Schneider et al v. CitiMortgage, Inc. et al

Filing 595

MEMORANDUM AND ORDER denying 588 Motion to Alter Judgment. See order for details. Signed by U.S. District Senior Judge Sam A. Crow on 11/16/18.(msb)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
RANDALL A. SCHNEIDER
and AMY L. SCHNEIDER
Plaintiffs,
v.

No. 13-4094-SAC

CITIMORTGAGE, INC.,
et. al.,
Defendants.

MEMORANDUM AND ORDER
The case comes before the court on the plaintiffs’ filing of
October 17, 2018, entitled, “Motion to Reconsider Summary Judgment as to
the Consumer Protection Act.” ECF# 588. This motion addresses the court’s
order filed September 19, 2018, that decided all pending motions. ECF#
586. The court’s ruling, in part, granted summary judgment for defendants
on the plaintiffs’ claims under the Kansas Consumer Protection Act (“KCPA”),
K.S.A. 50-623 et. seq. Id. at pp. 8-20, 48-54. Specifically, the court’s ruling
joined a growing number of others to conclude that the Act clearly and
unambiguously defines “supplier” to expressly exclude regulated banks.
Despite its title, the plaintiffs’ motion does not ask the court to
reconsider this ruling. Nor does the motion assert the court erred in so
ruling, as the plaintiffs explicitly note in their reply. ECF# 594, p. 3. Instead,

the plaintiffs essentially seek the court’s leave to go forward with their
consumer protection claims as if brought under the laws of Delaware, not
Kansas. They couch their request on another part of the court’s summary
judgment order which enforced a choice-of-law provision found in the 2007
Addendum to their promissory note and so applied Delaware law to the
breach of contract claims. To the plaintiffs, the court’s ruling is an
“intervening change in controlling law” under D. Kan. Rule 7.3(b)(1) which
justifies seeking relief to alter or amend judgment under Fed. R. Civ. P.
59(e). They also ask that their filing be read as alternatively asserting unfair
surprise and other reasons for relief under Fed. R. Civ. P. 60(b)(1) and (6).
No matter the procedural avenue, the plaintiffs’ premise is the
same, the court’s “summary judgment ruling effectively changed the law the
case would be decided under or alternatively to prevent manifest injustice
where a consumer has pursued their claims and the conduct is actionable
under the Delaware statutory construct.” ECF# 588, p. 2. Without analyzing
the applicable legal authorities, and relying principally on their views of
fairness, the plaintiffs contend that if Delaware law applies to some of their
claims, “then all claims should be determined under Delaware law rather
than have the Defendant benefit from selective application to some legal
issues and not others with the choice of law provision they created,
identified, and enforced.” Id.; see ECF# 589, pp. 2-3, 5. The plaintiffs cite
no authorities for this argument. In short, their motion lacks a cogent legal
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basis for now asserting Delaware law as the basis for their prior Kansas
consumer protection law claims. The plaintiffs center their claims of fairness
on the defendants’ delay in raising the Delaware choice-of-law provision.
The defendants respond first by observing that the plaintiffs’
motion goes beyond asking for reconsideration but actually seeks to amend
the pretrial order as referenced in the plaintiffs’ prayer for relief, “allow
amendment, further briefing, and a new pretrial order for remedy for
consumer protection . . . .” ECF# 588, p. 2. In reply, the plaintiffs agree with
this reading. The pretrial order presently provides that the “parties believe
and agree that the substantive issues in this case are governed by the
following law.” ECF# 519, p. 2. And particularly, the plaintiffs’ claims for
violations of KCPA, deceptive and unconscionable acts and practices, “are
governed by Kansas law.” Id. The parties recorded therein their
disagreement over whether Kansas or Delaware law governed their separate
breach of contract claims. Id. The parties, however, did not record, reserve
or reference any issue over Delaware law governing the plaintiffs’ consumer
protection claims, including in the event of a later ruling of Delaware’s
applicability to the breach of contract claims.
The pretrial order is to “control the subsequent course of the
action unless modified by consent of the parties and court, or by an order of
the court to prevent manifest injustice.” D. Kan. Rule 16(b); see Fed. R. Civ.
P. 16(e) (“The court may modify the order issued after a final pretrial
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conference only to prevent manifest injustice.”). “The burden of
demonstrating manifest injustice falls upon the party moving for
modification.” Koch v. Koch Industries, Inc., 203 F.3d 1202, 1222 (10th
Cir.), cert. denied, 531 U.S. 926 (2000). The plaintiffs have not carried their
burden. They stipulated to Kansas law governing their consumer protection
claims and neglected to timely preserve any issue over the applicability of
another state law. See id. at 1223 (“This court should also consider whether
the party favoring amendment of the pretrial order formally and timely
moved for such modification in the trial court.”). The prejudice to the
defendants is plain. The defendants pursued discovery, briefed and prevailed
at summary judgment on the plaintiffs’ Kansas consumer protection claims
by relying significantly on the KCPA’s statutory terms, including its unique
definition of “supplier.” The amendment would require defendants to
relitigate these consumer protection claims under a new state statutory
scheme. The plaintiffs make no persuasive showing that Delaware law and
Kansas law are so parallel as to require no more than an identical
presentation of the same facts and arguments. Even if they had made this
showing, the court would not be inclined to call the prejudice to the
defendants minimal or insubstantial. Considering the protracted and
contentious history to this case, allowing the plaintiff to lose under Kansas
law and to try again under Delaware law is certainly inefficient and lacks the
tenor of good faith. The circumstances moving the plaintiffs to seek this
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amendment do not constitute manifest injustice. The court denies the
plaintiffs’ efforts to amend the pretrial order.
The plaintiffs come forward with no viable argument for how the
court’s choice-of-law findings on their breach of contract claims now changes
the law governing their consumer protection claims. This is not an
intervening change in the controlling law, as the choice-of-law provision in
the promissory note does not govern, and was never argued by the parties
as governing, the plaintiffs’ allegations of KCPA violations. The court’s ruling
as to the choice-of-law did not address, let alone change, that the KCPA
governed the plaintiffs’ consumer protection claims. Instead, the alleged
consumer protection violations took place in Kansas, and the parties
properly agreed that Kansas is the place of the wrong and that the KCPA
governed. See Griffin v. Security Pacific Automotive Financial Services Corp.,
25 F. Supp. 2d 1214, 1216-17 (D. Kan. 1998); cf. Stone St. Services, Inc. v.
Daniels, 2000 WL 1909373, at *4 (E.D. Pa. 2000) (KCPA trumps choice of
law provision). There is no unfair surprise in the court deciding the
applicability of the choice-of-law provision in the parties’ promissory note
concerning the meaning, operation and enforcement of the note. This issue
was raised and preserved in the pretrial order. The plaintiffs present no
viable grounds for relief under Rules 59(e) or 60(b).

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IT IS THEREFORE ORDERED that the plaintiffs’ “Motion to
Reconsider Summary Judgment as to the Consumer Protection Act” (ECF#
588) is denied.
Dated this 16th day of November, 2018 at Topeka, Kansas.

s/Sam A. Crow
Sam A. Crow, U.S. District Senior Judge

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