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First Technology Capital, Inc. v. Banctec, Inc.

United States District Court, E.D. Kentucky, Central Division

February 1, 2018

FIRST TECHNOLOGY CAPITAL, INC., Plaintiff,
v.
BANCTEC, INC., Defendant.

          OPINION AND ORDER

          Robert E. Wier United States Magistrate Judge

         The Court addresses another motion for reconsideration in this case.[1] This time, FTC seeks reconsideration of a targeted portion of the summary judgment opinion (DE #110). See DE #112 (Motion). BancTec responded. DE #114. FTC replied. DE #119. The matter is ripe for consideration.

         Standard of Review

         The Court has already, in this case, set out the standard:

“The Federal Rules of Civil Procedure do not explicitly address motions for reconsideration of interlocutory orders.” Rodriguez v. Tenn. Laborers Health & Welfare Fund, 88 F. App'x 949, 959 (6th Cir. 2004). However, “[d]istrict courts have inherent power to reconsider interlocutory orders and reopen any part of a case before entry of a final judgment.” Mallory v. Eyrich, 922 F.2d 1273, 1282 (6th Cir. 1991); see also, e.g., In re Life Investors Ins. Co. of Am., 589 F.3d 319, 326 n.6 (6th Cir. 2009) (“[A] district court may always reconsider and revise its interlocutory orders while it retains jurisdiction over the case.”). “This authority allows district courts to afford such relief from interlocutory orders as justice requires. Traditionally, courts will find justification for reconsidering interlocutory orders when 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.” Rodriguez, 88 F. App'x at 959 (internal quotation marks and alteration removed); Louisville/Jefferson Cnty. Metro Gov't v. Hotels.com, L.P., 590 F.3d 381, 389 (6th Cir. 2009) (same). “This standard obviously vests significant discretion in district courts.” Rodriguez, 88 F. App'x at 959 n.7; see also, e.g., Kerns v. Caterpillar Inc., 144 F.Supp.3d 963, 967 (M.D. Tenn. 2015) (applying the standard); Simmerman v. Ace Bayou Corp., 304 F.R.D. 516, 518 (E.D. Ky. 2015) (same).

First Tech. Capital, Inc. v. BancTec, Inc., No. 5:16-CV-138-REW, 2017 WL 2735516, at *1 (E.D. Ky. June 26, 2017). FTC here makes no argument of an intervening change in law or newly available evidence, so the Court proceeds under Rodriguez category 3, probing whether it made a “clear error” or there is a need to “prevent manifest injustice.”

         Analysis

         FTC specifically “seeks reconsideration of that part of [DE #110] denying summary judgment on FTC's conversion claim.” DE #112, at 1. FTC wants the Court to “hold that BancTec was in undisputed default in the sense used in ¶ 5(B) on account of its undisputed destruction of equipment and its failure to pay holdover rent” and to conclude from such a holding that “summary judgment on conversion liability” is proper. Id. at 5. FTC ultimately, though, leaves such a conclusion “for the Court to decide, ” given the logic and progression of DE #110. See id.

         FTC's argument, as the Court understands DE #112, goes as follows: because (1) the Court held that BancTec did default under the MLA via the admitted hard drive alteration, DE #110, at 28-29, and, according to FTC, (2) any MLA default blocks application of ¶ 5(B), then (3) the Court erred in assessing conversion and ¶ 5(B) operation via only potential payment default, DE #110, at 21-26 & 21 n.11. The Court, for the reasons that follow, agrees with FTC, concludes it erred in the summary judgment analysis on this issue, reconsiders DE #110, and grants FTC summary judgment on conversion liability based on the established hard-drive-alteration default.

         As an initial matter, the Court agrees with FTC on the threshold waiver question: FTC did not waive argument that the hard-drive-alteration default blocks application of ¶ 5(B). BancTec does not contest this. See DE #114 (not contesting). A litigant waives an argument when it “fails to . . . develop the argument with specificity.” Nancy v. Goodyear Tire & Rubber Co., 527 F.3d 539, 558 (6th Cir. 2008). This question centers on the issues signified by footnote 11 of DE #110, where the Court stated that “FTC has not contended that any other default, except non-payment of rent (DE #91, at 10), would block this application of ¶ 5(B).” The page that the Court cited for this proposition indeed only makes reasoned argument as to payment-related default, but, as FTC argues, FTC did arguably incorporate broader contentions-that certain unnamed “other things, ” “argued above, ” also constituted Schedule 8 breaches that would block application of ¶ 5(B). See DE #91, at 10. One of the “other things” that FTC “argued above” was the destruction breach. See Id. at 7. The Court joins FTC in “wish[ing] it had made its reliance on that default clearer, ” DE #112, at 8, but the Court agrees that FTC adequately preserved the argument, in context. FTC specifically made a lengthy breach argument as to the collateral damage, and that argument conceptually applies to ¶ 5(B) just as would a rent default. The Court erred when it failed to recognize this and process the argument in the summary judgment opinion. The Court will not procedurally foreclose this argument to penalize FTC for choosing to make one default-related argument “in somewhat more detail.” Id.

         Moving to the merits, the Court previously stated its reasoning for denying summary judgment on conversion:

If BancTec did not default on rental payments, the jury will meter purchase liability under ¶ 5(B) at FMV, and BancTec will owe that amount, yielding title to it and negating conversion. If BancTec did default, then the Court anticipates the jury evaluating FMV as a conversion remedy[.]

DE #110, at 25 (emphases added). That analysis mistakenly only contemplated payment default, as the Court now clarifies. Pages later, the Court wrote, specifically regarding the hard-drive-alteration default:

The Court reserves the issue of damages pending trial, given the need to resolve the purchase status. Thus, if the jury determines that the agreement obligated BancTec to purchase for fair market value, then FTC would not get an additional remedy for the alterations. Further, . . . the Court would treat FMV [as conversion recovery] as defined to ...

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