Saia v. Flying J, Inc. et al

Filing 114

ORDER denying 108 Motion for Reconsideration. Signed by Judge S. Thomas Anderson on 6/8/16. (Anderson, S.)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
EASTERN DIVISION

LOUIS SAIA,
Plaintiff,
vs.
FLYING J, INC.,
FJ MANAGEMENT, INC. d/b/a FLYING J, INC.;
FLYING J. INSURANCE SERVICES, INC. and/or
its Successor, THE BUCKNER COMPANY;
TRANSPORTATION ALLIANCE BANK, INC.;
TRANSPORTATION ALLIANCE LEASING,
LLC; TAB BANK, INC.; TAB BANK, INC. d/b/a/
TRANSPORTATION ALLIANCE LEASING,
LLC; JAGIT “J.J.” SINGH, STEPHEN PARKER,
JOHN DOES A, B, and C AND JANE DOES A, B,
and C,

No. 15-cv-01045-STA-egb

Defendants.

ORDER DENYING PLAINTIFF’S MOTION FOR RECONSIDERATION
_________________________________________________________________________
Before the Court is Plaintiff Louis Saia’s Motion for Reconsideration (ECF No.
108) filed on April 28, 2016.

Defendants Transportation Alliance Bank, Inc.;

Transportation Alliance Leasing, LLC; Stephen Parker; FJ Management, Inc. d/b/a
Flying J, Inc.; Flying J Insurance Services, Inc. and/or its Successor The Buckner
Company have responded in opposition, and Plaintiff has filed a reply brief. 1 For the
reasons set forth below, Plaintiff’s Motion is DENIED.
1

Plaintiff filed a Motion for Leave to File a Reply (ECF No. 111) on May 13,
2016, and filed the reply brief as the next docket entry (ECF No. 112). Defendants filed a
response in opposition to Plaintiff’s request to file the reply. While the Court finds the
reply does not actually raise any new arguments, the Court finds good cause to allow
Plaintiff to file the brief. Therefore, Plaintiff’s Motion for Leave is GRANTED.

BACKGROUND
The Court has set out the factual background of this matter in previous orders and
need not review the full procedural history of the case here.

Briefly, Plaintiff’s

Complaint alleged claims against Defendants for fraud, tortious conspiracy, a civil claim
for violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”),
fraudulent concealment, negligent misrepresentation, malicious prosecution, abuse of
process, and common law unconscionability. Plaintiff alleged that Defendants acted in
concert to take control of Saint Michael Motor Express (“St. Michael”), a Tennessee
corporation in the business of providing over-the-road transportation services for goods
and products in the United States and, in particular, refrigerated transport services.
Plaintiff was the sole shareholder and president of St. Michael. Defendants and their
related entities provided a variety of financial services to St. Michael and ultimately took
control of St. Michael’s assets. Defendants did so, according to the Complaint, by
making false representations to Plaintiff and to the United States Bankruptcy Court where
St. Michael had filed for Chapter 11 bankruptcy reorganization and protection.
On March 28, 2016, the Court entered an order granting Defendants’ motions to
dismiss the Complaint. In support of their Rule 12(b)(6) motions, Defendants raised a
number of arguments for dismissal, including res judicata (in light of previous litigation
between these parties in the state of Utah), collateral estoppel, standing, the RookerFeldman doctrine, timeliness, and failure to state a claim. The Court concluded that it
was unnecessary to reach all of the issues presented in Defendants’ motions to dismiss
and held as a threshold matter that Plaintiff lacked standing to bring claims that properly
belonged to his company St. Michael. Therefore, the Court dismissed the Complaint for

2

lack of standing. Subsequent to the Court’s merits ruling on the initial Complaint, the
Magistrate Judge denied Plaintiff’s motion for leave to file an amended complaint. On
April 27, 2016, the Court entered an order denying Defendants’ joint motion for
sanctions (ECF No. 109).
In his pro se Motion for Reconsideration, Plaintiff raises three grounds to support
his request for revision of the Court’s dismissal order. First, Plaintiff argues that the
Court’s ruling was based on a clear error of law. According to Plaintiff, the Court
erroneously relied on the Sixth Circuit’s unpublished per curiam decision in Quarles v.
City of E. Cleveland, 202 F.3d 269 (6th Cir. 1999). Plaintiff argues that Quarles is
distinguishable on its facts from Plaintiff’s case. Plaintiff goes on to argue that the Court
should have followed the Sixth Circuit’s decision in Kepley v. Lanz, 715 F.3d 969 (6th
Cir. 2013) where the Court of Appeals concluded that Kentucky courts would follow
Delaware’s law of corporations and held that a “part-owner of a closely held company
had standing to sue another owner for that owner’s threats to sell restricted shares.”2
Second, Plaintiff states that he has recently received new evidence from the
United States Bankruptcy Trustee in St. Michael Express’s bankruptcy proceeding. The
new evidence lends additional support to Plaintiff’s factual allegations of Defendants’
fraudulent conduct. Plaintiff explains that he received the new evidence on March 24,
2016, and has attached the new evidence as exhibits to his Motion for Reconsideration.
The new evidence largely consists of email messages between various employees of
Defendants and Plaintiff discussing the need for St. Michael to obtain new insurance
quotes. Plaintiff argues that the new evidence shows Defendants’ emergency motion for
2

