfolio. In
making this argument, Kingston Properties acknowledges that the Payments Section
unambiguously entitles RS to 25% of the proceeds from the liquidation of the ANB
Financial NA $1.1 Billion Commercial Construction Loan Portfolio after RS recouped its
$12 million investment. But Kingston Properties insists that this Payments Section
conflicts with the various provisions that state RS purchased a 25% participation interest
in the portfolio. According to Kingston Properties, the parties inadvertently failed to
include a “true-up provision in Section 4.5” that would have offset the phase when RS
received 50% of the portfolio proceeds until it received the return on its investment.
This argument essentially mirrors the argument David Kingston made in briefing
the original motion for judgment on the pleadings, and it does not convince the Court to
deviate from its original decision. In reaching its original decision, the Court carefully
weighed the parties’ arguments but ultimately concluded that the plain language in
Section 4.5 could not be ignored – even in light of the various provisions stating that RS
purchased a 25% interest only. RS proffered a reasonable interpretation of the contract
that the Court found adequately reconciled the apparently conflicting provisions. Given
this finding, the Court’s decision comported with Idaho law. Madrid v. Roth, 10 P.3d
751 (Id. Ct. App. 2000) (directing that apparently inconsistent provisions must be
reconciled to give meaning to both, rather than nullifying any contractual provision).
MEMORANDUM DECISION AND ORDER - 4

The Court’s decision finding no ambiguity does not foreclose an argument that the
parties inadvertently omitted a “true-up” provision. Kingston Properties is free to argue
that the contract should be reformed to correct a unilateral or mutual mistake in the
creation of the contract. Chandler v. Hayden, 215 P.3d 485, 492 (Idaho 2009)( contract
may be reformed if it does not reflect parties’ agreement because of a mutual mistake);
Belk v. Martin, 39 P.3d 592, 597 (Idaho 2001) (contract may be reformed if it is the result
of a unilateral mistake and there is knowledge of the mistake by the other party). The
Court’s decision entered on September 7, 2011(Dkt. 79), however, will stand.
ORDER
Accordingly, IT IS ORDERED that Kingston Properties, LP’s Motion to
Reconsider (Dkt. 80) is DENIED.

DATED: October 27, 2011

_________________________
B. Lynn Winmill
Chief Judge
United States District Court

MEMORANDUM DECISION AND ORDER - 5