The opinion of the court was delivered by: GERARD E. LYNCH, District Judge
This lawsuit concerns a $7.5 million personal loan that Lodwrick
Cook, a senior executive at Global Crossing, Ltd. ("Global Crossing")
borrowed from JPMorgan Chase's private banking division and failed to
repay.*fn1 Cook moved to dismiss the complaint and JPM cross
moved for summary judgment on the doctrine of equitable subrogation. In a
February 13, 2004, Opinion and Order, the Court denied Cook's motion to
dismiss, and granted JPM's cross motion for summary judgment.
JPMorgan Chase Bank v. Cook, 03 Civ. 2690 (GEL), 2004 WL 324872
(S.D.N.Y. Feb. 20, 2004). Since that date, Cook has moved for
reconsideration of the February 13 Order, JPM has submitted a Proposed Order of Judgment,
and Cook has objected to the Proposed Order of Judgment. For the reasons
that follow, the motion for reconsideration will be denied, and the
Proposed Order of Judgment will be entered.
I. Standard on a Motion for Reconsideration
Local Civil Rule 6.3 for the Southern District of New York provides
that parties may file motions for reconsideration of the Court's
decisions, accompanied by memoranda that set forth "the matters or
controlling decisions which counsel believes the court has overlooked."
Courts in this District review motions pursuant to Local Rule 6.3 under
the same standards applicable to motions pursuant to Federal Rule of
Civil Procedure 59(e), and thus "a motion for reconsideration is
appropriate only where the movant demonstrates that the Court has
overlooked controlling decisions or factual matters that were put before
it on the underlying motion . . . and which, had they been considered,
might have reasonably altered the result before the Court."
McCullagh v. Merrill Lynch & Co., 01 Civ. 7322 (DAB), 2004
WL 744484, at *1 (S.D.N.Y. Apr. 7, 2004) (citations and internal
quotations omitted). Cook's motion puts forth three cases and an array of
factual issues that he claims the Court overlooked. See
Defendant's Mem. at 2-3. None of the authorities or factual matters
raised by Cook in his motion satisfy the standards for reconsideration
under Local Rule 6.3.
II. "Controlling Decisions"
First, Cook argues that the Court overlooked controlling authorities on
the question of whether JPM is entitled to pursue the remedy of equitable
subrogation, namely Eastern States Health & Welfare Fund v.
Philip Morris, Inc., 11 F. Supp.2d 384, 397 (S.D.N.Y. 1998), and Reliance Ins. Co. v. Aerodyne Engineers. Inc.,
612 N.Y.S.2d 87,88 (3d Dep't 1994). It should be apparent to learned counsel
such as those appearing in this matter that cases from another judge of
this Court or from the Third Department of New York's Appellate Division
do not constitute "controlling authority" for this Court, and, under the
standard of review applicable to motions for reconsideration, that fact
should end the matter. However, as Cook's chief complaint appears to be
that this Court's February 13 Order "does not reference" these two cases,
relied upon heavily by Cook in his submissions on the Motion to Dismiss
and Motion for Summary Judgment, see Deft's Mem. at 5,
a brief analysis seems appropriate to demonstrate that neither of these
cases, even if they were controlling as to this Court, would alter the
result in this case.
Cook relies on Eastern States and Reliance for the
proposition that New York law requires "(1) that the subrogee must have
actually made payment to the subrogor for the subrogor's loss and (2)
that the payment must have been made pursuant to an `obligation running
from the subrogee to the subrogor.'" Deft's Mem. at 5. Contrary to Cook's
assertions, Eastern States is neither "directly on point" nor
"determinative of the claims" in this action. The opinion in that case is
directed entirely to whether subject matter jurisdiction exists over the
plaintiff's claims, in the context of deciding a motion to remand the
action to state court, and the issue of who may assert a claim for
equitable subrogation is not examined at all. True, "in the interests of
completeness" in its survey of possible bases for federal jurisdiction,
although neither party had raised the issue, id. at 397, the
court gives glancing attention to the question of whether New York law on
equitable subrogation might reference federal law issues. The
Eastern States court quickly disposes of the first element
listed by Cook as plainly giving rise to no federal question; even if the limited discussion on this point were not entirely
dictum, it is far from clear that the court intends the meaning that Cook
gives to that language. As to the second element cited by Cook, the
Eastern States court employs the phrase "payment . . .
pursuant to some obligation" simply to contrast those payments that can
give rise to an equitable subrogation claim to payments made as a
volunteer, and raises the requirement merely as a point of access to the
plaintiff's claim that the payment in question had been made pursuant to
obligations under its ERISA plan documents, which could possibly have
raised an issue under federal law. See id Nothing in the
opinion bears on the question of whether JPM is entitled to assert a
claim of equitable subrogation here, nor alters the reasoning or
conclusion of the Court's February 13 Order.