Pl.’s Mot. for Reconsideration 6 (ECF No. 108).
3

relief before the Bankruptcy Court to take control of St. Michael’s assets was a fraud on
the court. Plaintiff argues that the new evidence lends even more support to his claims of
fraud and should prompt the Court to reconsider the application of the Rooker-Feldman
doctrine or the doctrine of res judicata. Plaintiff emphasizes that none of the evidence
was ever presented to the Utah court.
Third and finally, Plaintiff argues that reconsideration is necessary to prevent a
manifest injustice. The Court’s ruling denies Plaintiff the opportunity to pursue claims
against Defendants for acts that have caused significant financial losses. Plaintiff further
argues that he has suffered his own injuries separate and distinct from any injury to his
company as a result of Defendants’ breaches of the covenant of good faith and fair
dealing implied from Plaintiff’s guaranty agreement. Plaintiff concludes his brief with a
request for an opportunity to amend his pleadings to add allegations based on the newly
discovered evidence.
Defendants have filed a joint response in opposition to Plaintiff’s Motion for
Reconsideration.

With respect to Plaintiff’s claims of clear legal error, Defendants

respond that Plaintiff has failed to show any error in the Court’s dismissal of the
Complaint.

Defendants argue that the Sixth Circuit’s holding in Quarles is not

distinguishable in any material way from the facts presented in this case. The Court
should decline to consider the other cases cited by Plaintiff because Plaintiff failed to cite
them or brief them as part of his original submission on Defendants’ motion to dismiss.
Plaintiff should not be allowed now to circle back and raise new arguments to oppose
dismissal. Defendants also highlight that the cases on which Plaintiff relies were decided
under Indiana law; Tennessee law governs the claims in this case. Defendants collect a

4

number of cases holding, like Quarles, that a personal guarantor of corporate debt lacks
standing to sue for injuries to the corporation. For similar reasons the Court should also
reject Plaintiff’s arguments relying on Delaware law instead of controlling decisions of
the Tennessee Supreme Court. Thus, Plaintiff has not shown that the Court’s order of
dismissal contained clear error of law.
Defendants next dispute Plaintiff’s claims that the discovery of new evidence
supports reconsideration.

Plaintiff has not shown that the evidence was previously

unavailable to him. Only one affidavit shows that Plaintiff received the affidavit on
March 24, 2016. Some of the evidence dates back to 2012. And more to the point, none
of the evidence alters the Court’s legal conclusion that Plaintiff lacked standing to assert
his claims. Under the circumstances, Plaintiff has not established that newly available
evidence requires revision of the Court’s order of dismissal. As for the third ground for
reconsideration, Defendants argue that Plaintiff has not carried his burden to satisfy the
manifest injustice standard. Plaintiff has simply failed to identify with particularity any
fundamental flaw in the Court’s evaluation of his pleadings.
Defendants conclude with an objection to Plaintiff’s argument on the RookerFeldman doctrine because the Court’s dismissal of the Complaint was based on standing
and only standing. The Court should likewise decline Plaintiff’s request to amend his
pleadings. Plaintiff had the opportunity to file objections to the Magistrate Judge’s order
denying his motion to amend and failed to do so. Therefore, the Court should deny the
Motion for Reconsideration.
In his reply, Plaintiff raises several arguments to support reconsideration.
Plaintiff begins by stating that the previous litigation in Utah between Plaintiff and some

5

of the same Defendants does not render Plaintiff’s claims in this case res judicata.
Plaintiff goes on to argue that St. Michael’s bankruptcy proceedings do not preclude
Plaintiff’s claims because Plaintiff is not a party to the bankruptcy matter.

The

Bankruptcy Court recently decided that St. Michael lacked standing to pursue its
adversary claims and that the Bankruptcy Court was not the proper forum to pursue the
claims.

Plaintiff suggests then that he has suffered a wrong without a remedy.

