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Weinsten v. Autozoners LLC

United States District Court, D. Nevada

September 12, 2014

YVETTE WEINSTEN, Trustee of the George J. Latelle, Jr., Bankruptcy Estate, Plaintiff,
v.
AUTOZONERS LLC; AMY NAGLE; DOES I through V; and, DOE CORPORATIONS VI through X. Defendants.

ORDER

LLOYD D. GEORGE, District Judge.

On March 6, 2014, this Court granted partial summary judgment in favor of plaintiff Yvette Weinstein (as trustee of the bankruptcy estate of George Latelle, Jr.) against defendant Autozoners LLC (AutoZone), concluding that Autozone was liable for interfering with Latelle's rights under the Family and Medical Leave Act (FMLA). (#114). The Court also granted partial summary judgment in favor of AutoZone, however, concluding that Weinstein was limited to recovering damages in an amount not greater than necessary to satisfy the timely-filed claims of the creditors of Latelle's bankruptcy estate. Id.

On March 18, 2014, Weinstein filed a motion for attorney's fees and costs (#115). On April 3, 2014, AutoZone filed a motion to amend or alter the March 6, order pursuant to Rule 59, seeking to establish the amount of damages owed to Weinstein as a sum certain (#117). Weinstein subsequently filed an opposition to AutoZone's Rule 59 motion and further filed a countermotion for relief from the March 6 grant of partial summary judgment pursuant to Rule 59(e) and 60(b) (#121, 122, 123, 124). AutoZone then filed an opposition to Weinstein's counter-motion for relief from the March 6 order, as well as a reply to her opposition to its Rule 59 motion. (#125, 126). Weinstein filed a reply in support of her counter-motion for relief. (#127).

Background

George Latelle, Jr., was terminated by his employer, AutoZone, on April 26, 2010. (#75). On April 27, 2010, one day following his termination, Latelle filed for bankruptcy. Id. He did not identify, as an asset of the estate, any actual or potential legal claim. (#113). Latelle was discharged from bankruptcy on August 4, 2010, and proceedings were terminated on September 28, 2010. Id.

On April 18, 2011, Latelle filed an FMLA claim against AutoZone. Id. Latelle was represented by attorney Michael Gebhart in both Latelle's bankruptcy proceedings and FMLA claim. Id. On July 21, 2011, AutoZone moved for summary judgment, arguing that Latelle was estopped from prosecuting this action because he failed to disclose the lawsuit as an asset of the bankruptcy estate. Latelle opposed, arguing that a question of fact existed as to whether he was aware of the claim while the bankruptcy was pending. (#27).

On August 22, 2011, Yvette Weinstein, Trustee of Latelle's bankruptcy proceedings, received a letter from AutoZone's counsel informing her of this FMLA suit. She therefore moved to reopen Latelle's bankruptcy, which occurred on September 22, 2011. (#113). Latelle subsequently filed amended schedules for loss of pension benefits and loss of future wages in the bankruptcy action, but again failed to disclose the instant suit. Weinstein then moved to be substituted as the real party in interest in this suit. In so doing, she asserted that "[i]t seems apparent to her that the Debtor is continuing his pattern of lack of candor and obfuscation toward the bankruptcy court. Trustee believes that this is a textbook case for the application of judicial estoppel." (#75).

On March 6, 2014, this Court held that AutoZone was liable for Latelle's FMLA claim. (#113). However, this Court also held that AutoZone's damages would be "[l]imited to an amount not greater than necessary for Yvette Weinstein, Trustee, to satisfy the timely-filed claims of the creditors of the bankruptcy estate of George J. Latelle, Jr." Id. Because Latelle had wrongfully failed to inform the Bankruptcy court of his FMLA claim, this Court held that no amount of such damages may be distributed to Latelle.

Subsequent to the March 6 order, Weinstein filed a motion on March 18, 2014, to collect attorney's fees and costs pursuant to 29 U.S.C. ยง 2617(a)(3) and FRCP 54(d). (#115). AutoZone moved pursuant to Rule 59 to amend or alter the March 6 judgment to include the precise amount that it owes to Weinstein. (#117). On April 11, 2014, Weinstein filed an opposition to AutoZone's Rule 59 motion, as well as a counter-motion for relief from the grant of partial summary judgment, pursuant to Rule 59(e) and 60(b), (#121, 123), along with memoranda to support her opposition and counter-motion. (#122, 124). In Weinstein's counter-motion, she asserts that "this Court applied a wrong standard in concluding that the damages AutoZone must pay are limited to those necessary to satisfy creditors." (#122).

Standard of Review for Motion to Alter or Amend Judgment

Rule 59(e) of the Federal Rules of Civil Procedure provides for motions to alter or amend a judgment. A motion to alter or amend a judgment must be filed no later than 28 days after the entry of the judgment. Id. The Court generally considers four circumstances in granting a motion to alter or amend a judgment. These include: (1) to correct manifest errors of law or fact upon which the judgment rests; (2) to present newly discovered or previously unavailable evidence; (3) to prevent manifest injustice; or (4) if the amendment is justified by an intervening change in controlling law. Allstate Ins. Co. v. Herron, 634 F.3d 1101, 1111 (9th Cir. 2011). However, courts are not limited to these four circumstances in granting a motion to alter or amend a judgment. Id. In considering such a motion, a district court "enjoys considerable discretion." Id. However, such motions should be "used sparingly, " because amending a judgment remains "an extraordinary remedy." Id.

