No. 03 Civ. 6942 (SAS).
October 25, 2004
Blair C. Fensterstock, Esq. Maureen McGuirl, Esq. Josiah Greenberg, Esq. Fensterstock Partners, L.L.P. New York, New York, Counsel for Plaintiffs.
Laurence M. Hill, Esq. Seth C. Farber, Esq. Dewey Ballantine, L.L.P. New York, New York, Counsel for Defendants Deutsche Bank AG and Deutsche Bank Securities
Ann E. Schofield, Esq. McDermott, Will Emery New York, New York, Counsel for Defendants Jenkens Gilchrist and Paul Daugerdas.
Aaron R. Marcu, Esq. Andrew A. Ruffing, Esq. Jason P. Criss, Esq. Covington Burling, New York, New York, Counsel for Defendant Sidley Austin Brown Wood.
Bruce D. Abbot, Esq. Munger, Tolles Olson, L.L.P. Los Angeles, California.
Stuart Abrams, Esq. Frankel Abrams New York, New York, Counsel for Defendant R.J. Ruble.
MEMORANDUM OPINION AND ORDER
This case arises out of tax and consulting services provided by several professional law, financial services and accounting firms. Plaintiffs, William and Sharon Seippel, filed this suit on September 10, 2003, alleging violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962, and various state law claims. Defendants Sidley, Austin, Brown Wood L.L.P., joined by R.J. Ruble (collectively, "the Sidley Defendants") moved to dismiss. In an Opinion and Order dated August 25, 2004 (the "August 25 Order"), the Court granted the Sidley Defendants' motion in part. Applying New York limitations principles, the Court determined that the Seippels' state law malpractice claim against the Sidley Defendants was time-barred. The Court further determined that the Seippels' state law claims against the Sidley Defendants for negligent misrepresentation, breach of contract, and breach of fiduciary duty were duplicative of and merged into the malpractice claim, and so were also time-barred. The August 25 Order dismissed all of these claims, but, at the request of the Seippels, stated that the Seippels should have leave to refile these claims "in another jurisdiction in which they would not be time-barred."
August 25 Order at 53.
The Sidley Defendants now move for reconsideration of the August 25 Order, requesting that the Court amend that Order to "clarify that Plaintiffs are not entitled to `leave to refile elsewhere' their [time-barred] claims against [the Sidley Defendants] and that Plaintiffs are precluded from filing those claims in another jurisdiction." For the following reasons, the motion for reconsideration is granted.
Memorandum of Law in Support of Sidley Defendants' Motion for Reconsideration ("Mem.") at 4. The Seippels have filed a brief in opposition. See Memorandum of Law in Opposition to Motion for Reconsideration ("Opp'n Mem.").
II. LEGAL STANDARD
Motions for reconsideration are governed by Local Civil Rule 6.3 and are committed to the sound discretion of the district court. Reconsideration is an "extraordinary remedy to be employed sparingly in the interests of finality and conservation of scarce judicial resources."
See ATT Corp. v. Microsoft Corp., No. 01 Civ. 4872, 2004 WL 309150, at *1 (S.D.N.Y. Feb. 19, 2004).
In re Health Mgmt. Sys., Inc. Secs. Litig., 113 F. Supp. 2d 613, 614 (S.D.N.Y. 2000) (quotation marks and citation omitted). See also Range Road Music, Inc. v. Music Sales Corp., 90 F. Supp. 2d 390, 392 (S.D.N.Y. 2000) ("The . . . limitation on motions for reconsideration is to ensure finality and to prevent the practice of a losing party examining a decision and then plugging the gaps of the lost motion with additional matters.") (quotation marks and citation omitted).
Under Local Civil Rule 6.3, "the moving party must demonstrate controlling law or factual matters put before the court on the underlying motion that the movant believes the court overlooked and that might reasonably be expected to alter the court's decision." The standard for granting a motion for reconsideration is strict so as to prevent repetitive arguments on issues that have been thoroughly considered by the court. But the court may grant a motion for reconsideration to "correct a clear error or prevent manifest injustice."
Montanile v. National Broad. Co., 216 F. Supp. 2d 341, 342 (S.D.N.Y. 2002), aff'd, 2003 WL 328825 (2d Cir. Feb. 13, 2003) (unpublished).
See In re Houbigant, Inc., 914 F. Supp. 997, 1001 (S.D.N.Y. 1996).
Doe v. New York City Dep't of Social Servs., 709 F.2d 782, 789 (2d Cir. 1983).