Concerning Quarles and the other cases cited by the parties, Plaintiff maintains that the
cases on which he relies are only distinguishable insofar as the fraudulent conduct of the
Defendants in the case at bar was even more egregious. Plaintiff next argues that he has
standing to pursue his own RICO claims against Defendants. And as far as the new
evidence submitted, Plaintiff contends that he had not seen most of the evidence before
March 24, 2016. Plaintiff lastly argues that the Court erred in dismissing his Complaint
before giving him an opportunity to amend his pleadings and include new factual
allegations to support his claims.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 59(e) provides that parties can file a motion to
alter or amend a judgment within twenty-eight (28) days of entry of the judgment.3 Rule
59(e) may be appropriate only for the following reasons: (1) a clear error of law; (2)
newly discovered evidence; (3) an intervening change in controlling law; or (4) to
prevent manifest injustice.4

A Rule 59(e) motion must state with particularity the

3

Fed. R. Civ. P. 59(e).

4

Betts v. Costco Wholesale Corp., 558 F.3d 461, 474 (6th Cir. 2009).
6

grounds for the relief sought in the motion.5 “The purpose of Rule 59(e) is to allow the
district court to correct its own errors, sparing the parties and appellate courts the burden
of unnecessary appellate proceedings.”6 Even so, Rule 59(e) motions serve a “limited”
purpose.7 Relief under Rule 59(e) is “an extraordinary remedy which should be used
sparingly.”8 Therefore, Rule 59(e) motions should not be based on legal arguments or
evidence that the movant simply failed to raise in the earlier motion. 9 Put another way,
“a motion to reconsider generally is not a vehicle to reargue a case” with new theories the
party could have raised at an earlier stage of the case. 10

“[W]here the movant is

attempting to obtain a complete reversal of the court’s judgment by offering essentially
the same arguments presented on the original motion, the proper vehicle for relief is an
appeal.”11

5

Intera Corp. v. Henderson, 428 F.3d 605, 621 (6th Cir. 2005) (“Moving parties
are exhorted to state with clarity the basis for their Rule 59(e) motions.”).
6

Howard v. United States, 533 F.3d 472, 475 (6th Cir.2008) (quotation marks and
citations omitted).
7

Gritton v. Disponett, 332 F. App’x 232, 238 (6th Cir. 2009).

8

11 Charles Alan Wright et al., Federal Practice and Procedure § 2810.1 (2d ed.
1995) (footnotes omitted).
9

See Exxon Shipping Co. v. Baker, 554 U.S. 471, 519 n.5 (2008) (citing 11 C.
Wright & A. Miller, Federal Practice & Procedure, § 2810.1 pp. 127-128 (2d ed. 1995));
Nat’l Ecological Found. v. Alexander, 496 F.3d 466, 477 (6th Cir. 2007).
10

United States v. LaDeau, 734 F.3d 561, 572 (6th Cir. 2013) (citing Sault Ste.
Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367, 374 (6th Cir. 1998)).
11

Helton v. ACS Grp., 964 F. Supp. 1175, 1182 (E.D. Tenn. 1997) (quoting
Keweenaw Bay Indian Cmty. v. Mich., 152 F.R.D. 562, 563 (W.D. Mich. 1992)).
7

ANALYSIS
The Court holds that Plaintiff has not shown why reconsideration of the Court’s
order of dismissal would be proper in this case.

The Court dismissed Plaintiff’s

Complaint for lack of standing. Plaintiff seeks revision of the dismissal order for a
number of reasons, which are by and large unrelated to the question of standing. To the
extent that Plaintiff seeks to introduce new evidence as the basis for reconsideration,
Plaintiff has not shown with particularity how any of the evidence somehow establishes
his standing to bring the claims alleged in his Complaint. And to the extent that Plaintiff
argues other theories such as the Rooker-Feldman doctrine or res judicata as grounds for
reconsideration, Plaintiff’s arguments are without merit. The Court decided the case only
on the threshold issue of standing, and not on the basis of any other legal doctrine.
Plaintiff has likewise failed to carry his burden to show how dismissal of his claims is a
manifest injustice.
Plaintiff’s only arguments squarely addressed to the issue of standing concern the
Court’s application of the Quarles decision and its failure to consider the Sixth Circuit’s
opinion in Kepley v. Lanz, 715 F.3d 969 (6th Cir. 2013). While Plaintiff believes Kepley
and not Quarles controls this case, the Court disagrees. As a procedural matter, Plaintiff
could have raised Kepley in his original submissions to the Court on Defendants’ motions
to dismiss. Rule 59(e) does not permit Plaintiff to return to the standing issue with
citations to new cases or additional legal arguments. Even if Plaintiff had previously
cited Kepley, the Court finds that nothing in that decision would alter the Court’s analysis
of the standing issue in the case at bar. The remainder of Plaintiff’s argument in support
of his Motion for Reconsideration on the standing issue is simply a repetition of the

8

arguments the Court has already heard and rejected. Therefore, Plaintiff’s Motion for
Reconsideration must be DENIED.
Plaintiff’s Motion for Reconsideration also challenges the Magistrate Judge’s
order denying Plaintiff’s motion to amend his complaint. Plaintiff states that if granted
leave to amend, he would include new factual allegations in an amended pleading to
buttress his fraud claims against Defendants.12

