Lustgraaf v. Behrens et al

Filing 306

MEMORANDUM AND ORDER denying the following Motions for Reconsideration Pursuant to Fed R.Civ. Pro 60(b), filed by Defendant Sunset Financial Services, Inc.: Denying(281) Motion for Reconsideration in case 8:08-cv-00335-LSC-FG3; denying (276) Moti on for Reconsideration in case 8:08-cv-00399-LSC-FG3; denying (266) Motion for Reconsideration in case 8:08-cv-00436-LSC-FG3; denying (243) Motion for Reconsideration in case 8:09-cv-00013-LSC-FG3; denying (190) Motion for Reconsideration in case 8:09-cv-00044-LSC-FG3 Ordered by Chief Judge Laurie Smith Camp. (MKR)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
MARLIN LUSTGRAAF,

CASE NO. 8:08CV335

Plaintiff,
vs.

MEMORANDUM
AND ORDER

SUNSET FINANCIAL SERVICES, INC.,
and BRYAN S. BEHRENS,
Defendants.
JEAN POOLE and DEE POOLE,
Trustees of the Poole Family Trust,

CASE NO. 8:08CV399

Plaintiff,
vs.

MEMORANDUM
AND ORDER

SUNSET FINANCIAL SERVICES, INC.,
and BRYAN S. BEHRENS,
Defendants.
MILO VACANTI,

CASE NO. 8:08CV436
Plaintiff,

vs.

MEMORANDUM
AND ORDER

SUNSET FINANCIAL SERVICES, INC.,
and BRYAN S. BEHRENS,
Defendants.
WILLIAM GREEN and JANN GREEN,

CASE NO. 8:09CV13

Plaintiff,
vs.

MEMORANDUM
AND ORDER

SUNSET FINANCIAL SERVICES, INC.,
and BRYAN S. BEHRENS,
Defendants.

MILO VACANTI,

CASE NO. 8:09CV44
Plaintiff,

vs.

MEMORANDUM
AND ORDER

SUNSET FINANCIAL SERVICES, INC.,
and BRYAN S. BEHRENS,
Defendants.

This matter is before the Court on the Motions for Reconsideration Pursuant to
Fed. R. Civ. Pro. 60(b) (Case No. 8:08CV335, Filing No. 281; Case No. 8:08CV399,
Filing No. 276; Case No. 8:08CV436, Filing No. 266; Case No. 8:09CV13, Filing No.
243; Case No. 8:09CV44, Filing No. 190), filed by Defendant Sunset Financial Services,
Inc. (“SFS”). SFS requests that the Court reconsider its Orders (Case No. 8:08CV335,
Filing No. 280; Case No. 8:08CV399, Filing No. 275; Case No. 8:08CV436, Filing No.
265; Case No. 8:09CV13, Filing No. 242; Case No. 8:09CV44, Filing No. 189) adopting
the Reports and Recommendations and Order (“RROs”) of U.S. Bankruptcy Judge
Timothy J. Mahoney. Judge Mahoney recommended that the references of the above
captioned actions to the U.S. Bankruptcy Court for the District of Nebraska be
withdrawn, and ordered that SFS’s third-party claim against Plaintiff William Green for
contribution and indemnity be severed and remain pending as a separate case in the
Bankruptcy Court. For the reasons stated below, the Motions will be denied.
On October 18, 2012, the Bankruptcy Court entered its RROs, which were filed
with this Court the next day. On November 7, 2012, this Court entered its Orders
adopting the RROs (the “Adoption Orders”).

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No party had filed with this Court an

objection to the RROs in accordance with NEGenR 1.5(b)(2),1 or anything else relating
to the RROs. Prior to November 7, 2012, SFS filed with the Bankruptcy Court a Notice
of Appeal (see Case No. 8:08CV335, Filing No. 289; Case No. 8:08CV399, Filing No.
284; Case No. 8:08CV436, Filing No. 274; Case No. 8:09CV13, Filing No. 251; Case
No. 8:09CV44, Filing No. 198) indicating that it was appealing the RROs, and a motion
seeking to stay the RROs pending the appeal2 (see Case No. 8:08CV335, Filing No.
291; Case No. 8:08CV399, Filing No. 286; Case No. 8:08CV436, Filing No. 276; Case
No. 8:09CV13, Filing No. 253; Case No. 8:09CV44, Filing No. 200). SFS did not file or
otherwise notify this Court of those Bankruptcy Court filings until November 18, 2012,
when it filed the present Motions. Those filings did not indicate SFS’s grounds for
challenging the RROs.
STANDARD
SFS seeks reconsideration of the Adoption Order under Federal Rule of Civil
Procedure 60(b)(1) and (6).3 Rule 60(b) states, in pertinent part, “[o]n motion and just
terms, the court may relieve a party . . . from a final judgment, order, or proceeding for
1

When a motion for withdrawal of reference is filed, a bankruptcy judge after notice and
hearing files a report and recommendation with the bankruptcy and district courts. The
district court may adopt the report and recommendation if the parties file no objections
within 14 days of service. Parties must file any objections to the report and
recommendation with both the bankruptcy and district courts.
NEGenR 1.5(b)(2).
2

The Bankruptcy Court denied the motions to stay on November 16, 2012.

