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United States ex rel. Kolchinsky v. Moody's Corp.

United States District Court, S.D. New York

September 1, 2017

UNITED STATES OF AMERICA, ex rel. ILYA ERIC KOLCHINSKY, Plaintiff,
v.
MOODY'S CORPORATION, et al., Defendants.

          OPINION & ORDER

          WILLIAM H. PAULEY III, District Judge.

         Relator Ilya Kolchinsky moves pursuant to Federal Rules of Civil Procedure Rule 59(e) and Local Rule 6.3 for reconsideration of this Court's Opinion and Order, dated March 2, 2017, granting Moody's motion to dismiss this whistleblower action. Kolchinsky's motion is granted in part and denied in part.

         BACKGROUND

         The factual background of this case is set forth in this Court's prior Opinion and Order. United States ex rel. Kolchinsky v. Moody's Corp., No. 12 CV 1399, 2017 WL 825478 (S.D.N.Y. March 2, 2017) (“Moody's I”). In short, Kolchinsky brought this action on behalf of the United States of America against Moody's Corporation and Moody's Investors Service, Inc. under the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq, alleging that he was constructively discharged after protesting Moody's practice of issuing false credit ratings. This Court granted the Defendant's motion to dismiss because the Second Amended Complaint failed to state a valid FCA claim.

         DISCUSSION

         A motion to alter or amend a judgment pursuant to Rule 59(e) is evaluated under the same standard as a motion for reconsideration under Local Rule 6.3. Williams v. N.Y. Dep't. of Corr., 219 F.R.D. 78, 83 (S.D.N.Y. 2003). Such motions “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). Reconsideration is warranted only “if the moving party establishes: (1) a change in the controlling law; (2) new evidence has become available; or (3) reconsideration is necessary to correct a clear error or prevent manifest injustice.” Analytical Surveys, Inc. v. Tonga Partners, L.P., No. 06-CV-2692, 2009 WL 1514310, at *1-2 (S.D.N.Y. May 29, 2009), aff'd, 684 F.3d 36 (2d Cir. 2012). The motion “cannot assert new arguments or claims which were not before this court on the original motion.” Koehler v. Bank of Berm., Ltd., No. M18-302, 2005 WL 1119371, at *1 (S.D.N.Y. May, 10, 2005). The decision to grant or deny a motion for reconsideration is within the sound discretion of the district court. McCarthy v. Manson, 714 F.2d 234, 237 (2d Cir.1983).

         I. Motion to Dismiss

         Kolchinsky seeks reconsideration of this Court's Opinion on the grounds that the Second Amended Complaint adequately alleged factual falsity, fraudulent inducement, and materiality. Kolchinsky also argues that this Court erred in finding that the Second Amended Complaint did not satisfy the pleading requirements of FRCP 9(b).

         a. FCA Claim

         i. Factual Falsity

         Kolchinksy's arguments regarding factual falsity largely re-assert those raised in his opposition to the motion to dismiss and otherwise fail to point to any fact or relevant law that the Court overlooked. As this Court held, the Second Amended Complaint did not “plead that Moody's failed to provide any credit ratings, or that the ratings it provided were entirely worthless. Rather, Kolchinsky's claim [was] one of legal falsity-that its ratings differed in quality and accuracy from the ratings it promised to Government agencies.” Moody's I, 2017 WL 825478, at *4. “[C]ourts should not grant a motion for reconsideration when the moving party seeks solely to relitigate an issue already decided.” Shamis v. Ambassador Factors Corp., 187 F.R.D. 148, 151 (S.D.N.Y.1999).

         ii. Fraudulent Inducement

         Kolchinsky argues that the Second Amended Complaint also stated a claim under the theory of fraudulent inducement. This argument is inadequately presented on the motion for reconsideration, as Kolchinsky did not raise such a theory in the Second Amended Complaint or in his briefing on the motion to dismiss. See Koehler, 2005 WL 1119371, at *1 (a motion for reconsideration “cannot assert new arguments or claims which were not before [the] court on the original motion”). The only prior mention of fraudulent inducement was a string citation in Kolchinsky's opposition to the motion to dismiss. (See MTD Opp., ECF No. 66, at 23-24.) These cites offered the proposition that fraudulent inducement could be a valid basis for an FCA claim, but Kolchinsky's papers were otherwise bereft of any mention of the theory. At oral argument Kolchinsky's counsel emphasized his theory of implied legal falsity, and only alluded opaquely to fraudulent inducement. (See Arg. Tr., ECF No. 69, at 6:17-7:1).

         “A motion for reconsideration is not an invitation to parties to ‘treat the court's initial decision as the opening of a dialogue in which that party may then use such a motion to advance new theories or adduce new evidence in response to the court's rulings.'” Patterson v. United States, No. 04-CV-3170, 2006 WL 2067036, at *2 (S.D.N.Y. July, 26, 2006) (quoting De Los Santos v. Fingerson, No. 97-CV-3972, 1998 WL 788781, at *1 (S.D.N.Y. Nov. 12, 1998)). Accordingly, Kolchinsky's arguments regarding fraudulent inducement do not provide a basis for reconsideration. Because ...


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