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Federal Deposit Insurance Corp. v. Red Hot Corner, LLC

United States District Court, D. Nevada

October 22, 2014

Federal Deposit Insurance Corp., as Receiver for Irwin Union Bank and Trust Company, Plaintiff,
v.
Red Hot Corner, LLC, a Nevada Limited Liability Company, et al., Defendants.

ORDER GRANTING PLAINTIFF'S MOTION FOR RECONSIDERATION [DOC. 147] AND ORDERING SUPPLEMENTAL SUGGESTION OF DEATH

JENNIFER A. DORSEY, District Judge.

A settlement between the FDIC (as receiver for Irwin Union Bank and Trust Company) and most defendants left claims pending only against Ellen and John Woodrum, individually and as trustees of the Woodrum Family Trust. Id. Counsel for John Woodrum filed a suggestion of death upon the record on January 17, 2014. Doc. 130. Four months later, the FDIC moved to substitute the estate as the proper defendant. Doc. 139. I denied the motion and dismissed the claims against Mr. Woodrum under Rule 25(a) of the Federal Rules of Civil Procedure because the FDIC waited more than 120 days after the suggestion of death to move to substitute Mr. Woodrum's estate as the proper defendant, and Rule 25(a) mandates dismissal of the claims against a decedent if the substitution motion is not made within 90 days of service of the suggestion. Doc. 146; Fed.R.Civ.P. 25(a).

The FDIC now asks me to reconsider that ruling on the basis that an automatic bankruptcy stay extended its 90-day deadline. Doc. 147.[1] The impact of a stay on the timing of the motion-particularly in light of the unequivocal, mandatory 90-day deadline for substitution motions under Rule 25(a)-is a material point (perhaps the most material point) and one that I expect I would have thoughtfully considered in deciding this motion. But as the FDIC notes, I did not take the stay into consideration when evaluating the timeliness of its substitution motion. Doc. 147. Further investigation has revealed the reason for this lapse: this central and material point was buried in a footnote midway into the FDIC's motion. Doc. 137 at 3, n.1. Relegating substantive arguments to footnotes is dangerous business: it risks the court overlooking an important point, [2] as I did here.

Discussion

A. Reconsideration is Warranted.

Although the federal rules do not expressly authorize motions for reconsideration, requests for review of interlocutory orders are commonly entertained under Federal Rules of Civil Procedure 59(e) and 60(b).[3] Rule 60(b) allows a district court to give relief from a final order due to "mistake, inadvertence, surprise, or excusable neglect."[4] Inadvertence-or surprise-is precisely what the court is guilty of here. Although FRCP 25(a)(1) set a 90-day time limit on the FDIC's substitution request, [5] the combination of the automatic stay and 11 U.S.C. ยง 108(c) extended those 90 days until 30 days after the expiration of the bankruptcy stay, and I did not consider this impact in my August 27th order.[6] The Woodrum defendants' Chapter 13 bankruptcy petition was filed on December 31, 2013, prior to the January 17, 2014, suggestion of death. Doc. 139 at 3 & n.1. The stay expired on May 20, 2014, when the bankruptcy case was dismissed. Id. at 3-4 n.1. The FDIC moved for substitution on May 22, 2014-well within its extended 30-day period after expiration of the bankruptcy stay. The FDIC's motion was thus timely, and I grant the FDIC's motion for reconsideration of my August 27, 2014, order and vacate it.

B. Additional Information is Needed from the Woodrum Defendants.

Before I can enter an order substituting Mr. Woodrum's estate or other successor in his stead, I need additional information from the Woodrum defendants. A party who files a suggestion of death may be required to supply "the name and proper party to be substituted, "[7] and even if the party is unknown, may be required to make a reasonable inquiry into the name and whereabouts of a decedent's successor.[8] Counsel for the Woodrum defendants filed the suggestion of death but did not include any information about the decedent's successor. See Doc. 130. The FDIC suggests in its reply to the motion for reconsideration that the Woodrum defendants may have been silent because Mrs. Woodrum-John Woodrum's wife-may be his successor-in-interest. Instead of speculating, I order counsel for the Woodrum defendants who filed the suggestion of death to file a supplement to the suggestion within 15 days that indicates (1) whether John Woodrum's successor is known and disclosing the name and address of the successor if known; or (2) if the successor is unknown, what efforts have been made to locate the successor and why those efforts have been futile. The FDIC will then have 20 days to file a renewed motion to substitute Mr. Woodrum's successor.

Conclusion

Accordingly, it is HEREBY ORDERED that the FDIC's Motion for Reconsideration [Doc. 147] is GRANTED. The August 27, 2014, Order [Doc. 146] is hereby VACATED;

It is FURTHER ORDERED that counsel for the Woodrum defendants must file a Supplement to the Suggestion within 15 days that indicates (1) whether John Woodrum's successor is known and disclosing the name and address of the successor if known; or (2) if the successor is unknown, what efforts have been made to locate the successor and why those efforts have been futile. The FDIC shall have 20 days from the filing of the supplement to file a renewed motion to substitute Mr. Woodrum's successor; the FDIC's original motion [Doc. 139] is therefore DENIED without prejudice.


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