800 Bourbon Street, LLC v. Bay Bridge Building Ltd. (In re 800 Bourbon Street)800 Bourbon Street, LLC v. Bay Bridge Building Ltd. (In re 800 Bourbon Street)
REASONS FOR DECISION
The Motion to Reconsider and Amend Judgment (“Motion to Reconsider”) filed by 800 Bourbon Street, L.L.C. (“800 Bourbon”) came up for hearing on March 4, 2016.
I. Findings of Fact
On June 11, 2008, 800 Bourbon Street filed a Voluntary Petition for Relief under Chapter 11 of the Bankruptcy Code (“2008
Guarantor, John L. Chisholm, Jr., and Chisholm Properties Circuit Events, LLC,4 assume full payment of all obligations of the Debtor to this Class Claimant, ...
To the extent this Class Claimant has an allowed secured claim, the Collateral Mortgage, Collateral Mortgage Note, Hand Note, and/or auxiliary Promissory Notes, properly paraphed, shall remain as collateral security, but “in rem” only. Amended collateral security documents and notes will be prepared, executed and recorded in the Parish of Orleans if requested by this Class Claimant. ...5
No objection was filed to Bay Bridge’s 2008 Claim, and the 2008 Bankruptcy was closed on August 17, 2011.
On October 15, 2014, 800 Bourbon filed a second Voluntary Petition for Relief under Chapter 11 of the Bankruptcy Code.
800 Bourbon and Louisiana Interests, Inc. (“La. Interests”)
On July 15, 2015, Bay Bridge filed Proof of Claim no. 5 in 800 Bourbon’s bankruptcy case. Bay Bridge claimed a debt of $1,979,886.47 secured by the building located at 800 Bourbon Street. Bay Bridge’s claim is evidenced by four (4) promissory notes signed by Johnny Chisholm on behalf of 800 Bourbon (“Notes”). Bay Bridge also holds a collateral mortgage note dated April 21, 2005, secured by a collateral mortgage (“Mortgage”) on the property located at 800 Bourbon Street. The Mortgage was signed by Johnny Chisholm and Doyle Yeager. The same Notes and Mort
On July 21, 2015, 800 Bourbon filed the instant adversary proceeding objecting to Bay Bridge’s proof of claim.
On July 22, 2015, and directly prior to the confirmation hearing, the Court held an auction of substantially all of the assets of 800 Bourbon and La. Interests, including Bay Bridge’s collateral. The prevailing bid for $8,175,000.00 was approved by an Order entered on August 3, 2015.
The Original Complaint filed by 800 Bourbon against Bay Bridge included two (2) claims for relief: 1) Bay Bridge’s lien should be avoided pursuant to 11 U.S.C. § 544; and 2) Bay Bridge’s claim was unenforceable against 800 Bourbon because of the 2009 Plan.
800 Bourbon subsequently filed an Amended Complaint asserting two (2) additional causes of action : 1) Bay Bridge’s lien should be avoided due to untimely . reinscription; and 2) the attorney’s fees claimed by Bay Bridge were unsubstantiated and excessive.
Pursuant to Local Rule 7016-1, once all answers have been filed in an adversary proceeding, the Court schedules a pretrial conference for the purpose of setting deadlines for discovery; the filing and consideration of dispositive motions; and a trial date. On September 1, 2015, 800 Bourbon filed a Motion for Summary Judgment (“MSJ”).
Bay Bridge opposed the MSJ and filed a Cross Motion for Summary Judgment (“Cross Motion”).
At the conference on September 28, 2015, 800 Bourbon represented that only limited discovery was required to address the issues presented by the MSJ and Cross Motion. It further asserted that full discovery would be a waste of time and money. As a result of the conference, the Court barred any discovery pending hearing on the MSJ and Cross Motion with one exception. By agreement between the parties, Bay Bridge was ordered to provide to 800 Bourbon:
[Djocuments showing to which account the funds loaned by Bay Bridge were initially transferred or deposited, a copy of the note, a copy of the guaranty, and a representation that Chisholm has not been released.23
After the response was delivered, the Court set a deadline of October 12, 2015, for 800 Bourbon to file a Motion to Conduct Discovery.
