FIRST INVESTORS NEVADA REALTY, LLC et al v. EIS, INC. et al
Filing
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MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE EDUARDO C. ROBRENO ON 7/15/21. 7/15/21 ENTERED AND COPIES E-MAILED.(jaa, ) (Main Document 37 replaced on 7/15/2021) (jaa, ).
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
FIRST INVESTORS NEVADA REALTY,
LLC, et al.,
Plaintiffs,
v.
EIS, INC., et al.,
Defendants.
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CIVIL ACTION
NO. 20-4134
M E M O R A N D U M
EDUARDO C. ROBRENO, J.
I.
July 15, 2021
INTRODUCTION
This is a breach of contract case involving a landlord-
tenant agreement. Following the Court’s denial of Defendants’
Motion to Dismiss, the Court ordered limited discovery and
supplemental briefing as to the issue of subject matter
jurisdiction. After supplemental briefing, the Court found that
diversity jurisdiction does not exist with respect to Defendants
EIS Buyer, LLC, (“Buyer”) and EIS Legacy, LLC (“Legacy”).
Plaintiffs have now filed a motion to reconsider that decision.
For the reasons explained below, Plaintiffs’ motion will be
denied.
II.
BACKGROUND
On October 16, 2020, Defendants filed a Motion to Dismiss
the Complaint. Among other issues, Defendants argued that Legacy
and Buyer should be dismissed because the Court lacked diversity
jurisdiction. Defendants claimed that Pennsylvania resident
Robert Baginski was a limited partner of EIS Acquisition
Holdings, LP (“Acquisition Holdings”), which is an upstream
member of Buyer and Legacy. Thus, Defendants argued that Buyer
and Legacy are Pennsylvania citizens as well, thereby destroying
diversity jurisdiction since Plaintiffs are both Pennsylvania
residents. The issue then became whether Baginski was in fact a
limited partner of Acquisition Holdings at the time the
Complaint was filed on August 21, 2020.
On November 10, 2020, the Court denied Defendants’ Motion
to Dismiss and allowed for limited jurisdictional discovery. The
Court also ordered supplemental briefing. After supplemental
briefing, the Court found that diversity jurisdiction did not
exist with respect to Buyer and Legacy because of the following
section of the Delaware Revised Uniform Limited Partnership Act
(“DRULPA”):
§ 17-301. Admission of limited partners. . . .
(b) After the formation of a limited partnership, a
person is admitted as a limited partner of the limited
partnership:
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(1) In the case of a person who is not an
assignee of a partnership interest, including a
person acquiring a partnership interest directly
from the limited partnership and a person to be
admitted as a limited partner of the limited
partnership without acquiring a partnership
interest in the limited partnership, at the time
provided in and upon compliance with the
partnership agreement or, if the partnership
agreement does not so provide, upon the consent
of all partners or as otherwise provided in the
partnership agreement; . . .
(d) A person may be admitted to a limited partnership
as a limited partner of the limited partnership and
may receive a partnership interest in the limited
partnership without making a contribution or being
obligated to make a contribution to the limited
partnership. Unless otherwise provided in a
partnership agreement, a person may be admitted to a
limited partnership as a limited partner of the
limited partnership without acquiring a partnership
interest in the limited partnership.
Del. Code Ann. tit. 6, § 17-301 (2020) (emphases added).
Accordingly, the Court found that the terms of the Limited
Partnership (“LP”) Agreement determine who is a limited partner.
The LP Agreement here specifically provides the following
definition of who will be considered a limited partner:
“Limited Partners” means the Persons listed as Limited
Partners on Exhibit 3.1 and any other Person that both
acquires an Interest in the Partnership and is
admitted to the Partnership as a Limited Partner, in
each case so long as such Person continues to hold any
Units and is not a Former Unit Holder.
Limited Partnership Agreement 9-10, ECF No. 25-1.
Defendants argued that Robert Baginski was listed as a
limited partner on Exhibit 3.1 either on January 27, 2020, or
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shortly thereafter, and was thus a limited partner well before
the Complaint was filed in August 2020. See Defs.’ Mem. re
Subject Matter Jurisdiction 10-11, ECF No. 25. Plaintiffs did
not dispute this fact, so the Court found that Baginski was a
limited partner of Acquisition Holdings before the Complaint was
filed and, consequently, that there was no subject matter
jurisdiction as to Buyer and Legacy.
