Ignite Spirits, Inc. v. Consulting by AR, LLC

• Court: District Court, D. Nevada
• Decided: March 8, 2024
• Docket: 2:21-cv-01590
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * *

7 IGNITE SPIRITS, INC., Case No. 2:21-CV-1590 JCM (EJY)

8 Plaintiff(s), ORDER

9 v.

10 CONSULTING BY AR, LLC,

11 Defendant(s).

12 13 Presently before the court is the counter-defendants’ (Ignite Spirits, Inc. and Ignite 14 International Brands, LTD) motion for reconsideration of the court’s summary judgment order. 15 (ECF No. 195). Counter-claimant Consulting by AR, LLC has filed a response (ECF No. 209), 16 to which the counter-defendants have replied (211). For the reasons stated below, the court 17 reaffirms its summary judgment ruling in favor of Consulting by AR, LLC. 18 I. Background 19 This case originated in Nevada state court as a contract dispute between Ignite Spirits, Inc. 20 (“Spirits”), and Consulting by AR (“Consulting”). (ECF No. 1-2). Spirits sought declaratory relief 21 that Consulting breached a contract to which it and Consulting were parties (the “Letter 22 Agreement”). (Id.). Consulting removed the case to federal court based on diversity and 23 counterclaimed for breach against Spirits and Ignite International Brands, LTD (“Brands”), 24 alleging that Brands was also a party to the agreement. (ECF No. 8). The court refers to Spirits 25 and Brand collectively as the “Ignite counter-defendants.” 26 The undisputed facts are as follows. Under the terms of the Letter Agreement, Consulting 27 was to broker an agreement between Spirits and another third party. (ECF No. 182, at 2). 28 Consulting would be compensated the value of two million Canadian dollars in Brands shares if a 1 definitive agreement between Spirits and the third party was signed “no later than July 1, 2021.” 2 (Id.). A definitive agreement was executed on July 2, 2021. (Id. at 3). Consulting was not 3 compensated pursuant to the Letter Agreement. (Id. at 4). 4 This court, in entering summary judgment in favor of Consulting and against the Ignite 5 counter-defendants, made several rulings. First, the court ruled that execution of the definitive 6 agreement one day after the deadline was not a material breach. (Id. at 6–7). Second, the parol 7 evidence rule did not bar the court from considering Consulting’s evidence submitted in support 8 of its summary judgment motion. (Id. at 8–9). Third, Brands was a party to the letter agreement 9 and therefore subject to liability. (Id., at 9). And finally, Consulting was entitled to the value of 10 two million Canadian dollars in damages as the non-breaching party. (Id. at 10). In entering 11 summary judgment and closing the case, the court also denied as moot several pending, 12 miscellaneous motions. (Id. at 12). 13 The Ignite counter-defendants then filed the instant motion for reconsideration, taking a 14 shotgun approach by citing Rules 52, 59, and 60. (ECF No. 195, at 2). They take issue with many 15 of the court's findings in support of summary judgment for Consulting. (See generally id.). They 16 also assert that the court should not have denied certain motions as moot. ((Id.). The court 17 addresses these arguments. 18 II. Legal Standard 19 Rule 59(e) “permits a district court to reconsider and amend a previous order[;]” however, 20 “the rule offers an extraordinary remedy, to be used sparingly in the interests of finality and 21 conservation of judicial resources.” Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir. 2003) 22 (internal quotations omitted). A motion for reconsideration “should not be granted, absent highly 23 unusual circumstances.” Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000). 24 On one hand, a motion for reconsideration “may not be used to raise arguments or present 25 evidence for the first time when they could reasonably have been raised earlier in the litigation.” 26 Kona Enters., Inc., 229 F.3d at 890. On the other hand, “[a] movant must not repeat arguments 27 already presented unless (and only to the extent) necessary to explain controlling, intervening law 28 1 or to argue new facts. A movant who repeats arguments will be subject to appropriate sanctions.” 2 LR 59-1(b). 