557 B.R. 489
Bankr. E.D. La.2016Background
- 800 Bourbon Street, LLC filed Chapter 11 in 2008; Bay Bridge filed a secured claim based on notes and a mortgage; 2009 plan treated Bay Bridge as secured and noted proceeds were received by Chisholm/Circuit Events, not 800 Bourbon.
- 800 Bourbon filed a second Chapter 11 in 2014; Bay Bridge filed Proof of Claim in July 2015 for ~$1.98M based on the same notes and mortgage; 800 Bourbon objected and commenced an adversary proceeding.
- Cross-motions for summary judgment were filed; the court granted Bay Bridge’s cross-motion and denied 800 Bourbon’s motion, then 800 Bourbon moved for reconsideration and the court partially vacated the judgment to allow trial on whether Chisholm obtained a reduction or release affecting the debt amount.
- New counsel for 800 Bourbon later filed a second motion to reconsider alleging fraud and withholding of evidence (canceled checks, deposition excerpts of Chisholm) and sought relief under FRCP 59(e), 60(b)(3), and sanctions under FRCP 37.
- The court allowed limited post-hearing evidence (Chisholm’s continued examination excerpts and certain subpoena returns) but found the materials either not newly discovered, insufficiently particularized to plead fraud, or available to 800 Bourbon earlier (knowledge imputed to its managing member Warner).
- The court denied the second motion to reconsider: (1) fraud was a new legal theory not pleaded with the particularity required by Rule 9(b); (2) the ‘new’ evidence would not have produced a different result; and (3) sanctions and relief under Rule 60(b)(3) and Rule 37 were not warranted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Motion to alter/amend judgment under FRCP 59(e) | 800 Bourbon: newly discovered evidence (checks, Chisholm testimony) and fraud theory justify altering judgment | Bay Bridge: evidence was available earlier or immaterial; 800 Bourbon could have raised fraud earlier | Denied — 800 Bourbon raised a new legal theory (fraud) not pleaded; evidence not "newly discovered" or outcome-altering |
| Amendment of pleadings by implied consent (FRCP 15(b)(2)) | 800 Bourbon: its discovery motion and Warner declaration put Bay Bridge on notice of fraud issue | Bay Bridge: no explicit fraud claim in pleadings; Warner’s declaration is speculative and was not in evidence at MSJ hearing | Denied — no implied consent; Warner’s declaration lacked particulars and was not admissible evidence at summary judgment stage |
| Relief for fraud on the court (FRCP 60(b)(3)) | 800 Bourbon: Bay Bridge withheld canceled checks and misrepresented records, preventing full presentation | Bay Bridge: produced what it had; plaintiff had independent access to checks; representations about destroyed records not proven false | Denied — plaintiff had access to the information and no showing of fraud on the court that would change the outcome |
| Sanctions for discovery abuses (FRCP 37) | 800 Bourbon: Bay Bridge’s failure to produce records hampered its response and merits sanctions/exclusion | Bay Bridge: destruction or lack of records and plaintiff’s access to some documents independent of Bay Bridge | Denied — plaintiff failed to show prejudice or that failure to disclose was unjustified and harmful |
Key Cases Cited
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (summary judgment burden on nonmoving party to show genuine issue)
- Templet v. HydroChem, Inc., 367 F.3d 473 (5th Cir. 2004) (failure to present available evidence at summary judgment justifies denying later reconsideration)
- Ford v. Elsbury, 32 F.3d 931 (5th Cir. 1994) (factors for considering late-filed evidence balance finality and deciding on all facts)
- Estate of Mixon v. United States, 464 F.2d 394 (5th Cir. 1972) (multi-factor test for distinguishing debt from equity)
- Williams v. WMX Technologies, Inc., 112 F.3d 175 (5th Cir. 1997) (standards for Rule 59(e) and reconsideration)