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SFS points to Elder-Keep v. Aksamit, 460 F.3d 979 (8th Cir. 2006), for the proposition that a
motion for reconsideration of a non-final order is treated as a Rule 60(b) motion. See id. at 984 (quoting
Anderson v. Raymond Corp., 340 F.3d 520, 525 (8th Cir. 2003)) (“[W]e have determined that motions for
reconsideration are ‘nothing more than Rule 60(b) motions when directed at non-final orders.’”). But see
Disc. Tobacco Warehouse, Inc. v. Briggs Tobacco & Specialty Co., Inc., No. 3:09-CV-05078-DGK, 2010
WL 3522476, at *2 (W.D. Mo. Sept. 2, 2010) (citing Garrett v. Albright, No. 4:06-CV-4137-NKL, 2008 WL
268993, at *2 n.2 (W.D. Mo. Jan. 30, 2008) (criticizing Elder-Keep for ignoring “a district court’s inherent
authority to reconsider interlocutory orders””); Garrett, 2008 WL 268993, at *2 n.2 (disagreeing with ElderKeep for similar reasons).

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the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; [or] (6)
any other reason that justifies relief.” Fed. R. Civ. P. 60(b)(1), (6). “[A] motion filed
under Rule 60(b) addresses itself to the discretion of the district court,”

Clarke v.

Burkle, 570 F.2d 824, 830 (8th Cir. 1978), and is “grounded in equity[.]” MIF Realty L.P.
v. Rochester Assocs., 92 F.3d 752, 755 (8th Cir. 1996).
DISCUSSION
SFS argues that it was legitimately surprised by the Adoption Order, and that
prior to the issuance of the Adoption Order, it was unaware of the need to file objections
in accordance with NEGenR 1.5(b)(2) and attempted in good faith to challenge the
RROs by filing its notice of appeal and motion to stay. It asserts that the neglect of its
counsel to file an objection in accordance with NEGenR 1.5(b) to the RROs should not
cause it to forfeit its opportunity to challenge the RROs. Finally, SFS contends that its
inability to challenge the RROs would prejudice it by forcing it to litigate the above
captioned actions and the third-party claim the Bankruptcy Court retained.
Considering all of the equities in this case, the Court finds that relief from the
Adoption Order is not warranted. This Court’s local rules clearly state that a party
seeking to challenge a report and recommendation that withdraws the reference of a
case to the Bankruptcy Court “must file any objections to the report and
recommendation with both the bankruptcy and district courts” within fourteen days after
being served with the bankruptcy judge’s report and recommendation.
1.5(b)(2).

NEGenR

See Ceridian Corp. v. SCSC Corp., 212 F.3d 398, 404 (8th Cir. 2000)

(quoting Canfield v. Van Atta Buick/GMC Truck, Inc., 127 F.3d 248, 250 (2d Cir.1997))
(“‘[F]ailure to follow the clear dictates of a court rule will generally not constitute . . .
excusable neglect.’”). No such objection was filed with this Court or the Bankruptcy
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Court.4 Furthermore, in light of the “broad discretion” a bankruptcy court has under Fed.
R. Civ. P. 215 to sever discrete claims, the clear requirements imposed by NEGenR
1.5(b)(2), and the circumstances surrounding these actions, the Court finds that a
further delay would unfairly prejudice the Plaintiffs. Therefore, the Court will deny SFS’s
Motions. Accordingly,
IT IS ORDERED that the following Motions for Reconsideration Pursuant to Fed.
R. Civ. Pro. 60(b), filed by Defendant Sunset Financial Services, Inc., are denied:
1.

Case No. 8:08CV335, Filing No. 281;

2.

Case No. 8:08CV399, Filing No. 276;

3.

Case No. 8:08CV436, Filing No. 266;

4.

Case No. 8:09CV13, Filing No. 243; and

5.

Case No. 8:09CV44, Filing No. 190.

Dated this 28th day of November, 2012.
BY THE COURT:
s/Laurie Smith Camp
Chief United States District Judge
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The Court notes that SFS relies on Chapman v. Houston, No. 4:07CV3081, 2007 WL 2306908
(D. Neb. Aug. 8, 2007), for the proposition that filing a notice of appeal to a bankruptcy judge’s findings
and recommendation to withdraw the reference of a case to the Bankruptcy Court satisfies the
requirements of NEGenR 1.5(b)(2). Chapman, however, is distinguishable from this case. The plaintiff in
Chapman was a pro se prisoner, and his “appeal” of the bankruptcy judge’s report and recommendation
to withdraw the reference of the case to the bankruptcy court was filed within NEGenR 1.5(b)(2)’s
deadline and with both the bankruptcy court and the district court. Furthermore, the pro se prisoner’s
“appeal” contained the grounds on which he challenged the report and recommendation; the Court ruled
on the “appeal” based on the challenges presented therein. Here, SFS is represented by counsel, its
Notice of Appeal and Motion to Stay were filed only in the Bankruptcy Court and did not indicate its
grounds for challenging the RROs. Under these circumstances, the Court will not delay the above
captioned actions further by re-characterizing SFS’s Bankruptcy Court filings as an objection that
complies with NEGenR 1.5(b)(2).
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See McDowell Welding & Pipefitting, Inc. v. U.S. Gypsum Co., 285 B.R. 460, 470 (D. Or. 2002);
see also Bailey v. Bayer CropScience L.P., 563 F.3d 302, 308-09 (8th Cir. 2009). Fed. R. Civ. P. 21 is
made applicable to bankruptcy adversary proceedings under Fed. R. Bankr. P. 7021.

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