CalMat Co. v. Old Castle Precast, Inc. et al

Filing 189

ORDER by District Judge Kenneth J. Gonzales denying as moot 158 Motion for Attorneys' Fees as Sanctions Pursuant to Rule 11; and denying 177 Motion to [Set] Aside Order to Show Cause. (tah)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
CALMAT CO.,
Plaintiff,
vs.

Civ. No. 16-26 KG/JHR

OLDCASTLE PRECAST, INC.,
and JOHN DOES 1-5,
Defendants.
ORDER ON MOTION TO [SET] ASIDE ORDER TO SHOW CAUSE (DOC. 177)
AND MOTION FOR ATTORNEYS’ FEES AS SANCTIONS
PURSUANT TO RULE 11 (DOC. 158)
This matter comes before the Court upon Rune Kraft’s second Motion to [Set] Aside
Order to Show Cause (Second Motion to Set Aside Order to Show Cause), filed June 26, 2017,
and upon Defendant Oldcastle Precast, Inc.’s (Oldcastle) Motion for Attorneys’ Fees as
Sanctions Pursuant to Rule 11 (Motion for Attorneys’ Fees and Costs), filed May 24, 2017.
(Docs. 177 and 158). Having considered both motions, the Court denies the Second Motion to
Set Aside Order to Show Cause, awards Oldcastle reasonable attorneys’ fees and costs under the
Order to Show Cause, and denies the Motion for Attorneys’ Fees and Costs as moot.
A. Background
1. The Order to Show Cause
On April 12, 2017, the Court entered an Order to Show Cause requiring Rune Kraft to
appear in person, at the Las Cruces, New Mexico, Federal Courthouse, on June 29, 2017, “to
show cause why he should not be sanctioned, by monetary sanctions, a finding of contempt,
and/or a referral to the State Bar of New Mexico for the unauthorized practice of law, for
continuing to file pleadings as a non-lawyer on behalf of his business entities….” (Doc. 132) at

4. The Court noted that “Rune Kraft’s failure to appear for the in-person show cause hearing
may result in additional sanctions for disobeying a Court order….” Id.
Despite the Order to Show Cause, Rune Kraft continued filing motions on behalf of Kraft
Americas Holdings, Inc. (KAHI), one of Rune Kraft’s business entities. (Docs. 137 through
142). Then, on May 1, 2017, Rune Kraft filed his first Motion to Set Aside Order to Show
Cause. (Doc. 143).
On May 8, 2017, the Court struck the filings Rune Kraft made on behalf KAHI noting
once more “that KAHI cannot participate in this lawsuit without first obtaining legal counsel and
that Rune Kraft, as a non-attorney, cannot file legal documents on behalf of KAHI.” (Doc. 145)
at 1. The Court further stated that
Rune Kraft’s continued refusal to follow the Court’s orders regarding KAHI’s need to
obtain licensed legal counsel and his continued insistence on filing documents on KAHI’s
behalf do not bode well for Rune Kraft and will significantly bear on whether the Court
imposes sanctions at the June 29, 2017, show cause hearing.
Id. After the entry of this order, Rune Kraft desisted from filing documents on behalf of KAHI.
Also, on May 8, 2017, the Court denied the first Motion to Set Aside Order to Show
Cause. (Doc. 147). The Court rejected the following arguments made by Rune Kraft: (1) that
Rune Kraft, a non-lawyer and KAHI corporate officer, can appear in Court on behalf of KAHI;
(2) that the Court should waive the Local Rules’ requirement that corporations be represented by
counsel; and (3) that Rune Kraft was not practicing law because he has no clients. (Doc. 147) at
2. The Court also determined that it would not set aside the Order to Show Cause based on Rune
Kraft’s assertion that he cannot appear for the show cause hearing because (1) he is 8,300 miles
from Las Cruces, (2) traveling to the hearing would be unreasonably expensive and time
consuming, and (3) he “has personal and business obligations that make such a trip impossible.”
Id. at 4. The Court, however, allowed Rune Kraft to “file a motion to continue the show cause
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hearing until a later, but not unreasonable, date to accommodate his schedule,” and, otherwise,
ordered Rune Kraft to attend the show cause hearing in-person in Las Cruces. Id. at 4 n. 2.
In response to the Court’s invitation to file a motion to continue the show cause hearing,
Rune Kraft filed on June 19, 2017, a “Notice to the Court, Motion for Clarification and Request
that the June 29, 2017 Hearing be Cancelled or Continued” (Notice). (Doc. 172). Rune Kraft
stated, as before, that (1) he cannot appear for the show cause hearing because he is 8,300 miles
from Las Cruces, (2) traveling to the hearing would be unreasonably expensive and time
consuming, and (3) he “has personal and business obligations that make such a trip impossible.”
Id. at 20. In ruling on this Notice on June 20, 2017, the Court decided to provide “Rune Kraft
yet another opportunity to explain, in specific detail, what ‘personal and business obligations’
would prevent him from appearing in-person for the Order to Show Cause hearing.” (Doc. 173)
at 6. The Court required that by June 23, 2017, Rune Kraft email “to chambers a detailed
explanation of what ‘personal and business obligations’ would prevent him from attending the
in-person Order to Show Cause hearing set in Las Cruces on June 29, 2017, at 9:00 a.m.” Id. at
6-7.
On June 21, 2017, Rune Kraft emailed chambers explaining that his various job duties
prevent him from attending the show cause hearing in-person. (Doc. 175). Some of those job
duties include supervising employees, managing “critical and time sensitive transactions,”
overseeing “treasury and cash management activities,” and implementing “new and ongoing
projects.” Id.
As a result of this email, the Court vacated the show cause hearing on June 26, 2017,
noting that the hearing would be “rescheduled at a later date.” (Doc. 176). Also on June 26,
2017, Rune Kraft filed his Second Motion to Set Aside Order to Show Cause. (Doc. 177).

