Wallace Sales & Consulting, LLC v. Tuopu North America, Limited

Filing 112

ORDER DENYING DEFENDANT TUOPU NORTH AMERICA LIMITED'S MOTION FOR RECONSIDERATION [#101]. Signed by District Judge Gershwin A. Drain. (TBan)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

WALLACE SALES &
CONSULTING, LLC,
Plaintiff,
Case No.: 2:15-cv-10748
Honorable Gershwin A. Drain

v.

TUOPU NORTH AMERICA,
LIMITED,
Defendant.
___________________________/
ORDER DENYING DEFENDANT TUOPU NORTH AMERICA
LIMITED’S MOTION FOR RECONSIDERATION [#101]
On

October

3,

2016,

this

Court

entered

an

Order

denying

Defendant/Counter-Plaintiff Tuopu North America’s (“TNA”) Motion to Amend
its Counter-Complaint and Implead James Wallace (“Wallace”) as a Third Party
Defendant. See Dkt. No. 97. The Court denied TNA’s Motion to Amend its
Counter-Complaint because of TNA’s undue delay in requesting the amendment
and the significant prejudice that Plaintiff Wallace Sales & Consulting, LLC
(“WSC”) and Wallace would suffer if an amendment were granted at such a late
stage in the litigation.

Lastly, the Court also found that TNA’s proposed

counterclaims were futile because they were barred by the applicable statute of
limitations, among other reasons.
Presently before the Court is TNA’s Motion for Reconsideration, filed on
October 17, 2016. TNA argues that this Court must reconsider its decision denying
its request for an amendment because the proposed claims are valid and brought
well within the statute of limitations. TNA also disputes this Court’s conclusion
that WSC and Wallace will be substantially prejudiced by an amendment. Upon
consideration of the arguments presented by TNA, the Court will deny its Motion
for Reconsideration.
Local Rule 7.1(h)(3) of the Local Rules of the United States District Court
for the Eastern District of Michigan provides:
Generally, and without restricting the Court’s discretion, the Court
will not grant motions for rehearing or reconsideration that merely
present the same issues ruled upon by the Court, either expressly or by
reasonable implication. The movant must not only demonstrate a
palpable defect by which the Court and the parties and other persons
entitled to be heard on the motion have been misled but also show that
correcting the defect will result in a different disposition of the case.
E.D. Mich. L.R. 7.1(h)(3). “A ‘palpable defect’ is ‘a defect that is obvious, clear,
unmistakable, manifest, or plain.’” United States v. Lockett, 328 F. Supp. 2d 682,
684 (E.D. Mich. 2004) (citing United States v. Cican, 156 F. Supp. 2d 661, 668
(E.D. Mich. 2001)). “[A] motion for reconsideration is not properly used as a
vehicle to re-hash old arguments or to advance positions that could have been
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argued earlier but were not.” Smith ex rel. Smith v. Mount Pleasant Pub. Sch., 298
F. Supp. 2d 636, 637 (E.D. Mich. 2003) (citing Sault Ste. Marie Tribe of Chippewa
Indians v. Engler, 146 F.3d 367, 374 (6th Cir.1998)).
TNA first argues that the applicable statute of limitations does not bar its
claims because Wallace concealed “his fraud throughout Plaintiff’s entire
relationship with Tuopu.”

Mot. Recon. at 4.

However, a review of TNA’s

proposed amended Counter-Complaint reveals that there are no allegations
supporting a claim for fraudulent concealment.

Michigan Compiled Laws §

600.5855 states in relevant part:
If a person who is or may be liable for any claim fraudulently
conceals the existence of the claim . . . from the knowledge of the
person entitled to sue on the claim, the action may be commenced at
any time within 2 years after the person who is entitled to bring the
action discovers, or should have discovered, the existence of the claim
. . . although the action would otherwise be barred by the period of
limitations.
MICH. COMP. LAWS § 600.5855 (emphasis supplied). The elements of fraudulent
concealment are: “(1) wrongful concealment of his actions by the defendant; (2)
failure of the plaintiff to discover the operative facts that are the basis of his cause
of action within the limitations period; and (3) plaintiff’s due diligence until
discovery of the facts.” Evans v. Pearson Enterprises, Inc., 434 F.3d 839, 851 (6th
Cir. 2006).

