Wells Fargo Bank, N.A., Trustee for the Registered Holders of Merrill Lynch Mortgage Pass-through Certificates, Series 1999-C1, by Orix Capital Markets, LLC as Special Servicer v. Narbonne et al
Filing
48
Magistrate Judge Marianne B. Bowler: ORDER entered. MEMORANDUM AND ORDER. In accordance with the foregoing discussion, the motion for reconsideration (Docket Entry 35 ) and the motion for entry of a Rule 54(b) judgment (Docket Entry 31 ) are DENIED. The motion for interest (Docket Entry 34 ) is ALLOWED to the extent set forth in this opinion.(Garvin, Brendan)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
WELLS FARGO BANK, N.A.,
Trustee for Registered
Holders of Merrill Lynch
Mortgage Pass-through Certificates,
Series 1999-C1, by Orix Capital
Markets, LLC as Special Servicer,
Plaintiff,
v.
CIVIL ACTION NO.
10-11261-MBB
LEON NARBONNE, SR.
and DEVITT J. ADAMS,
Defendants.
MEMORANDUM AND ORDER RE:
DEFENDANT’S MOTION FOR RECONSIDERATION (DOCKET ENTRY # 35);
PLAINTIFF’S MOTION FOR INTEREST (DOCKET ENTRY # 34); PLAINTIFF’S
MOTION FOR SEPARATE AND FINAL JUDGMENT
(DOCKET ENTRY # 31)
September 30, 2013
BOWLER, U.S.M.J.
Pending before this court is a motion for reconsideration
filed by defendants Leon Narbonne, Sr. (“Narbonne”) and Devitt
Adams (“defendants”) against plaintiff Wells Fargo Bank, N.A.
(“plaintiff”).
(Docket Entry # 35).
Also pending before this
court is plaintiff’s motion for interest under Count One.
(Docket Entry # 34).
Plaintiff also seeks to dismiss Count Two
under Rule 41(a)(2), Fed. R. Civ. P. (“Rule 41(a)(2)”), and for a
separate and final judgment under Rule 54(b), Fed. R. Civ. P.,
(“Rule 54(b)”), against defendants as to Count One.
Entry # 31).
(Docket
Defendants oppose this motion (Docket Entry # 36)
but do not oppose the motion to add interest to the damages award
in Count One.
After conducting a hearing, this court took the
motions under advisement.
BACKGROUND
The facts of this case are explained in detail in the
September 30, 2012 Memorandum and Order (Docket Entry # 29) and
need not be repeated at length.
On July 28, 2010, plaintiff
filed this lawsuit against defendants seeking:
(1) damages for
failing to pay and indemnify plaintiff as required under an
Indemnity and Guaranty Agreement (“Guaranty Agreement”) in Count
One; and (2) damages arising from defendants’ misleading
representation in connection with the management of Ocean Mist
Resort (“Resort”) in Count Two.
(Docket Entry # 1).
On
September 30, 2012, this court allowed summary judgment and
awarded $931,285.85 damages as to Count One and denied summary
judgment as to Count Two.
I.
MOTION FOR RECONSIDERATION (DOCKET ENTRY # 35)
Defendants request this court “to reconsider its ruling to
the effect that [a] Time Share is anything other than a form of
title to real estate, substantially similar if not equal to
ownership of a condominium . . ..”
(Docket Entry # 35-1, p. 1).
They also seek reconsideration of the deficiency amount with
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respect to the foreclosure.
DISCUSSION
As an interlocutory ruling, this court has the discretion to
reconsider the summary judgment ruling.
See Geffon v. Micrion
Corporation, 249 F.3d 29, 38 (1st Cir. 2001); see In Re Villa
Marina Yacht Harbor, Inc., 984 F.2d 546, 548 (1st Cir. 1993)
(court’s inherent power is rooted in the equitable power to
“process litigation to a just and equitable conclusion”); see
generally Ellis v. United States, 313 F.3d 636, 646-48 (1st Cir.