In the interim, 800 Bourbon replied to the Cross Motion opposing its request for relief as premature because “essential facts” to justify its opposition were unavailable due to a need to “review additional documents to be provided by Bay Bridge at the direction of the Court.” It further stated, “[U]pon review of such documents, [it would] submit a Declaration pursuant to Rule 56(d) concerning discovery which will be necessary in the event summary judgment is not granted in [its] favor.”
[A]ll' contemporaneous communications between Bay Bridge and the principal obligors — Johnny Chisholm and Properties Circuit Events, LLC as to how the obligations under the promissory notes were treated before and after confirmation of the 2009 Plan. The Debtor has informally requested certain of these documents from Bay Bridge, but, at this time, has not received them.26
800 Bourbon also made the following responses to the Cross Motion:
1). 800 Bourbon never received the alleged loan proceeds;
2) Bay Bridge failed to produce evidence of the hand note; and
3) Bay Bridge’s security rights were extinguished because the principal obligation was extinguished.
On October 12,2015, 800 Bourbon filed a Motion for Expedited Hearing on a Motion to Conduct Discovery.
The MSJ and Cross Motion were heard by this Court on October 14, 2015, and taken under advisement. On November 20, 2015, this Court entered a ruling granting the Cross Motion of Bay Bridge and denying the MSJ of 800 Bourbon (“Judgment”).
The Court granted the Motion for Reconsideration because (1) it had stayed any formal discovery pending the hearing on the MSJ and Cross Motion; (2) ordered the production of minimal documentation based on the representations of Bay Bridge; and (3) 800 Bourbon filed a timely Motion for Discovery based on the insufficiency of the documentation submitted. As a result, the portions of the Judgment purporting to render final judgment on the amount owed were vacated. Pursuant to this ruling, the Court reserved for trial on the merits one issue: whether or not an alleged reduction, modification, or release of Chisholm was previously granted by Bay Bridge and affected the sums due to it by 800 Bourbon. The Order granting reconsideration was entered on January 12, 2016.
Following this ruling, 800 Bourbon’s attorneys withdrew as counsel because 800 Bourbon suggested that a malpractice action might be filed against them.
On January 26, 2016, 800 Bourbon filed a Motion to Enroll New Counsel as well as this second Motion to Reconsider.
Ms. Bobby Warner, Mr. Johnny Chisholm, and Mr. Doyle Yeager are the three (3) members of 800 Bourbon. Mr. Yeager and Ms. Warner authorized the voluntary filing of the bankruptcy petition by 800 Bourbon. Further, Mr. Yeager and Ms. Warner have been represented by counsel and have participated in the reorganiza-tional efforts of 800 Bourbon. Ms. Warner has acted as the managing member during the administration of the case.
On September 23, 2014, Julian Mac-Queen responded to a subpoena to produce documents issued by Ms. Warner’s counsel, Erin B. Saucier of the Didriksen Law Firm.
1. Check dated May 10, 2006, by Bay Bridge to the order of 800 Bourbon and Johnny Chisholm in the amount of $110,000.00.
2. Check dated May 31, 2006, by Julian and Kim MacQueen to the order of Johnny Chisholm and Circuit Events . in the amount of $90,000.00 with the memo “loan.” The deposit slip shows that Circuit Events deposited it on May 31, 2006.
3. Check dated July 18, 2005, by Circuit Events to the order of Bay Bridge in the amount of $300,000.00.
4. Check dated December 5, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
5. Check dated November 30, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
6. Check dated November 21, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
7. Check dated November 4, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
8. Check dated October 19, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
9. Check dated October 26, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
10. Check dated October 10, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
11. Check dated October 3, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
12. Check dated September 26, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
13. Check dated September 16, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
14. Check dated September 7, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
15. Check dated August 31, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
16. Check dated August 19, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
17. Check dated August 12, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
18. Check dated August 5, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
19. Check dated August 8, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
20. Check dated July 22, 2005, by Circuit Events to the order of Bay Bridge in the amount of $5,000.00.
II. Conclusions of Law
800 Bourbon seeks 1) to alter or amend the Judgment pursuant to F.R.C.P. 59(e);
A. Motion to Alter or Amend Judgment Pursuant to F.R.C.P. 59(e)
Motions for reconsideration filed no later than fourteen (14) days after entry of judgment are treated as Motions for New Trial or to Alter or Amend a Judgment pursuant to F.R.B.P. 9023. 800 Bourbon timely filed its first Motion for Reconsideration. It filed its Second Motion to Reconsider fourteen (14) days after entry of the Order granting the first Motion for Reconsideration. Through a request to reconsider the Order granting the first Motion for Reconsideration, 800 Bourbon seeks another bite at the almost eaten apple.