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TNA’s proposed counterclaim is devoid of any facts suggesting it exercised
due diligence before its discovery of the alleged fraud.

It apparently failed to

confirm Wallace’s degree from Lawrence Technological University. Nor did it
contact any of Wallace’s previous employers to ascertain whether those positions
required a mechanical engineering degree. Rather, it seems that TNA equates
fraudulent concealment with “confidently approach[ing] Tuopu as an experienced
candidate who held jobs that seemed to require an engineering degree.” Mot.
Recon. at 5. Even if these facts amounted to fraudulent concealment, which they
do not, these allegations are absent from TNA’s proposed Counter-Complaint.
TNA’s discussion of resume fraud and the “after-acquired evidence”
doctrine should have been raised during its original briefing on this issue. A
motion to reconsider “is not properly used as a vehicle to . . . advance positions
that could have been argued earlier but were not.” Mount Pleasant Pub. Sch., 298
F. Supp. at 637.

The “after-acquired evidence” doctrine is used when a plaintiff

brings an unlawful discharge lawsuit and “the defendant finds evidence of
wrongdoing, such as resume fraud, such that the defendant would have either fired
or failed to hire the plaintiff had it found the evidence earlier.” Moos v. Square D.
Co., 72 F.3d 39, 43 (6th Cir. 1995). In any event, application of the after-acquired
evidence doctrine to this case is misplaced pursuant to McKennon v. Nashville
Publishing Co., 513 U.S. 352 (1995), which limited the doctrine’s application.
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Under McKennon, wrongfully discharged employees cannot obtain certain
remedies such as reinstatement or front pay, but may receive back pay.

Id. As

such, the after-acquired evidence doctrine is inapplicable here since WSC is not
seeking reinstatement or front pay.
Accordingly, TNA cannot rely on purported fraudulent concealment to avoid
the statute of limitations bar to its proposed fraud based claims. Wallace sent his
resume eleven years prior to TNA seeking to sue on its claim. Similarly, the
parties’ contractual relationship began nine years before TNA’s proposed
amendment.

Both dates are well beyond the applicable six year statute of

limitations for fraud claims. MICH. COMP. LAWS § 600.5813.

Therefore, TNA

fails to demonstrate a palpable defect the correction of which will result in a
different disposition concerning the futility of TNA’s fraud based claims.
Moreover, even if TNA’s claims were not barred by the applicable statute of
limitations, leave to amend was properly denied based on TNA’s undue delay and
the substantial prejudice to WSC and Wallace that would inevitably result from an
amendment at this late stage in the litigation. TNA waited eight months between
discovering Wallace did not have an engineering degree and moving for an
amendment to its Counter-Complaint. At the time TNA filed its motion to amend,
discovery cut-off had been extended four times and it was set to expire in a little
more than thirty days. As such, resolution of TNA’s motion would not occur prior
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to the expiration of the discovery cut-off. This Court’s scheduling order states in
relevant part: “Discovery shall be completed on or before the date set forth in the
scheduling order. The court will not order discovery to take place subsequent to
the discovery cutoff date.” Dkt. No. 61 at 2. Thus, this Court did not commit
palpable error when it concluded TNA cannot demonstrate it timely moved for the
amendment to its counterclaim.
Lastly, TNA continues to argue that WSC and Wallace will not suffer
substantial prejudice if an amendment is granted. These arguments have already
been considered and rejected by this Court. TNA seeks to bring six new claims
against either WSC or Wallace or both. These claims stem from different theories
as those that have been present from the outset of this matter. As such, WSC and
Wallace will have to re-depose at least two individuals and depose up to six more
individuals, as well as serve additional discovery requests. Prejudice is not merely
a “possibility” as TNA claims, but a reality.
For the foregoing reasons, TNA’s Motion for Reconsideration [#101] is
DENIED.
SO ORDERED.
Dated: November 4, 2016

/s/Gershwin A. Drain
GERSHWIN A. DRAIN
United States District Judge
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CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
November 4, 2016, by electronic and/or ordinary mail.
/s/ Tanya Bankston
Deputy Clerk 

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