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Cornelia Fifth Avenue, LLC v. Canazales

United States District Court, S.D. New York

March 16, 2017

Cornelia Fifth Avenue, LLC and GVK Limited Partners, Plaintiffs,
v.
Michael Canizales, Harris Mylonas, Allen Hunt, Christopher Condy, and Paul O'Beirne, Defendants.

          OPINION & ORDER

          ANDREW L. CARTER, JR., District Judge

         I. INTRODUCTION

         Plaintiffs Cornelia Fifth Avenue, LLC and GVK Limited Partners (collectively "Plaintiffs") bring suit against Spa Chakra, Inc. ("Spa Chakra") and its Board Members Michael Conizales, Harris Mylonas, Allen Hunt, Christopher Condy, and Paul O'Beirne (collectively "Defendants"). The suit arises out of the negotiation and execution of the February 2009 Asset Purchase Agreement (the "APA") between Plaintiff Cornelia Fifth Avenue, LLC ("Cornelia") and a non-party Spa Chakra Fifth Avenue, LLC ("Spa Chakra Fifth"), a wholly-owned subsidiary of Spa Chakra. The APA concerned the assets of a luxury spa operated by Cornelia, located on Fifth Avenue in New York City. By the time of negotiation of the APA, Plaintiff Cornelia was suffering from severe financial difficulties and had defaulted on almost all of its debts - including its debt to its largest secured creditor, Plaintiff GVK Limited Partners ("GVK"). GVK had secured its loan by taking a security interest in all of Cornelia's assets, giving GVK the power to block any sale of Cornelia. In light of Cornelia's default, GVK had begun contemplating foreclosing on its security interest in Cornelia's assets. Thus, GVK's approval was a necessary prerequisite for Cornelia to enter into any agreement.

         In order to induce GVK to forebear from foreclosing on Cornelia's assets so that Spa Chakra could purchase the assets, two Spa Chakra Board Members, Defendants Michael Canizales and Christopher Condy, issued a guaranty, promising that Spa Chakra Fifth and Spa Chakra would make scheduled interest and principle payments to GVK until Cornelia's loan was repaid. Shortly after the APA was executed, Spa Chakra Fifth and Spa Chakra failed to make the promised payments. Plaintiffs filed suit.

         According to Plaintiffs, throughout the period of negotiations and closing, Defendants, each directors of Spa Chakra, made or approved the making of fraudulent misrepresentations to Plaintiffs Cornelia and GVK. Both, Plaintiffs detrimentally relied upon these alleged misrepresentations - GVK by agreeing to forbear on foreclosure and Cornelia by signing over the assets of its Manhattan spa. Plaintiffs assert that both were damaged as a result. Together, Plaintiffs seek redress for Defendants' allegedly fraudulent misrepresentations, asserting claims for New York common law fraud, fraudulent concealment, constructive fraud, aiding and abetting fraud, negligent misrepresentation, and breach of the covenant of good faith and fair dealing.

         Defendants moved for summary judgment on each of Plaintiffs' claims and Plaintiffs cross-moved for summary judgment as to minimum damages. The Court denied both parties' motions. Cornelia Fifth Ave., LLC v. Canizales, 2016 WL 5390894, at *1 (S.D.N.Y. Sept. 26, 2016) (the "Opinion"). Defendants now move for reconsideration on the issue of damages pursuant to Federal Rule of Civil Procedure 59(e) and Local Rule 6.3. For the reasons set forth below, Defendants' motion for reconsideration is DENIED.

         II. DISCUSSION

         Defendants ask the Court to reconsider their arguments contained within Defendants' summary judgment briefing and dismiss each and every cause of action against each of the Defendants. According to Defendants, the Opinion contained an error of law that necessitates reconsideration because the Court failed to specifically address the controlling case law regarding the economic loss doctrine. Defendants contend that the Court should have granted summary judgment in favor of Defendants because the economic damages sought by Plaintiffs are inappropriate contract damages, rather than appropriate tort damages. Defendants' argument is without merit.

         a. Legal Standard

         As an initial matter, Local Rule 6.3 provides that "a notice of motion for reconsideration . .. shall be served ... in the case of a court order resulting in a judgment, within fourteen (14) days after the entry of the judgment." Defendants' motion for reconsideration was timely filed. Under Federal Rule of Civil Procedure 59(e), reconsideration of a previous order by the court lies squarely within the court's sound discretion. See Devlin v. Transp. Comm'ns Int'l Union, 175 F.3d 121, 132 (2d Cir. 1999).

         Reconsideration of a prior order under Federal Rule of Civil Procedure 59(e) "is an extraordinary remedy to be employed sparingly in the interests of finality and conservation of scarce judicial resources." Ferring B.V. v. Allergan. Inc., 2013 WL 4082930, at *1 (S.D.N.Y. Aug. 7, 2013) (quoting Sikhs for Justice v. Nath, 893 F.Supp.2d 598, 605 (S.D.N.Y. 2012)). For that reason, the standard of review applicable to such a motion is "strict." Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995).

         The burden is on the movant to demonstrate that the Court overlooked controlling decisions that were before it on the original motion, and that might '"materially have influenced its earlier decision.'" Anglo Am. Ins. Group v. Cal Fed, Inc., 940 F.Supp. 554, 557 (S.D.N.Y. 1996) (quoting Morser v. AT & T Info. Sys., 715 F.Supp. 516, 517 (S.D.N.Y. 1989)); see also Analytical Surveys, Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012) ("[T]he 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."); Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir. 1992)); Schoolcraft v. City of New York, 298 F.R.D. 134, 136 (S.D.N.Y. 2014); Parrish v. Sollecito, 253 F.Supp.2d 713, 715 (S.D.N.Y. 2003).

         A party seeking reconsideration may neither repeat "arguments already briefed, considered and decided, " nor "advance new facts, issues or arguments not previously presented to the Court." Schonberger v. Serchuk, 742 F.Supp. 108, 119 (S.D.N.Y. 1990) (citations omitted).

         b. The Court Did Not Commit ...


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