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On September 20, 2017, the Court informed Rune Kraft that he may attend a show cause
hearing by video conference and required that Rune Kraft provide the Court with the necessary
information to set up a hearing using video conference technology. (Doc. 187). The Court
stated that it wanted this information from Rune Kraft by the end of October 2017. Id.
On October 13, 2017, Rune Kraft responded to the Court by stating that he was in
Europe. (Doc. 186) at 2. He did not provide any video conference information nor did he state
that he was willing to appear at a show cause hearing by video conference. Id.
2. Oldcastle’s Motion for Attorneys’ Fees and Costs
As an initial matter, the Court notes that Oldcastle apparently did not serve the Motion
for Attorneys’ Fees and Costs on Rune Kraft. Oldcastle, nonetheless, seeks an award of
reasonable attorneys’ fees and costs against Rune Kraft under Fed. R. Civ. P. 11(b). In support
of its motion, Oldcastle states that Rune Kraft filed numerous documents and motions on behalf
of his business entities without being a licensed attorney, a clear violation of court orders and the
Local Rules, and the basis for the Order to Show Cause. Oldcastle also argues that Rune Kraft,
as a nonparty, filed numerous frivolous and unreasonable motions and papers, including a
“Motion to Dismiss Based on Fed. R. Civ. P. 12(b)(1) and/or Fed. R. Civ. P. 12(h)(3)” (Motion
to Dismiss) in which Rune Kraft argues that the Court does not have subject matter jurisdiction
over himself and Kraft Americas L.P., another of Rune Kraft’s business entities. (Doc. 154).
Rune Kraft filed the Motion to Dismiss on May 22, 2017, more than a month after the Court
entered its Order to Show Cause. On May 24, 2017, Oldcastle responded to the Motion to
Dismiss.1 (Doc. 157). Oldcastle requests that the Court award reasonable attorneys’ fees and

