Webster Capital Finance, Inc v. Newby et al

Filing 72

MEMORANDUM AND ORDER granting 65 Motion for Attorney Fees in an amount of $64,784.06; denying 66 Motion to Alter Judgment; denying 66 Motion for Reconsideration ; denying 69 Motion to Set Aside. Signed by District Judge Eric F. Melgren on 2/21/2014. (cm)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

WEBSTER CAPITAL FINANCE, INC.,
f/k/a CENTER CAPITAL CORPORATION,
Plaintiff,

vs.

Case No. 12-2290-EFM

DANIEL NEWBY, et al.,
Defendants.

MEMORANDUM AND ORDER
In this action, Plaintiff Webster Capital Finance f/k/a Center Capital Corporation seeks to
enforce personal loan guaranties against Defendants Daniel Newby and Thomacine Newby.
This matter comes before the Court on Defendants’ Motion to Reconsider (Doc. 66) and Motion
to Set Aside Judgment (Doc. 69). Also before the Court is Plaintiff’s Motion for Attorneys’ Fees
(Doc. 65).

For the reasons stated herein, the Court grants Plaintiff’s motion and denies

Defendants’ motions.
I.

Factual Background

Plaintiff, Webster Capital Finance, Inc., is a Connecticut corporation that provides
financing to various business ventures. Defendants Daniel Newby and Thomacine Newby are
residents of Kansas City, Missouri, who operate Ottawa Bus Service, Inc. (“Ottawa Bus”), a

Kansas corporation. On February 19, 2002, Plaintiff and Ottawa Bus entered into a Master Loan
and Security Agreement (“Master Loan Agreement”), which provided the terms under which
Plaintiff would subsequently provide financing to Ottawa Bus for the purchase of buses and
other equipment.
To secure payment under the Master Loan Agreement and the various loan schedules,
Defendants each executed a Continuing Guaranty on February 26, 2002 (the “Continuing
Guaranties”).1 In these documents, Defendants personally guaranteed Ottawa Bus’s “prompt
payment of all indebtedness, including, but not limited to, principal, accrued interest, costs, late
charges, out of pocket expenses, and attorneys’ fees”2 due under the Master Loan Agreement or
any related obligations. Defendants’ guaranties gave rise to “an absolute and unlimited guaranty
of payment and performance, not a guaranty of collection, and Guarantor agrees to pay and/or
reimburse [Webster Capital] for any attorney’s fees and out of pocket costs incurred in
connection with the collection on or enforcement of this Guaranty.”3
Plaintiff filed the present action on May 15, 2012, asserting that Defendants have
improperly refused to honor their personal guaranties upon Ottawa Bus’s bankruptcy and alleged
default under the Master Loan Agreement. On August 2, 2013, the Court granted summary
judgment in favor of Plaintiff on all claims, including Plaintiff’s claim for attorneys’ fees.
Defendants now argue that the Court should reconsider and set aside its Order, while Plaintiff
seeks its final award of attorneys’ fees.

1

Defendants issued their Continuing Guaranties in favor of Center Capital Corporation, Webster Capital’s
predecessor.
2

Daniel Newby Continuing Guaranty, Pl.’s Ex. M, Doc. 49-14, at 1; Thomacine Newby Continuing
Guaranty, Pl.’s Ex. N, Doc. 49-15, at 1.
3

Id.

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II.

Analysis

A. Defendants’ Motion for Reconsideration
Defendants first ask the Court to reconsider its Memorandum and Order granting Plaintiff
summary judgment on all claims. “A motion for reconsideration provides the court with an
opportunity to correct ‘manifest errors of law or fact and to review newly discovered
evidence.’”4 A court has discretion whether to grant or deny a motion for reconsideration.5
“There are three circumstances in which a court may appropriately grant a motion for
reconsideration: (1) where the court made a manifest error of fact or law; (2) where there is
newly discovered evidence; and (3) where there has been a change in the law.”6 A motion for
reconsideration is not a vehicle for the losing party to rehash arguments previously considered
and rejected.7 “The party moving for reconsideration has the burden to show that there has been
a change of law, that new evidence is available, or that reconsideration is necessary to correct
clear error or prevent manifest injustice.”8
Here, Defendants do not allege a change in law or the availability of new material
evidence. Instead, Defendants’ motion for reconsideration restates most of the arguments made
in response to Plaintiff’s motion for summary judgment, simply asserting that manifest injustice
will result because the Court did not find in their favor. “It is well settled that a motion to
reconsider is not a second chance for the losing party to ask the Court to revisit issues already

4

Classic Commc’ns, Inc. v. Rural Tel. Serv. Co., Inc., 180 F.R.D. 397, 399 (D. Kan. 1998) (quoting Dees v.
Wilson, 796 F. Supp. 474, 475 (D. Kan. 1992)).
5

Id. (citing Hancock v. City of Oklahoma City, 857 F.2d 1394, 1395 (10th Cir. 1988)).

