Bancroft Life & Casualty ICC, LTD v. Scolari
Filing
94
ORDER Denying 83 MOTION for Reconsideration re 76 Order on Motion to Dismiss Amended Counterclaims by Judge Ronald B. Leighton.(JAB)
HONORABLE RONALD B. LEIGHTON
1
2
3
4
5
6
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA
7
8
9
BANCROFT LIFE & CASUALTY, ICC,
LTD,
10
11
12
No. 3:11-cv-05017-RBL
Plaintiff,
ORDER DENYING PLAINTIFF’S
MOTION FOR
RECONSIDERATION
[Dkt. #83]
v.
CESAR SCOLARI,
13
Defendant.
14
15
16
17
18
19
THIS MATTER comes before the Court on Plaintiff’s Motion for Reconsideration [Dkt.
#83]. Because Plaintiff has failed to show manifest error in the prior ruling or introduce
previously unavailable facts or legal authority, the motion is DENIED.
I. BACKGROUND
20
Plaintiff Bancroft Life & Casualty, ICC, Ltd. (“Bancroft”) is a licensed captive insurance
21
company organized under the laws of Saint Lucia, an island country in the eastern Caribbean
22
Sea. Pl.’s Mot. to Dismiss at 1 [Dkt. #47]. In 2005, Defendant Cesar Scolari enrolled in
23
Bancroft’s “Premium Lite” insurance program. Id. at 2. The program enabled Scolari to borrow
24
back a portion of his insurance premiums, amounting to a loan of approximately $5 million,
25
whereby Bancroft issued Scolari two promissory notes memorializing the loan obligations.
26
Order at 3 [Dkt. #76].
27
When the parties’ relationship soured, Scolari discontinued payment, and Bancroft sued
28
on the notes, which provided for enforcement in the United States. Id. Scolari counterclaimed
ORDER - 1
1
for a declaratory judgment granting him equitable ownership of the promissory notes on the basis
of fraud, misrepresentation, and breach of contract. Def.’s Answer at 16–19 [Dkt. #12].
2
Bancroft moved to dismiss Scolari’s counterclaims for improper venue under Fed. R.
3
Civ. P. 12(b)(3), arguing forum selection clauses in the insurance agreement required
4
adjudication in Saint Lucia, or in the alternative to dismiss for failure to state a claim upon which
5
relief can be granted. Pl.’s Mot. to Dismiss at 1 [Dkt. #47]. The Court, after reviewing the
6
record and hearing oral argument, denied the motion because Bancroft’s 2005 forum selection
7
clause, signed in conjunction with the application for insurance, does not govern Scolari’s
8
counterclaims, and Bancroft’s forum selection clause in the General Master Policy was never
9
effectuated. Order at 6 [Dkt. #76].
10
11
Bancroft now moves for reconsideration of the Court’s order denying the motion to
dismiss for improper venue. Bancroft requests that the Court either vacate its prior order or hold
an evidentiary hearing to further develop the material facts of this case.
12
II. AUTHORITY
13
14
Local Civil Rule 7(h) controls motions for reconsideration: “Motions for reconsideration
are disfavored. The court will ordinarily deny such motions in the absence of a showing of
15
manifest error in the prior ruling or a showing of new facts or legal authority which could not
16
have been brought to its attention earlier with reasonable diligence.” CR 7(h)(1).
III. DISCUSSION
17
18
Bancroft cites five separate grounds for reconsideration: (1) the Court’s order is based on
19
incorrect factual conclusions; (2) the Court’s order misapprehends Bancroft’s motion to dismiss;
20
(3) the Court’s order overlooks legal authority governing fraud and forum selection clauses; (4)
21
the forum selection clause should be enforced regardless of whether Bancroft’s claims are
inextricably linked to Scolari’s counterclaims; and (5) the Court’s order fails to address
22
Bancroft’s alternate motion to dismiss for failure to state a claim upon which relief can be
23
granted. Pl.’s Mot. for Recons. at 2–6 [Dkt. #83].
24
25
A. Incorrect Factual Conclusions
In a motion to dismiss for improper venue predicated on a forum selection clause, “the
26
trial court must draw all reasonable inferences in favor of the non-moving party and resolve
27
factual conflicts in favor of the non-moving party.” Murphy v. Schneider Nat’l, Inc., 362 F.3d
28
ORDER - 2
1
1133, 1138 (9th Cir. 2004). The decision to hold an evidentiary hearing is within the sound
discretion of the trial court. Id. at 1139.
2
The Court did not purport to articulate the truth or falsity of the facts as presented by
3
either party; it properly resolved factual conflicts in favor of Scolari, and it properly drew all
4
reasonable inferences in favor of Scolari. The Court’s interpretation of the facts in the light most
5
favorable to the non-moving party is consistent with Ninth Circuit case law and does not
6
constitute manifest error.
7
B. Misapprehension of the Plaintiff’s Motion
8
9
10
11
Bancroft argues the Court misapprehended its motion, which relied on both the forum
selection clause in the 2005 insurance application and the forum selection clause in Bancroft’s
Group Master Policy, because the Court “[did] not address the application of the forum selection
clause found in the Group Master Policy . . . other than in passing in footnote 4.” Pl.’s Mot. for
Recons. at 4 [Dkt. #83]. This argument is puzzling; not only did the Court cite to the text of the
12
broader Group Master Policy clause, but it expressly rejected this clause because Bancroft
13
14
15
unilaterally modified the language without Scolari’s knowledge, or at a minimum without
Scolari’s consent. See Order at 4, 6 [Dkt. #76].