3 Thus, the Ninth Circuit has provided that “[r]econsideration is appropriate if the district 4 court (1) is presented with newly discovered evidence, (2) committed clear error or the initial 5 decision was manifestly unjust, or (3) if there is an intervening change in controlling law.” School 6 Dist. No. 1J v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993); FED. R. CIV. P. 60(b). “A motion 7 to alter or amend a judgment must be filed no later than 28 days after the entry of the judgment.” 8 FED. R. CIV. P. 59(e). 9 III. Discussion 10 As this action is in federal court on diversity jurisdiction, the court applies Nevada 11 substantive law and federal procedural law. E.g., Feldman v. Allstate Ins. Co., 322 F.3d 660, 666 12 (9th Cir. 2003) (quoting Erie R.R. v. Tompkins, 304 U.S. 64, 78 (1938)); MRO Commc'ns, Inc. v. 13 Am. Tel. & Tel. Co., 197 F.3d 1276, 1282 (9th Cir. 1999). 14 A. The Summary Judgment Ruling 15 The Ignite counter-defendants’ motion to reconsider this court’s summary judgment order 16 cannot be granted under Rule 60, Rule 52, or Rule 59. Rule 60(a) allows the court to “correct a 17 clerical mistake or a mistake arising from oversight or omission whenever one is found in a 18 judgment, order, or other part of the record.” FED. R. CIV. P. 60(a). Whether to grant a Rule 60 19 motion is a matter within the district court’s discretion. Fantasyland Video, Inc. v. Cnty. of San 20 Diego, 505 F.3d 996, 1001 (9th Cir. 2007). The court did not commit a clerical mistake or 21 omission when it entered judgment in favor of Consulting. 22 Rule 52(b) is also not the proper vehicle for the Ignite counter-defendants’ motion because 23 this rule is used to amend findings after a bench trial, not a summary judgment. Critchlow v. 24 Critchlow, 617 F. App'x 664, 666 (9th Cir. 2015). “Since a court engages in no fact-finding when 25 it decides a summary judgment motion, a party may not use a Rule 52(b) motion to seek 26 reconsideration of such a decision.” Buck v. Libous, No. 3:02 CV 1142, 2005 WL 2033491, at *1 27 (N.D.N.Y. Aug. 17, 2005). 28 1 The Ignite counter-defendants’ motion must also be denied under Rule 59(e) as it is merely 2 an attempt to relitigate issues the court has already decided. The court admonishes them that, 3 under Local Rule 59-1(b), a movant who repeats arguments on a motion for reconsideration may 4 be subject to sanctions. The Ignite counter-defendants cannot seek reconsideration simply because 5 they disagree with the court’s decision—the remedy that Rule 59(e) provides is “extraordinary” 6 and allowed only “sparingly.” Allstate Ins. Co. v. Herron, 634 F.3d 1101, 1111 (9th Cir. 2011). 7 The Ignite counter-defendants’ first argument for reconsideration (that the court incorrectly 8 decided that time for performance was not of the essence) not only repeats arguments already made 9 in their response to Consulting’s summary judgment motion (compare ECF No. 100, at 15–161 10 with ECF No. 195, at 4–52), but also misstates the court’s summary judgment order. The court 11 found that—even if time was of the essence—Consulting’s one-day delay in performance was not 12 a material breach of the Letter Agreement. (ECF No. 182, at 6). As Consulting’s breach was 13 immaterial, the Ignite counter-defendants were not excused from their duty to compensate 14 Consulting. (Id.). The Ignite counter-defendants do not cite a single case to show that the court’s 15 conclusion was in error. The court denies reconsideration of this issue. 16 The Ignite counter-defendants’ next argument suffers from the same flaws as its previous 17 argument. They contend that the court “ignored corporate formalities” and created “non-existing 18 facts out of whole cloth”3 when it found that there was no dispute of fact that Brands was a party 19 to the Letter Agreement. (ECF No. 195, at 6). Yet again, the Ignite counter-defendants repeat the 20 same arguments already made while misunderstanding and misrepresenting the court’s order. The 21 court did not pierce the corporate veil when it found that Brands was a party to the Letter 22 Agreement; rather, the court found that Brands was a party based on its own actions and the 23 Agreement’s language. (ECF No. 182, at 9–10).

