UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
J. Krist Schell
v. Civil No. 06-cv-425-JM Opinion No. 08NH191P Thomas W. Kent
O R D E R
Plaintiff and defendant both have moved for reconsideration
of my May 9, 2008, order granting in part and denying in part
cross motions for summary judgment ("Summary Judgment Order").
Each party claims the order was based on three different errors
of fact or law which justify the reconsideration now sought. See
United States District Court for the District of New Hampshire
Local Rule ("LR") 7.2(e) (following Fed. R. Civ. P. 59(e) by
requiring motions for reconsideration to demonstrate a manifest
error of either fact or law). After carefully considering the
arguments on both sides, for the reasons set forth below,
plaintiff's motion (document no. 56) is granted in part and
denied in part, and defendant's motion (document no. 58) is
denied. Discussion
1. Standard of Review
"The granting of a motion for reconsideration is 'an
extraordinary remedy which should be used sparingly.'" Palmer v.
Champion Mortq., 465 F.3d 24, 30 (1st Cir. 2006) (quoting 11
Charles Alan Wright, et a l., Fed. Practice & Procedure § 2810.2
(2d ed. 1995)). A motion for reconsideration is not available to
revisit or reargue theories previously advanced and rejected.
See id. Instead, the movant must demonstrate either that
evidence has been newly discovered that could not have been
discovered previously, that some intervening change in the law
has occurred, or that the court's decision was based on some
"manifest error of law," rendering the motion necessary to
prevent "manifest injustice." Id. The Rule 59(e) motion may
not be used to relitigate old matters or to raise arguments or
present evidence that could have been raised prior to the entry
of judgment. Id.; see also Laundrau-Romero v. Banco Popular de
P .R ., 212 F.3d 607, 612 (1st Cir. 2000) ("new legal arguments or
evidence may not be presented via Rule 59(e)").
With this standard in mind, I turn to each of the parties'
arguments.
2 2. Defendant's Motion (document no. 58)
I begin with defendant's motion, because it challenges the
basis of my summary judgment analysis that found defendant's
failure to timely respond to plaintiff's Requests for Admission
deemed the assertions made therein undisputed and accepted as
true. See Summary Judgment Order at 12, 14. Defendant now
contends that this "essentially default[]" judgment against him
was unfair, because the untimeliness of defendant's response was
inadvertent and excusable. The record does not substantiate this
claim. Instead, the record reflects that plaintiff's counsel
inquired about defendant's failure to respond on August 3, 2007.
See Document no. 19-4, Aff. of David. A. Strock, Ex. D-6. Though
defense counsel promptly forwarded a copy of Defendant's Answers
to Plaintiff's First Set of Interrogatories, see id., Ex. D-7,
defense counsel did not provide Defendant's Response to
Plaintiff's First Set of Requests for Admissions until August 31,
2007, explaining they "were lost in the file and not sent." Id.,
Ex. D-8.
Once the error was recognized, defendant could and should
have asked for leave to file his untimely responses, but did not.
See Fed. R. Civ. P. 6(b) (allowing the court to extend time for
3 excusable neglect); see also Fed. R. Civ. P. 36(a)(3) (allowing
the court to order a "longer time for responding" to requests for
admission). Defendant also could have moved to withdraw or amend
the admissions, pursuant to Fed. R. Civ. P. 36(b). Defendant
chose to do nothing until almost a year after the late admissions
were filed, and only after the Summary Judgment Order was issued.
That is simply too little, too late. Defendant cannot now claim
a manifest error of fact or law was done by the court following
the explicit provisions of the Federal Rules of Civil Procedure.
See Rule 36(a)(3) ("A matter is admitted unless, within 30 days
after being served, the party to whom the request is directed
serves on the requesting party a written answer or objection
addressed to the matter and signed by the party or its
attorney."); see also Brook Vill. N. Ass'n v. Gen. Elec. Co., 686
F.2d 66, 70-71 (1st Cir. 1982) (finding an admission under Rule
36(a)(3) is "conclusively established"); Sunoco, Inc. v. MX
Wholesale Fuel Corp., 565 F. Supp. 2d 572, 577-78 (D.N.J. 2008)
(granting summary judgment based on Rule 36(a)(3) admissions).
