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American Manufacturers Mutual Insurance Co. v. Payton Lane Nursing Home

March 14, 2010

AMERICAN MANUFACTURERS MUTUAL INSURANCE COMPANY AND AMERICAN MOTORISTS INSURANCE COMPANY, PLAINTIFFS,
v.
PAYTON LANE NURSING HOME, INC., PERKINS EASTMAN ARCHITECTS, P.C., AND LINCOLN GENERAL INSURANCE COMPANY, DEFENDANTS.



The opinion of the court was delivered by: A. Kathleen Tomlinson, Magistrate Judge

ORDER

I. PRELIMINARY STATEMENT

Defendant Payton Lane Nursing Home, Inc. ("Payton Lane") moves [DE 265], pursuant to Local Civil Rule 6.3, for reconsideration of this Court's February 22, 2010 Order [DE 255] (the "February 22 Order") denying Defendant's in limine motion to exclude certain evidence on judicial estoppel grounds. Plaintiffs American Manufacturers Mutual Insurance Company and American Motorists Insurance Company ("Plaintiffs" or "Sureties") oppose [DE 217] the motion. Based upon my review of the parties' submissions, Payton Lane's oral reply on the record during trial on March 9, 2010, and the applicable law, I find that Payton Lane has not made the requisite showing that this Court overlooked controlling decisions or factual matters raised in the underlying motion which would warrant reconsideration of the February 22, 2010 Order. For the reasons set forth below, the motion for reconsideration is GRANTED, and I am adhering to my original decision.

II. STANDARD OF REVIEW

Motions for reconsideration under Rule 59(e) are governed by Local Rule 6.3, which requires the moving party to "set forth concisely the matters or controlling decisions which counsel believes the court has overlooked." E.D.N.Y. Local R. Civ. P. 6.3; Myers v. Okada, No. 08-CV-1635, 2008 WL 4724579, at *1 (E.D.N.Y. Oct. 23, 2008). A motion for reconsideration is within the sound discretion of the district court. See Rates Tech. Inc., v. Mediatrix Telecom, Inc., CV 05-2755, 2007 WL 2581776, at *1 (E.D.N.Y. Sept. 5, 2007) (citing, inter alia, Bueno v. Gill, 237 F. Supp. 2d 447, 449 (S.D.N.Y. 2002)).

In the Second Circuit, the standard for granting a motion for reconsideration "is strict, and reconsideration will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked -- matters, in other words, that might reasonably be expected to alter the conclusion reached by the court." Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995) (holding that the lower court's reconsideration of a summary judgment motion was not an abuse of discretion because the moving party presented "data the court had not previously considered," such as extensive legislative history on the relevant statute and new case law); see also Bell Sports, Inc. v. Sys. Software Assocs., Inc., 71 F. Supp. 2d 121, 126 (E.D.N.Y. 1999). Motions for reconsideration "should not be granted where the moving party seeks solely to relitigate an issue already decided." Shrader, 70 F.3d at 257. This heightened burden is imposed "to dissuade repetitive arguments on issues that have already been considered fully by the Court." Ruiz v. Comm'r of the Dep't of Transp., 687 F. Supp. 888, 890 (S.D.N.Y. 1988), modified on other grounds, 934 F.2d 450 (2d Cir. 1991); see also Equal Employment Opportunity Comm'n v. Fed. Express Corp., 268 F. Supp. 2d 192, 195 (E.D.N.Y. 2003) (holding that a motion for reconsideration "is to be narrowly construed and strictly applied so as to avoid repetitive arguments on issues that have been considered fully by the court"). The scope of a motion for reconsideration, therefore, is extremely narrow and is an "extraordinary remedy to be employed sparingly in the interest of finality and conservation of scarce judicial resources." In re Health Mgmt Sys. Inc. Sec. Litig., 113 F. Supp. 2d 613, 614 (S.D.N.Y. 2000).

III. DISCUSSION

A. Timing of Payton Lane's Request for Relief

Payton Lane's motion in limine -- upon which this motion for reconsideration is based -- was, in effect, an application to reopen discovery to assert a new defense of judicial estoppel. The Court addressed the timing of this very belated defense to a degree in its February 23, 2010 Order [DE 262]. Although the Court appreciates the apology proffered by counsel for Payton Lane for bringing the application so late in the game here, Payton Lane has still not adequately addressed the reasons for its failure to bring the request for relief until the eve of trial.