800 Bourbon argues that this Court must “strike the proper balance between
Once Bay Bridge filed its Cross Motion, it was incumbent upon 800 Bourbon to raise any and all objections to summary judgment. The United States Supreme Court has found:
[A] party opposing a properly supported motion for summary judgment may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial.
Anderson v. Liberty Lobby, Inc,,
A motion to reconsider, alter, or amend a judgment:
[I]s not the proper vehicle for rehashing evidence, legal theories, or arguments that could have been offered or raised before the entry of judgment. Rather, Rule 59(e) “serve[s] the narrow purpose of allowing a party to correct manifest errors of law or fact to present newly discovered evidence. Reconsideration of a judgment after its entry is an extraordinary remedy that should be used sparingly.40
Although FRCP 59(e) does not contain any factors for a court to consider, the Fifth Circuit has held for such a motion to prevail, it must:
[C]learly establish either a manifest error of law or fact or must present newly discovered evidence. These motions cannot be used to raise arguments which could, and should, have been made before the judgment issued. Moreover, they cannot be used to argue a case under a new legal theory.41
It is an inarguable fact that 800 Bourbon’s Complaint and Amended Complaint fail to allege any claim of fraud against Bay Bridge. 800 Bourbon alleges for the first time in this second Motion to Reconsider that Chisholm and MacQueen conspired to commit fraud. This is a new legal theory that was not raised in the Complaint, Amended Complaint, the MSJ, or Reply to the Cross Motion.
800 Bourbon alleges in its Motion to Reconsider, that 1) it informally asserted a claim of fraud in its pleadings and evidence; and 2) it was surprised by Bay Bridge’s proof of claim. As a result, it is not arguing a new theory of recovery, or if it is, it should be excused.
1. 800 Bourbon Did Not Assert an Informal Fraud Objection to Bay Bridge’s Claim
Although 800 Bourbon did not use the specific word “fraud,” it contends that it informally alleged a fraud claim against Bay Bridge: arguing that because it produced evidence of fraud in an exhibit to its Motion to Conduct Discovery, it has asserted a claim based in fraud against .Bay Bridge.
800 Bourbon appears to assert a claim that its pleadings should conform to the evidence presented pursuant to F.R.C.P. 15(b)(2).
Rule 15(b)(2) provides:
When an issue not raised by the pleadings is tried by the parties’ express or implied consent, it must be treated in all respects as if raised in the pleadings. A party may move — at any time, even after judgment — to amend the pleadings to conform them to the evidence and to raise an unpleaded issue. But failure to amend does not affect the result of the trial of that issue.
For an amendment to be allowed, the parties must have received “actual notice of an unpleaded issue and [ ] been given an adequate opportunity to cure any surprise that might result from the change in the pleadings.”
[I]t must be tried with the consent of the parties, or if the evidence is challenged, the objecting party must be given an opportunity to demonstrate that the introduction of the evidence at trial is so prejudicial that the detrimental effect cannot be cured by a continuance or the imposition of some other condition on allowing the amendment.44
800 Bourbon argues that Ms. Warner’s Declaration attached to 800 Bourbon’s Motion to Conduct Discovery was evidence of its intention to plead a fraud claim. The Declaration, while of record, was attached to a Motion to Conduct Discovery that was not considered nor admitted until heard on January 5, 2016.
In the Declaration, Ms. Warner recites: Based upon my knowledge of the relationship between Johnny Chisholm and Julian MacQueen..., I do not believe that Johnny Chisholm in fact.owes Bay • Bridge the amount Bay Bridge is alleging based upon the following facts. First, Chisholm claimed that he and Julian MacQueen ... engaged in an informal agreement in connection with a property acquisition whereby Chisholm submitted an offer of the property in Pensacola upon direction of MacQueen, when Mac-Queen did not want it to be known that he was interested in the property. Second, Chisholm has also claimed an ownership interest in MacQueen’s hotel business and may have had other dealings with MacQueen and Bay Bridge which would impact the amount of any claim by Bay Bridge against Chisholm.
