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Long John Silver's, Inc. v. Nickleson

United States District Court, Sixth Circuit

April 29, 2013

LONG JOHN SILVER'S, INC., A&W RESTAURANTS, INC., Plaintiffs,
v.
PATRICK NICKLESON, ET.AL., Defendants.

MEMORANDUM OPINION AND ORDER

JOHN G. HEYBURN, Jr., District Judge.

Before the Court is Defendants'[1] motion to reconsider this Court's January 7, 2013 Order denying Defendants' previous motion to transfer. For the following reasons, the Court will deny the motion.

I.

By way of background, this Court has previously denied Defendants' motion for transfer twice. See ECF No. 24, 71. In Defendants' first motion, they moved pursuant to 28 U.S.C. § 1404(a)[2] to transfer venue to the United States District of Minnesota, arguing, inter alia, that Minnesota was the more convenient forum and that most of the events relating to the dispute occurred in Minnesota. After weighing the nine factors enunciated by the Sixth Circuit in determining whether a motion to transfer venue under 28 U.S.C. § 1404(a) is warranted, this Court denied the motion on October 21, 2010. See Cowden v. Parker & Associates, Inc., 2010 WL 715850, *3 (E.D. Ky. Feb. 22, 2010)(outlining the nine factors).

In September of 2012, Defendants filed a second motion to transfer based on its subsequent bankruptcy filings. ECF No. 48. Defendants advanced two statutory grounds to warrant a transfer of venue: 28 U.S.C. § 1412 and 28 U.S.C. § 1334(e). The Court will briefly summarize its denial on both grounds, as the analysis is relevant to the motion currently before the Court.

In most critical respects, 28 U.S.C. § 1412 mirrors 28 U.S.C. § 1404(a), except that the former applies to bankruptcy proceedings exclusively. See City of Liberal v. Trailmobile Corp., 316 B.R. 358, 362 (D. Kan. 2004)("The plain language of § 1412 provides that it applies to a change of venue of a Title 11 Bankruptcy case or proceeding, while § 1404(a) refers generally only to a civil action.'"). This Court denied the motion to transfer pursuant to 28 U.S.C. § 1412, finding that at this advanced stage of the litigation, a transfer of venue would not be in the interest of justice and did not promote the convenience of the parties.

Defendants filed for bankruptcy in the District of Minnesota. Under 28 U.S.C. § 1334(e)(1), "[t]he district court in which a case under title 11 is commenced or is pending shall have exclusive jurisdiction of all of the property, wherever located, of the debtor as of the commencement of such a case, and of property of the estate." Defendants argued that the legal and equitable interests in the causes of actions pending in this Court, specifically their counterclaims, are property of the estate. As such, Defendants argue that 28 U.S.C. § 1334(e) operates to divest this Court of jurisdiction and mandates the transfer of this matter to the district court in which the bankruptcy petition was filed.

However, the Court denied the transfer motion because prior to filing for bankruptcy, Defendants assigned all of their interests in the counterclaims against Plaintiffs to a third-party, Platinum Bank. The May 6, 2011 Assignment and July 2011 Assignment of Claims and Lawsuit Proceeds (collectively, the "Assignments") unequivocally state that Defendants assign "all existing or future claims, rights, interests, and causes of action against third parties, including, without limitation, franchisors with respect to its former or present franchised business." ECF No. 35-3. This Court found that "[p]ursuant to the unconditional and absolute assignment, Platinum Bank is the holder of interests in the counterclaims. As such, the counterclaims are not property of the estate and § 1334(e) is inapplicable." ECF No. 71. The Court will now entertain Defendants' third motion to transfer venue.

II.

As this Court has recently discussed, a district court may reconsider and modify an interlocutory order under its common law powers and Federal Rule of Civil Procedure 56(b). See Phat's Bar & Grill, Inc. v. Louisville-Jefferson Cnty. Metro Gov't, 2013 WL 124063, *2-3 (W.D. Ky. Jan. 9, 2013). "Courts will reconsider interlocutory orders under Rule 54(b) as justice so requires' if there is (1) an intervening change of controlling law; (2) new evidence available; or (3) a need to correct a clear error or prevent manifest injustice.'" Id. (quoting Rodriguez v. Tenn. Laborers Health & Welfare Fund, 89 F.Appx. 949, 959 (6th Cir. 2004)). Defendants assert two theories for reconsideration: in their initial motion for reconsideration, they allege new evidence necessitates a transfer, and in their reply, they assert the Court committed clear error in its previous ruling. The Court will address each argument individually.

A.

Defendants base their first argument for reconsideration on new evidence. Following this Court's January 7, 2013 ruling denying Defendants' renewed motion to transfer, Platinum Bank and the Trustee negotiated a Clarifying Addenda and Amended Joint Prosecution Agreement. In those documents, Defendants asserted that the previous Assignments were not an absolute assignment of the counterclaims, but rather a partial assignment. As such, Defendants maintain that Platinum Bank merely has a security interest in the counterclaims being pursued in this matter. Accordingly, Defendant argues that the Trustee retains a residual interest in the claim, and pursuant to 28 U.S.C. § 1334(e), the Court should transfer the matter to the United States District Court of Minnesota.

"To constitute newly discovered evidence, the evidence must have been previously unavailable." GenCorp, Inc. v. Am. Intern. Underwriters, 178 F.3d 804, 834 (6th Cir. 1999)(internal quotation omitted). The Clarifying Addenda and Amended Joint Prosecution Agreement are not new evidence. Rather, they appear to re-write unfavorable documents that the Defendants acquiesced to prior to the Court's ruling. Perhaps Defendants' legal theory to transfer venue is newly discovered, but the Clarifying Addenda and Amended Joint Prosecution documents concocted to support this legal theory are not. Defendant cannot use newly manufactured documents as a vehicle to transfer venue.

If Defendants meant to convey a security interest in the counterclaims to Platinum Bank, it could have done so in the Assignments. However, Defendants choose not to, and since then, have not produced any new, previously unavailable, evidence to merit reconsideration. The law does not permit Defendant to retroactively amend the Assignment after the court has entered judgment.[3] See GenCorp, Inc., 178 F.3d at 834 (denying a motion to reconsider based on an amended settlement agreement that was technically not in existence prior to the district court's decision but "was certainly within [the parties'] power and control to revise... prior to the lower ...


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