Defendant's motion fails to satisfy the demanding standards
of Rule 59(e). The motion cites only documents already in the
record which, therefore, cannot be newly discovered evidence that
4 was not previously available. The motion also does not cite a
single legal authority and, therefore, does not rely on a recent
change in the law that the court must now consider to avoid a
manifest injustice. The motion, instead, improperly attempts to
relitigate the facts and issues previously considered, while
neglecting to develop any argument to justify the relief sought.
See Cao v . P .R ., 525 F.3d 112, 115-16 (1st Cir. 2008) (citing
authority to explain previously undeveloped arguments cannot be
presented in a Rule 59(e) motion); see also Bourne v. Town of
Madison, slip op. No. 05-CV-365-JD, 2007 WL 1796239, *2 (D.N.H.
June 19, 2007) (citing Higgins v. New Balance Athletic Shoe,
Inc., 194 F.3d 252, 260 (1st Cir. 1999) to disregard undeveloped
arguments). Accordingly, defendant's motion (document no. 58) is
denied.
3. Plaintiff's Motion (document no. 56)
Plaintiff advances three arguments in support of his request
for reconsideration. The first two arguments are unpersuasive;
the third, however, warrants the relief sought.
(a) Scope of the Indemnification Agreement
Plaintiff first contends the Indemnification Agreement
covers all of his damages related to the underlying state law
5 suits and is not limited to those related to the Guarantee,
because defendant's untimely response to plaintiff Request for
Admission ("RFA") number 17 conclusively establishes defendant's
liability for those costs, fees and expenses. RFA 17 stated:
The costs, attorney's fees, and expenses incurred by J. Krist Schell in defending against Edward Myslik's claims in Edward H. Mvslik v. Bradley Reed Lumber Company, LLC, et a l ., Grafton County Superior Court (Docket No. 04-C-167) are covered by the indemnification provisions of the Indemnification Agreement, dated February 28, 2000.
Document no. 19-1, 5 17. In support of his position, plaintiff
cites Sigmund v. Starwood Urban Retail VI, LLC., 236 F.R.D. 43
(D.D.C. 2006). Plaintiff also argues defendant's Answer to the
Complaint did not respond to 5 22, which alleged that the "costs,
attorney's fees, and expenses incurred by plaintiff in defending
the New Hampshire and Maine Lawsuits are covered by the terms of
the Indemnification Agreement." Plaintiff claims that
defendant's failure to answer that allegation deems it admitted
as well, citing Fed. R. Civ. P. 8(d). Plaintiff contends that
these admissions "define - as a matter of law - the scope of the
Indemnification Agreement," and that a narrower interpretation by
the court constitutes a manifest error of fact and law. Document
no. 56 at 4.
6 I do not agree. It is black letter law that the
interpretation of a contract is a question of law for the court.
See Hill of Portsmouth Condo. Ass'n v. Parade Office, LLC, slip
op. No. 04-CV-4 03-SM, 2006 WL 1644539, *6 (D.N.H. June 12, 2006)
(citing authority); Found, for Seacoast Health v. HCA Health
Servs. of N.H., __ N.H. __ , 953 A.2d 420 (2008). "In the absence
of ambiguity, the parties' intent will be determined from the
plain meaning of the language used. The words and phrases used
by the parties will be assigned their common meaning, and we will
ascertain the intended purpose of the contract based upon the
meaning that would be given it by a reasonable person." Id.
(quotation omitted). The relevant language from the
Indemnification Agreement was not disputed, and clearly provided
that defendant would reimburse plaintiff for 2/3 of:
any and all damages, losses, obligations, liabilities, claims, lawsuits, deficiencies, costs and expenses . . . by reason of, or in connection with, or arising out of [plaintiff's] liability resulting from the Guarantee . . . or other cause for [plaintiff's] payment under the Guarantee.
Compl. 5 16; see also Document no. 19-1, Pi.'s RFA, Ex. A (Feb.
