RedHawk Holdings Corp., et al v. Schreiber, et al
Filing
143
ORDER AND REASONS DENYING 129 Motion for New Trial, as set forth in document. Signed by Judge Ivan L.R. Lemelle on 01/22/2019. (am)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
REDHAWK HOLDINGS CORP., ET AL
CIVIL ACTION
VERSUS
NO. 17-819
DANIEL J. SCHREIBER, ET AL
SECTION: “B”(2)
ORDER AND REASONS
Before the Court is Plaintiffs RedHawk Holdings Corp. and
Beechwood Properties, LLC’s (“Plaintiffs”) Motion for New Trial
(Rec. Doc. 129) and Defendants Daniel Schreiber, individually, and
as
Trustee
of
the
Schreiber
Living
Trust
–
DTD
2/08/95’s
(“Defendants”) Opposition to Motion for New Trial (Rec. Doc. 134).
There is no reply. For the reasons discussed below,
IT IS ORDERED that the motion for new trial is DENIED.
FACTS AND PROCEDURAL HISTORY
This case is about an unsuccessful business venture between two
experienced
businessmen.
Plaintiff
RedHawk
Holdings
Corporation
(“RedHawk”) is a Nevada corporation with its principal place of
business in Lafayette Parish, Louisiana. See Rec. Doc. 1 at 1.
Plaintiff Beechwood Properties, LLC (“Beechwood”) is a Louisiana
limited liability company with its principal place of business in
Lafayette Parish, Louisiana. See id. G. Darcy Klug is the CFO and
majority shareholder of both Plaintiffs. See Rec. Doc. 74-1 at 9.
Defendant Daniel J. Schreiber (“Defendant Schreiber”) is the former
CEO and a former Director of RedHawk. See id. Defendant Schreiber is
1
also the trustee and beneficial owner of at least some of the
securities 1 held by Defendant Schreiber Living Trust – DTD 2/08/95.
See Rec. Doc. 76-1 at 1-2.
In March 2014, American Medical Distributors, Inc. (“AMD”)
entered into an Asset Purchase Agreement (“APA”) with RedHawk. See
Rec. Doc. 1 at 2. RedHawk agreed to issue AMD or its designees
approximately half of RedHawk’s shares. See id. at 2-3. In exchange,
AMD agreed to pay RedHawk $60,000 and to assign RedHawk all of AMD’s
assets and property. See id. at 3. The principal asset was exclusive
distribution rights of non-contact thermometers in North, Central,
and South America. See Rec. Doc. 74-1 at 12.
The transaction, known as the AMD-RedHawk Transaction, was
executed as provided in the APA. See Rec. Doc. 1 at 4. Plaintiff
Beechwood and Defendants provided AMD $60,000; thereafter, AMD paid
$60,000 to RedHawk and assigned RedHawk all of its assets including
the distribution rights of the non-contact thermometers. See id. In
exchange, RedHawk assigned the agreed-upon shares to four designees
of AMD. See id. The four designees were Beechwood, Schreiber Trust,
Howard Taylor, and Paul Rachmuth. See id.
All stemming from the executed transaction, Plaintiffs allege
numerous fraudulent misrepresentations and omissions and contract
breaches by Defendant Schreiber. See Rec. Doc. 74-1 at 9. There are
1
There is a dispute as to which securities are held by Defendant Schreiber.
Defendants contend that Defendant Schreiber holds all of them. See Rec. Doc. 761 at 1-2. Plaintiffs contend that he only holds certain ones. See id.
2
three main allegations that give rise to their cause of action.
First, Plaintiffs allege that Defendant, along with Paul Rachmuth
who served as a counsel for AMD and Beechwood in the transaction,
failed to disclose possible patent infringement litigation that
significantly impaired the value of the distribution rights assigned
to RedHawk. See Rec. Doc. 1 at 4. Second, Defendant Schreiber failed
to uphold his agreement with Beechwood to split RedHawk’s expenses
on a 50/50 basis and contribute to other assets. See id. at 11-14.
Third, Defendant Schreiber failed to disclose his past SEC issues to
RedHawk and its investors. See Rec. Doc. 76 at 7-8. 2
On January 31, 2017, Plaintiffs filed a six-claim Complaint.
See Rec. Doc. 1. Specifically, Plaintiffs allege (1) Securities Fraud
under Sections 10B and 20 of the Exchange Act and SEC Rule 10b-5;
(2) Securities Fraud under Sections 18 and 20 of the Exchange Act;
(3) Fraud under State Law; (4) By Beechwood for Breach of Contract;
(5) By Beechwood for Unjust Enrichment; and (6) By RedHawk for
Defendant Schreiber’s Breach of Fiduciary Duties. See id. at 19-29.
