CNH Capital America LLC v. Hunt Tractor, Inc. et al

Filing 141

MEMORANDUM OPINION by Senior Judge Charles R. Simpson, III on 3/27/2015. The Court will deny the Plaintiff's motion to strike the Defendant's renewed motion for summary judgment (DN 130 ) and grant the Plaintiff's alternative reque st for an extension of time to respond to the Defendant's motion. (DN 131 ). In light of this ruling, the Court will deny the Plaintiff's motion for a pretrial conference and to set a trial date. (DN 132 ). Finding no need for a hearing, we will also deny Plaintiff's request for a hearing on these motions. (DN 133 ). A separate order and judgment will be entered this date in accordance with this Memorandum Opinion. cc: Counsel (CDR)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE

CNH CAPITAL AMERICA LLC

PLAINTIFF

v.

CIVIL ACTION NO. 3:10CV-350-CRS

HUNT TRACTOR, INC., et al.

DEFENDANTS

MEMORANDUM OPINION

This matter is before the Court for consideration of the following motions:
(1) Motion of the Plaintiff, CNH Capital America, LLC (“CNH”), to strike
Defendant, Dominick Pagano’s, motion for summary judgment (DN 130; DN
129) or, alternatively, for an extension of time to respond/reply (DN 131).
(2) Motion of the Plaintiff, CNH, for a pretrial conference and to set a trial date
(DN 132).
(3) Motion of the Plaintiff, CNH, for a hearing on the above pending motions and
Pagano’s motion for summary judgment (DN 133).
Fully briefed, these matters are now ripe for adjudication. Having considered the parties’
respective positions, we conclude that Pagano’s renewed motion for summary judgment was
proper. For the reasons set forth below, the Court will deny the Plaintiff’s motions to strike, for
a pretrial conference and to set a trial date, as well as its motion for a hearing. We will also grant
the Plaintiff’s motion for an extension of time to respond/reply to Defendant’s motion for
summary judgment. DN 130; DN 131; DN 132; DN 133.

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I.
On April 15, 2012, Pagano filed a motion for summary judgment in this matter requesting
that the Court dismiss all of CNH’s claims against him – Counts III, IV, V, VI, VII, VIII, IX, X,
and XI. DN 102. CNH responded by filing a motion for partial summary judgment against all
Defendants. DN 103. We assessed the merits of these motions and granted Pagano’s motion for
summary judgment in full, thereby dismissing all Counts against him. DN 117.
In our opinion, we briefly discussed Count XI against Pagano in CNH’s complaint. Id.
We noted that a plaintiff must prove the following elements to establish a claim for conversion
under Kentucky law:
(1) the plaintiff had legal title to the converted property; (2) the plaintiff had
possession of the property or the right to possess it at the time of the conversion;
(3) the defendant exercised dominion over the property in a manner which denied
the plaintiff's rights to use and enjoy the property and which was to the
defendant's own use and beneficial enjoyment; (4) the defendant intended to
interfere with the plaintiff's possession; (5) the plaintiff made some demand for
the property's return which the defendant refused; (6) the defendant's act was the
legal cause of the plaintiff's loss of the property; and (7) the plaintiff suffered
damage by the loss of the property.
Id. at 33. The Court then went on to find, “without deciding whether the plaintiffs can establish
any of the other elements,” that “the evidence as to the third element[, dominion and control,
wa]s lacking.” Id. We so held because “Pagano . . . never exercised control over th[e relevant]
proceeds, . . . the proceeds were in control of Hunt Tractor, . . . [and] Pagano was ordering the
loans to be repaid . . . [only] on behalf of Hunt Tractor.” Id. We rejected CNH’s theory that
Pagano exercised dominion over the proceeds because he benefitted from the conveyance at
issue. Id. CNH nevertheless took issue with our ruling and appealed to the Sixth Circuit.

