United States District Court, D. Idaho
CHRISTOPHER E. JOHNSON, Plaintiff,
CACH, LLC, and MANDARICH LAW GROUP, LLP, Defendants.
MEMORANDUM DECISION AND ORDER
Lynn Winmill Chief Judge United States District Court
Defendants asked the Court to dismiss Johnson's claims or
order the case to arbitration. On December 16, 2016 the Court
granted the motion in part by ordering all claims to
arbitration. Dkt. 27. Since then, Johnson has filed a number
of motions, and Defendant CACH, LLC has filed a notice of
bankruptcy. Johnson asks the Court to reconsider its order
requiring arbitration. The motion originally asked the Court
to reconsider its entire decision, but later withdrew the
motion as to CACH because of the bankruptcy. Still, Johnson
asks that the withdrawal be made without prejudice in case
the bankruptcy is dismissed or unsuccessful. In a separate
motion, Johnson asks the Court to allow him to amend his
Complaint to remove CACH. These motions are somewhat at odds
with each other, but the Court believes that Johnson is
essentially attempting to move forward with its case against
Mandarich, while possibly reserving its claims against CACH
pending resolution of the bankruptcy proceeding.
March 19, 2017, Defendant CACH filed a petition for Chapter
11 bankruptcy. During informal discussions between the
Court's staff and counsel via email, counsel for both
sides appeared to agree that the Court may proceed with this
case as to the non-debtor party - that the case is only
stayed as to CACH. In order to apply an automatic stay
outlined in 11 U.S.C. § 362 to a non-debtor party, the
bankruptcy court typically must issue an extension of the
stay under its jurisdiction. Boucher v. Shaw, 572
F.3d 1087, 1093 (9th Cir.2009). The bankruptcy of one
defendant does not normally stay the case as to non-debtor
defendants absent unusual circumstances. Totten v. Kellog
Brown & Root, LLC, 152 F.Supp.3d 1243, 1268 (C.D.
Cal 2016) (citing In re Chugach Forest Products,
Inc.), 23 F.3d 241, 246 (9th Cir.1994). Accordingly, the
Court will address the pending motions as they apply to the
non-debtor defendant Mandarich.
Motion to Reconsider
motion to reconsider an interlocutory ruling requires an
analysis of two important principles: (1) error must be
corrected; and (2) judicial efficiency demands forward
progress. The former principle has led courts to hold that a
denial of a motion to dismiss or for summary judgment may be
reconsidered at any time before final judgment. Preaseau
v. Prudential Insurance Co., 591 F.2d 74, 79-80 (9th
Cir. 1979). While even an interlocutory decision becomes the
“law of the case, ” it is not necessarily carved
in stone. Justice Oliver Wendell Holmes concluded that the
“law of the case” doctrine “merely
expresses the practice of courts generally to refuse to
reopen what has been decided, not a limit to their
power.” Messinger v. Anderson, 225 U.S. 436,
444 (1912). “The only sensible thing for a trial court
to do is to set itself right as soon as possible when
convinced that the law of the case is erroneous. There is no
need to await reversal.” In re Airport Car Rental
Antitrust Litigation, 521 F.Supp. 568, 572 (N.D. Cal.
1981) (Schwartzer, J.).
need to be right, however, must co-exist with the need for
forward progress. A court's opinions “are not
intended as mere first drafts, subject to revision and
reconsideration at a litigant's pleasure.”
Quaker Alloy Casting Co. v. Gulfco Indus., Inc., 123
F.R.D. 282, 288 (N.D. Ill. 1988). Reconsideration of a
court's prior ruling under Federal Rule of Civil
Procedure 59(e) is appropriate “if (1) the district
court is presented with newly discovered evidence, (2) the
district court committed clear error or made an initial
decision that was manifestly unjust, or (3) there is an
intervening change in controlling law.” S.E.C. v.
Platforms Wireless Int'l Corp., 617 F.3d 1072, 1100
(9th Cir. 2010) (citation omitted). If the motion to
reconsider does not fall within one of these three
categories, it must be denied.
Plaintiff argues that the Court committed clear error.
However, the motion essentially just asks the Court to
reconsider its earlier decision based on the same arguments
Plaintiff initially made. The Court explained its earlier
reasoning in detail, and nothing in the motion to reconsider
changes the Court's mind. Accordingly, the motion to
reconsider will be denied.
Motion to Amend and Motion for Substitution
asks the Court to amend the Complaint to remove defendant
CACH and any claim brought under North Carolina law.
Plaintiff suggests leave should be freely given under Rule
15(a)(2). However, that rule requires that leave be freely
given when “justice so requires.” Fed.R.Civ.P.
15(a)(2). Here, justice does not so require.
and foremost, the case is stayed as to defendant CACH. Thus,
pursuant to 11 U.S.C. § 362, the Court cannot address
the motion if it affects CACH. Second, the Court has already
ordered all claims to arbitration in a detailed Order. Dkt.
27. Moreover, as explained above, the Court will deny the
request to reconsider that Order. The Court also notes that
Plaintiff attempts to amend the Complaint to remove CACH as a
defendant, but with leave to essentially add CACH back to the
case depending on the outcome of the bankruptcy. This creates
a moving target and may lead to serious judicial
inefficiencies. Under these circumstances, justice requires
that the Court not amend the Complaint to remove CACH at this
point. Accordingly, the Court will deny the motion to amend.
the motion to substitute, Plaintiff asks to substitute the
Estate of Johnson for Johnson as the plaintiff because
Johnson recently passed away. The parties go back and forth
on whether the substitution is proper given the class action
allegations in the Complaint. But class action certification
is not before the Court at this point, and it has no bearing
on the motion to substitute. Although the case was pled as a
class action, no class has been certified, no motion to
certify has been filed, and the case has been ordered to
arbitration. Thus, nothing stands in the way of substituting
the Estate of Johnson for Plaintiff Johnson, or the case
proceeding to arbitration as ordered by the Court.
Accordingly, the motion will be granted.