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Millennium Drilling Co. Inc. v. Beverly House-Meyers Revocable Trust

United States District Court, D. Nevada

July 5, 2017

MILLENNIUM DRILLING CO., INC., a Delaware Corporation, Plaintiff,
v.
BEVERLY HOUSE-MYERS REVOCABLE TRUST; BEVERLY-HOUSE MYERS, TRUSTEE; GRACE MAE PROPERTIES, LLC; HAMRICK TRUST; ROBERT H. HAMRICK AND MOLLY KAY HAMRICK, TRUSTEES; DOES I through X; and ROES I through X, Defendants. MOLLY HAMRICK; BEVERLY HOUSE-MYERS; R&M HAMRICK FAMILY TRUST, Third-Party Plaintiffs,
v.
JONATHAN FELDMAN; MONTCALM, LLC; PATRIOT EXPLORATION COMPANY, LLC; CARTER HENSON, JR.; MATTHEW BARNES; ROBERT HOLT; ELIZABETH HOLT; and SCHAIN, LEIFER, GURALNICK, Third-Party Defendants.

          ORDER

          MIRANDA M. DU UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Before the Court are five post-judgment motions. Defendants and Third-Party Plaintiffs (“HHM Parties”) bring four motions: (1) Motion to Amend the Judgment (“Motion to Amend”) (ECF No. 331); (2) Motion to Stay Enforcement of Judgment Pending Disposition of Defendants' Motion to Amend the Judgment (“Motion to Stay”) (ECF No. 334); (3) Renewal of Motion for Judgment as a Matter of Law (“Rule 50(b) Motion”) (ECF No. 340); and (4) Motion to Stay Enforcement of the Judgment Pending Appeal to the Ninth Circuit (“Motion to Stay Pending Appeal”) (ECF No. 349). Plaintiff Millennium Drilling Co., Inc. (“Millennium”) brings a Motion for Writ of Execution (“Motion for Writ”) (ECF No. 348). The Court has reviewed HHM Parties' response (ECF No. 354) and replies (ECF Nos. 341, 356, 357, 377), Third-Party Defendants Jonathan Feldman and Patriot Exploration Company, LLC (“Patriot”) and Plaintiff Millennium's collective[1] responses (ECF Nos. 337, [2] 353), as well as Millennium's response[3] (ECF No. 376) and reply (ECF No. 357).

         For the reasons discussed below, all four of HHM Parties' Motions are denied and Millennium's Motion is granted.

         II. BACKGROUND

         This case concerns a contract dispute arising from a series of oil and gas investment drilling partnerships.[4] After a nine-day trial beginning on November 8, 2016, a jury returned a verdict in favor of Millennium on its breach of contract and breach of the implied covenant of good faith and fair dealing claims and denied relief to HHM Parties on all claims in their third-party complaint. (ECF No. 330.) Judgment on the verdict was then entered on November 22, 2016. (ECF No. 328.)

         On December 6, 2016, HHM Parties filed the Motion to Amend based on the theory that Millennium received a double recovery by being awarded damages for both its breach of contract claim and its breach of the implied covenant of good faith and fair dealing claim. (ECF No. 331.) That same day, HHM Parties also filed their Motion to Stay. (ECF No. 334.)

         On December 13, 2016, HHM Parties renewed their motion for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(b), raising for the first time purely legal questions concerning the existence of an event of default under the relevant contracts. (ECF No. 340.) On December 21, 2016, HHM Parties filed a notice of appeal to the Ninth Circuit. (ECF No. 346.) The following day, both parties filed motions: Millennium filed a motion for a writ of execution while HHM Parties filed an emergency motion to stay enforcement of the judgment pending its appeal to the Ninth Circuit. (ECF Nos. 348, 349.) This Court ultimately refused to consider the emergency motion to stay on an emergency basis because of HHM Parties' failure to comply with Local Rule 7-4(a). (ECF No. 350.)

