alliance Industries, Inc. v. Longyear Holding, Inc.
Filing
136
DECISION AND ORDER DENYING Alliance's 128 Motion for Reconsideration. Signed by William M. Skretny, Chief Judge U.S.D.C. on 5/18/2012. (MEAL)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
ALLIANCE INDUSTRIES, INC.,
Plaintiff / Counter-Defendant,
v.
DECISION AND ORDER
08-CV-490S
LONGYEAR HOLDINGS, INC.,
Defendant / Counter-Plaintiff.
I. INTRODUCTION
Plaintiff, Alliance Industries, Inc. (“Alliance”) commenced this diversity action on July
2, 2008 alleging, inter alia, that Defendant Longyear Holdings, Inc., (“Longyear”) unlawfully
withheld funds from an escrow account pursuant to the sale of Alliance’s subsidiary,
Prosonic Corp. (“Prosonic”). Longyear answered and asserted eleven counterclaims,
alleging that it withheld the funds because Alliance breached the Stock Purchase
Agreement (“Agreement”), which memorialized the sale. Each party eventually moved for
summary judgment. (Docket Nos. 88, 95.) The Honorable Hugh B. Scott, United States
Magistrate Judge, entered a Report and Recommendation advising this Court to grant in
part and deny in part Alliance’s motion for summary judgment and to deny in full
Longyear’s motion. (Docket No. 112.) By Decision and Order dated February 28, 2012, this
Court adopted in part and set aside in part that Recommendation. (Docket No. 127.) In the
Decision, this Court granted Longyear’s motion for summary judgment regarding several
of Alliance’s claims and Longyear’s counterclaims. Alliance now moves for reconsideration
of that Decision under Fed. R. Civ. P. 59(e). For the following reasons, Alliance’s motion
1
is denied.
II. BACKGROUND
A.
Facts
This Court assumes the parties’ familiarity with the underlying facts. Some
explanatory factual background, however, remains necessary.1
This action arises from complications surrounding Longyear’s full stock purchase
of Alliance’s subsidiary, Prosonic for $72.5 million. (Pl.’s State. of Facts ¶ 1; Docket No.
91.)2 That purchase was finalized December 6, 2006 by the Agreement. (Id., ¶ 5.)
In September of 2006, a Prosonic employee, covered by Alliance’s health insurance,
had a child who was born with serious medical ailments.3 (Id., ¶ 30.) Tragically, the child
never recovered from these birth defects, and after several months in the hospital, died in
December of 2007. (Id.; Def.'s State. of Facts, ¶ 150.)4 According to Longyear, the total
medical costs, which ultimately became its responsibility, amounted to nearly $3 million.5
(Def.’s State. of Facts, ¶¶ 142, 149). Longyear had its own insurance policy for these
1
For a fuller description of the facts, see this Court’s earlier Decision and Order. Alliance Indus.,
Inc. v. Longyear Holdings, Inc., --- F. Supp. 2d ----, No. 08-CV-490S, 2012 W L 651439, at *1-*3 (W .D.N.Y.
Feb. 28, 2012).
2
This Court has accepted facts in each parties’ statem ent of facts to the extent that they have not
been controverted by the opposing party. See Local Rule 56(a)(2) (statem ents not specifically
controverted are deem ed adm itted).
3
For privacy reasons, this Court will refer to the child sim ply as the “child” or “infant.”
4
Longyear’s Statem ent is not docketed on CM/ECF. It is m aintained in paper form only in the
Clerk’s Office at the W estern District of New York.
5
Alliance objects to this figure on hearsay grounds. But because this allegation serves as the
basis for the litigation, it is included for inform ational purposes.
2
employees, which became effective January 1, 2007. (Id., ¶ 146.) But this policy did not
cover the infant’s claim because it excluded any dependant of an employee who was
already hospitalized at the time the policy began. (Id., ¶¶ 146-147.)