The Court concluded the 2005 clause was the only executed clause in effect when Scolari
16
repudiated the contract, and this clause was not broad enough to control Scolari’s fraud claims.
17
Id. at 6. Footnote 4 rejects the separate argument that Scolari is a third party beneficiary to the
18
contract. Id. The Court did not misapprehend the motion.
19
C. Overlooking Relevant Legal Authority
20
21
Next, Bancroft argues the Court overlooked relevant legal authority, specifically, the rule
that a party seeking to set aside a forum selection clause on the basis of fraud must show that the
forum selection clause resulted from fraud or coercion. Pl.’s Mot. for Recons. at 4 [Dkt. #83]
22
(citing Richards v. Lloyd’s of London, 135 F.3d 1289, 1296–97 (9th Cir. 1998)). Bancroft
23
contends Scolari is bound to the broader forum selection clause because Scolari has not alleged
24
that the clause itself was the product of fraud or coercion. Bancroft advanced this argument in its
25
original motion to dismiss [Dkt. #47], so the principle does not constitute “new . . . legal
26
authority which could not have been brought to [the Court’s] attention earlier with reasonable
27
diligence.” CR 7(h)(1). Thus, in order for Bancroft to prevail, it must rely on a showing of
28
manifest error.
ORDER - 3
1
In Richards, the court upheld choice of law and choice of forum clauses against more
than 600 “Names” participating in the Lloyd’s insurance syndicate. 135 F.3d at 1291–92. The
2
Names advanced three arguments for repudiating the clauses, including the argument that
3
Lloyd’s obtained the clauses by fraud. Id. at 1292. The court found the argument unpersuasive,
4
however, because the allegations concerned the “contract as a whole, with no allegations as to
5
the inclusion of the choice clauses themselves.” Id. at 1297. The Names failed to allege “that
6
Lloyd’s misled them as to the legal effect of the choice clauses,” or “that Lloyd’s fraudulently
7
inserted the clauses without their knowledge.” Id. “For a party to escape a forum selection
8
clause on the grounds of fraud, it must show that ‘the inclusion of that clause in the contract was
9
the product or fraud or coercion.’” Id. (emphasis omitted) (citing Prima Paint Corp. v. Flood &
10
11
Conklin Mfg. Co., 388 U.S. 395 (1967)).
While Scolari did not set out allegations of fraud with respect to forum selection in his
counterclaims, see Def.’s Answer at 17–18 [Dkt. #12], Scolari responded to Bancroft’s motion
12
with specific allegations of fraud related to the clause itself, see Def.’s Resp. at 6–11 [Dkt. #49].
13
14
Unlike in Richards, where the Names never argued Lloyd’s inserted or altered the clauses
without their knowledge, Scolari alleges Bancroft concealed the terms of the General Master
15
Policy from Scolari and his agent. Def.’s Resp. at 6–11 [Dkt. #49]. Scolari further alleges that
16
Bancroft secretly, unilaterally, and retroactively changed the terms of the original clause. Id.
17
Because Scolari has stated a plausible case for fraud related specifically to the execution of the
18
forum selection clause in the General Master Policy, Bancroft has failed to show manifest error
19
in the Court’s prior ruling.
20
D. Enforcement Regardless of Whether the Claims are Inextricably Linked
21
In its order denying Bancroft’s motion, the Court stated, “[t]he action to collect on the
promissory notes and the claims regarding the return of premiums are inextricably linked[] and
22
should be tried together.” Order at 6 [Dkt. #76]. Bancroft argues this reasoning constitutes error
23
“to the extent that the Court is relying on a conclusion that Bancroft has waived its ability to
24
25
26
enforce the forum selection clause . . . because the counterclaims are compulsory.” Pl.’s Mot. for
Recons. at 5 [Dkt. #83].
A counterclaim defined as “compulsory” under Fed. R. Civ. P. 13(a) is not immune from
27
dismissal when the counterclaim is controlled by an enforceable forum selection clause. See,
28
e.g., Publicis Commc’n v. True N. Commc’ns, Inc., 132 F.3d 363 (7th Cir. 1997). Nothing in the
ORDER - 4
1
Court’s order contravenes this authority. The Court did not conclude Bancroft waived its ability
to enforce the clause against Scolari’s counterclaims because the counterclaims were
2
compulsory; it determined the 2005 forum selection clause, the only executed clause in effect,
3
was not broad enough to govern Scolari’s counterclaims. See Order at 6 [Dkt. #76]. Bancroft’s
4
assertion is rejected.
5
E. Failure to Address Plaintiff’s 12(b)(6) Motion
6
Finally, Bancroft argues the Court failed to address its alternate motion. A plaintiff’s
7
complaint must allege facts to state a claim for relief that is plausible on its face. See Ashcroft v.
8
Iqbal, 129 S. Ct. 1937, 1949 (2009). Scolari’s counterclaims constitute more than “labels and
9
conclusions” or a mere “recitation of the elements” of fraud. Bell Atl. Corp. v. Twombly, 550
10
U.S. 544, 555 (2007). The Court expressly stated Scolari’s “allegations of fraudulent conduct
11
are plausible,” thereby defeating Bancroft’s alternate motion to dismiss under Fed. R. Civ. P.
12(b)(6). Order at 2 [Dkt. #76].
12
IV. CONCLUSION
13
14
15
For the reasons stated above, Plaintiff’s Motion for Reconsideration [Dkt. #83] is
DENIED.
IT IS SO ORDERED.
16
DATED this 14th day of February, 2012.
17
18
19
A
RONALD B. LEIGHTON
UNITED STATES DISTRICT JUDGE
20
21
22
23
24
25
26
27
28
ORDER - 5
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?