28, 2000 Indem. A g t .). This provision unequivocally limited
coverage to damages sustained by plaintiff in connection with his
7 obligations stemming from the Guarantee, nothing further.
In his motion for reconsideration, plaintiff attempts to
relitigate the scope of the Indemnification Agreement, without
demonstrating how Sigmund or Rule 8 (d) represent a change in the
law that I must now consider to prevent some manifest injustice.
Sigmund discusses why questions similar to those allowed under
Rule 36(a) should also be allowed in a deposition under Rule
3 0 (b), and determined that the plaintiff could inquire about
defendant's understanding of the contract's divvying up of
responsibilities. See id., 236 F.R.D. at 46-47.1 Plaintiff
seems to rely on Sigmund for the proposition that Rule 36(a)
allows RFA 17 to define the scope of the Indemnification
Agreement and to trump my construction of that contract, set
forth in the Summary Judgment Order. Neither Sigmund nor the
cases on which it relies, however, support a reading of Rule
36(a) to change well-settled principles of contract construction
by allowing the parties, rather than the court, to interpret the
1The Sigmund court explained that for the same reasons questions about defendant's understanding of "who was responsible for repairing and maintaining the parking garage door under its management contract" would be appropriate as a Request for Admission under Rule 36(a), those questions could be asked in a deposition under Rule 30(b). See id. at 46. meaning of an unambiguous contract.
While Rule 36(a) allows mixed questions of law and fact, to
discover "any matters within the scope of Rule 26(b)," those
admissions include only opinions or conclusions reasonably drawn
from facts. See 8A Wright & Miller, Fed. Practice & Procedure, §
2255 (2d ed. 1994). The rule anticipates questions such as
whether a contract exists, or whether an employee acted within
the scope of his employment, or whether a property was under the
control of one of the defendants, and may even ask what was
intended to clarify ambiguous terms in a contract. See id.; see
also Booth Oil Site Admin. Group v. Safetv-Kleen Corp., 194
F.R.D. 76, 80 (W.D.N.Y. 2000); cf. Disability Rights Council v.
Wash. Metro. Area, 234 F.R.D. 1, 3 (D.D.C. 2006). It does not,
however, allow a request for an admission of a pure matter of
law. See 8A Wright & Miller, Fed. Practice & Procedure § 2255;
see also Booth Oil Site Admin. Group, 194 F.R.D. at 79 (citing 4A
Moore's Fed. Practice, 5 36.04 (2) & (4) (2d ed. 1982)). When a
contract is unambiguous, like the Indemnity Agreement at issue
here, parole evidence, either through Rule 36(a) or otherwise,
regarding what the parties intended simply is not considered.
C f . id. at 80 (allowing Rule 36 admissions for extrinsic evidence
9 to interpret a contract because the contract language was not
clear).
Similarly, Federal Rule of Civil Procedure 8 (d) provides no
basis to reevaluate my prior decision. Rule 8(d) describes how
allegations should be stated; it does not provide that an
unanswered allegation is deemed admitted.2 The rule is lenient
and inclusive, allowing alternative statements and providing "the
pleading is sufficient if any one of them is sufficient." Fed.
R. Civ. P. 8(d)(2). I was aware of the Federal Rules of Civil
Procedure when I issued the Summary Judgment Order. They provide
no support for the pending Rule 59(e) motion.
Here, the Indemnification Agreement was clear and its
references to the Guarantee were unambiguous. There was no need
2Perhaps plaintiff intended to cite Fed. R. Civ. P. 8(b), which addresses "Defenses; Admissions and Denials," and which provides that an allegation is admitted if it is not denied in a responsive pleading. See Fed. R. Civ. P. 8(b)(6). Yet, the rules also provide that a party can generally deny all the allegations. Rule 8(b)(3), and that the "pleadings must be construed so as to do justice." Fed. R. Civ. P. 8(e). Based on plaintiff's own allegations, plaintiff knew that defendant did not intend to reimburse all his business-related expenses. See Compl., 5 13. Defendant also denied any liability on the Guarantee and answered that the Indemnification Agreement was irrelevant. See A n s ., 16, 24 & 25. Construing the pleadings "to do justice," defendant did not admit liability under the Indemnification Agreement for all of plaintiff's costs, fees and expenses in the underlying state law suits.
