MANN et al v. THE ESTATE OF EUGENE C. MEYERS et al
Filing
121
OPINION. Signed by Judge Kevin McNulty on 3/11/2015. (nr, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
THOMAS H. MANN, et al., individually
and on behalf of PARAMUS MALL
CHEVROLET-GEO, INC. AND PARAMUS
HUMMER, LLC
Civ. No. 11-1679
(KM)(SCM)
Plaintiff,
OPINION
v.
THE ESTATE OF EUGENE C. MEYERS,
ET AL.,
Defendants.
KEVIN MCNULTY, U.S.D.J.:
This Court entered an Opinion and Order (ECF’ Nos. 109 and 110) in this
case on November 21, 2014 deciding several motions and cross motions for
summary judgment. That Order and Opinion ruled in favor of the plaintiff on
certain issues, and against him on others. The plaintiff, Thomas H. Mann, has
now filed a motion for reconsideration with respect to two of the Court’s
determinations: (1) The Court’s decision to deny preclusive effect to an
arbitrator’s decision that defendant PAM wrongfully withheld profits from
shareholders in 2010; and (2) The Court’s decision to deny preclusive effect to
the arbitrator’s valuation of the Hummer franchise, at least pending the result
of a state court appeal. Mann’s motion for reconsideration will be denied.
1
DISCUSSION
The factual background of this case and the reasons for the Court’s
decision are explained in detail in the Opinion.’ Because I write for the parties,
I do not summarize them here.
As noted in the Opinion, another shareholder of PAM, Ronald Barna,
brought an action asserting claims similar to those asserted by Mann here.
Barna obtained an arbitration award, which was confirmed by the New Jersey
Superior Court, Law Division, a decision that is currently on appeal. That
confirmed arbitration award is the basis for Mann’s applications to preclude
the Estate Defendants from litigating certain issues here.
2
Local Rule 7.1(i) governs motions for reconsideration. Such a motion
must specifically identify “the matter or controlling decisions which the party
believes the Judge or Magistrate Judge has overlooked.” Id. Reconsideration is
granted sparingly, and only in three situations: (1) when there has been an
intervening change in the law; (2) when new evidence has become available; or
(3) when necessary to correct a clear error of law or to prevent manifest
injustice. See North River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194,
1218 (3d Cir. 1995); Carmichael v. Everson, 2004 U.S. Dist. LEXIS 11742
(D.N.J. May 21, 2004). “A motion for reconsideration is improper when it is
used ‘to ask the Court to rethink what it had already thought through
—
rightly
or wrongly.”’ Oritani Say. & Loan Ass’n v. Fidelity & Deposit Co., 744 F. Supp.
1311, 1314 (D.N.J. 1990) (quoting Above the Belt v. Mel Bohannan Roofing, Inc.,
1
Citations to the record will be abbreviated as follows:
“Complaint” Second Amended Complaint and Jury Demand, ECF No. 41.
“Mot.” Plaintiff, Thomas H. Mann’s Brief in Support of Motion for Partial
Reconsideration of the Court’s November 21, 2014 Order, ECF No. 113.
“Opinion” Opinion dated November 21, 2014, ECF No. 10.
Estate Defendants’ Brief in Opposition to Motion for Reconsideration, ECF No.
119.
-
-
—
—
The Estate Defendants consist of the Estate of Eugene C. Meyers; the Eugene C.
Meyers Revocable Trust, and Melody Paton as Executrix and Trustee.
2
2
99 F.R.D. 99, 101 (E.D.Va. 1983)). The considerations that Mann has raised do
not warrant a change to the Court’s ruling.
I.
2010 profit distribution
In my November 2014 decision, I denied collateral estoppel effect to the
arbitrator’s ruling on the 2010 profit distribution (or bonuses). It was clear that
the arbitrator had decided that issue. Nevertheless, Mann’s complaint, in this
action, does not assert an analogous claim. Because the issues in the prior
arbitration and in this lawsuit are not “identical,” they fail to meet the basic
3
test for application of collateral estoppel.
