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Svenningsen v. Ultimate Professional Grounds Management, Inc.

United States District Court, S.D. New York

July 20, 2017

CHRISTINE SVENNINGSEN, 33 PROSPECT HILL ROAD, LLC, 34 PROSPECT HILL ROAD, LLC, AUTO I, LLC, BELDENS ISLAND, LLC, CUT-IN-TWO EAST, LLC, CUT-IN-TWO WEST, LLC, EAST CRJB ISLAND, LLC, GUILFORD DOCKOMINTUM I, LLC, HOME PALACE, LLC, JEPSON ISLAND, LLC, LINDEN POINT, LLC, REEL ISLAND, LLC, ROGERS ISLAND, LLC, SNOW PALACE, LLC, THE OLD ADAMS HOUSE, LLC, WEST CRIB ISLAND, LLC, WHALER I, LLC, and WHEELER ISLAND, LLC, Plaintiffs,
v.
ULTIMATE PROFESSIONAL GROUNDS MANAGEMENT, INC., doing business as ULTIMATE SERVICES PROFESSIONAL GROUNDS MANAGEMENT, JOHN G. CHIARELLA, JR., DOMENIC A. CHIARELLA, and ULTIMATE SERVICES PROFESSIONAL GROUNDS MANAGEMENT, INC., Defendants.

          OPINION & ORDER

          NELSON S. ROMAN United States District Judge

         Defendant Ultimate Professional Grounds Management, Inc. ("Ultimate") seeks reconsideration of this Court's March 31, 2017 Opinion and Order (the "Opinion") (ECF No. 167) resolving the parties' cross-summary judgment motions. Ultimate argues the Court should have dismissed the Property LLC Plaintiffs' remaining claims on the bases of judicial estoppel and lack of standing. (See Def. Reply at 1, 6, ECF No. 174.) But, as the Property LLCs correctly observe (see Pis. Opp'n at 6-11, ECF No. 172), neither of Ultimate's positions are correct. Familiarity with the Opinion and the factual background of this action is assumed.

         LEGAL STANDARD

         Reconsideration of a Court's previous order is “an extraordinary remedy to be employed sparingly in the interests of finality and conservation of scarce judicial resources.” In re Initial Pub. Offering Sec. Litig., 399 F.Supp.2d 298, 300 (S.D.N.Y. 2005) (internal citation and quotation omitted), aff'd sub nom. Tenney v. Credit Suisse First Boston Corp., Nos. 05 Civ. 3430, 05 Civ. 4759 & 05 Civ. 4760, 2006 WL 1423785, at *1 (2d Cir. 2006). Motions for reconsideration are governed by Local Civil Rule 6.3 and Federal Rule of Civil Procedure 60(b), and “[t]he standard for granting a motion for reconsideration . . . is strict.” Targum v. Citrin Cooperman & Company, LLP, No. 12 Civ. 6909 (SAS), 2013 WL 6188339, at *1 (S.D.N.Y. Nov. 25, 2013). Motions for reconsideration are “addressed to the sound discretion of the district court and are generally granted only upon a showing of exceptional circumstances.” Mendell ex rel. Viacom, Inc. v. Gollust, 909 F.2d 724, 731 (2d Cir. 1990).

         Importantly, a motion to reconsider “is not a vehicle for . . . presenting the case under new theories . . . or otherwise taking a second bite at the apple.” Analytical Surveys, Inc. v. Tonga Partners, L.P., 684 F.3d 36, 52 (2d Cir. 2012) (quotation and citation omitted); see also Nat'l Union Fire Ins. Co. of Pittsburgh, PA v. Stroh Cos., 265 F.3d 97, 115 (2d Cir. 2001) (quoting Polsby v. St. Martin's Press, No. 97 Civ. 0690 (MBM), 2000 WL 98057, at *1 (S.D.N.Y. Jan. 18, 2000)) (in moving for reconsideration, “‘a party may not advance new facts, issues, or arguments not previously presented to the Court.'”). Generally, these motions “‘will [] be denied unless the moving party can point to controlling decisions or data that the court overlooked.'” Analytical Surveys, 684 F.3d at 52 (quoting Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir. 1995)).

         DISCUSSION

         The admonition to avoid making motions for reconsideration absent “extraordinary” circumstances-such as “point[ing] to controlling decisions or data that the court overlooked, ” Shrader, 70 F.3d at 257-has not deterred Ultimate from asking for reconsideration in this case. Primarily, Ultimate argues that the Court “overlooked” its seven page argument regarding the application of judicial estoppel to Plaintiff Svenningsen's claims and its lengthy footnote argument that the Property LLC Plaintiffs were similarly estopped or lacked standing to assert claims against Ultimate. (See Def. Mem. at 2, ECF No. 169.) What Ultimate does not do, however, is point to controlling precedent or information that the Court neglected to consider.