6

Id.

7

Voelkel v. GMC, 846 F. Supp. 1482, 1483 (D. Kan. 1994).

8

Classic Commc’ns, 180 F.R.D. at 399 (quoting Mackey v. IBP, Inc., 1996 WL 417513 at *2 (D. Kan. July
22, 1996)).

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addressed or to consider new arguments and supporting facts that could have been presented
originally.”9 Nor is a motion to reconsider to be used as “a second chance when a party has
failed to present its strongest case in the first instance.”10 For these reasons, the Court finds that
Defendants have not carried their burden to demonstrate that reconsideration is appropriate.
Defendants’ motion for reconsideration must therefore be denied.
B. Defendants’ Motion to Set Aside Judgment Based on Fraud
A postjudgment motion to set aside judgment must arise under either Rule 59(e) or Rule
60(b), which serve different purposes.11 If the motion is filed more than ten days after the entry
of the judgment, it is considered a motion seeking relief from the judgment under Fed. R. Civ. P.
60(b).12 Because Defendants’ motion was filed fourteen days after the Court entered summary
judgment, their submissions must be considered a motion for relief from judgment pursuant to
Fed. R. Civ. P. 60(b).
Under that Rule, courts may grant relief from a judgment under the following
circumstances:
(1) mistake, inadvertence, surprise, or excusable neglect;
(2) newly discovered evidence that, with reasonable diligence, could not have
been discovered in time to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or
misconduct by an opposing party;
(4) the judgment is void;

9

Sonnino v. Univ. of Kansas Hosp. Auth., 221 F.R.D. 661, 664 (D. Kan. 2004).

10

Id.

11

Wallace v. United States, 372 Fed. Appx. 826, 831 (10th Cir. 2010).

12

Id.

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(5) the judgment has been satisfied, released or discharged; it is based on an
earlier judgment that has been reversed or vacated; or applying it
prospectively is no longer equitable; or
(6) any other reason that justifies relief.13
“Relief under Rule 60(b) . . . is extraordinary and may only be granted in exceptional
circumstances.”14 “Generally speaking, only the most egregious misconduct, such as bribery of a
judge or members of a jury, or the fabrication of evidence by a party in which an attorney is
implicated will constitute fraud on the court.”15 “Less egregious misconduct, such as
nondisclosure to the court of facts allegedly pertinent to the matter before it, will not ordinarily
rise to the level of fraud on the court.”16 A party moving for relief pursuant to Rule 60(b)(3) must
establish misconduct by clear and convincing evidence, including a showing that the party acted
with an intent to deceive or defraud the court by means of a deliberately planned and carefully
executed scheme.17 In this context, “all doubts must be resolved in favor of the finality of the
judgment.”18
In this case, Defendants make two arguments that the Court should set aside judgment
based on fraud or misrepresentation.

First, Defendants allege that Plaintiff made a

misrepresentation in its motion for summary judgment, namely, that Plaintiff sent Defendants a
notice of default and demand for payment. The Court evaluated the evidence and decided this

13

Fed. R. Civ. P. 60(b).

14

Yapp v. Excel Corp., 186 F.3d 1222, 1231 (10th Cir. 1999).

15

Weese v. Schukman, 98 F.3d 542, 552-53 (10th Cir. 1996).

16

Id.

17

Smith v. Cochran, 182 Fed. Appx. 854, 861 (10th Cir. 2006).

18

Weese, 98 F.3d at 552.