Mann’s complaint in this action does not assert a claim that the 2010
bonuses were wrongfully withheld. As the earlier Opinion noted, the complaint
generally requests, in its prayer for relief, “all bonuses and company profits
wrongfully withheld him by Meyers, Paramus Chevrolet, and Paramus
Hummer.” (Opinion, 15). But, as the Opinion explained, that is a general
demand, not a factual allegation: the Complaint does not specifically allege
“that Paton or PAM wrongfully withheld profits, in 2010 or at other times, in
order to retaliate against Barna.” (Opinion, 15).
In his motion for reconsideration, Mann points to two additional
passages in the Complaint. These, he says, sufficiently state a claim that PAM
wrongfully withheld profits in 2010. He refers to Count Two, which asserts that
“the actions of defendant, Meyers, constitute unlawful conduct,
mismanagement of Paramus Chevrolet, abuse of authority, ultra virus [sic]
3
In New Jersey, a party seeking to invoke preclusion must show that:
(1) the issue to be precluded is identical to the issue decided in the prior
proceeding;
(2) the issue was actually litigated in the prior proceeding;
(3) the court in the prior proceeding issued a final judgment on the
merits;
(4) the determination of the issue was essential to the prior judgment;
and
(5) the party against whom the doctrine is asserted was a party to or in
privity with a party to the earlier proceeding.
Winters v. N. Hudson Reg’l Fire & Rescue, 50 A.3d 649, 659 (N.J. 2012)
3
acts, misfeasance and malfeasance, oppression and unfairness towards Mann.
The defendants’ scheme has harmed the investment of plaintiff, Mann.”
(Complaint,
¶
89). Mann refers also to Count Six, which alleges that Meyers
“deprivjed] Mann of his rights to his rightful share of the profits of the entities,
and using these entities, and using these entities for his personal benefit and
for the benefit of third parties in complete disregard of Mann and the minority
owners.” (Complaint,
¶
101).
These allegedly “neglected” statements make no difference. Alone or
together, they come nowhere near stating a claim that PAM wrongfully refused
to distribute profits in 2010—let alone that it did so to retaliate against Barna
or anyone. The complaint makes no mention of the 2010 profit distribution. It
makes no mention of PAM’s use of the 2010 profits to make a loan to the
Meyers estate. It likewise makes no mention of Melody Paton’s
misrepresentation to PAM shareholders that the company would instead use
the profits to comply with a GM mandate that dealerships improve their
facilities. A court or a defendant reading these generalized accusations—it is
hard to even call them allegations—would get no notion of the factual grounds
for Mann’s claim. The reader could not even glean that it was the 2010 bonus
money that Mann was demanding. Such statements lack the specificity
required to state a claim for relief. See generally Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007) (explaining that Fed. R. Civ. P. 8(a)(2) requires that the
complaint “give the defendant fair notice of what the claim is and the grounds
upon which it rests.” (internal quotations and alterations omitted)). While it is
certainly true that a Complaint need not provide “detailed factual allegations,”
it does require “more than labels and conclusions.” Twombly, 550 U.S. at 555.
The Complaint here does not meet the basic requirement of stating facts with
respect to the 2010 bonus claim.
Mann’s reconsideration motion also builds on the arbitrator’s conclusion
that Paton had withheld profits to retaliate against Barna. Mann takes issue
with the Court’s remark in its November 2014 Opinion, that this finding was
“to some degree, unique to Barna.” (Opinion, 14-15). In Mann’s view, although
4
Paton’s motive may have been specific to Barna, her conduct was unlawful with
respect to all PAM shareholders. (Motion, 4-7). Therefore, the argument runs,
the arbitrator’s ruling as to Barna should apply to Mann here, via collateral
estoppel. That, I think, is a non sequitur. The problem never was with the
interpretation of the arbitration ruling; the problem is at this end. Mann’s
Complaint in this action says nothing about the withholding of the 2010
bonuses, and certainly does not allege they were withheld as an act of
retaliation against Barna. Because Mann does not, in this action, assert a claim
with respect to the 2010 bonus, there is nothing for the preclusion doctrines to
preclude. The deficiencies in the Complaint are, alone, enough to rule out issue
preclusion.
As to the 2010 bonus issue, the motion for reconsideration will be
DENIED.