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On appeal, the Sixth Circuit affirmed our decision to grant summary judgment as to all
counts except for CNH’s conversion claim, citing two errors in our discussion of that count. DN
124, p. 9-10. First, it found that we erred in finding that Pagano was responsible for ordering the
loans to be repaid, concluding instead that there were genuine issues of fact on that question. Id.
Second, the court found that we erred in finding that Pagano could not be personally liable for
conversion as a matter of law because, if he did in fact order the loans to be repaid, he was a
minority shareholder of Hunt Tractor that could be personally liable for acting on behalf of Hunt
Tractor. Id. Consequently, the Sixth Circuit “remand[ed] this issue for proceedings consistent
with [its] opinion.” Id. Pagano then filed a Petition for Panel Rehearing with the Sixth Circuit,
seeking rehearing on the conversion claim and modification certain language in its opinion. The
Sixth Circuit granted the petition in part by modifying its opinion only to the extent that it
deleted language discussing a non-existent contractual requirement about remitting proceeds
from a sale of inventory. DN 130-4. The conversion analysis did not change, however, and
remand followed. Id.
Thereafter, Pagano filed a renewed motion for summary judgment on CNH’s conversion
claim with this Court. DN 129. In this renewed motion, Pagano now argues that CNH is unable
to prove the first, second, and sixth elements of conversion. DN 129-1. His motion does not
contest or address the third element – dominion and control. Id. CNH responded by moving to
strike Pagano’s motion. DN 130. Along with its motion to strike, CNH alternatively moved the
Court to extend its time to respond/reply to Pagano’s motion in the event that we deny its motion
to strike. DN 131. Also, CNH moved the Court for an order setting a trial date and pretrial
conference, which will only be appropriate if CNH’s motion to strike is granted, and for a
hearing on these pending motions. DN 132.
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II.
CNH moved the Court to strike Pagano’s motion for summary judgment on two bases: 1.
because Pagano allegedly raises arguments that were made to and rejected by the Sixth Circuit
which may not be reargued them under the “law of the case” doctrine; and, 2. because Pagano
allegedly raises new arguments in his motion that are untimely and, resultantly, have been
waived. We will address these contentions in turn.
A. Law of the Case Doctrine
First, the Plaintiff has moved to strike Defendant Pagano’s motion for summary judgment
under the law of the case doctrine. The law of the case prevents relitigation of an issue once it
has been decided. Bowles v. Russell, 432 F.3d 668, 676 (6th Cir.2005), aff'd, 551 U.S. 205, 127
S.Ct. 2360, 168 L.Ed.2d 96 (2007). One specific application of this doctrine holds that a district
court is bound to the scope of remand issued by a court of appeals – this is the application
relevant here. See Scott v. Churchill, 377 F.3d 565, at 570 (6th Cir. 2004). It requires us, as a
district court, to proceed in accordance with the mandate and the law of the case as established
by the Sixth Circuit. Mason v. Mitchell, 729 F.3d 545, 550 (6th Cir. 2013).
But practically speaking, how does a district court determine which issues it is forbidden
from hearing on remand? The answer to that question is fairly straightforward: the law of the
case only prevents relitigation of “those questions necessarily decided in the earlier appeal.”
Hanover Ins. Co. v. American Engineering Co., 105 F.3d 306, 312 (6th Cir. 1997). An issue was
“necessarily decided” on appeal, moreover, if it was “fully briefed and squarely decided.”
Perkins v. Am. Elec. Power Fuel Supply, Inc., 91 F. App'x 370, 374 (6th Cir. 2004) (citing 1B
James Wm. Moore, Moore's Federal Practice ¶ 0.404[1], at II–5 (2d ed.1996)). And although
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the Plaintiff is correct that the law of the case includes issues that were “implicitly resolved” on
appeal, it simply does not extend to preclude consideration of issues that were not presented or
issues that were not decided. Conway v. Chem. Leaman Tank Lines, Inc., 644 F.2d 1059, 1062
(5th Cir. 1981).
In order to implement the Sixth Circuit’s mandate, we must by take into account the
circumstances its opinion embraces and the context of its analysis. Mason v. Mitchell, 729 F.3d
545, 550 (6th Cir. 2013) cert. denied sub nom. Mason v. Johnson, 134 S. Ct. 1937, 188 L. Ed. 2d
964 (2014); United States v. O’Dell, 320 F.3d 674, 681 (6th Cir. 2003). As such, we begin by
looking to the impetus for its decision: our opinion on Pagano’s original motion for summary
judgment. In that opinion, we found that CNH’s evidence of conversion was lacking because:
Pagano, as an individual, never exercised control over those proceeds. The
proceeds were within the control of Hunt Tractor, which used them to pay
Commonwealth Bank. While the evidence put forth by CNH shows that Pagano
was ordering the loans to be repaid, it is clear that he did so on behalf of Hunt
Tractor.
DN 117, p. 33 (emphasis added). Critical to the context of CNH’s appeal, we also explicitly
stated that we were not “deciding whether the plaintiffs c[ould] establish any of the other
elements” of conversion. Id. Therefore, based on the dominion-and-control element only, we
granted Pagano’s motion for summary judgment on conversion.
On appeal to the Sixth Circuit, CNH challenged, in pertinent part, our decision to grant
Pagano’s motion for summary judgment on CNH’s conversion claim. Lest there had been any
doubt, the Court of Appeals began by reiterating that we had “only analyzed the dominion and
control element” of CNH’s conversion claim. DN 117, p. 33. The Sixth Circuit then set the
scope of its analysis by identifying the parties’ relevant arguments:

