New Products Corp. v. Tibble (In re Modern Plastics Corp.)
536 B.R. 783
Bankr. W.D. Mich.2015Background
- New Products Corporation lost two July 23, 2015 orders: (1) summary judgment largely for defendants Thomas R. Tibbie and Federal Insurance Company regarding the scope of an assignment from Bank of America; (2) a discovery order awarding subpoena-related costs to non-parties (Bank of America and Harbor Shores entities/Dickinson Wright).
- On August 6, 2015 New Products filed two motions for reconsideration: one challenging the summary judgment ruling (First Motion) and one challenging the discovery/cost-shifting award (Second Motion). It also filed a motion to stay the Discovery Order (Stay Motion).
- New Products mainly re-argued legal points and cited additional authorities; it did not present new evidence or claim intervening changes in controlling law.
- The court evaluated whether reassessment was warranted under the narrow reconsideration standards (clear error, new evidence, change in law, or manifest injustice) and whether Rule 45 supported cost-shifting to the subpoenaing party and counsel for failing to mitigate non-party burdens.
- The court concluded New Products’ additional authorities did not change the contractual analysis of assignment scope and that counsel (Mr. Demorest) failed to mitigate subpoena burdens, justifying cost-shifting under Rule 45.
- The court denied all three motions: both reconsideration motions and the stay motion, explaining Rule 62/8007 standards for stays pending appeal and finding stay factors disfavored relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of assignment — whether assignee may pursue third-party tort/statutory claims | Assignment conveys claims related to the loan; historical authorities (e.g., Sweet) support broader reach | Assignment language here is narrower; contract-interpretation controls; third-party claims not within assigned rights | Court denied reconsideration; assignment did not cover the third-party claims at issue (summary judgment stands) |
| Reconsideration standard — whether new authorities warrant reconsideration | New Products cited additional cases to reframe scope analysis | Defendants argued reconsideration improper absent new law/evidence or clear error | Court held cited authorities were available earlier and did not meet reconsideration standards; First Motion denied |
| Discovery cost-shifting — whether non-parties’ compliance costs properly shifted to New Products and counsel | New Products argued findings were unclear and costs unreasonable; invoked Rule 45(d)(2)(B) to justify production without bearing costs | Defendants/non-parties argued Rule 45 protects non-parties and counsel failed to mitigate burden under Rule 45(d)(1) | Court affirmed Discovery Order shifting significant reasonable costs to New Products and counsel under Rule 45 for failure to mitigate; Second Motion denied |
| Stay of Discovery Order — whether enforcement should be stayed pending reconsideration/appeal | Sought 14-day stay under Rule 62/8007 pending disposition of reconsideration and short extension | Defendants argued no security offered and stay factors (likelihood of success, irreparable harm, harm to others, public interest) disfavor stay | Court denied stay: reconsideration denied, and stay factors under Rule 8007 not met; Stay Motion denied |
Key Cases Cited
- GenCorp. Inc. v. American Int’l Underwriters, 178 F.3d 804 (6th Cir. 1999) (sets narrow standards for reconsideration)
- Macomb Interceptor Drainage Dist. v. Kilpatrick, 896 F.Supp.2d 650 (E.D. Mich. 2012) (assignment does not automatically permit assignee to bring unrelated tort or statutory claims)
- Pazdzierz v. First Am. Title Ins. Co. (In re Pazdzierz), 718 F.3d 582 (6th Cir. 2013) (assigned holder may seek nondischargeability under §523(a)(2) as to obligor’s debt)
- Legal Voice v. Stormans, Inc., 738 F.3d 1178 (9th Cir. 2013) (discusses making remaining non-party expense “non-significant” when shifting costs)
- Linder v. Calero-Portocarrero, 251 F.3d 178 (D.C. Cir. 2001) (discusses allocation of discovery compliance burden and reasonableness of cost-shifting)
- In re DeLorean Motor Co., 755 F.2d 1223 (6th Cir. 1985) (stay factors are flexible considerations to be balanced)