II.
Valuation of the Hummer Franchise
Mann also asks the Court to reconsider its decision with respect to the
valuation of the Hummer franchise at the time of the transfer. In Barna’s
action, the arbitrator found that the transfer of the Hummer franchise
constituted misappropriation of a corporate asset. In my November 2014
Opinion, I examined the factors governing offensive collateral estoppel, and
ruled that the arbitrator’s decision precluded the Estate Defendants from
arguing to the contrary vis-à-vis Mann. (Opinion, 17).
More specifically, I gave preclusive effect to the ruling of the arbitrator,
identified as Ruling no. 1 and summarized in my Opinion as follows:
(1) With respect to the moving of the Hummer franchise (see Section
II.B. 1, supra), Judge Keefe found that General Motors had, in fact,
granted the Hummer franchise to PAM, not to Meyers. Because the
franchise. was the property of PAM, transferring it to another
corporation without compensating PAM constituted misappropriation
of a corporate asset and oppression of PAM’s minority shareholders.
See Interim Award, 16. At the time that Meyers misappropriated the
Hummer franchise from PAM, Barna had owned a 19.277% interest in
PAM. Id. Judge Keefe therefore ordered that Barna be awarded
5
19.277% of the value of the Hummer franchise as of the date it was
transferred to Mahwhah Hummer. Id. at 16-17. He ordered an
accountant to perform a valuation of the franchise. Id. at 17.
(Opinion, 12)
So far, Mann obviously has no objection. My Opinion, however, stopped
short of granting the full relief he requests. The dispute revolves around the
valuation phase of the arbitration:
Part of the arbitrator’s decision ordered the Estate defendants to
pay Barna approximately 19% of the value of the Hummer
franchise as of the date it was transferred out of PAM. See Interim
Award, 16-17. The decision provided that the value of the franchise
as of that date, January 1, 2007, would be estimated by a
valuation expert, and evaluated by the arbitrator. Id. at 17. That
valuation was subsequently performed. The arbitrator issued a
final award incorporating the valuation, and that award was
confirmed by the New Jersey Superior Court. See 104-1, Exhs. A,
B.
(Opinion, 7)
Mann asks that the Court give preclusive effect to: (a) the portion of the
Interim Award that stated that Mann (like Barna) was entitled to a share of the
Hummer franchise’s value in proportion to his ownership interest in PAM; (b)
the dollar amount of the arbitrator’s valuation of the Hummer franchise.
As to (a), it is implicit in my earlier ruling that the Estate Defendants are
liable to Mann, as they are to Barna, for a proportionate share of the value of
the Hummer franchise. That proportionate share corresponds to Mann’s
ownership percentage of PAM, some 9.638% (Mot., 3).
As to (b), in general the dollar valuation, too, would extend to Mann’s
case via offensive collateral estoppel. The Estate Defendants had a full and fair
opportunity to arbitrate the issue as to Barna, and it makes no sense that the
Hummer franchise could have one value as to Barna, but another as to Mann.
But my Opinion noted that the valuation issues (and therefore the value of
Mann’s share) would soon be the subject of an appeal. That appeal, I am
informed, was filed on October 24, 2014, and there is a briefing schedule.
6
(Opp.,
7 n.2). It is possible that the basis for the arbitrator’s award to Barna or
the amount of the valuation could be overturned or modified by the State
appeals court. If so, then any amount I awarded now would have to be
unwound and perhaps redistributed. In my earlier Opinion, I therefore
withheld final decision as to the valuation amount.
I adhere to that ruling. Once the issue of the valuation of the Hummer
franchise has been finally resolved and confirmed in state court, Mann may file
a simple motion to fIx the value of his share. In the meantime, I exercise my
discretion and decline to give collateral estoppel effect to the valuation unless
and until it is confirmed on appeal.
CONCLUSION
The motion for reconsideration will be denied. As to the valuation aspect,
however, that denial is without prejudice to a later application after resolution
of the state-court appeal. A separate order will issue.
Dated: March 11, 2015
Newark, New Jersey
/$J(
HON. KEVIN MCNU
United States District Ju
7
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