Alliance learned of the child’s birth in October of 2006 and by November, it was
aware that the medical costs had exceeded $400,000. (Pl.’s State. of Facts, ¶¶ 33, 37;
Def.’s State. of Facts, ¶ 107.) However, Alliance did not affirmatively disclose this event
as a liability during the purchase negotiations or due diligence period because the liability
was covered by its stop-loss insurance. (Pl.’s State. of Facts, ¶ 25.) Pursuant to Alliance’s
standard accounting practice, health benefit related costs were not booked until the
expense was actually incurred. (Id., ¶ 29.) In this case it booked $50,000, but nothing over
that amount, because its insurance provider covered the remainder. (Id., ¶¶ 28, 41, 42.)
Longyear contended that Alliance’s failure to disclose the infant’s claim violated §
2.1(f)(ii) of the Agreement, which provides: “There are no liabilities of [Prosonic] or any
[Prosonic] Subsidiary, except: . . . (B) those arising subsequent to September 30 2006, in
the ordinary course of business consistent with past practice.”
III. DISCUSSION
A.
“Motion for Reconsideration” Standard
Although the Federal Rules of Civil Procedure do not explicitly provide for “motions
for reconsideration,” courts typically consider motions of this kind under Fed. R. Civ. P.
59(e). Hill v. Lashburn, No. 08-CV-6285-CJS-JWF, 2011 WL 4807921, at *1 (W.D.N.Y.
Oct. 11, 2011) (citing Hamilton v. Williams, 147 F.3d 367, 371 n. 10 (5th Cir. 1998)). “The
standard for granting such a motion is strict, and reconsideration will generally be denied
3
unless the moving party can point to controlling decisions or data that the court overlooked
— matters, in other words, that might reasonably be expected to alter the conclusion
reached by the court.” Shrader v. CSX Transp. Inc., 70 F.3d 255, 257 (2d Cir. 1995). While
district courts may alter or amend judgment “to correct a clear error of law or prevent
manifest injustice,” Munafo v. Metropolitan Transportation Authority, 381 F.3d 99, 105 (2d
Cir. 2004), reconsideration is not a proper tool to repackage and relitigate arguments and
issues already considered by the court in deciding the original motion, United States v.
Gross, No. 98–CR–0159, 2002 WL 32096592, at *4 (E.D.N.Y. Dec. 5, 2002). Nor is it
proper to raise new arguments and issues. Lehmuller v. Inc. Vill. of Sag Harbor, 982 F.
Supp. 132, 135 (E.D.N.Y. 1997). Finally, relief under this provision lies within the sound
discretion of the court. Schwartz v. Liberty Mut. Ins. Co., 539 F.3d 135, 150 (2d Cir. 2008).
B.
Alliance’s Motion
In its February 26, 2012 Decision and Order, this Court found, inter alia, that the
infant’s claim was Alliance’s liability and that Alliance breached § 2.1(f)(ii) of the Agreement
when it failed to disclose it as such. That breach, this Court also found, caused Longyear’s
damages.
Alliance argues that these findings were in error. Specifically, it argues that because
this Court found that Alliance retained liability for the infant’ claim, it did not breach §
2.1(f)(ii), which required only Prosonic to disclose its liabilities. According to Alliance, “The
Court erred in conflating liabilities of Alliance (for which there were no representations or
warranties) and liabilities of Prosonic (the only entity covered by the ‘no undisclosed
liabilities representations’).” (Pl.’s Br. in Supp. of Reconsideration, at 5; Docket No. 128-3.)
4
But two undisputed facts demonstrate that no conflation occurred: (1) the infant was
a dependant of an insured Prosonic employee (see Pl.’s State., ¶ 30) and (2) Alliance
allocated health care liabilities to the company where the employee who incurred the cost
was employed. John Walsh, Alliance’s Vice President of Human Resources, testified to the
latter fact:
Alliance is a holding company that holds . . . at this time a
series of companies. We’ve always allocated the health care
costs, for example, out which was essentially a pro rata share
[sic]. They had “X” number of participants in the program.