         In the Opinion, this Court decided that Svenningsen and Chiarella had mutually waived claims against each other by virtue of their divorce agreement. (Opinion at 24; Svenningsen v. Ultimate Prof'l Grounds Mgmt., Inc., No. 14 Civ. 5161 (NSR), 2017 WL 1234040, at *12 (S.D.N.Y. Mar. 31, 2017).) The Court concluded that the LLCs, not parties to that personal divorce, could not be held to the same waiver. (Id.; Svenningsen, 2017 WL 1234040, at *12.) The Court then held that Ultimate's remaining arguments were either “unnecessary” or “unpersuasive.” (Id. at 25; Svenningsen, 2017 WL 1234040, at *13.) Though Ultimate appears to think the word “unpersuasive” was the only instance in which the Court dismissed its other arguments against the LLCs, the Court also indicated that: (1) Ultimate's arguments regarding “statute of limitations and waiver [] address[ed] a significant portion of Plaintiffs' claims in th[e] action;” (2) “Defendants' remaining arguments d[id] not impact the remaining viable claims;” and, specifically, (3) Ultimate did not “articulate any viable defenses to claims brought by the LLCs.” (Id. at 11, 24; Svenningsen, 2017 WL 1234040, at *6, 12-13 (emphasis added).)

         Despite failing to demonstrate its entitlement to reconsideration, the Court will explain in greater detail why Ultimate's arguments were unpersuasive, i.e., why judicial estoppel does not apply to the Property LLCs' claims and why the LLCs have standing to pursue this action.

         I. Judicial Estoppel Does Not Apply to the LLCs Claims

         Under Connecticut law, the law applicable to this action, judicial estoppel requires that “(1) ‘a party's later position is clearly inconsistent with its earlier position, ' (2) ‘the party's former position has been adopted in some way by the court in the earlier proceeding, ' and (3) ‘the party asserting the two positions would derive an unfair advantage against the party seeking estoppel.'” Barton v. City of Norwalk, 326 Conn. 139, __ A.3d __, at *9 (2017) (quoting Dep't of Transportation v. White Oak Corp., 319 Conn. 582, 612 (2015) and citing Dougan v. Dougan, 301 Conn. 361, 372-73 (2011); DeRosa v. National Envelope Corp., 595 F.3d 99, 103 (2d Cir. 2010)) (emphasis added). “[G]enerally speaking, the doctrine will not apply ‘if the first statement or omission was the result of a good faith mistake . . . or an unintentional error.'” Id. (citation omitted). And, “[l]ike all equitable remedies, judicial estoppel requires the party invoking the doctrine to do so with clean hands.” David M. Somers & Assocs., P.C. v. Kendall, 1 A.3d 217, 220 (Conn. App. Ct. 2010). Furthermore, where the parties in the two proceedings differ, the Court must determine whether they are in sufficient privity for the doctrine to apply. See Central Hudson Gas & Elec. Corp. v. Empresa Naviera Santa S.A., 56 F.3d 359, 368 (2d Cir. 1995) (for res judicata purposes, determination of whether party is in privity with former litigant requires court to inquire whether “party controlled or substantially participated in the control of the presentation on behalf of a party to the prior action” and that its interests were “identical to the interests” of former litigant) (internal quotation marks and alterations omitted).

         “In the bankruptcy context, the federal courts have developed a basic default rule: If a plaintiff-debtor omits a pending (or soon-to-be-filed) lawsuit from the bankruptcy schedules and obtains a discharge (or plan confirmation), judicial estoppel bars the [pending] action.” Ah Quin v. Cty. of Kauai Dep't of Transp., 733 F.3d 267, 271 (9th Cir. 2013); see BPP Illinois, LLC v. Royal Bank of Scotland Grp. PLC, 859 F.3d 188, 192 (2d Cir. 2017) (“Judicial estoppel will ‘prevent a party who failed to disclose a claim in bankruptcy proceedings from asserting that claim after emerging from bankruptcy.'”) (citations omitted); see, e.g., In re Crossover Fin. I, LLC, 477 B.R. 196, 204 (Bankr. D. Colo. 2012) (noteholders took “positions to suit their litigation tactics regardless of whether they conflict[ed] with each other”). The doctrine has similarly been applied to an LLC as a result of a position previously taken by its sole owner-member during a personal bankruptcy. See, e.g., Patriot Mfg. LLC v. Hartwig, Inc., No. 10 Civ. 1206 (EFM) (KGG), 2014 WL 4538059, at *1 (D. Kan. Sept. 11, 2014) (plaintiff's “sole member” omitted “his ownership interest in [the plaintiff LLC] or th[e] lawsuit in his personal bankruptcy filing, ” requiring application of judicial estoppel to LLC's breach of contract claims).

         Application of the doctrine is more nuanced in a case, such as this, where the parties have intertwined their personal and professional matters. The thrust of Ultimate's argument at summary judgment was that judicial estoppel should apply to the LLCs', as well as Svenningsen's, claims “as a matter of equity and public policy, ” because “[i]f parties could circumvent the court and avoid the consequences of judicial estoppel simply by bringing the same claims on behalf of their solely owned LLCs, they would be free to advance inconsistent positions in different courts with impunity, rendering the doctrine powerless.” (Def. S.J. Mem., at 8 n.3; see also Id. at 2 (“Christine, either personally or through her solely owned [] LLCs, should not be permitted to now take a completely inconsistent position before this court”).)[1] Ultimate tellingly omitted any case citations for this proposition and omitted the fact that Chiarella also had an intimate relationship with the LLCs. In fact, it is the complexity of the relationship between Ultimate and the LLCs, Chiarella and Svenningsen, that undermines the application of judicial estoppel in this case.

         A. Is Svenningsen's Prior Position, Taken During the Divorce, Clearly Inconsistent with ...


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