On June 15, 2018, Defendants filed a Motion for Summary Judgment
and Alternatively Judgment on the Pleadings (Rec. Doc. 74-1). On
July
19,
2018,
Plaintiffs
filed
2
a
Response
and
Memorandum
in
In 2009, following allegations of bribery to the Securities and Exchange
Commission (“SEC”), Defendant Schreiber entered into a consent judgment with the
SEC and agreed to pay a civil penalty. See Rec. Doc. 76-1 at 3. In November 2015,
the FINRA denied RedHawk’s request to change its stock symbol because of its
affiliation with Defendant Schreiber. See Rec. Doc. 74-1 at 12.
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Opposition (Rec. Doc. 78). On August 2, 2018, Defendants filed a
Reply Memorandum (Rec. Doc. 80).
On October 15, 2018, this Court entered an Order and Reasons,
granting
summary
judgment
in
favor
of
Defendants
and
thereby
dismissing all of Plaintiffs’ claims (Rec. Doc. 122). On November
13,
2018,
Plaintiffs
filed
a
Motion
for
New
Trial,
seeking
reconsideration of summary judgment in favor of Defendants (Rec.
Doc. 129). On November 27, 2018, Defendants filed an Opposition to
Motion for New Trial (Rec. Doc. 134). On December 5, 2018, Plaintiffs
filed a motion for leave to file a reply, but the motion was denied
(Rec. Doc. Nos. 135, 136).
LAW AND ANALYSIS
Rule 54(b) states that “. . . any order . . . that adjudicates
fewer than all the claims . . . does not end the action . . . and
may
be
revised
at
any
time
before
the
entry
of
a
judgment
adjudicating all the claims . . ..” Accordingly, a district court
possesses
inherent
power
to
reconsider,
rescind,
or
modify
an
interlocutory order for cause seen by it to be sufficient. See
Melancon v. Texaco, Inc., 659 F.2d 551, 553 (5th Cir. 1981).
In
the
Fifth
Circuit,
Rule
54(b)
motions
to
reconsider
interlocutory orders are analyzed and decided as Rule 59(e) motions
to alter or amend final judgments. See NUSSLI US, LLC v. Motorsports
Host Comm., Inc., 2016 U.S. Dist. LEXIS 152915 *1, *19 (E.D. La.
2015). Specifically, in the Eastern District of Louisiana, courts
4
generally analyze four factors. See Bernard v. Grefer, 2015 U.S.
Dist. LEXIS 71039 *1, *16 (E.D. La. 2015). The four factors are
(1) the motion is necessary to correct a manifest error of
law or fact upon which the judgment is based; (2) the
movant presents newly discovered or previously unavailable
evidence; (3) the motion is necessary in order to prevent
manifest injustice; or (4) the motion is justified by an
intervening change in controlling law. See NUSSLI US, LLC,
2016 U.S. Dist. LEXIS 152915 at *19.
For a court to grant a motion to reconsider, the movant must clearly
establish a manifest error of law or fact or present newly discovered
evidence. See Bernard, 2015 U.S. Dist. LEXIS 71039 at *17.
It is well-established that motions to reconsider are not for
rehashing evidence, legal theories, or arguments. See NUSSLI US,
LLC, 2016 U.S. Dist. LEXIS 152915 at *19. Instead, said motions are
for the narrow purpose of correcting manifest errors of law or fact
or presenting newly discovered evidence. See id. “When there exists
no
independent
reason
for
reconsideration
other
than
mere
disagreement with [the previously issued] order, reconsideration is
a waste of judicial time and resources and [therefore the motion]
should not be granted.” Id.
Here, Plaintiffs fail to clearly establish a manifest error of
law or fact or present newly discovered evidence. Plaintiffs argue
that their motion is necessary to correct the Court’s error of
applying
Texas
law
to
their
claims
of
breach
of
contract
and
fraudulent misrepresentations. Specifcally, Plaintiffs offer state
law from Louisiana and California to establish the applicable rule.
5
The Court properly relied on Fifth Circuit precedent in its analysis.
Plaintiffs restate arguments that were in their Opposition to the
underlying motion for summary judgment. Their restatements reflect
mere
disagreement
rather
than
independent
reason
for
reconsideration. The Court will not relitigate these issues again.
Plaintiffs continue to argue that the incorrect prescription period
was applied to their fraud claims. Specifcally, Plaintiffs argue
that the Court should have applied a longer prescriptive period. The
Court will not relitigate this issue. The motion to reconsider is
not necessary to prevent manifest injustice. Plaintiffs make no
argument that there has been an intervening change in controlling
law. Therefore, the previously issued Order and Reasons in favor of
Defendants shall remain in effect.
New Orleans, Louisiana, this 22nd day of January, 2019.
__________________________________
SENIOR UNITED STATES DISTRICT JUDGE
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