There was a premium basis on that head count. And then the
claims or – the companies that Alliance holds are set up in the
health care plan departmentally. So the claims that would
come in above and beyond the premiums are tied to those
department numbers, and you simply – we simply just allocate
that entire claim to whichever company incurred it, whichever
company’s employee incurred it, I should say.
(Walsh Dep., 51:16-52:21, attached as “Ex. 87” to Longyear’s Mot. for Summ. J. (emphasis
added); see also Walsh Dep., 69:25-71:1 (same)).6
Therefore, this Court, along with the parties,7 was aware that although health care
costs were covered by Alliance’s insurance policy, medical costs deriving from a Prosonic
employee were attributed to Prosonic. Thus, when this Court found that “the sole risk of
loss belongs to Alliance,” and that the health claim represented a liability, it was working
under the undisputed premise that the liability, because it was incurred by a Prosonic
dependant, was attributable to Prosonic in accordance with Alliance’s stated policy and
6
Retained in paper form only at the Clerk’s Office in the W estern District of New York.
7
Despite its current argum ent, even Alliance referred to its health coverage obligation as
belonging, interchangeably, to Alliance and Prosonic. Com pare, e.g., Pl.’s State. of Facts, ¶ 25 (“Alliance
had to pay $50,000 of an em ployee’s or dependent’s m edical claim s in a calender year, and then
Alliance’s stop-loss carrier would cover the rem ainder . . .”) with Pl.’s Br. in Supp. of Sum m . J., at 16
(“Prosonic was or would be responsible for – at m ost – $50,000”) (em phasis added).
5
corporate structure. As such, § 2.1(f)(ii) required its disclosure and Alliance’s failure to do
so resulted in breach.
***
Alliance also argues that this Court improperly found that its breach caused
Longyear to suffer damages. Longyear, however, offers no “controlling decisions or data
that the court overlooked.” See Shader, 70 F.3d at 257. At most, it notes that there is no
evidence in the record substantiating Longyear’s claim that it would have negotiated a
lower purchase price if it knew about the infant’s claim. But this fact does not alter this
Court’s finding, which is that as a “natural and direct consequence” of Alliance’s breach,
Longyear unwittingly incurred a $2.9 million responsibility. See Bennett v. U.S. Trust Co.,
770 F.2d 308, 316 (2d Cir. 1986). This is so because “[t]he buyer of a business bringing
a breach of contract claim is entitled to be put in the position they would have occupied had
the seller's representations and warranties been true.” Koch Indus., Inc., v.
Aktiengesellschaft, 727 F. Supp. 2d 199, 220 (S.D.N.Y. 2010) (citing Merrill Lynch & Co.
Inc. v. Allegheny Energy, Inc., 500 F.3d 171, 185 (2d Cir. 2007)). Had Alliance’s
representation been true – i.e., it did not have a $2.9 million medical claim liability –
Longyear would not have become responsible for that sum when it purchased Prosonic.
Instead, Alliance breached it representation, and Longyear took on a $2.9 million claim as
a direct result.8 Alliance’s argument that this causal chain was broken by Longyear’s failure
to obtain its own comprehensive insurance is rejected as irrelevant, just as it was in this
Court’s original Decision.
8
Som e of the recoverable dam ages m ay be lim ited by the Agreem ent. As certain claim s and a
fee-application m otion rem ain pending, this Court takes no position on that m atter at this tim e.
6
Accordingly, Alliance’s motion for reconsideration is denied.
IV. CONCLUSION
For the reasons discussed above, Alliance’s motion is denied.
V. ORDERS
IT HEREBY IS ORDERED, that Alliance’s Motion for Reconsideration (Docket No.
128) is DENIED.
SO ORDERED.
Dated:
May 18, 2012
Buffalo, New York
/s/William M. Skretny
WILLIAM M. SKRETNY
Chief Judge
United States District Court
7
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?