The Reliance case is likewise neither directly on point nor
determinative of the claims in this action. The brief three
paragraph opinion reverses an order of the New York Supreme Court that
had allowed a re insurer to equitably subrogate to the rights of
the insured, holding that the reinsurance contract was "distinct and
separate" from the original insurance contract and thus no privity
existed between the original insured and the reinsurer. 612 N.Y.S.2d 87,
87. This case is distinguishable from the present one on any number of
legal and factual grounds it addresses re insurance
rather than letters of credit, it pre dates the amendment to New
York's Uniform Commercial Code § 5-117, and it deals with two
"distinct and separate" contracts as opposed to the clearly related and
interlocking Credit Agreement and Letter of Credit at issue in this case.
As with Eastern States, even if the holding in
Reliance were controlling as to this Court, the decision in
that case does not alter the reasoning or conclusion of the Court's
February 13 Order.
Second, Cook argues that, in applying New York's Uniform Commercial
Code § 5-117, the February 13 Order did not "address the unambiguous terms and
definitions contained therein." Deft's Mem. at 6-7. This discussion
amounts to nothing more than an assertion that the Court incorrectly
applied section 5-117 argument that is plainly improper on a
motion for reconsideration. See, e.g., In re Houbigant, Inc.,
914 F. Supp. 997, 1001 (S.D.N.Y. 1996) (a litigant may not use a motion
for reconsideration to reargue "those issues already considered when a
party does not like the way the original motion was resolved."). The
Court declines Cook's invitation to revisit its analysis of section
Third, Cook asserts that the Court failed to "address or distinguish"
the authorities cited in his original submissions that stand for the
proposition that equitable subrogation is not available to a party that
has contractual remedies available. Deft's Mem. at 8-10. Cook relies in
particular on the majority opinion in Tudor Development Group. Inc.
v. U.S. Fidelity & Guaranty Co., 968 F.2d 357 (3d Cir. 1992). As
with Eastern States and Reliance, an opinion from the
Court of Appeals for the Third Circuit is in no sense "controlling" as to
this Court. Moreover, the re arguing of the applicability of
Tudor Development in the guise of bringing "overlooked"
authority to the Court's attention borders on the contumacious, as the
question was extensively briefed by both parties in the original
submissions and it is plain from the face of section 5-117 that the New
York legislature expressly adopted Chief Judge Becker's dissent in
Tudor Development. Contrary to Cook's assertions that only
certain portions of the dissent were incorporated into New York law,
Judge Becker rejects the majority's arguments on contractual remedies as
part and parcel of rejecting the majority's conclusions on the
availability of equitable subrogation to issuers of letters of credit,
noting the anomaly of the majority's position: that such a rule "denies
equitable subrogation when the owing party is judgment proof, yet
that is precisely when subrogation is most likely to be necessary." Id. at 370. The
policy justifications (among them the availability of contractual
remedies) for the traditional common law rule denying issuers of
letters of credit access to equitable subrogation, ably critiqued by
Judge Becker, are precisely what the New York legislature rejected in
amending section 5-117. A reconsideration of Cook's tenacious belief that
the rule of Tudor Development is the better policy does not alter the
reasoning or conclusion of the Court's February 13 Order.
Cook asserts that, in issuing the February 13 Order, the Court
"overlooked a multitude of disputed factual issues" that Cook believes
would preclude summary judgment if they were considered. Deft's Mem. at
10-18. Cook also asserts that "new evidence" requires reconsideration.
These factual issues include asserted disputes over JPM and the
Participant Bank's knowledge and intent with regard to the Global
Crossing Loan Guarantee Program, Cook's knowledge and expectations with
regard to the Loan Guarantee Program, a possible extension of Cook's
reimbursement obligation to Global Crossing, the availability to Cook of
defenses to the underlying promissory note, the authority of JPM to act
on behalf of the Participant Banks, and the contractual remedies
available to JPM and the Participant Banks as well as the distribution to
the Participant Banks from the Global Crossing bankruptcy estate that
took place after briefing and argument on the underlying motions here.
None of the factual matters raised by Cook alter the result in the
Court's February 13 Order.
First, contrary to Cook's assertions, the Court did not rest its
conclusion on speculation as to Cook's mental state when he secured the
$7.5 million loan through the Loan Guarantee Program. Even accepting
Cook's version of the facts surrounding both his and the Participant Bank's participation in the Loan Guarantee Program (inter alia,
that all parties knew and expected Global Crossing to repay the
obligations incurred through the Loan Guarantee Program), as the Court
must on a motion for summary judgment, the balance of equities remains
the same. Cook himself concedes that, at a minimum, he took on the
obligation to reimburse Global Crossing for any corporate funds expended
to guarantee his personal debt of $7.5 million.*fn2 In addition, no one
disputes that Cook has not paid a single penny of the principal on the
$7.5 million, whether to JPM, the Participant Banks, or Global Crossing
for distribution to its many unpaid creditors and empty handed
shareholders. In the face of the undisputed facts ...