24 1 “Here[,] the language of the Letter Agreement is either ambiguous nor uncertain, 25 particularly concerning the July 1st deadline….If a contract expressly provides for the time for performance, then it is considered of the essence.” 26 2 “In fact, the [c]ourt found in its [o]rder that the contract was unambiguous…[y]et 27 somehow read into this language that ‘time was not of the essence.” 28 3 Despite this astonishing accusation against the court, the Ignite counter-defendants fail to cite a single fact that this court stated in its order that was not based on record evidence. 1 Because Brands and Spirits conducted business simultaneously (holding simultaneous 2 board meetings with the same managers), the court found that Spirits’s participation in the Letter 3 Agreement could not be distinguished from Brands’s. (Id.). The Letter Agreement itself also 4 failed to distinguish between Brand and Spirits, and the Agreement obligated Brands to 5 compensate Consulting with Brands shares. (Id.). Based on the totality of these undisputed facts, 6 the court found no factual dispute that Brands was an intended party to the Letter Agreement. The 7 Ignite counter-defendants have not met their burden for reconsideration of this issue. 8 The Ignite counter-defendants next argue that the court improperly considered parol 9 evidence submitted by Consulting (such as the parties’ conduct after signing the Letter Agreement) 10 while not considering parol evidence submitted by them. (ECF No. 195, at 7). They have 11 misstated the law. 12 The parol evidence rule does not bar consideration of all evidence outside of the four 13 corners of the contract; it bars “extrinsic evidence regarding prior or contemporaneous agreements 14 that are contrary to the terms of an integrated contract.” Khan v. Bakhsh, 306 P.3d 411, 14 (Nev. 15 2013) (emphasis added) (citations omitted). As the court explained in its prior order, extrinsic 16 evidence is admissible to establish a subsequent alteration to an agreement, the course of dealings 17 between parties, the course of performance of the agreement, and to resolve a latent ambiguity in 18 the agreement. E.g., id.; M.C. Multi-Fam. Dev., L.L.C. v. Crestdale Assocs., Ltd., 193 P.3d 536, 19 545 (Nev. 2008); TDN Money Sys., Inc. v. Everi Payments, Inc., No. 2:15-CV-2197-JCM-NJK, 20 2017 WL 5148359, at *4 (D. Nev. Nov. 6, 2017), aff'd, 796 F. App'x 329 (9th Cir. 2019). 21 In issuing its summary judgment ruling, this court considered only evidence falling outside 22 the purview of the parol evidence rule. The Ignite counter-defendants have not pointed to a single 23 piece of evidence that this court considered erroneously under the parol evidence rule. 24 Reconsideration of this issue is not warranted. 25 Finally, the Ignite counter-defendants argue that the court improperly granted a “cash 26 award” of damages despite Consulting providing “no evidence of damages” and the Letter 27 Agreement stipulating that Consulting was entitled only to an award of stock. (ECF No. 195, at 28 7). But the court awarded Consulting the value of two million Canadian dollars in damages after 1 it found that the terms of the Letter Agreement clearly and unambiguously entitled it to such.4 2 (ECF No. 182, at 11). The court explained that Consulting was entitled to compensatory damages 3 because, as a matter of law, that was what it was owed as the non-breaching party to an agreement. 4 (ECF No. 182, at 10–11). 5 On a motion for reconsideration, the movant must provide the court with new evidence that 6 could not have been discovered earlier even with due diligence, point to a clear error or manifest 7 injustice, or an intervening change in the controlling law. School Dist. No. 1J, 5 F.3d at 1263; 8 Coastal Transfer Co. v. Toyota Motor Sales, U.S.A., 833 F.2d 208, 211–212 (9th Cir. 1987). The 9 Ignite counter-defendants have provided none of the above to support its request for 10 reconsideration as to the issue of damages.5 The court accordingly denies reconsideration of this 11 issue. 