2002).
To succeed on a motion for reconsideration, “‘the movant
must demonstrate either that newly discovered evidence (not
previously available) has come to light or that the rendering
court committed a manifest error of law.’”
Mulero-Abreu v.
Puerto Rico Police Dept., 675 F.3d 88, 95 (1st Cir. 2012); accord
Ellis v. U.S., 313 F.3d at 648 (reconsideration “warranted if
there has been a material change in controlling law” or “newly
discovered evidence bears on the question”).
The existence of a
manifest injustice also provides a basis for reconsideration.
Ellis v. U.S., 313 F.3d at 648.
The manifest injustice exception
“requires a definite and firm conviction that a prior ruling on a
material matter is unreasonable or obviously wrong.”
A.
Id.
Deficiency Amount
Defendants do not identify the specific ruling in the 58
page decision that they seek to reconsider.
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Instead, they
request reconsideration:
to the effect that [a] Time Share is anything other than a
form of title to real estate, substantially similar if not
equal to ownership of a condominium and are both controlled
pursuant to the same Chapter M.G.L. 183. The form of
ownership does not effect the form or process of operation
of a resort.
(Docket Entry # 35-1, p. 1).
In seeking reconsideration, defendants repeat their previous
argument that time share “ownership pursuant to chapter 183B is
not inconsistent with the continuing operation of the property as
a Condominium/Hotel.”
(Docket Entry # 24-2, p. 5).
Thus, in
opposing summary judgment initially, defendants argued that, “The
form of ownership has very little if anything to do with the
professional operation of the Condominium/Hotel.”
(Docket Entry
# 24-2, p. 5).
The primary determination in the Memorandum and Order vis-àvis a time share consists of the finding that time share
ownership “is distinct and materially different from owning a
property that does not include time share estates.”
Entry # 29, p. 50).
(Docket
The plain language of Massachusetts General
Laws chapter 183A applies to condominiums whereas chapter 183B
applies to time share estates.
Thus, as correctly explained in
the Memorandum and Order, “Listing a percentage of ‘ownership’ of
these two properties” in Narbonne’s personal financial statement
“while omitting their operation as time shares is materially
misleading with respect to the loan.”
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(Docket Entry # 29, p.
50).
Defendants’ argument that both time share and resort
ownership are covered under Massachusetts General Laws chapter
183 ignores the statutory distinctions and the materiality of the
financial implications of operating a time share resort as
opposed to a condominium/hotel.
Defendants do not provide any
newly discovered evidence or identify a manifest injustice
resulting from this court’s ruling.
Reconsideration is therefore
improper.
B.
Price Unfairness
Defendants also ask this court to reconsider the amount of
deficiency with respect to the Resort’s property valuation.
Defendants assert that the inadequacy of the price was so great
that there is a manifest error of law as well as manifest
injustice.
Defendants fail to meet the standard for reconsideration in
asserting that the bidding price of the Resort at the foreclosure
sale was an error of law or that newly discovered evidence
warrants reconsideration.
“Absent evidence of bad faith or
improper conduct, a mortgagee is permitted to buy the collateral
at a foreclosure sale as ‘cheaply’ as it can.”
Resolution Trust
Corp. v. Carr, 13 F.3d 425, 430 (1st Cir. 1993) (citing Chartrand
v. Newton Trust Co., 296 Mass. 317, 320, 5 N.E.2d 421 (1936)).
Defendants’ unsupported foreclosure deficiency assertion does not
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amount to a manifest error of law.
There has been no newly
discovered evidence for this court to reconsider the unfairness
of the deficiency.
Finally, defendants fail to show that
manifest injustice has resulted from the price deficiency
determined by this court.
The record therefore fails to provide
a sufficient basis to reconsider the inadequacy and deficiency of
the Resort’s valuation and foreclosure price.
II.