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CNH argues that because Pagano was neither an employee or officer of Hunt
Tractor, Pagano claims to have had no authority to act on behalf of Hunt Tractor,
and that the district court found Pagano directed the funds to be paid, Pagano
must have asserted dominion and control over the proceeds. CNH further argues
that a corporate officer can be personally liable for acts committed on behalf of a
corporation. Pagano argues that he could not have exercised dominion and control
over the funds because the Hunt Tractor bank account was controlled solely by
Hunt, and that any benefit received by Pagano did not amount to dominion and
control.
DN 124, p. 9 (emphasis added). As evidenced by the terms we have marked with emphasis, the
Sixth Circuit only found it necessary to discuss the parties’ dominion-and-control arguments in
assessing CNH’s conversion claim. It is undisputed, however, that Pagano raised arguments that
related to other elements of conversion; but, like this Court, the Sixth Circuit did not address
them. Nor were they required to do so because our holding was limited to the dominion-andcontrol element. See U.S. Postal Serv. v. Nat'l Ass'n of Letter Carriers, AFL–CIO, 330 F.3d 747,
750 (6th Cir.2003).
Then the Sixth Circuit decided to reverse our grant of summary judgment on the
conversion claim based on two conclusions: 1. that we “erred when [we] found that Pagano was
responsible for ordering the loans to be repaid; and, 2. that we “erred, as a matter of law, when
[we] found that Pagano could not be personally liable for conversion because the proceeds were
always maintained within the bank account of Hunt Tractor.” DN 124, p. 9-10. It comes as no
surprise that these conclusions mirror the exact language used in our dominion-and-control
discussion; because, quite plainly, the Sixth Circuit’s analysis was similarly limited to that
element of conversion. See DN 117 (“Pagano was ordering the loans to be repaid . . . [but] did
so on behalf of Hunt Tractor.”). Considering the totality of circumstances surrounding “the letter
and spirit” of the appeal, there is no indication that the Sixth Circuit gave any consideration to
any of the other six elements of conversion. See Mason v. Mitchell, 729 F.3d 545, 550 (6th Cir.
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2013) cert. denied sub nom. Mason v. Johnson, 134 S. Ct. 1937, 188 L. Ed. 2d 964 (2014).
Thus, Pagano is only prohibited from relitigating judgment as a matter of law on the third
element of conversion – dominion and control – on remand, but may proceed with his other
arguments.
Still, CNH argues that “[t]he fact that the Sixth Circuit did not expressly address
Pagano’s [other arguments] does not allow this Court to reconsider the issues. The Sixth Circuit
reversed summary judgment to Pagano and thus rejected all of Pagano’s arguments.” DN 130, p.
8. But this disregards two well-settled points of law. First, a court of appeals “may of course
affirm a district court’s judgment on legal grounds not relied upon by the lower court,” but is not
required to do so. Molosky v. Washington Mut., Inc., 664 F.3d 109, 116 (6th Cir. 2011) (citing
U.S. Postal Serv. 330 F.3d at 750). So, regardless of whether we granted summary judgment
based solely on the dominion-and-control element, the Sixth Circuit could have, but was not
required to, rely on or discuss any of the alternative arguments put forth by Pagano on appeal. It
exercised that right here. Second, to use a decision cited by CNH, the law of the case doctrine
“applies only to the issues decided, not to all those presented for decision but left unanswered.”
See DN 130; Conway v. Chem. Leaman Tank Lines, Inc., 644 F.2d 1059, 1062 (5th Cir. 1981)
(quoting Lehrman v. Gulf Oil Corporation, 500 F.2d 659, 663 (5th Cir. 1974); see also Coal
Res., Inc. v. Gulf & W. Indus., Inc., 865 F.2d 761, 766 (6th Cir.) opinion amended on denial of
reh'g sub nom. Coal Res., Inc., No. 11 v. Gulf & W. Indus., Inc., 877 F.2d 5 (6th Cir. 1989). Yet,
CNH has not argued that any part of the Sixth Circuit’s opinion addressed, let alone resolved,
Pagano’s arguments through the lens of the other six (6) elements of conversion.