12 B. The magistrate judge’s report and recommendation. 13 The Ignite counter-defendants argue that the court incorrectly denied several motions as 14 moot. The first of these motions is the magistrate judge’s report and recommendation (R&R) on 15 Brands’s motions to dismiss and for a more definite statement, to which Brands objected (ECF 16 Nos. 56, 57). (Id., at 3). The magistrate judge recommended denying Brands’s motions. (ECF 17 No. 56, at 14). The court finds that it erred in denying the R&R as moot because the R&R 18 addressed jurisdictional issues. The court therefore reviews the R&R and Brands’s objections 19 here. 20 The court is not required to conduct a de novo review of those portions of the R&R to 21 which no objections are made. 28 U.S.C. § 636(b)(1); United States v. Reyna-Tapia, 328 F.3d 22 1114, 1121 (9th Cir. 2003) (en banc) (“[T]he district judge must review the magistrate judge’s 23 24 25 4 “It is clear that “within thirty days of the [full] execution of the [definitive agreement],” AR is owed “the value of Two Million Canadian dollars (CAD$2,000,000) of [Brands] subordinate 26 voting shares [ ] simultaneously at the time of the [definitive agreement] being fully executed. (ECF No. 86-1). This is the only provision under which AR seeks damages, and it is clear and 27 unambiguous. (ECF No. 83).” 28 5 The Ignite counter-defendants also failed to properly oppose Consulting’s request for damages in the original motions. (ECF No. 100, at 11–12; ECF No. 107). 1 findings and recommendations de novo if objection is made, but not otherwise.”). Accordingly, 2 the court addresses only Brands’s objections to the Magistrate Judge’s recommendations. 3 Brands moved to dismiss the claims against it by arguing lack of subject matter jurisdiction, 4 personal jurisdiction, and improper venue. (ECF No. 57, at 4–5). Brands contends that the court 5 lacks subject matter jurisdiction because Brands is a Canadian entity, which destroys the basis for 6 diversity jurisdiction. (ECF No. 39, at 4). Magistrate Judge Youchah correctly found this 7 proposition to be nonsensical and without any basis in law, given the complete diversity of the 8 parties.6 9 Brands’s reliance on Guan v. Bi in its objection to Judge Youchah’s recommendation is 10 misplaced for at least two reasons. No. 13-CV-05537-WHO, 2014 WL 953757 (N.D. Cal. Mar. 11 6, 2014). First, Guan is a district court order that has no binding effect on this court. Second, 12 Guan is wholly inapplicable to this case because its decision is based on finding a lack of complete 13 diversity between aliens “on one side” versus aliens “on the other side,” not simply because one 14 party was an alien. Id. at 16–17. Brands, while casting aspersions on Judge Youchah in its 15 objection, appears to have fundamentally misunderstood the law regarding diversity jurisdiction. 16 Brands next argues that the court does not have personal jurisdiction over it because the 17 “only basis for personal jurisdiction” is the Letter Agreement. (ECF No. 57, at 7). Judge Youchah 18 correctly found that this court has personal jurisdiction over Brands. First, Brands did not support 19 its objections with competent legal authority and analysis. Second, Brands misrepresents Judge 20 Youchah’s ultimate finding, which is that—whether or not Brands is found to be a party to the 21 Letter Agreement7—“Brands could reasonably anticipate litigation over the compensation 22 23 24 6 “Despite Ignite Brands’ contention to the contrary (ECF No. 39 at 6-7), the law is clear that Counterclaim Plaintiff (Consulting) and the additional Counterclaim Defendants (Ignite 25 International and Ignite Brands) are completely diverse. 