A review of the record of this action shows that (1) Davis Polk & Wardell never raised the defense of judicial estoppel in Payton Lane's original motion to dismiss the Complaint [DE 3]; (2) Payton Lane's counsel did not raise the defense of judicial estoppel in its Answer, with Counterclaims and Cross-Claim, which it filed on April 9, 2007, well after the Sureties' action against the indemnitors in New York State Supreme Court was concluded [DE 27]; rather, Payton Lane asserted only general defenses of laches, estoppel, waiver and ratification; (3) in the initial Case Management and Scheduling Order, the deadline to amend pleadings was set at October 19, 2007 [DE 32]; (4) in its Answer to the Amended Complaint filed on November 14, 2007, Payton Lane again did not raise the defense of judicial estoppel and asserted only the general defenses noted previously*fn1 [DE 58]; (5) at the July 7, 2008 status conference, for one of six times in this case, I amended the schedule and directed that all paper discovery be completed by August 8, 2008 and all depositions within 90 days thereafter [DE 86]; a Second Amended Case Management Order dated August 25, 2008, set the discovery deadline at February 13, 2009 [DE 94]; a Third Amended Case Management and Scheduling Order set the discovery deadline at March 16, 2009 [DE 106]; the parties were granted an extension of time to file their expert reports and to serve the opening briefs in their summary judgment motions (see Electronic Order of April 14, 2009); (6) summary judgment motions were fully briefed as of June 24, 2009; one set of motion papers was referred to me by Judge Feuerstein (April 23, 2009 Electronic Order); all three summary judgment motions were denied after substantial briefing. For all of the extensions granted, extensive discovery motion practice, and summary judgment motion submissions, not once did Payton Lane raise the defense of judicial estoppel. It was not until the submission of Payton Lane's Trial Memorandum [DE 206] and motion in limine {DE 218] that the defense was raised for the first time, on the eve of trial.

Under Federal Rule 8(c), parties are required to raise affirmative defenses, such as estoppel, in the pleadings. It is a generally accepted principle that a party's failure to plead such affirmative defenses results in the waiver of those defenses. 5 Charles Alan Wright & Arthur R. Miller FEDERAL PRACTICE & PROCEDURE § 1278 (cases collected); see also Arizona v. California, 530 U.S. 392, 294 (2000) ("res judicata is an affirmative defense ordinarily lost if not timely raised"). In dealing with the issue of late assertion of an affirmative defense, the Second Circuit reversed a district court's decision to grant a defendant leave to amend its answer to assert a claim for res judicata because the defendant failed to establish good cause for the two-year and nine month delay in asserting the defense and the amendment at such a late date prejudiced the plaintiff. See Evans v. Syracuse City Sch. Dist., 704 F.2d 44, 46-48 (2d Cir. 1983); see also, In re Cross Media Marketing Corp., 367 B.R. 435, 445 (S.D.N.Y. Bktcy. Ct. 2007) (denying defendants' attempt to assert judicial estoppel affirmative defense days before trial where the defense was available at the pleading stage). A general equitable defense stating that principles of waiver, estoppel, laches and equity is insufficient to preserve an enumerated affirmative defense under Rule 8(c). See Saks v. Franklin Covey Co., 316 F.3d 337, 350 (2d Cir. 2003) (a general defense for failure to state a claim under Rule 12(b)(6) is insufficient to preserve an enumerated affirmative defense under Rule 8(c) because one of the purposes of the rule is to "place the opposing parties on notice that a particular defense will be pursued so as to prevent surprise or unfair prejudice"). Therefore, Payton Lane's assertion of a general estoppel defense in its Answer is insufficient. The affirmative defense of judicial estoppel which Payton Lane seeks to raise here was clearly available to Payton Lane over the course of more than four years since this litigation was commenced.

"A party seeking to reopen discovery bears the burden of establishing good cause and discovery should not be extended when there was ample opportunity to pursue the evidence during discovery." Durakovic v. Bldg. Serv. 32B-J Pension Fund, 642 F. Supp. 2d 146, 155 (E.D.N.Y. 2009); see also Trebor Sportswear Co. v. The Limited Stores, Inc., 865 F.2d 506, 511 (2d Cir.1989) (denying further discovery when the party opposing summary judgment had a "fully adequate opportunity for discovery"). Courts apply the following six-part test to analyze a request to reopen discovery:

(1) whether trial is imminent; (2) whether the request is opposed; (3) whether the non-moving party would be prejudiced; (4) whether the moving party was diligent in obtaining discovery within the guidelines established by the court; (5) the foreseeability of the need for additional discovery in light of the time allowed for discovery by the district court; and (6) the likelihood that the discovery will lead to relevant evidence.

Pharmacy, Inc. v. Am. Pharm. Partners, Inc., No. CV 05-776, 2008 WL 4415263, at *3 (E.D.N.Y. Sept. 24, ...


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