10 for any extrinsic evidence to determine the scope of the
indemnification coverage. Any admission regarding the contract's
scope conveyed in RFA 17 or Defendant's Answer is irrelevant to
my construction of what the Indemnification Agreement covered.
Plaintiff's motion for reconsideration proffers no basis to
reevaluate my analysis of his claims based on the Indemnification
Agreement as decided in the Summary Judgment Order.
(b) Breach of the Oral Agreement
Plaintiff's second argument for reconsideration asserts that
I erroneously found that the statute of limitations had run on
his claims based on an oral agreement he had with defendant for
reimbursement of certain business expenses incurred on behalf of
and capital contributions to the company. In the Summary
Judgment Order, I found that, again because of the untimeliness
of defendant's responses to plaintiff's Requests for Admission,
defendant had admitted an oral agreement was made in February
2001 pertaining to the repayment of that money, and that
defendant had reaffirmed that obligation as late as January 2003.
I concluded that any claims based on the January 2003
reaffirmation of that debt were barred after January 2006, based
on New Hampshire's three year statute of limitations. See N.H.
11 Rev. Stat. Ann. 508:4, I (1997). Plaintiff now contends that I
erred, because the oral agreement was not breached until
defendant's 2007 denial of the debt, which first triggered the
running of the statute of limitations.
In support of his argument, plaintiff relies heavily on
Archdiocese of San Salvador v. FM Int'l, LLC, slip op. No. 05-cv-
2 37-JD, 2006 WL 437493 (D.N.H. Feb. 23, 2006). In that case,
defendants breached their oral promise to repay plaintiff money
within one month of plaintiff having made an investment with
defendants. Based on the agreement between the parties, the
money should have been paid in April 2002. In May 2002, one
defendant acknowledged his liability for the debt and promised to
repay it as soon as a bank guaranty was procured. In July 2002,
plaintiff realized the bank guaranty was counterfeit. After
several unsuccessful attempts to secure repayment of the money,
plaintiff commenced suit in June 2005. The court held that the
statute of limitations had run on the original promise to pay in
April 2005, because plaintiff was aware that defendants had
breached their promise and that plaintiff would be harmed as a
result of that breach as early as April 2002. See id. at *4.
The statutory period was not tolled by the one defendant's
12 reaffirmation of his liability for that debt in May 2002. See
id. at *5. Instead, the court held that in May 2002 the one
defendant had made a new promise, conditioning repayment of the
debt on his receipt of a bank guaranty, which the original
promise had not had. See id. ("[t]he admission [of liability]
itself does not take the action out of the statue of limitations;
rather, it is the new promise that may be inferred from that
admission that removes the bar." (internal quotation omitted)).
The court held that the breach occurred when the counterfeit bank
guaranty was discovered and defendant's nonperformance first
became clear, in July 2002, because the promise to repay had been
conditioned on the receipt of the bank guaranty. See id. at 5.
Plaintiff's claim, therefore, was not barred by the statute of
limitations.
The critical issue in San Salvador, as it is here, is when
was the promise to repay breached? Because the second promise,
made in May 2002, was conditioned on an event the non-performance
of which was not discovered until July 2002, that promise was not
breached until July 2002; accordingly, the June 2005 claims based
on that breach were not barred by the statute of limitations.
Plaintiff argues here that defendant's promise to pay was not
13 breached until 2007 when he first denied any liability based on
the February 2001 oral agreement. That argument assumes
defendant's promise to pay was open-ended and indefinitely
enforceable into the future, which it could not be if it is
understood to be an enforceable contract. Such a promise would
be illusory and not supported by any consideration. Under those
circumstances, there would be no contract. But defendant's debt
under the oral agreement was deemed to be admitted under Rule
3 6 (a) .