28 U.S.C. § 1332(a)(2); Nike, Inc. v. Commercial Iberica de Exclusivas Deportivas, S.A., 20 F.3d 987, 990 (9th Cir. 1994) (“We draw 26 no distinction between corporations incorporated in a state of the United States and those incorporated in a foreign country when determining the corporation’s citizenship for purposes of 27 diversity jurisdiction.”) (internal citation omitted).” (ECF No. 56, at 6). 28 7 And, as explained supra, the court did find Brands to be an intended party to the Letter Agreement. 1 promised in the Letter Agreement to occur in Nevada” based on the totality of its other actions. 2 (ECF No. 56, at 11). 3 Brands’s sole argument against venue is that it was “not a party to the Letter Agreement, 4 and therefore did not choose, or agree, to litigate in this venue.” (ECF No. 39, at 9; ECF No. 57, 5 at 9). Judge Youchah correctly found this argument unpersuasive (at best), given that venue exists 6 over the principal claim and therefore exists over the related counterclaims against Brands. (ECF 7 No. 56, at 14). To support its objection, Brands cites a nonbinding, Seventh Circuit decision with 8 no legal analysis. (ECF No. 57, at 9). Brands has not given this court any reason to reject Judge 9 Youchah’s recommendation that venue is proper. 10 The remainder of Brands’s objections are similarly bereft of substantive legal analysis and 11 contain many misstatements—both of the law and Judge Youchah’s R&R. The court finds them 12 unavailing. Couturier v. Am. Invsco Corp., No. 2:12-cv-01104-APG-NJK, 2013 WL 4499008, at 13 *3 (D. Nev. Aug. 20, 2013) (“A judge is the impartial umpire of legal battles, not a party's attorney. 14 He is neither required to hunt down arguments the parties keep camouflaged, nor required to 15 address perfunctory and undeveloped arguments.”). The court therefore adopts Judge Youchah’s 16 R&R (ECF No. 56) in FULL and DENIES Brand’s motions at ECF Numbers 39, 40, and 52. This 17 ruling does not affect the court’s order of summary judgment in favor of Consulting, which remains 18 intact. 19 C. The Remaining Miscellaneous Motions 20 The Ignite counter-defendants claim that there are “several” other errors in the court’s 21 order. (ECF No. 195, at 3). They first contend that there is no reason for the order to remain under 22 seal. (Id.). As Consulting also supports unsealing the order, the court will order it unsealed. But 23 whether the order is sealed does not affect its ruling of summary judgment in favor of Consulting. 24 The Ignite counter-defendants next argue that the court never “ruled” on Brands’s joinder 25 to Spirits’s motion for summary judgment, citing ECF No. 79. (Id.). But ECF No. 79 is actually 26 Brands’s joinder to a motion for leave to file a document under seal. Regardless, these motions 27 were rendered moot when the court entered judgment on the claims, and the Ignite counter- 28 defendants do not provide points and authorities to dispute this. 1 Finally, the Ignite counter-defendants claim that the court erred by not addressing Judge 2 Youchah’s civil contempt order and its related filings. (ECF No. 174). But they fail to explain, 3 much less provide authority, for why they believe the court was required to address that issue in 4 its order on summary judgment. (See generally ECF No. 195). The Ignite counter-defendants 5 have not provided the court with any reason to reconsider or amend its previous order. 6 IV. Conclusion 7 Accordingly, 8 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that Ignite Spirits, Inc. and 9 Ignite International Brands, LTD.’s motion for reconsideration (ECF No. 195) be, and the same 10 hereby is, GRANTED in part and DENIED in part, consistent with the foregoing. 11 Specifically, the court ORDERS that its summary judgment order (ECF No. 182) be 12 UNSEALED but reaffirms the findings and ruling therein. 13 The court ADOPTS Judge Youchah’s R&R (ECF No. 56) in FULL and DENIES the 14 motions at ECF Numbers 39, 40, and 52. 15 DATED March 8, 2024.

16 __________________________________________ UNITED STATES DISTRICT JUDGE 17 18 19 20 21 22 23 24 25 26 27 28