The Declaration merely states that prior dealings between Chisholm and Julian MacQueen, principal of Bay Bridge, might exist. It fails to indicate that the dealings were fraudulent. Nor'does it detail any allegedly fraudulent conduct by time, date, or place. The Declaration merely poses a theory that due to prior business dealings, the amount of the debt owed to Bay Bridge may not be as claimed. No evidence of this theory was offered at the hearing on the Cross Motion. Because the Declaration was not offered into evidence at the hearing and in any event does not set forth an allegation of fraud, it cannot form the basis for a ruling under F.R.C.P. 15(b)(2).
F.R.C.P, 9(b), made applicable to this proceeding by F.R.B.P. 7009, provides, “In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake.” In the Fifth Circuit, pleading fraud with particularity requires “time, place and contents of the false representations, as well
800 Bourbon analogized Ms. Warner to a bankruptcy trustee and cited Birnberg v. Rancho La Costa, Inc. (In re Reach McClinton & Co., Inc.)
2. Surprise
800 Bourbon also contends that the Court should allow it to plead fraud due to surprise because 800 Bourbon was close to a hearing on confirmation when Bay Bridge filed it’s proof of claim. As a result, 800 Bourbon claims it “rushed” to file the Complaint objecting to the claim.
Bay'Bridge’s claim was reorganized in the 2009 Plan. Bay Bridge was also scheduled as a creditor in this case. For these reasons, 800 Bourbon cannot credibly argue it was surprised by Bay Bridge’s claim.
The claim was timely filed. Any rush to object to the proof of claim was a result of 800 Bourbon’s own making.
2. Reconsideration Based on “Newly Discovered” Evidence
a. The Standard
800 Bourbon does not complain of a manifest error of law or fact attributable to the Judgment. Instead, it points to newly discovered evidence of Bay Bridge’s fraud: 1) a check that its representative, Bobby Warner, obtained by subpoena in 2014; and 2) the 2004 Examination testimony of Chisholm.
In Templet v. HydroChem Inc.
In deciding whether to consider late-filed evidence, the district court must strike the proper balance between two competing interests: “the need to bring litigation to an end and the need to render just decisions on the basis of all the facts.”57
The Elsbury Court also provided a non-exhaustive list of relevant considerations:
(1) the reasons for the plaintiffs’ default, (2) the importance of the evidence to the plaintiffs’ case, (3) whether the evidence was available to plaintiffs before they responded to the summary judgment motion, and (4) the likelihood that the defendants will suffer unfair prejudice if the case is reopened.58
In order to grant reconsideration, the evidence must be “material and controlling and clearly would have produced a different result if present before the original judgment.”
This Court has already granted reconsideration on one issue. 800 Bourbon’s new counsel offers additional evidence and even an additional and novel cause of action in a second Motion for Reconsideration. The Court has weighed the competing interests and for the reasons set forth below, finds that this litigation must come to an end.
b. The Evidence Offered
i. The Check Held by Bobby Warner
Following the pre-hearing conference on the MSJ and Cross Motion, Bay Bridge was ordered to produce evidence of its advances to 800 Bourbon. In response, Bay Bridge alleged that documentation evidencing the advances was no longer available. Following the entry of Judgment, 800
The fact' that Circuit Events received the funds generated by the Bay Bridge loan was acknowledged by the 2009 Plan.
Pursuant to a’Proof of Claim filed by Bay Bridge on June 24, 2008, it filed a secured claim of $1,360,571.01.
The Collateral Mortgage secured a loan in the principal amount of $1.2 million by Bay Bridge in April 2005, a loan in the amount of $110,000 by Bay Bridge in May [ ] 2006, and loan in the amount of $90,000 by Bay Bridge in June [ ]2006. The loan proceeds were received by Chisholm Properties Circuit Events, LLC, not by the Debtor. ...