Plaintiffs subsequently filed the instant motion to
reconsider the Court’s decision, arguing that the LP Agreement
was heavily redacted and that the issue cannot be decided
without knowing whether other provisions hidden by redactions
address the issue as well.
III. LEGAL STANDARD
The Third Circuit treats motions for reconsideration as
functional equivalents to Rule 59 motions. Pitts v. United
States, No. CR 10-703, 2015 WL 9244285, at *4 (E.D. Pa. Dec. 17,
2015) (Robreno, J.) (quoting Venen v. Sweet, 758 F.2d 117, 122
(3d Cir. 1985)). Motions for reconsideration are designed to
“correct manifest errors of law or fact or to present newly
discovered evidence.” Lazaridis v. Wehmer, 591 F.3d 666, 669 (3d
Cir. 2010) (quoting Max’s Seafood Café v. Quinteros, 176 F.3d
669, 677 (3d Cir. 1999)). A motion for reconsideration may be
granted if the movant demonstrates one of the following
circumstances: “(1) an intervening change in controlling law;
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(2) the availability of new evidence; or (2) the need to correct
clear error of law or prevent manifest injustice.” Id. (citing
N. River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194, 1218
(3d Cir. 1995)).
As the Third Circuit has not definitively circumscribed the
“manifest injustice” standard, courts should “‘look at the
matter on a case-by-case basis’ to determine whether a judgment
will work a manifest injustice.” Conway v. A.I. duPont Hosp. for
Child., No. 04-4862, 2009 WL 1492178, at *6 (E.D. Pa. May 26,
2009) (quoting United States v. Jarnigan, No. 08-CR-7, 2008 U.S.
Dist. LEXIS 60395, at *6-7 (E.D. Tenn. July 25, 2008)) (citing
Att’y Registration & Disciplinary Comm. of the Sup. Ct. (In re
Betts), 157 B.R. 631 (Bankr. N.D. Ill. 1993)). However, judges
in the Eastern District of Pennsylvania have held that a
manifest injustice occurs when there is an error in the trial
court that is “direct, obvious, and observable.” See, e.g., id.
at *7 (quoting Black’s Law Dictionary 982 (8th ed. 2004)).
Because federal courts “have a strong interest in the
finality of judgments, motions for reconsideration should be
granted sparingly.” In re Asbestos Prods. Liab. Litig. (No. VI),
801 F. Supp. 2d 333, 334 (E.D. Pa. 2011) (Robreno, J.) (quoting
Cont’l Cas. Co. v. Diversified Indus., Inc., 884 F. Supp. 937,
943 (E.D. Pa. 1995)). “Courts often take a dim view of issues
raised for the first time in post-judgment motions.” Kiewit E.
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Co. v. L&R Constr. Co., 44 F.3d 1194, 1204 (3d Cir. 1995). And
“a motion to reconsider may not raise new arguments that could
have (or should have) been made in support of or in opposition
to the original motion.” Pac. Emps. Ins. Co. v. Glob.
Reinsurance Corp. of Am., No. 09-6055, 2010 U.S. Dist. LEXIS
56758, at *12-13 (E.D. Pa. June 9, 2010) (quoting Helfrich v.
Lehigh Valley Hosp., No. 03-5793, 2005 WL 1715689, at *3 (E.D.
Pa. July 21, 2005)).
IV.
DISCUSSION
Plaintiffs argue that the Court committed a direct,
obvious, and observable error by relying on the redacted LP
Agreement, and that it would be a manifest injustice to dismiss
Buyer and Legacy when so much of the Agreement has been hidden.
Defendants completely redacted 73 pages of the 98-page
Agreement, and on the pages that were not completely redacted,
Defendants redacted all but a few sentences. Although Plaintiffs
argue that the entire Agreement should be unredacted, they take
particular issue with the majority of Section 3.1 being
redacted. The first (and only unredacted) sentence of Section
3.1 states as follows: “Partners. The Partners of the
Partnership will be listed on Exhibit 3.1, as from time to time
updated in accordance with this Agreement.” Pls.’ Mot. Recons.
