Rent-A-Center East, Inc. v. Leonard

Filing 51

ORDER denying 38 Motion Indicative Ruling; granting 31 Motion to Intervene (Written Opinion). Signed by Senior Judge David S. Doty on 4/22/15. (JRC)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 13-2496(DSD)
In re:

BKY Case No.: 11-42325

WEB2B Payment Solutions, Inc.

Chapter 7

Debtor.
Rent-A-Center East, Inc.,
Appellant,
v.

ORDER

Brian F. Leonard, Trustee,
Appellee.
Paul L. Ratelle, Esq. and Fabyanske, Westra, Hart &
Thomson, PA, 333 South Seventh Street, Suite 2600,
Minneapolis, MN 55402, counsel for appellant.
Andrea M. Hauser, Esq. and Leonard, O’Brien, Spencer,
Gale & Sayre Ltd., 100 South Fifth Street, Suite 2500,
Minneapolis, MN 55402, counsel for appellee.
John C. Holper, Esq. and Winthrop & Weinstine, P.A.,
225 South Sixth Street, Suite 3500, Minneapolis, MN
55402, counsel for non-party National American Banking
Company.
This matter is before the court upon the motion by non-party
North American Banking Company (NABC) to intervene and the motion
by appellant Rent-A-Center East, Inc. (RAC) for indicative ruling.
Based on a review of the file, record, and proceedings herein, and
for the following reasons, the court grants the motion to intervene
and denies the motion for indicative ruling.

BACKGROUND
The background of this action is fully set out in the court’s
order dated July 18, 2014, and the court recites only those facts
necessary for disposition of the instant motions.

On March 19,

2007, RAC entered into a client agreement (Agreement) with debtor
Web2B Payment Solutions, Inc. (Web2B), pursuant to which Web2B
processed checks received from RAC’s clients.

To facilitate the

Agreement, Web2B established an account at NABC, through which it
“accept[ed] electronic credit and debit entries for” RAC.

Compl.

Ex. A, at 1.
In 2011, Web2B filed for bankruptcy.

The bankruptcy court

appointed Brian F. Leonard as trustee of the estate (trustee).
Thereafter,

NABC

turned

over

approximately

various Web2B accounts, to the trustee.

$933,000,

held

in

On February 24, 2012, RAC

filed an adversary proceeding against the trustee, claiming that
$801,378.76 of the NABC funds belong to RAC.
each

moved

for

summary

judgment.

On

RAC and the trustee

August

22,

2013,

the

bankruptcy court granted the trustee’s motion and entered final
judgment.

See ECF Nos. 1-8, 1-9.

RAC appealed and this court

affirmed on July 18, 2014, finding, in relevant part, that RAC had
no basis to challenge Web2B’s dominion over the funds because it
endorsed the checks to Web2B.

ECF No. 15, at 11.

2014, the court denied RAC’s motion for rehearing.
RAC appealed to the Eighth Circuit.

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ECF No. 25.

On August 27,
ECF No. 23.

Meanwhile, in late 2013, RAC filed a separate suit against
NABC alleging conversion of the disputed funds.

See Rent-A-Center

East, Inc. V. N. Am. Banking Co., No. 13-3274 (D. Minn. filed Nov.
29, 2013) (RAC/NABC litigation).

At the close of discovery, NABC

moved for summary judgment and RAC requested a stay pending the
Eighth Circuit’s decision on the appeal in the instant case. Judge
Kyle granted the stay request, concluding that “affirmance by the
Eighth Circuit would significantly undermine RAC’s claims in this
case, whereas reversal would alter the foundation upon which both
parties lay their arguments.”

Id., ECF No. 43, at 3.

A few months after the appeal in this case was filed, RAC and
the

trustee

agreed

to

settle

contingent

on

bankruptcy

court

approval and this court’s agreement to vacate the orders on appeal.
On December 22, 2014, RAC and the trustee filed a joint motion with
the Eighth Circuit to hold briefing in abeyance pending the
parties’ proposed settlement.

The Eighth Circuit granted the

motion.
On January 20, 2015, the parties moved for bankruptcy court
approval of the settlement and NABC objected.

At the hearing, RAC

disclosed that it is seeking vacatur, at least in part, to avoid
any adverse impact the orders may have in the RAC/NABC litigation.
See

Holper

Decl.

Ex

N,

at

24:13-18

(“Judge

Doty’s

order

respectfully made certain determinations that [the bankruptcy
court’s] orders did not and those orders have a bearing, in our

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view, on pending litigation that we have with [NABC].”).

The

bankruptcy court declined to approve the settlement, stating that
vacating the judgment would be a “subversion of the judicial
process [and] cynical in the extreme.”

Id. at 28:7-11.

RAC then

filed a motion in this court under Federal Rule of Civil Procedure
62.1, requesting an indicative ruling as to whether the court would
vacate its July 18, 2014, and August 27, 2014, orders, both of
which are pending on appeal.