Pre-petition, payments and credits toward the Bay Bridge loan total $314,931.26. Such payments were made by Johnny Chisholm or Chisholm Properties Circuit Events, LLC, not by the Debtor. ...
Post-petition, Chisholm Properties Circuit Events, LLC has made payments to Bay Bridge from revenues.
The 2009 Plan also provides that all prior payments on the Bay Bridge debt were made by Chisholm or Circuit Events, not 800 Bourbon.
Unable to contest prior knowledge of this fact, 800 Bourbon focuses on one check in the amount of $90,000.00 written by Julian and Kim MacQueen to Chisholm and Circuit Events. 800 Bourbon asserts that the newly discovered inclusion of this check constitutes fraud as the funds were not advanced by Bay Bridge, and by inference, not owed to it.
ii. Testimony of Chisholm
800 Bourbon points to Chisholm’s 2004 Examination as newly discovered evidence of fraud. Sometime after confirmation of the most recent plan, Chisholm filed a personal case for voluntary relief under the bankruptcy code. With this filing, the automatic stay went into effect, complicating, if not wholly preventing, access to Chisholm. As a result, the deposition of Chisholm (through 2004 examination) could not be completed prior to the hearing on the Motion to Reconsider.
800 Bourbon now alleges that this evidence establishes a claim for fraud against Bay Bridge. The excerpts from Chisholm’s testimony state:
1. On the mortgage signed in 2005, Chisholm cannot verify Yeager’s signature and does not recall when Yeager signed.65
2. Chisholm and Julian MacQueen, Bay Bridge’s principal are Mends.
3. As additional consideration for the $1,200,000 loan, Chisholm agreed that once the $1,200,000 note to Bay Bridge was paid in full, Circuit Events would give Bay Bridge 50% of its profits.66
800 Bourbon alleges that Circuit Events’ future profit participation is evidence that the loan should be recharacterized as equity. It also alleges that because Chisholm and Julian MacQueen were Mends, the terms of the agreement call the arrangement between them into question and, by reference, Bay Bridge’s debt.
Chisholm testified that in 2005, Bay Bridge loaned Circuit Events $1,200,000.00 for the production of a music festival or weekend event in Orlando, Florida. At the time, Chisholm was involved in producing concerts or events but this was larger than any other he had organized. Chisholm anticipated that revenues from the event could repay the loan.
Chisholm freely admitted that he and MacQueen were friends when the loan took place. Nevertheless, the loan was documented with Notes and secured by a Mortgage on 800 Bourbon’s property. At the time, the only other member of 800 Bourbon was Doyle Yeager, and Chisholm testified that Yeager both knew of the loan and signed the Mortgage. From this testimony, 800 Bourbon argues that Chisholm and Bay Bridge perpetrated a fraud on 800 Bourbon and its members, Yeager and Warner.
The Fifth Circuit in Estate of Mixon v. U.S.
(1) [T]he names given to the certificates evidencing .the indebtedness;
(2) The presence or absence of a fixed maturity date;
(3) The source of payments;
(4) The right to enforce payment of principal and interest;
(5) [Participation in management flowing as a result;
(6) [T]he status of the contribution in relation to regular corporate creditors;
(7) [T]he intent of the parties;
(8) “[T]hin or adequate capitalization;
(9) [Ijdentity of interest between creditor and stockholder;
(10) [SJource of interest payments;
(11) [T]he ability of the corporation to obtain loans from outside lending institutions;
(12) [T]he extent to which the advance was used to acquire capital assets; and
(13) [T]he failure of the debtor to repay on the due date or to seek a postponement.
The indebtedness owed to Bay Bridge is evidenced by the Notes and Mortgage. Prior to 800 Bourbon’s 2008 Bankruptcy, Circuit Events repaid Bay Bridge with interest as provided for in the Notes. Nevertheless, 800 Bourbon alleges that the provision relating to a transfer of equity calls the characterization of the Notes into question.
Bay Bridge’s agreement provides that after full satisfaction of the debt, an equity interest would be transferred. In the preceding years, Circuit Events would be wholly owned by Chisholm who would retain all benefits of ownership. Exactly how 800 Bourbon was defrauded by a future promise to advance equity in Chisholm’s company after the repayment of a debt is completely unclear.