1

The Court subsequently struck the Motion to Dismiss because Rune Kraft is no longer a party
in this lawsuit. (Doc. 167).
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costs it incurred in (1) filing the Motion for Attorneys’ Fees and Costs, and (2) responding to the
Motion to Dismiss.
B. Discussion
1. The Second Motion to Set Aside Order to Show Cause
Rune Kraft apparently brings this Second Motion to Set Aside Order to Show Cause
under Fed. R. Civ. P. 54(b). (Doc. 177) at 6. The Tenth Circuit has analyzed motions to
reconsider interlocutory orders under Rule 54(b)2 and looked to Fed. R. Civ. P. 59(e) for
guidance in addressing those motions to reconsider. Ankeney v. Zavaras, 524 Fed. Appx. 454,
458 (10th Cir. 2013) (stating that, in considering Rule 54(b) motion to reconsider, “court may
look to the standard used to review a motion made pursuant to Federal Rule of Civil Procedure
59(e).”). A Rule 59(e) movant carries the burden of demonstrating that the Court should alter or
amend a judgment. See, e.g., Winchester v. Wilkinson, 2015 WL 2412175, at *2 (E.D. Okla.)
(“court finds petitioner has failed to meet his burden for relief under Fed. R. Civ. P. 59(e).”).
Rule 59(e) relief is appropriate if there is new controlling law, new evidence not available
previously, or if there is a “need to correct clear error or prevent manifest injustice.” Ankeney,
524 Fed. Appx. at 458 (quoting Servants of the Paraclete v. Does, 204 F.3d 1005, 1012 (10th
Cir. 2000)). The Tenth Circuit has defined clear error as “an arbitrary, capricious, whimsical, or
manifestly unreasonable judgment.” Wright ex rel. Trust Co. of Kan. v. Abbott Labs., Inc., 259
F.3d 1226, 1236 (10th Cir. 2001). Although the Tenth Circuit has not specifically defined
manifest injustice in the Rule 59(e) context, other courts have defined manifest injustice as
“more than just a clear and certain prejudice to the moving party, but also a result that is
2

Rule 54(b) states: “any order or other decision, however designated, that adjudicates fewer than
all the claims or the rights and liabilities of fewer than all the parties does not end the action as to
any of the claims or parties and may be revised at any time before the entry of a judgment
adjudicating all the claims and all the parties’ rights and liabilities.”
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fundamentally unfair in light of governing law.” Smith v. Lynch, 2015 WL 4324167, *3
(D.D.C.). See also In re Green Goblin, Inc., 2012 WL 1971143, *1 (Bankr. E.D. Pa. May 31,
2012) (“In order for a court to reconsider a decision due to ‘manifest injustice,’ the record
presented must be so patently unfair and tainted that the error is manifestly clear to all who view
it.”) (quoting In re Roemmele, 466 B.R. 706, 712 (Bankr. E.D. Pa. 2012)). Rule 59(e) does not
allow a losing party to “revisit issues already addressed or advance arguments that could have
been raised in prior briefing.” Servants of the Paraclete, 204 F.3d at 1012.
Here, Rune Kraft is not arguing that there is new controlling law or newly discovered
evidence which would justify a reconsideration of the Order to Show Cause. Rune Kraft,
instead, raises arguments which he could have raised in the first Motion to Set Aside Order to
Show Cause. Rune Kraft is essentially attempting to obtain an impermissible “second bite of the
apple.” See, e.g., New York Life Ins. Co. v. Legault, 678 F. App'x 84, 85 (3d Cir. 2017)
(affirming district court’s decision wherein district court found that party “was essentially
attempting to get the proverbial ‘second bite of the apple’” when she filed second motion for
reconsideration). Moreover, Rune Kraft has not convinced the Court that the Order to Show
Cause was arbitrary or “fundamentally unfair in light of governing law.” In fact, the law clearly
establishes that Rune Kraft, a non-attorney, cannot engage in the unauthorized practice of law by
trying to legally represent his business entities in this matter. See D.N.M. LR-Cv 83.7
(corporation “must be represented by an attorney authorized to practice before this Court.”);
D.N.M. LR-Cv 83.8(c) (corporation “can only appear with an attorney” and, absent entry of
appearance by an attorney, filings by corporation “may be stricken and default judgment or other
sanctions imposed.”); Harrison v. Wahatoyas, L.L.C., 253 F.3d 552, 556–57 (10th Cir. 2001)
(holding that “[a]s a general matter, a corporation or other business entity can only appear in