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matter in its Memorandum and Order.19 On September 2, 2010, Plaintiff sent Defendants a letter
advising Defendants that they were in default, that the loan was being accelerated, and that
payment was demanded. Though Defendants may still deny that this letter constitutes a notice of
default, a motion to set aside judgment is not the appropriate forum for restating arguments
already evaluated and rejected by the Court. Further, Defendants present no evidence of any
intention to affirmatively deceive the Court. Accordingly, the Court finds that relief from
judgment is inappropriate with respect to the representations in Plaintiff’s motion for summary
judgment.
Second, Defendants argue that Amy Levy, a representative of Webster Capital, made
fraudulent representations to the Court in her Declaration in support of summary judgment.
Specifically, Defendants argue that Levy misrepresented that Plaintiff accelerated the loan by
operation of its letter on September 2, 2010, and that Defendants failed to make monthly
payments due on July, August, and September 2010. Again, these substantive issues were
addressed in the Court’s Memorandum and Order, and Defendants present no evidence that
Plaintiff intended to mislead the Court. Accordingly, Defendant’s motion to set aside judgment
must be denied.
C. Plaintiff’s Motion for Attorneys’ Fees
Finally, Plaintiff seeks an award of attorneys’ fees in an amount of $64,784.06 in
accordance with the Court’s Order granting summary judgment in its favor.

In response,

Defendants first argue that an award of attorneys’ fees is inappropriate while their motion for
reconsideration and motion to set aside are pending.

Because the Court denies both of

Defendants’ motions as set forth above, the Court finds that Plaintiff’s motion for attorneys’ fees
is ripe for adjudication.

19

Memorandum & Order, Doc. 60, at 7-8.

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Defendants also oppose the scope of Plaintiff’s motion for attorneys’ fees.

More

specifically, Defendants argue that Plaintiff requests an unreasonably broad award that includes
attorneys’ fees for this action as well as the Ottawa Bus bankruptcy. Without citation to
authority, Defendants assert that the Court should limit its award to attorneys’ fees that Plaintiff
incurred in prosecuting the present action, excluding any fees related to the bankruptcy
proceedings.
In support of its motion, Plaintiff cites several cases to support its alleged entitlement to
attorneys’ fees incurred to recover the indebtedness, regardless of whether those fees are related
to this action or to the bankruptcy proceedings.20 To determine the proper scope of attorneys’
fees to award, courts review the terms of the contract or guaranty.21 Here, the relevant Guaranty
agreements provide that each Defendant “agrees to pay and/or reimburse [Plaintiff] for any
attorney’s fees and out of pocket costs incurred in connection with the collection on or
enforcement of this Guaranty.”22 Courts interpreting very similar language have held that “[t]he
attorneys’ fees attributable to the bankruptcy proceedings were part of an attempt to satisfy the
debt incurred under the Loan Agreement and are amounts due under the Loan Agreement and
guaranteed by [Guarantor] under the Guaranty Agreement.”23
In this case, Plaintiff protected its rights by participating in the Ottawa Bus bankruptcy
and by seeking to collect directly from Defendants. Upon thorough review of the record, the

20

See First Bank Se., N.A. v. Predco, Inc., 951 F.2d 842, 851-52 (7th Cir. 1992); Porter Capital Corp. v.
Haralson, 2012 WL 4813769, *8 (N.D. Ala. Oct. 10, 2012); CIT Grp./Equip. Fin., Inc. v. Airport Shuttle Inc., 2008
WL 393696, *1-2 (E.D. La. Feb. 11, 2008).
21

Predco, 951 F.2d at 851.

22

Daniel Newby Continuing Guaranty, Pl.’s Ex. M, Doc. 49-14, at 1; Thomacine Newby Continuing
Guaranty, Pl.’s Ex. N, Doc. 49-15, at 1.
23

Predco, 951 F.2d at 851; CIT Grp., 2008 WL 393696 at *1.

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Court finds that attorneys’ fees attributable to the bankruptcy proceedings relate to Plaintiff’s
attempt to satisfy the debt incurred under the Master Loan Agreement, which Defendants
personally guaranteed in their Continuing Guaranties. Therefore, Plaintiff is entitled to an award
for attorneys’ fees incurred in this action as well as those incurred in the Ottawa Bus bankruptcy.
The Court has reviewed the Declaration of Evan S. Goldstein, counsel for Plaintiff, as well as the
relevant invoices, and finds that the attorneys’ fees are reasonable. Accordingly, the Court
grants Plaintiff’s motion.
IT IS ACCORDINGLY ORDERED that Defendants’ Motion to Reconsider Order
Granting Plaintiff’s Motion for Summary Judgment and/or Amended and Additional Findings
(Doc. 66) is hereby DENIED.
IT IS FURTHER ORDERED that Defendants’ Motion to Set Aside Judgment Based on
Fraud (Doc. 69) is hereby DENIED.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Attorneys’ Fees (Doc. 65) is
hereby GRANTED in an amount of $64,784.06.
IT IS SO ORDERED.
Dated this 21st day of February, 2014.

ERIC F. MELGREN
UNITED STATES DISTRICT JUDGE

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