While 800 Bourbon makes much of Chisholm’s testimony, it fails to provide any facts or circumstances supported by the testimony that suggest a fraud was conducted against it by Bay Bridge. That Bay Bridge will receive future equity in Circuit Events after the full repayment of its advance is insufficient to establish that a different ruling would have resulted had this information been known. This Motion to Reconsider requires 800 Bourbon to bring forth specific facts supported by evidence, newly discovered and previously unavailable, to justify the extraordinary relief it is requesting. Instead, it brings more undocumented and unsupported suspicions and suppositions based on a new legal theory that is, as of yet, undeveloped. The testimony excerpts simply do not show evidence of fraud nor do they provide even a color of a claim.
iii. The Yeager Affidavit
800 Bourbon filed the MSJ and picked its day to argue. Given this history, the Court was generous in allowing the record to remain open even for the limited purpose that it did. Incredibly, 800 Bourbon seeks to expand this grant post-hearing.
After the conclusion of the hearing on the second Motion for Reconsideration, 800 Bourbon asked the Court to admit into evidence an affidavit of Doyle Yeager, which the Court refused.
Mr. Yeager, a principal of 800 Bourbon, has been involved in this bankruptcy case from its filing. He was a signatory to the resolution by 800 Bourbon to file a Voluntary Petition for Relief under Chapter 11 of the Bankruptcy Code;
At the hearing on the Motion to Reconsider, 800 Bourbon also offered into evidence Yeager’s Ex Parte Application to Reopen the 2008 Bankruptcy for the proposition that Yeager alleged there were fraudulent documents bearing his signa
c. Availability of Evidence
Warner, Yeager, and Chisholm were engaged in many prepetition lawsuits between each other and the creditors of 800 Bourbon and La. Interests. In connection with these suits, Warner’s counsel conducted discovery and obtained copies of checks representing the advances made by Bay Bridge.
800 Bourbon contends that because Warner’s counsel did not bring the subpoenaed documents to its or the Court’s attention, he must have forgotten about them. 800 Bourbon suggests that this excuses his failure to disclose.
In Louisiana, knowledge of an attorney is imputed to his or her client.
800 Bourbon cites Creager v. Womack,
Under Louisiana law “the general rule is that the private acts and knowledge of a chairman or director of a corporation are not imputable to it, except with respect to matters within their general authority to act for the corporation or when they are indeed acting for the corporation.77
In Creager, the plaintiffs were minority shareholders of Louisiana Commercial Bank (“LCB”), and Creager, Sr. and McDonald were also members of LCB’s board. The plaintiffs alleged that Mr. Womack, who was the Chairman of the Board of LCB, fraudulently induced them to sell their LCB stock to him for a price below market value. LCB filed a Motion for Summary Judgment that Mr. Wom-ack’s acts could not be imputed to it. The Court found that the defendant’s acts “were unrelated to his function as a director of LCB” and granted summary judgment.
In D’Aubin, Mr. D’Aubin borrowed funds from Royal American Life Insurance Co. (“Royal”) to build a home using Mau-roner-Craddock, Inc. (“MC”) as the contractor. Royal advanced funds to MC, but MC did not use the funds to pay construc
through its officer, Rolfe McCollister, assumed control for [MC] of the flow of and payment from the construction Arm’s interim financing proceedings, and Royal [] permitted diversion of $7,000 of these funds to pay an unsecured debt due to McCollister’s law firm.78
McCollister’s law firm also represented Royal, and his assistant, Stephens, handled the MC account and co-signed all related checks. D’Aubin contended that Royal was hable for the funds given to MC but diverted elsewhere.
. The Court opined that if McCollister supervised the MC account on behalf of Royal, Royal breached its duty to D’Aubin. However, the Court found that McCollis-ter’s firm only represented Royal in drafting the construction loan agreement. Therefore, Royal could not “be charged with McCollister’s knowledge acquired or acts done in his private capacity unrelated to his function as chairman of [Royal’s] board.”