NABC moved to intervene for the

limited purpose of opposing RAC’s motion.

DISCUSSION
I.

Motion to Intervene
NABC moves under Federal Rule of Civil Procedure 24(b) to

intervene in this matter to challenge RAC’s motion for indicative
ruling.

The rule provides that “[o]n timely motion, the court may

permit anyone to intervene who ... has a claim or defense that
shares with the main action a common question of law or fact.”
Fed. R. Civ. P. 24(b)(1)(B). The principal consideration in ruling
on a Rule 24(b) motion is whether the proposed intervention would
unduly delay or prejudice the adjudication of the parties’ rights.
S. Dakota ex rel Barnett v. U.S. Dep’t of Interior, 317 F.3d 783,
787 (8th Cir. 2003).
As a threshold matter, RAC argues that the court lacks
jurisdiction to entertain NABC’s motion because the case is on
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appeal.

But it is undisputed that the court has the authority to

consider RAC’s motion for indicative ruling, and because NABC seeks
to intervene for the limited purpose of objecting to that motion,
the

court

intervene.

also

has

jurisdiction

Moreover,

RAC

does

to

consider

not

seriously

the

motion

dispute

to

that

intervention is warranted under these limited circumstances.
Indeed, the motion is timely in light of RAC’s motion, common
questions exist in this case and in the RAC/NABC litigation, and no
delay will occur because the issue is narrow and already fully
submitted to the court.

As a result, NABC’s motion to intervene

for the limited purpose of objecting to RAC’s motion for indicative
ruling is granted.
II.

Motion for Indicative Ruling
RAC acknowledges that the court lacks jurisdiction, given the

pending appeal, to vacate its prior orders.

RAC therefore moves

under Rule 62.1 for a ruling indicating that the court will vacate
its prior orders under Rule 60(b)(6) if the Eighth Circuit remands
for that purpose.

Rule 62.1(a) provides:

If a timely motion is made for relief that the court
lacks authority to grant because of an appeal that has
been docketed and is pending, the court may: (1) defer
considering the motion; (2) deny the motion; or (3) state
either that it would grant the motion if the court of
appeals remands for that purpose or that the motion
raises a substantial issue.
Rule 60(b)(6) may be used to vacate a final judgment for any
“reason that justifies relief.”

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The rule “affords courts the

discretion to vacate judgments whenever such action is appropriate
to accomplish justice.”

Duluth v. Fond du Lac Band of Lake

Superior Chippewa, 977 F. Supp. 2d 944, 948 (D. Minn. 2013). “Such
relief, however, is ‘exceedingly rare’ because it requires an
intrusion into the sanctity of a final judgment, and therefore, it
is available only in ‘extraordinary circumstances.’”

Id. (quoting

In re Guidant Corp. Implantable Defibrillators Prods. Liab. Litig.,
496

F.3d

863,

868

(8th

Cir.

2007)).

Circumstances

are

extraordinary when they “have denied the moving party a full and
fair opportunity to litigate his claim” and “have prevented the
moving party from receiving adequate redress.” Murphy v. Mo. Dep’t
of Corr., 506 F.3d 1111, 1117 (8th Cir. 2007).

The court may

consider the public interest in assessing the propriety of vacatur.
U.S. Bancorp Mortg. Co. v. Bonner Mall P’ship, 513 U.S. 18, 26
(1994).
No extraordinary circumstances exist here.

RAC explains that

it seeks vacatur as a condition of settlement.

This alone is an

insufficient basis to establish extraordinary circumstances.

See

id. at 29 (holding that exceptional circumstances may counsel in
favor of vacatur, but noting that “those circumstances do not
include the mere fact that the settlement agreement provides for
vacatur”).

RAC has also failed to establish that public interest

would be served by vacating the orders.

To the contrary, the

public interest is advanced by denying vacatur because judicial

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determinations are “presumptively correct” and are “valuable to the
legal community as a whole.”

Id. at 26.

Nor has RAC established

that it was denied a full and fair opportunity to litigate its
claim.

Instead, it appears that RAC seeks vacatur for the purpose

of avoiding adverse consequences in the RAC/NABC litigation.
reason is far from extraordinary.

This

Duluth, 977 F. Supp. 2d at 948

(“Extraordinary circumstances are not present every time a party is
subject to potentially unfavorable consequences as a result of an
adverse judgment at which a court properly arrived.”). Under these
circumstances,

vacatur

of

the

court’s

prior

orders

is

not

warranted.

CONCLUSION
Accordingly, based on the above, IT IS HEREBY ORDERED that:
1.

The motion to intervene [ECF No. 31] is granted; and

2.

The motion for indicative ruling [ECF No. 38] is denied.

Dated: April 22, 2015
s/David S. Doty
David S. Doty, Judge
United States District Court

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