A motion for reconsideration is not a substitute for appeal. Nor is it a vehicle "to reargue those issues already considered when a party does not like the way the original motion was resolved." Accordingly, the moving party may not "advance new facts, issues or arguments not previously presented to the Court."
See RMED Int'l, Inc. v. Sloan's Supermarkets, Inc., 207 F. Supp. 2d 292, 296 (S.D.N.Y. 2002).
In re Houbigant, Inc., 914 F. Supp. at 1001.
Morse/Diesel, Inc. v. Fidelity and Deposit Co. of Maryland, 768 F. Supp. 115, 116 (S.D.N.Y. 1991).
Under New York law, a judgment dismissing a claim as barred by the statute of limitations is treated as a judgment on the merits for res judicata purposes, and has full claim preclusive effect. Under Semtek International Inc. v. Lockheed Martin Corp., "the claim-preclusive effect of [a New York] federal court's dismissal `upon the merits' of petitioner's action on statute-of-limitations grounds is governed by a federal rule that in turn incorporates [New York's] law of claim preclusion." If the Seippels were to refile the claims dismissed by this Court as time-barred in a court of another jurisdiction, that court would be required to apply New York preclusion rules, and to dismiss their claims on the basis of res judicata. The Court overlooked the effect of Bray, Garguil, Smith and Semtek in granting the Seippels leave to refile elsewhere.
See Bray v. New York Life Insurance Co., 851 F.2d 60, 64 (2d Cir. 1988); Garguil v. Tompkins, 790 F.2d 265, 269 (2d Cir. 1986); Smith v. Russell Sage College, 54 N.Y.2d 185, 194 (1981). The Seippels argue, citing practice commentaries, that "the theory of the statute of limitations generally followed in New York is that the passing of the applicable limitations period does not wipe out the substantive right; it merely suspends the remedy." Opp'n Mem. at 2 (citing D. Seigel, N.Y. Prac. § 34, p. 40 (1999)). However, this Court is bound by the holdings of Bray, Garguil, and Smith.
Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 509 (2001).
The Sidley Defendants' memorandum reiterates, clearly and at length, arguments made obliquely and allusively in their original papers. For that reason, the Court might, as the Seippels urge, deny the motion for reconsideration. However, reconsideration, in this case, will contribute to the "conservation of scarce judicial resources." If the Seippels were to file their claims in another court, that court would have no choice but to dismiss them. No purpose would be served by requiring another court to engage in that useless exercise. Nor should the Sidley Defendants be put to the burden of responding to a doomed suit. Accordingly, the Sidley Defendants' motion for reconsideration is granted.
See Jenkens Gilchrist Reply Memorandum of Law in Further Support of Motion to Dismiss at 10 (citing Semtek). The Sidley Defendants incorporated the arguments of Jenkens Gilchrist into their reply memorandum. See Sidley Defendants Reply Memorandum of Law in Further Support of Motion to Dismiss at 7, n. 3.
In re Health Mgmt. Sys., Inc. Secs. Litig., 113 F. Supp. 2d at 614.
At first blush, this result may seem unfair. It was only by the operation of New York's borrowing statute that the Seippels' malpractice claim was found to be time-barred; had the Seippels originally brought that claim in another jurisdiction ( e.g., Virginia), it would not have been time-barred. On initial consideration, it appeared to the Court that fairness required that the Seippels be allowed to refile their claims in a jurisdiction where they might proceed to a determination on the merits. Having given the matter further thought, however, the result urged by the Sidley Defendants, though it may seem harsh, is justified by important policy concerns. Plaintiffs should not be encouraged or permitted to forum shop, by bringing a claim in New York that is likely time-barred, safe in the knowledge that if it is found to be untimely, they are free to pursue it elsewhere. Indeed, it is the clear purpose of New York's borrowing statute to discourage such forum-shopping.
See N.Y.C.P.L.R. § 202 (McKinney 2003). Under New York's borrowing statute, where a plaintiff who is not a resident of New York sues based upon a cause of action that accrued outside New York, the court must apply the shorter limitations period of either New York or the state where the cause of action accrued.
See Manning v. Utils. Mut. Ins. Co., 254 F.3d 387, 396 (2d Cir. 2001) (stating that purpose of borrowing statute is to "discourage forum shopping").
For the foregoing reasons, the Sidley Defendants' motion for reconsideration is granted. The August 25 Order is hereby amended to clarify that the Seippels' time-barred claims against the Sidley Defendants for malpractice, negligent misrepresentation, breach of contract, and breach of fiduciary duty are dismissed with prejudice; the Seippels are precluded from refiling these claims in another jurisdiction.