7, ECF No. 30-1. Plaintiffs argue that by redacting the
remainder of Section 3.1, which appears to be three pages long,
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Defendants are concealing, inter alia, “the procedure for the
admission of limited partners, whether the LP Agreement allows
the admission of partners prior to their partnership interests
vesting, and the timing of the admission of partners after they
have acquired a partnership interest.” Pls.’ Mot. Recons. 6.
In support of their argument, Plaintiffs assert that the
following language in DRULPA requires the Court to consider the
entire LP Agreement when determining whether a person is a
limited partner: “Unless otherwise provided in a partnership
agreement, a person may be admitted to a limited partnership as
a limited partner of the limited partnership without acquiring a
partnership interest in the limited partnership.” Del. Code Ann.
tit. 6, § 17-301 (2020) (emphasis added). Plaintiffs allege that
the Court “could not determine if the LP Agreement had terms
that ‘otherwise provided’ for the admission of limited partners
because it has not seen the entire LP Agreement and cannot be
sure that there is not an alternative procedure for the
admission of limited partners.” Pls.’ Mot. Recons. 10.
But the Court could, and did, determine that the LP
Agreement contained the following unredacted provision that
otherwise provided for who may be considered a limited partner:
“Limited Partners” means the Persons listed as Limited
Partners on Exhibit 3.1 and any other Person that both
acquires an Interest in the Partnership and is
admitted to the Partnership as a Limited Partner, in
each case so long as such Person continues to hold any
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Units and is not a Former Unit Holder.
Limited Partnership Agreement 9-10, ECF No. 25-1. And Plaintiffs
do not cite to any authority that supports the proposition that
the phrase “partnership agreement” in DRULPA was intended to
mean the entire partnership agreement, as opposed to a redacted
version of the partnership agreement. Furthermore, even if
Section 3.1 does provide alternative procedures for the
admission of limited partners, it does not change the fact that
Section 3.1 explicitly provides that one possible mechanism for
becoming a limited partner is to be listed on Exhibit 3.1. See
Pls.’ Mot. Recons. 7 (“The Partners of the Partnership will be
listed on Exhibit 3.1, as from time to time updated in
accordance with this Agreement.”)
In any case, “[a] litigant that fails in its first attempt
to persuade a court to adopt its position may not use a motion
for reconsideration either to attempt a new approach or correct
mistakes it made in its previous one.” PBI Performance Prods. V.
NorFab Corp., 514 F. Supp. 2d 732, 744 (E.D. Pa. 2007). In other
words, “[a] motion for reconsideration may not be used to give a
litigant a ‘second bite at the apple.’” Id. (quoting Bhatnagar
v. Surrendra Overseas Ltd., 52 F.3d 1220, 1231 (3d Cir. 1995)).
For example, in LM General Insurance Co. v. Lebrun, Judge
Marston explained that a party’s failure to raise an issue of
which it was aware at the time of original briefing did not
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warrant reconsideration of dismissal, even on “manifest
injustice” grounds:
Next, as LM General rightly points out (see Doc.
45 at p. 3), in moving for reconsideration, a litigant
may not raise a new argument that it could have
previously asserted but failed to do so. See, e.g.,
PBI Performance Prods., Inc., 514 F. Supp. 2d at 744
(“A litigant . . . may not use a motion for
reconsideration either to attempt a new approach or to
correct mistakes it made in its previous one. A motion
for reconsideration should not be used as a means to
argue new facts or issues that inexcusably were not
presented to the court in the matter previously
decided.” (quotation marks and citation omitted));
Kennedy Indus., 2006 WL 1892685, at *1 (same); see
also Digneo v. City of Philadelphia, Civil No. 072372, 2008 WL 11515930, at *1 n.1 (E.D. Pa. June 13,
2008) (“[A] Motion for Reconsideration cannot be
granted based on . . . newly raised arguments that
could have previously been asserted”); accord United
States v. Jasin, 292 F. Supp. 2d 670, 676 (E.D. Pa.