MOTION FOR INTEREST (DOCKET ENTRY # 34)
Plaintiff next seeks interest at a “Default Rate” set in a
promissory note.
(Docket Entry # 34).
The motion sets out
plaintiff’s entitlement to interest under the language of the
Guaranty Agreement, a mortgage and the promissory note in light
of this court’s allowance of summary judgment on Count One.
(Docket Entry # 34, pp. 2-4).
This court found defendants liable
for a deficiency in the amount of $865,444.85 and lost income in
the amount of $65,841.00.
Plaintiff calculates the interest
amount on the deficiency at a default interest rate of 12.48%
from May 27, 2010 to October 31, 2012, resulting in a total of
$266,718.56 based on a daily amount of $300.02.
Plaintiff
calculates the interest amount on the lost income or opportunity
cost from July 2, 2010 to October 31, 2012, as $19,469.62 based
on a daily amount of $22.82.
Defendants do not object to the rate of interest or to the
calculation of the amounts of the interest.
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Nor do they object
to the start dates of the accrual of interest as May 27, 2010,
with respect to the deficiency and July 2, 2010, with respect to
the lost opportunity cost.
Accordingly, they have waived their
right to challenge these issues.
See Higgins v. New Balance
Athletic Shoe, Inc., 194 F.3d 252, 260 (1st Cir. 1999) (“district
court is free to disregard arguments that are not adequately
developed”); see, e.g., In re Pharmaceutical Industry Average
Wholesale Price Litigation, 588 F.3d 24, 31, (1st Cir. 2009)
(“district court properly held that anything raised in [prior]
pleading that Howe did not explain in the reply brief was
waived”); see generally U.S. v. Dyer, 589 F.3d 520, 527 (1st Cir.
2009) (before “district court, Dyer never used the term ‘specific
intent’ to set forth the legal requirements for applying §
2G2.4(c)(2), and has waived the argument”).
An interest rate
award for the May 27, 2010 to October 31, 2012 time period in the
amount of $266,718.56 shall be added to the $865,444.85
deficiency award in Count One.
Likewise, an interest rate award
for the July 2, 2010 to October 31, 2012 time period in the
amount of $19,469.62 shall be added to the $65,841.00 lost income
award in Count One.
Plaintiff additionally requests the default rate of interest
on the deficiency amount and the lost opportunity cost amount run
up to the date of “any separate and final judgment as to Count I
of its Complaint.”
(Docket Entry # 34).
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As explained elsewhere,
a separate and final judgment under Rule 54(b) on Count One is
not appropriate.
III.
Accordingly, this request is denied.
ENTRY OF JUDGMENT (DOCKET ENTRY # 31)
Plaintiff’s motion is twofold.
It seeks to dismiss Count
Two without prejudice under Rule 41(a)(2) and then enter a final
judgment under Rule 54(b).
Turning to the first issue, “Rule
41(a)(2) establishes a framework for district courts to enter
voluntary dismissals.”
Esso Standard Oil Co. (Puerto Rico) v.
Rodriguez-Perez, 455 F.3d 1, 3 (1st Cir. 2006); see also Doe v.
Urohealth Systems, Inc., 216 F.3d 157, 160 (1st Cir. 2000).
By
its terms, Rule 41(a)(2) applies to the dismissal of “an action.”
Rule 41(a)(2), Fed. R. Civ. P.
Plaintiff seeks to use the
framework of Rule 41(a)(2) to dismiss one claim as opposed to all
of the claims against defendants.
Even recognizing defendants’
failure to identify the prejudice that would result with a
dismissal of Count Two without prejudice, this court in its
discretion will not overlook plaintiff’s use of the incorrect
rule to accomplish a dismissal of Count Two.
The plain language of Rule 41(a)(2) is unambiguous.
allows that “an action may be dismissed . . ..”
Fed. R. Civ. P. (emphasis added).
It
Rule 41(a)(2),
In contrast, Rule 41(b) allows
an involuntary dismissal of “the action or any claim against” the
defendant.