Warner’s knowledge is attributable to 800 Bourbon because she was both its managing member and the party responsible for directing the litigation against Bay Bridge. Warner obtained knowledge relevant to her representation of 800 Bourbon, and as its officer and the supervisor of its litigation, that knowledge can be imputed to 800 Bourbon.
d. Other Factors
The reason for 800 Bourbon’s failure to discover, present, or plead the relevancy of evidence as a fraud claim is an additional factor to consider under F.R.C.P. 59. In this case, the “newly” discovered evidence was available to 800 Bourbon prior to the hearing on the Cross Motion. The fact that 800 Bourbon wants to recharacterize its importance or content in this second Motion to Reconsider does not make it “newly” discovered.
Further, the evidence it offers is not compelling as explained above. Nor does it establish that the Judgment rendered by this Court would differ had this claim been made prior to its entry. In summary, the evidence indicates that while Ms. Warner and Mr. Yeager claim no knowledge of Chisholm’s actions and dispute that they gave any him authority to bind the company to Bay Bridge,
B. Motion for Relief from Judgment Pursuant to F.R.C.P. 60
800 Bourbon alleges reconsideration based on F.R.C.P. 60(b)(3),
On September 29, 2015, this Court ordered:
Bay Bridge to provide 800 Bourbon with documents showing to which account the funds loaned by Bay Bridge were initially transferred or deposited, a copy of the note, a copy, of the guaranty, and a representation that Chisholm had not been released.82
In response, Bay Bridge’s counsel sent a letter stating that “Bay Bridge no longer has cancelled checks or other evidence of the disbursal of the loaned funds in 2005.”
800 Bourbon argues that it hinted at a collusion between Bay Bridge and Chisholm in the Declaration of Ms. Warner attached to 800 Bourbon’s Motion to Conduct Discovery filed prior to the hearing on the MSJ and Cross Motion.
As previously found, the Declaration states that prior dealings between Chisholm and Julian MacQueen might exist. It fails to indicate that the dealings were fraudulent. Nor does it detail any allegedly fraudulent conduct by time, date, or place. The Declaration poses a theory that due to prior business dealings, the amount of the debt owed may not be as claimed. As the Court has already granted reconsideration on the amount of the claim, this is not an issue to be addressed by this Motion to Reconsider.
Whether or not Bay Bridge had the copies of the canceled checks in its files or lost the ability to reproduce them between the filing of its proof of claim and the hearing on the Cross Motion cannot be determined based on the record. However, what is clear is that 800 Bourbon had access to this information without relying on Bay Bridge’s production. In addition, 800 Bourbon knew that no deposits from Bay Bridge were on its own books, and the 2009 Plan specified where the funds were deposited. 800 Bourbon’s failures simply do not justify its claim of fraud on the Court.
800 Bourbon seeks reconsideration as a sanction for what it characterizes as discovery abuses for failure to disclose or supplement discovery. F.R.C.P. 37(c)(1), made applicable to this proceeding by F.R.B.P. 7037, provides:
If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was substantially justified or is harmless.
In order to carry its request for sanctions, 800 Bourbon must establish that Bay Bridge withheld discoverable information that hampered 800 Bourbon’s ability to respond to the Cross Motion. Having previously concluded that it has failed to meet its burden of proof, the Court declines to impose the requested sanction.
III. Conclusion
That new counsel has thought of a new legal theory is not grounds for reconsideration.
. Case no. 08-11322.
. Case no. 08-11322, Proof of Claim 1.
. Chisholm Properties Circuit Events, LLC, will be referred to as "Circuit Events.”
. Case no. 14-12770.
. In a Chapter 11 case, there is no default deadline to file proofs of claim. Because 800 Bourbon had not previously filed a Motion to Set a Deadline to File Proofs of Claim, the Court's Order Approving Debtor's Second Amended Joint Disclosure Statement set the deadline to file proofs of claim as July 15, 2015. P-176. As a result, creditors contesting their scheduled status or amount were required to file a proof of claim no later than July 15, 2015.
. Case no. 14-12772.
. 14-12270, P-171; 14-12772, P-291.
. 14-12770, P-176; 14-12772, P-299. ■
. 14-12770, P-175; 14-12772, P-298.
. 14-12770, P-242; 14-12772, P-366.
. 14-12770, P-240; 14-12772, P-361.
. P-1. .
. P-7.
. P-9.