Hence,

whether Pagano made alternative arguments is of no consequence on remand because the Court
of Appeals opted to resolve the appeal without addressing them.
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The Sixth Circuit’s decision in Haddad v. Alexander, Zelmanski, Danner & Firitto, PLLC
(“Haddad II”), 758 F.3d 777 (6th Cir. 2014) is instructive.1 When that case initially appeared
before the district court, the plaintiff argued both that the condominium assessments at issue
qualified as “debt” under the Fair Debt Collection Practices Act (“FDCPA”) and that the
Defendant failed to verify such debt. The district court nevertheless refrained from deciding the
latter issue because it found that the assessments were not a “debt” at all. Haddad v. Alexander,
Zelmanski, Danner & Fioritto, PLLC (“Haddad I”), 698 F.3d 290, 292 (6th Cir. 2012). On
appeal, the Sixth Circuit disagreed and held that the assessments in question were, in fact, a
“debt,” and remanded the matter for further proceedings. In light of this reversal, the district
court then “took up the [failure-to-verify] issue on remand.” Haddad II, 758 F.3d at 782. On a
subsequent appeal, the defendant challenged this district court’s decision to address the
verification issue on the grounds that the plaintiff had already presented these arguments to the
Sixth Circuit. Id. However, the Sixth Circuit concluded that the district court’s reconsideration
of that issue was proper because the issue had not been “decided ‘expressly or impliedly by the
appellate court.’” Id. Here, we are allowed to consider Pagano’s remaining arguments for the
same reason.
This Court explicitly refrained from analyzing any elements of CNH’s conversion claim
other than dominion and control, and the Sixth Circuit did the same on appeal. The law of the
case does not preclude Pagano from disputing the other elements of CNH’s conversion claim.
Because Pagano’s renewed motion addresses the first, second, and sixth elements of conversion
1

The opinion in Kindle v. City of Jeffersontown, Ky., though not addressed by the parties, is also strikingly similar to
the case at hand. See Kindle v. City of Jeffersontown, Ky., 589 F. App'x 747, 755 (6th Cir. 2014). There, because the
Sixth Circuit did not explicitly or implicitly address the veracity of the plaintiffs’ speech, an element of the
defamation claim at issue, the defendants were not precluded from challenging that element of the defamation claim
on remand. Id.