Analysis

I. Trustee's Counter-motion for Relief from Grant of Partial Summary Judgment Pursuant to 59(e) and 60(b) Is Denied.

In Weinstein's counter-motion for relief from the March 6 order, she agrees with the Court's decision to hold AutoZone liable. (#122). However, she argues that the Court applied the wrong standard in limiting the damages to the amount necessary to satisfy the debt owed to creditors. Id. AutoZone argues that Weinstein is not deserving of a Rule 59(e) or 60(b) motion because, (1) her Rule 59(e) motion is untimely; (2) her Rule 60(b) motion is untimely; and (3) her Rule 60(b) motion lacks merit.

Weinstein has agreed that her 59(e) motion is untimely. (#127). However, she asserts (1) that her 60(b) claim is timely; (2) that her motion is meritorious, because controlling Ninth Circuit precedent was not previously considered by this Court; and 3) that an evidentiary hearing is needed. Id.

The parties dispute whether Weinstein's 60(b) motion was brought under Rule 60(b)(1) or Rule 60(b)(6). (#125, 127). This determination impacts the timeliness of Weinstein's motion, and therefore whether it was procedurally proper. However, the Court need not reach this issue. Assuming the motion was procedurally proper, the Court will nevertheless deny it on substantive grounds.

Weinstein asserts in her counter-motion that this Court applied the wrong legal standard in its March 6 order. (#122). In the order, this Court estopped Latelle from raising an FMLA claim due to his failure to include the claim in his bankruptcy proceedings. (#75). Weinstein argues that the Court did not consider whether this failure was due to inadvertence or mistake, as required by Ah Quin v. County of Kauai Dept. Of Transp., 733 F.3d 267, 271 (9th Cir. 2013). (#122, 2:9-17).

"Judicial estoppel is an equitable doctrine invoked by a court at its discretion." Id. at 270 (citing New Hampshire v. Main, 532 U.S. 742, 750 (2001)). The purpose of judicial estoppel is to "protect the integrity of the judicial process by prohibiting parties from deliberately changing positions according to the exigencies of the moment." Id. In a bankruptcy case, the federal courts have developed a standard rule that, if a plaintiff-debtor "omits a pending (or soon-to-be-filed) lawsuit from the bankruptcy schedules and obtains a discharge, judicial estoppel bars the action." Ah Quin, 733 F.3d at 271 (citing Payless Wholesale Distribs., Inc. V. Alberto Culver (P.R.) Inc., 989 F.2d 570, 571 (1st Cir. 1993); Hay v. First Interstate Bank of Kalispell, N.A., 978 F.2d 555, 557 (9th Cir. 1992)). However, the Supreme Court held in New Hampshire that judicial estoppel may not be applied when a party's failure was "based on inadvertence or mistake ." New Hampshire, 532 U.S. at 749-50. Many circuits interpreted this exception narrowly, asking only whether the debtor knew about the claim when filing the bankruptcy schedules. Id.

In Ah Quin, the Ninth Circuit ruled that the relevant inquiry is "not limited to the plaintiff's knowledge of the pending claim... the relevant inquiry is, more broadly, the plaintiff's subjective intent when filling out and signing the bankruptcy schedules." Ah Quin, 733 F.3d at 276-277 (emphasis added). In Ah Quin, a plaintiff did not disclose her pending discrimination claim during bankruptcy proceedings. Id. at 277-78. The discrimination claim was not disclosed until the plaintiff's attorney brought the unrevealed claim to the defendant's attention, after the closing of the bankruptcy case. Id. The Ninth Circuit ruled that the plaintiff was not judicially estopped, because the plaintiff filed an affidavit in which she swore that she did not think she had to disclose her pending lawsuit when she reviewed the bankruptcy schedule. Id. The court ruled that the relevant inquiry is to the plaintiff's subjective intent when filling out and signing the bankruptcy schedules. Id. 276-277. The court further held that it should interpret mistake and inadvertence broadly, rather than narrowly. Id. at 277.

AutoZone argues in its opposition to the countermotion that Ah Quin does not compel this Court to reconsider its March 6 order because Ah Quin merely states that courts "must consider the debtor's state of mind when deciding whether a bankruptcy filing was made by inadvertence or mistake. " (#125). AutoZone argues that this Court already took the debtor's state of mind into consideration in its partial grant of summary judgment. This Court agrees.

Here, like in Ah Quin, where the plaintiff did not disclose the pending discrimination claim, Latelle did not reveal his potential FMLA claim to the bankruptcy court before the bankruptcy case closed. (#113). Thus, the Ah Quin interpretation of inadvertence and mistake governs this case. However, because this Court already considered Latelle's subjective intent in its March 6 order, there is no need to vacate the judgment. (#75, #113).

In Dzakula, the plaintiff filed for bankruptcy, but failed to list her discrimination action as an asset on her bankruptcy schedules, and judicial estoppel was applied. Dzakula v. McHugh, 746 F.3d 399, 400 (9th Cir. 2014). Ah Quin was decided while her appeal was pending, and the plaintiff therefore argued that her case had been decided under the wrong standard. Id. at 401. The Ninth Circuit disagreed, and held that the district court had applied the proper standard even before Ah Quin was decided. Id.

Here, as in Dzakula, the Court did not cite Ah Quin but did apply the proper standard. (#113, 114). In a brief filed with this Court prior ...


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