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court through an attorney and not through a non-attorney corporate officer appearing pro se.”).
In other words, Rune Kraft has not carried his burden of demonstrating that the Court should
reconsider its Order to Show Cause “to correct clear error or prevent manifest injustice.”
Consequently, the Court denies the Second Motion to Set Aside Order to Show Cause.
2. The Order to Show Cause
Having denied the Second Motion to Set Aside Order to Show Cause, the Court
addresses the Order to Show Cause. Cognizant that Rune Kraft is evidently living in Europe
despite providing the Clerk with a Delaware address,3 the Court provided Rune Kraft with an
opportunity to avoid an in-person appearance at a show cause hearing by appearing via video
conference. Rune Kraft’s October 13, 2017, email unmistakably demonstrates that Rune Kraft
does not intend to appear either in-person or via video conference for a show cause hearing.
That being the case, the Court finds that Rune Kraft has no intention of providing cause as
ordered in the Order to Show Cause and knowingly waives the opportunity to do so. The Court,
therefore, determines that Rune Kraft has failed to show cause why he should not be sanctioned
for filing “pleadings as a non-lawyer on behalf of his business entities.” See (Doc. 132) at 4.
As sanctions for filing pleadings on behalf of his businesses without a license to practice
law, the Court orders that Rune Kraft, personally, pay reasonable attorneys’ fees and costs
incurred by Oldcastle in responding to the Motion to Dismiss. The Court notes that Rune Kraft
filed the Motion to Dismiss after the Court entered the Order to Show Cause, but, nonetheless,
brought it on behalf of Kraft Americas L.P. by arguing that this Court did not have subject matter
jurisdiction over Kraft Americas L.P.

3

Local Rule 83.6 states that “parties appearing pro se have a continuing duty to notify the Clerk,
in writing, of any change in their … mailing addresses….”
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The Court further orders that Rune Kraft, personally, pay reasonable attorneys’ fees and
costs incurred by Oldcastle in filing the Motion for Attorneys’ Fees and Costs. The Court
observes that Oldcastle brought the Motion for Attorneys’ Fees and Costs, in part, because Rune
Kraft purposefully violated the Local Rules and several court orders by filing documents on
behalf of KAHI and Kraft Americas L.P.
Given that Rune Kraft has finally desisted in filing documents on behalf of KAHI and
Kraft Americas L.P., the Court will not refer Rune Kraft to the State Bar of New Mexico for the
unauthorized practice of law.
In light of these rulings, the Court denies Oldcastle’s Motion for Attorneys’ Fees and
Costs as moot. The fact that Oldcastle did not serve the Motion for Attorneys’ Fees and Costs on
Rune Kraft is, therefore, immaterial.
IT IS ORDERED that
1. the Motion to [Set] Aside Order to Show Cause (177) is denied;
2. Oldcastle will be awarded reasonable attorneys’ fees and costs it incurred in
responding to Rune Kraft’s Motion to Dismiss (Doc. 154) and in bringing the Motion for
Attorneys’ Fees and Costs (Doc. 158), which Rune Kraft must personally pay;
3. Oldcastle has fourteen days from the date of the entry of this Memorandum Opinion
and Order to file a brief establishing those reasonable attorneys’ fees and costs;
4. Oldcastle must serve that brief on Rune Kraft and support it with appropriate
affidavits and concurrent time records, see D.N.M. LR-Cv 54.5;
5. Rune Kraft has fourteen days from the date of service of Oldcastle’s brief to oppose
the reasonableness of the requested award of attorneys’ fees and costs; and

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6. Defendant Oldcastle Precast, Inc.’s Motion for Attorneys’ Fees as Sanctions Pursuant
to Rule 11 (Doc. 158) is denied as moot.

________________________________
UNITED STATES DISTRICT JUDGE

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