.P-10.
. P-10, p. 9.
. P-17.
. P-17, p. 16.
. Id.
. P-10, 11.
. P-18.
. Id.
. P-19, n. 1.
. Id. at p. 8-9.
. P-21 and 22.
.P-26.
. P-31.
. The testimony occurred during the 11 U.S.C. § 341(a) meeting of creditors for Chisholm, in his personal bankruptcy case pending in the U.S. Bankruptcy Court for the Northern District of Florida.
.P-42.
. P-44.
. P-49 and 52.
. P-66.
.Exh. '13.
. F.R.C.P. 59 is made applicable to this proceeding by F.R.B.P. 9023.
. F.R.C.P. 60 is made applicable to this proceeding by F.R.B.P. 9024.
. F.R.C.P. 37 is made applicable to this proceeding by F.R.B.P. 7037.
. P-66 (citations omitted).
. Templet v. HydroChem, Inc,,
. Ross v. Marshall,
. F.R.C.P. 15 is made applicable to this proceeding by F.R.B.P. 7015.
.6A Charles Alan Wright, Arthur R, Miller, & Mary Kay Kane, Federal Practice and Procedure § 1491 at 7 (2010).
. Id.
. P-42
. Williams v. WMX Technologies, Inc.
. Id. at 177-178 (citation omitted):
. Id. at 178.
. Michaels Bldg. Co. v. Ameritrust Co., N.A.,
. Bimberg v. Rancho La Costa, Inc. (In re Reach McClinton & Co., Inc.),
. Id. at 981 (quoting In re O.P.M. Leasing Services, Inc.,
. The Court also notes that Bimberg is not binding authority, and it is unclear whether the Fifth Circuit would apply the same rule.
. Bay Bridge was treated as an allowed secured creditor owed in excess of $1.300,-000.00 in the 2009 Plan. After filing its second Chapter 11 proceeding, 800 Bourbon scheduled Bay Bridge as an unsecured creditor to whom no amount was due. This forced Bay Bridge to file a proof of claim or be barred from collection. Since, 800 Bourbon did not request an earlier deadline for filing proofs of claim, the Court set the deadline as July 15, 2015.
. Templet v. HydroChem Inc.,
. Id. at 479 (citing Russ v. Int’l Paper Co.,
. Ford v. Elsbury,
. Id. at 937 (quoting Lavespere v. Niagara Mach. & Tool Works, Inc.
.Id. at 937.
. Goldstein v. MCI WorldCom,
. 1) A check dated May 10, 2006, by Bay Bridge to the order of 800 Bourbon and Johnny Chisholm in the amount of $110,000.00; 2) A check dated May 31, 2006, by Julian and Kim MacQueen to the order of Johnny Chisholm and Circuit Events in the amount of $90,000.00 with the memo "loan.” Exh. 13.
. Case 08-111322, P-208, Exh. 1, Section 5.02, p. 17.
. Id. atp. 18.
. Exh. 2 and 13,
. Chisholm’s 2004 Examination was held over two (2) days; February 12, 2016, and March 16, 2016. The hearing on the Motion to Reconsider was on March 4, 2016.
. P-86, Exh. A, pp. 429-430.
. Id. at 437 and Exh. 13.
. Warner was not a member of 800 Bourbon at the time the loan was made.
.Estate of Mixon v. U.S.,
. P-74 and 76.
. P-86.
. Case 14-12770, P-1.
. Exh. 12.
. Exh. 13.
. Stevison v. Charles St. Dizier, Ltd.,
. Chisholm v. Yeager, et al., case no. 13-6325, Civil District Court for the Parish of Orleans.
. Creager v. Womack,
. Id.
. D'Aubin,
. Id. at 322.
. They have separately sued Chisholm in fraud and for breach of duty, attaching all distributions available to him from the sales conducted in 800 Bourbon and La Interests’ estates.
.F.R.C.P. 60 is made applicable to this proceeding by F.R.B.P. 9024.
. P-18.
. Exh. 10.
.Bay Bridge is an affiliate of Innisfree Hotels, Inc., and Jack Work is the Controller of Innisfree Hotels, Inc.
.P-21, Exh. 3.
. See U.S. v. Barnes,