See In re 229 Main Street Limited Partnership, 262
F.3d 1, 5-6 (1st Cir. 2001) (recognizing presumption that
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Congress acts intentionally “‘in the disparate inclusion or
exclusion’” of terms in statutory sections) (quoting Duncan v.
Walker, 533 U.S. 167, 173 (2001)).
The plain and ordinary
language of Rule 41(a)(2) allows a plaintiff to dismiss an entire
action against a defendant as opposed to one of several claims
against a defendant.
See Klay v. United Healthgroup, Inc., 376
F.3d 1092, 1106 (11th Cir. 2004) (text of Rule 41 “does not
permit plaintiffs to pick and choose, dismissing only particular
claims within an action”).
“‘A plaintiff wishing to eliminate
particular claims or issues from the action should amend the
complaint under Rule 15(a) rather than dismiss under Rule
41(a).’”
Id. (quoting 8 James Wm. Moore Moore’s Federal Practice
§ 41.21[2] (3rd ed. 2013)).
A dismissal of Count Two is
therefore inappropriate under Rule 41(a)(2).
Rule 15(a), Fed. R.
Civ. P., remains available as a means to drop Count Two and seek
relief at a later point in time in the event the statute of
limitations has not run.1
Turning to the request to enter a Rule 54(b) judgment, that
rule allows a district court to “enter partial final judgment
related to a subset of the claims or parties involved, but ‘only
if the court expressly determines that there is no just reason
for delay.’”
Boston Property Exchange Transfer Co. v. Iantosca,
1
The limitations issue applies regardless of whether there is a
dismissal of Count Two without prejudice under Rule 41(a)(2) or
an amendment to drop Count Two under Rule 15(a), Fed. R. Civ. P.
9
720 F.3d 1, 7 (1st Cir. 2013).
Certification under Rule 54(b)
requires a two part determination “that (i) the ruling in
question is final and (ii) there is no persuasive reason for
delay.”
Gonzalez Figaro v. J.C. Penney Puerto Rico, Inc., 568
F.3d 313, 317 (1st Cir. 2009); accord Boston Property Exchange,
720 F.3d at 7.
Piecemeal appeals are not favored and waste judicial
resources by avoiding a single determination of the merits of an
entire case.
See Kersey v. Dennison Manufacturing Co., 3 F.3d
482, 486 (1st Cir. 1993) (recognizing “strong judicial policy
disfavoring piecemeal appellate review”); accord Willhauck v.
Halpin, 953 F.2d 689, 701 (1st Cir. 1991).
are interrelated factually.
Counts One and Two
Although plaintiff wishes to
preserve Count Two depending on the outcome of any appeal on
Count One by dismissing it without prejudice under Rule 41(a)(2),
the entry of a separate final judgment under Rule 54(b) “should
not be indulged as a matter of routine or as a magnanimous
accommodation to lawyers or litigants.”
Spiegel v. Trustees of
Tufts College, 843 F.2d 38, 42 (1st Cir. 1988).
Separate final
judgments under the rule “must be reserved for the unusual case
in which the costs and risks of multiplying the number of
proceedings and of overcrowding the appellate docket are
outbalanced by pressing needs of the litigants for an early and
separate judgment as to some claims or parties.”
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Id.
This is
not such an unusual case.
In the event this court allowed leave
to amend the complaint to omit Count Two, a final judgment under
Rule 58, Fed. R. Civ. P., would be appropriate as opposed to a
partial final judgment under Rule 54(b) because only Count One
would remain.
CONCLUSION
In accordance with the foregoing discussion, the motion for
reconsideration (Docket Entry # 35) and the motion for entry of a
Rule 54(b) judgment (Docket Entry # 31) are DENIED.
The motion
for interest (Docket Entry # 34) is ALLOWED to the extent set
forth in this opinion.
/s/ Marianne B. Bowler
MARIANNE B. BOWLER
United States Magistrate Judge
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