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and not dominion and control, we find that his motion is not barred under the law of the case.
We will deny CNH’s motion to strike for that reason. We will, however, grant CNH’s request
for an extension of time to respond to Pagano’s motion.
B. Untimely Arguments
Second, CNH moves to strike all portions of Pagano’s motion for summary judgment that
raise new arguments on the basis that these arguments are untimely and, thus, waived. DN 130.
Pagano concedes both that his renewed motion sets forth arguments defending against CNH’s
conversion claim that he did not raise in his original motion for summary judgment and that the
deadline for dispositive motions has passed. However, he asks us modify the parties’ scheduling
order under Fed. R. Civ. P. 16(b) to permit him to raise these new arguments. We will do so for
the following reasons.
Per Pagano’s request, we will treat his motion for summary judgment as a request to
modify the scheduling order because it was filed after the applicable dispositive motion deadline.
Andretti v. Borla Performance Indus., Inc., 426 F.3d 824, 830 (6th Cir. 2005). We must still,
however, address the merits of that request. Under Fed. R. Civ. P. 16(b), a court may modify the
parties’ scheduling order for “good cause,” the primary measure of which is the moving party’s
diligence in attempting to meet the deadline. Inge v. Rock Fin. Corp., 281 F.3d 613, 625 (6th Cir.
2002) (quoting Bradford v. DANA Corp., 249 F.3d 807, 809 (8th Cir. 2001)); see also, Leary v.
Daeschner, 349 F.3d 888, 906 (6th Cir. 2003)). A court should also consider possible prejudice
to the nonmoving party, although this factor is not dispositive. Leary, 349 F.3d at 906.
Here, Pagano originally pled his waiver and estoppel theories as affirmative defenses in
his amended response. DN 80. He then complied with Court’s scheduling order when he filed
his original motion for summary judgment, although it did not include these defenses. DN 102.
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At that point in the litigation, however, Pagano was seeking summary judgment on Counts III,
IV, V, VI, VII, VIII, IX, X, XI, and XII against him – ten (10) claims in total. DN 102. Pagano
was ultimately successful in defeating nine (9) of those claims, and we cannot say that he was
not diligent by failing to assert two properly pled affirmative defenses against a conversion claim
that he believed was, and may still be, futile on the grounds he asserted. True, Pagano could
have asserted his waiver and estoppel arguments in this motion, but courts have never required
that a defendant “who has properly pled an affirmative defense in his answer – as is the case here
– to also file a motion for summary judgment in order to preserve the affirmative defense.”
Kindle, 589 F. App'x at 755. Moreover, we granted summary judgment in Pagano’s favor on
CNH’s conversion claim (for the reasons laid out above) after the deadline had passed, and
CNH’s appeal followed. DN 118; DN 123. Because we decided this claim on the dominion-andcontrol element of conversion only, it is likely that we would not have reached the merits of
Pagano’s affirmative defenses. As such, in light of the unusual circumstances surrounding
Pagano’s original motion and CNH’s appeal, we believe Pagano acted with proper diligence.
Further, we find no prejudice to CNH in allowing Pagano to advance these affirmative
defenses now. Pagano asserted his defenses of waiver and estoppel in his answer, so CNH has
long been aware of them. DN 80. In fact, CNH deposed Scott Hunt and Sheri Talley on these
topics. DN 129-3; DN 129-4. Additionally, no trial date has been set in the matter. Therefore,
because Pagano acted diligently to meet the scheduling deadline and CNH will not be
prejudiced, we will modify the scheduling order under Fed. R. Civ. P. 16(b) to permit Pagano to
assert his waiver and estoppel defenses.

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III.
For the reasons set forth herein, the Court will deny the Plaintiff’s motion to strike the
Defendant’s renewed motion for summary judgment (DN 130) and grant the Plaintiff’s
alternative request for an extension of time to respond to the Defendant’s motion. (DN 131). In
light of this ruling, the Court will deny the Plaintiff’s motion for a pretrial conference and to set a
trial date. (DN 132). Finding no need for a hearing, we will also deny Plaintiff’s request for a
hearing on these motions. (DN 133). A separate order and judgment will be entered this date in
accordance with this Memorandum Opinion.

March 27, 2015

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