The Court understands Plaintiff’s

objection to be that in November 2015 the Court ordered the parties not to file any
amended pleadings until the Magistrate Judge could decide Plaintiff’s motion to amend
his complaint13 and that the Magistrate Judge subsequently denied the motion to amend.
From Plaintiff’s perspective he was never given an opportunity to amend his pleadings.
However, the Magistrate Judge simply concluded that the amended complaint
proposed by Plaintiff was futile because it did not plead facts to establish Plaintiff’s
12

Defendants respond that Plaintiff failed to raise any objections to the Magistrate
Judge’s order in the time allowed under the Federal Rules of Civil Procedure 72. Rule
72(a) grants a party the opportunity to file objections to an order issued by a Magistrate
Judge but only within 14 days from the service of the order. Fed. R. Civ. P. 72(a). In its
order referring Plaintiff’s motion to amend his complaint to the Magistrate Judge, the
Court specifically cautioned the parties that any objections to the Magistrate Judge’s
order had to be filed within 14 days. Order Referring Motion 3, Nov. 16, 2015 (ECF No.
97). The Magistrate Judge’s order denying Plaintiff’s motion to amend his complaint
was issued March 30, 2015. Plaintiff did not file any objections within the time allowed
under Rule 72(a), and his Motion for Reconsideration was filed on April 25, 2016.
13

By way of background, Plaintiff filed pro se a Supplemental and Amended
Complaint (ECF No. 60) on October 16, 2015, and a Second Supplemental and Amended
Complaint (ECF No. 62) on October 29, 2015. Plaintiff did not seek prior leave of court
to file the amended pleadings, and Defendants quickly filed a number of motions to
dismiss addressed to the amended pleadings. At that time Defendants’ motions to
dismiss the initial Complaint were also still pending before the Court. In an effort to
control the orderly presentation of the issues, the Court entered an order striking
Plaintiff’s amended pleadings, denying Defendants’ motions to dismiss the amended
pleadings, and referring Plaintiff’s motion to amend his complaint to the Magistrate
Judge. Order Striking Pleadings, Order Denying Motions to Dismiss, Order Referring
Motion Nov. 16, 2015 (ECF No. 97).
9

standing. Even liberally construed as objections under Rule 72(a), Plaintiff’s Motion for
Reconsideration has not shown that the Magistrate Judge’s evaluation of the proposed
amended complaint was clearly erroneous or contrary to law. Moreover, in the more than
two months since the Magistrate Judge entered his order, Plaintiff was free to file an
appropriate motion at any time if he believed he could cure the standing defect in his
pleadings.14 Plaintiff never filed such a motion and instead requested reconsideration of
the Court’s order of dismissal.

The Court finds there has been no abridgement of

Plaintiff’s right to amend his pleadings.
Finally, the Court pauses to address Plaintiff’s concerns that his is a “wrong
without a remedy.”

The Court dismissed Plaintiff’s initial Complaint for lack of

standing. According to Plaintiff, the Bankruptcy Court has since declined to reopen St.
Michael’s adversary proceeding or allow St. Michael to bring identical claims against
Defendants in the Bankruptcy Court, apparently for lack of standing and because the
Bankruptcy Court was not the proper forum for the claims. Plaintiff simply believes that
he is now left without recourse to pursue a remedy for Defendants’ alleged wrongs. This
is not necessarily so. The Court’s holding here is only that Plaintiff has failed to plead
the elements of his own standing to pursue the claims in his initial Complaint. As is clear
from Plaintiff’s filings with the Court, Plaintiff believes that he has been the victim of a
fraudulent scheme and that certain parties have furthered the scheme by perpetrating a
fraud on courts other than this one. The Federal Rules of Civil Procedure, and their
analogs in the various states rules of procedure, permit relief of various kinds where one
14

Ohio Police & Fire Pension Fund v. Standard & Poor’s Fin. Servs. LLC, 700
F.3d 829, 844 (6th Cir. 2012) (“[I]t is not the district court’s role to initiate
amendments.”).
10

party believes that another party has prevailed by means of some fraud. Just because
Plaintiff’s initial Complaint has not alleged Plaintiff’s own standing to vindicate wrongs
allegedly committed against his company does not mean that Plaintiff or St. Michael
lacks any other avenue of relief. The Court’s holding is only that Plaintiff has not shown
why he is entitled to any relief from this Court.
CONCLUSION
Plaintiff’s Motion for Reconsideration is DENIED. The Court having now made
a determination of all of the motions filed with the Court and dismissed Plaintiff’s claims
for relief, the Clerk is ordered to enter judgment.
IT IS SO ORDERED.
s/ S. Thomas Anderson
S. THOMAS ANDERSON
UNITED STATES DISTRICT JUDGE
Date:

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June 8, 2016.