2003) (“In order to show clear error or manifest
injustice, the [moving party] must base its motion on
arguments that were previously raised but were
overlooked by the Court.” (emphasis added)).
Here, in their motion for reconsideration, the
LeBruns argue, for the very first time, that dismissal
of the declaratory judgment claims “may result in an
unfair and unjust deprivation of the rights of
putative class members” because the LeBruns may “be
unable to secure [class] certification” of the
compensatory relief (i.e., breach of contract) claims,
which are the only claims left. (Doc. No. 41-1 at p.
3.) Even though the LeBruns could have made this very
same argument in their initial opposition to LM
General’s motion to dismiss, they declined to do so. .
. . In raising a new argument in this final hour (and
where that argument is not based on newly discovered
evidence, but could have been raised all along), the
LeBruns are essentially asking us to flout the motion
for reconsideration standard. We will not do so.
Finally, we note that although “[t]here is a
dearth of case law within the Third Circuit discussing
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the standard to be applied when dealing with manifest
injustice” (i.e., the standard for what constitutes a
manifest injustice), it is “clear that the standard is
a high one.” Conway v. A.I. DuPont Hosp. for Children,
Civil Action No. 04-4862, 2009 WL 1492178, at *6-7
(E.D. May 26, 2009) (citations omitted). Plaintiffs
have failed to fulfill that high burden and have not
shown that our ruling constitutes manifest injustice
here.
No. 19-2144, 2020 WL 7640927, at *4 (E.D. Pa. Dec. 23, 2020)
(alterations in original) (footnotes omitted).
Similarly here, although Plaintiffs pointed out in their
supplemental briefing that the LP Agreement was heavily
redacted, they failed to argue that the redaction materially
affected the ability to address Baginski’s limited partnership
interests, despite having received Defendants’ interrogatory
answer demonstrating that Defendants were going to rely on the
Unit Certificate and the LP Agreement to establish that Baginski
was a limited partner. 1 Furthermore, after receiving this
discovery and a copy of the redacted LP Agreement, Plaintiffs
1
Defendants’ interrogatory answer stated as follows:
Of particular relevance to this matter, one of individuals
holding limited partnership units in Acquisition Holdings is
Robert Baginski, who is a domiciliary and citizen of
Pennsylvania. Effective January [27], 2020, Mr. Baginski was a
limited partner/member of Acquisition Holdings; was subject to
the terms and restrictions of the Limited Partnership Agreement;
was identified on Schedule 3.1, pursuant to its Limited
Partnership Agreement, of Acquisition Holdings’ list of partners
(or was listed on a schedule generated shortly thereafter) and,
thus, defined as a partner under that Agreement . . . .
Defs.’ Resp. Opp’n Pls.’ Mot. Reconsideration 3, ECF No. 34 (alteration in
original).
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explicitly represented to the Court during a January 22
discovery conference that they had all facts necessary to
address the discrete issue of diversity jurisdiction. 2 Given
Plaintiffs’ failure in their supplemental briefing to persuade
the Court to adopt their position, they cannot use a motion for
reconsideration either to attempt a new approach or to correct
the mistake they made in their previous approach. See PBI
Performance Prods., Inc., 514 F. Supp. 2d at 744. Thus,
Plaintiffs’ Motion for Reconsideration will be denied.
V. CONCLUSION
As a result of the foregoing, Plaintiffs’ Motion for
Reconsideration will be denied. An appropriate order follows.
2
THE COURT: Do you have all the discovery that you need to address
the issue of diversity?
MR. BURDETT: It’s stipulated that it’s really down to this one
individual and I am taking them at their word that they’ve
provided us with all documents showing that that -- the
individual’s purported interest in the upstream member. . . .
THE COURT: Well, you either accept them or you don’t accept them.
The question is, are you agreeing that those are the facts and
let the cookie crumble then or are you contesting those facts and
asking for discovery as to the question of diversity?
MR. BURDETT: As to the question of diversity, we accept the
stipulated facts.
Disc. Conference Tr. 13:3-8, 16:21-17:2.
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