         III. HHM PARTIES' MOTION TO AMEND (ECF No. 331)

         HHM Parties bring their motion to amend the judgment under Rule 59. (ECF No. 331 at 2.) The Ninth Circuit has held that a Rule 59(e) motion to amend or alter a judgment-also known as a motion for reconsideration-should not be granted “absent highly unusual circumstances.” Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 880 (9th Cir. 2009) (quoting 389 Orange Street Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 1999)). The motion must set forth the following: (1) some valid reason why the court should revisit its prior order; and (2) facts or law of a “strongly convincing nature” in support of reversing the prior decision. Frasure v. United States, 256 F.Supp.2d 1180, 1183 (D. Nev. 2003). “There are four grounds upon which a Rule 59(e) motion may be granted: 1) the motion is necessary to correct manifest errors of law or facts upon which the judgment is based; 2) the moving party presents newly discovered or previously unavailable evidence; 3) the motion is necessary to prevent manifest injustice; or 4) there is an intervening change in controlling law.” Turner v. Burlington N. Santa Fe R.R. Co., 338 F.3d 1058, 1063 (9th Cir. 2003) (citations and internal quotation marks omitted). A motion is properly denied when the movant fails to establish any reason justifying relief. Backlund v. Barnhart, 778 F.2d 1386, 1388 (9th Cir. 1985) (holding that a district court properly denied a motion for reconsideration in which the plaintiff presented no arguments that were not already raised in his original motion)). Moreover, “a Rule 59(e) motion may not be used to raise arguments or present evidence for the first time when they could reasonably have been raised earlier in the litigation.” Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000).

         HHM Parties appear to make the claim that the jury's verdict is based on a manifest error of law, specifically, the existence of a breach of the duty of good faith and fair dealing. HHM Parties contend that the basis for Millennium's breach of the duty of good faith and fair dealing claim is HHM Parties' disavowal of their debt, which is simply another way to say that HHM Parties breached an express obligation in the promissory notes. (See ECF No. 331 at 5.) HHM Parties point to Delaware case law-Delaware law governs the Falcon Drilling contract-wherein the court found that in order to sufficiently state a claim for breach of the duty of good faith and fair dealing, the party needed to allege an implied contractual obligation and a breach of that obligation. (ECF No. 331 at 4 (citing Kuroda v. SPJS Holdings, L.L.C., 971 A.2d 872, 888 (Del Ch. 2009)).) Thus, because Millennium put forth no evidence of an additional implied contractual provision that HHM Parties breached, HHM Parties contend that the damages awarded for this claim-$1, 366, 000 attributed to Beverly House-Myers and Grace Mae Properties, LLC and $751, 300 attributed to R&M Hamrick Family Trust under the Falcon Drilling Partnership[5] (id. at 3)- amount to an impermissible double recovery for the same injury. (See id. at 6.)

         Millennium responds that the issue of whether the “disavowal of debt” constituted an express contractual provision should have been raised earlier in the litigation. (See ECF No. 337 at 4.) In its First Amended Complaint (“FAC”), Millennium alleges that the basis for the breach of the duty of good faith and fair dealing was in part the parties' failure to make payment on amounts owed to Millennium under the contracts and by seeking to interfere with other resolutions made on behalf of the partnerships. (See ECF No. 30 at 7, 11, 14.) HHM Parties thus had ample notice of the allegations supporting Millennium's claim. HHM Parties fail to offer a valid reason why the Court should now consider their argument concerning the legal sufficiency of the jury's finding a breach of the duty of good faith and fair dealing.

         In addition, Millennium aptly points out that the damages awarded under the breach of the duty of good faith and fair dealing claim reflect a distinct category of damages and not a double recovery. (ECF No. 337 at 3.) The amount that the jury awarded for this claim was merely the pre-judgment interest accrued pursuant to the specific agreements.[6] To the extent that HHM Parties take issue with the jury finding a breach of the duty of good faith and fair dealing resulting in a damage award, they should have raised this issue earlier on in litigation, ostensibly at the motion to dismiss stage, as the plaintiff did in the Kuroda case that HHM Parties rely upon. Alternatively, HHM Parties could have proposed a jury instruction on this issue or moved for judgment as a matter of law pursuant to Rule 50(a) at the close of the case on the breach of the duty of good faith and fair dealing claim. The HHM Parties did none of these. Thus, HHM Parties have clearly waived their arguments with respect to this claim by not raising them earlier.

         HHM Parties request that if this Court allows the interest damages to stand for the breach of the duty of good faith and fair dealing claim, then the Court amend the judgment to discount the damages owed to their present value.[7] (ECF No. 331 at 6.) However, this is also an issue that could have been raised earlier, for instance through a motion for summary judgment limiting damages or a proposed jury instruction. The language of the contracts also does not indicate that in the event of default the note amount should be discounted to present day value.

         For these reasons, the Court denies HHM Parties' Motion to Amend.

         IV. HHM PARTIES' MOTION ...


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