Plaintiff's claim accrued in February 2001, when he first
knew that he was leaving the company without being compensated
for hisfinancial contributions to it, and when he first
understood that defendant would reimburse him for those amounts:
A claim accrues when all the events have occurred which fix the liability on the [defendant] and entitle the claimant to institute the action. Claims for breach of contract generally accrue at the time of the breach. A claim does not accrue, however, unless the claimant knew or should have known that the claim existed. Alternatively, a claim accrues when damages are ascertainable.
Patton v . U.S., 64 Fed. Cl. 768, 774 (Fed. Cl. 2005) (internal
quotations omitted). The undisputed facts in the record, taken
from plaintiff's own Requests for Admission, demonstrate that
14 defendant's liability for the monies plaintiff had contributed to
the company was fixed when plaintiff left in February 2001, and
was reaffirmed in January 2003. Based on the record, at that
time the amount of plaintiff's financial contribution was known
and defendant had admitted his liability for it. Plaintiff's
claim was fixed, and defendant's promise to pay plaintiff was,
based on the admission, not conditioned on any specified event or
period of time. Defendant's promise to pay was, therefore,
immediately performable, and his failure to do so constituted a
breach of that promise which triggered the statute of
limitations. See Archdiocese of San Salvador, 2006 WL 437493 at
*5 n.9 ("Of course, the limitations period on the new promise
will commence at the time of its making 'if the promise is
immediately performable.'" (quoting 3 Eric Mills Holmes, Corbin
on Contracts, § 9.10, at 280-81 (rev. ed. 1996)); see also 14 Am.
Law Reports 4th 1385, § 1 (1982) (collecting cases that hold the
statue of limitations begins to run on an oral promise to pay
money which does not contain a time for repayment from the date
the promise was made); Zecos v. Nicholas-Appleqate Capital Mqmt.,
42 Fed. Appx. 31, 32 (9th Cir. 2002) ("a cause of action for a
breach of an oral contract accrues at the time of the breach.
15 i.e., when the party charged with the duty to perform under the
contract fails to perform").
Plaintiff's motion for reconsideration has not demonstrated
that my statute of limitations analysis was based on a clear
error of fact or law. To find, as plaintiff would like me to do,
that the February 2001 promise was indefinitely enforceable would
require finding a contract based on an illusory promise not
supported by consideration and, therefore, unenforceable.3
Plaintiff's motion based on the oral contract is denied.
(c) Unjust Enrichment Claims
Plaintiff's last argument focuses on my finding that his
claims based on unjust enrichment were barred by the statute of
limitations. While the court is entitled to make findings on
summary judgment sua sponte, see Sanchez v. Triple-S Mcrmt. Corp.,
492 F.3d 1, 7 (1st Cir. 2007), the party against whom summary
judgment is entered must be provided with "appropriate notice and
a chance to present its evidence on the essential elements of the
3Plaintiff has not identified any condition on which the promise to pay depended, other than the company needing to become profitable. That condition expresses a promise to pay that is too "equivocal, vague and indeterminate, leading to no certain conclusion, but at best to probable inferences" to be enforceable. Soper v. Purdy, 144 N.H. 268, 270-71 (1999).
16 claim or defense." Id. I did not provide plaintiff with that
opportunity, and so will reverse my decision with respect to his
unjust enrichment claims. The discovery process here was
"sufficiently advanced that the parties have enjoyed a reasonable
opportunity to glean the material facts," see id., however, I did
not afford plaintiff the requisite opportunity to respond to this
defense. See id. (requiring the district court to meet the
discovery and notice conditions before entering summary
judgment). Accordingly, plaintiff's motion for reconsideration
to reverse the entry of summary judgment in favor of defendant is
granted. Plaintiff is hereby notified, however, that I find the
record supports a statute of limitations defense with respect to
the unjust enrichment claims.
Conclusion
For the reasons set forth above, the pending motions for
reconsideration (document nos. 56 and 58) are denied in all
respects, except that plaintiff's motion for reconsideration of
the entry of summary judgment on its unjust enrichment claims
asserted in Count III is reversed.
SO ORDERED.
James R. Muirhead
17 United States Magistrate Judge
Date: October 15, 2008
cc: Melinda J. Caterine, Esq. K. William Clauson, Esq.