United States District Court, E.D. Kentucky, Central Division, Lexington
LUNDY L. SPARKS, Plaintiff,
FIFTH THIRD MORTGAGE COMPANY, Defendant.
OPINION AND ORDER
K. CALDWELL, CHIEF JUDGE UNITED STATES DISTRICT COURT
matter is before the Court on the Plaintiff's Motion to
Alter, Amend, or Vacate (DE 52), which seeks to vacate a
judgment entered by this Court. (DE 52 at 1.) For the reasons
stated below, the Motion (DE 52) is DENIED.
case stems from a dispute over a residential construction
loan. In 2006, Lundy Sparks contracted with B.A. Parker
Custom Homes, LLC, (“Parker”) to build a
residence. Contemporaneously, Sparks contracted with Fifth
Third Bank (“Fifth Third”) to provide him with a
$671, 920.00 construction loan for the property. (DE 1-1 at
4.) In the loan contract, Sparks authorized Fifth Third to
disburse payments directly to Parker without Sparks first
inspecting his new residence to ensure construction had
progresses and the funds had been earned. (DE 1-1 at 5.) As
the construction project continued, Parker failed to make or
withheld payments to independent contractors, who filed liens
against the property. Sparks settled those liens in state
court to the tune of nearly $200, 000. (DE 1-1 at 6.)
filed suit seeking damages from Fifth Third for its alleged
breach of contract. (DE 1-1 at 7.) Sparks alleged that Fifth
Third was contractually obligated to ensure that
subcontractors had been paid prior to disbursing funds to
Parker, and that Sparks should be compensated for his costs
in resolving the liens. (DE 1-1 at 7-8.) Sparks also sought
indemnification from Fifth Third in the amount that he paid
to resolve the liens, plus attorney's fees and costs
incurred. (DE 1-1 at 8-9.)
Third filed a motion for judgement on the pleadings,
asserting that the Complaint failed to state a claim for
which relief can be granted. (DE 16 at 1.) Fifth Third argued
that the plain language of the contract and Kentucky law
precluded the relief sought by Sparks. (DE 16-1 at 1-2.) This
Court agreed, issued an Opinion and Order granting Fifth
Third's motion for judgment on the pleadings
(“Opinion and Order”), dismissed the Complaint,
and entered judgment in favor of Fifth Third. (See
DE 50 and 51.)
has now filed the present Motion to Alter, Amend, or Vacate
the judgment under Fed.R.Civ.P. 59(e). (DE 52 at 1.) He asks
this Court to vacate the judgment and allow the case to
proceed. His Motion asserts the following: (1) that Fifth
Third had a duty to pay off any liens filed by subcontractors
and that the Court erred in not finding that the Loan
Agreement required Fifth Third to hold back a retainage
sufficient to pay off such liens; (2) that the Loan Agreement
required Fifth Third to ensure that subcontractors had been
paid and that no liens were placed on the property; (3) that
the Court erred in finding that there was no fiduciary
relationship between Sparks and Fifth Third; and (4) that the
Court erred in not invalidating the Loan Agreement's
indemnity provision because it amounts to an unconscionable
exculpatory clause. (DE 52 at 1-2.) The Court considers
Sparks' arguments below.
brings his Motion under Fed.R.Civ.P. 59(e), which addresses
motions to alter or amend a judgment. (See DE 52 at
1.) Sparks does not address Fed.R.Civ.P. 60(b), which
addresses grounds for relief from a final judgment, order, or
proceeding. Sparks' Motion and Fifth Third's response
clearly address the standard under Fed.R.Civ.P. 59(e) and not
the standard under Fed.R.Civ.P. 60(b). Because motions to
reconsider are generally evaluated under the same standards
applicable to a civil motion to alter or amend a judgment
under Fed.R.Civ.P. 59(e), the Court construes Sparks'
Motion as a motion to reconsider. See United States v.
Reynolds, No. 3:08-CR-143, 2018 WL 1950433, at *1 (E.D.
Tenn. Apr. 24, 2018).
to reconsider are only granted if there was (1) a clear error
of law; (2) newly discovered evidence; (3) an intervening
change in controlling law; or (4) a need to prevent manifest
injustice. Intera Corp. v. Henderson, 428 F.3d 605,
620 (6th Cir. 2005). A motion to reconsider “is not an
opportunity to re-argue a case, ” and it “cannot
be used to present new arguments that could have been raised
prior to judgment.” Howard v. United States,
533 F.3d 472, 475 (6th Cir. 2008). When a motion to
reconsider is based exclusively on legal arguments or
evidence that could have been raised prior to the original
entry of judgement, it should be denied. See Bingham v.
Insight Commc'ns Midwest, LLC, No. CIV.A.
12-113-DLB, 2012 WL 5392635, at *1 (E.D. Ky. Nov. 5, 2012).
Motions to reconsider “must either clearly establish a
manifest error of law or must present newly discovered
evidence.” Roger Miller Music, Inc. v. Sony/ATV
Publ'g, LLC, 477 F.3d 383, 395 (6th Cir. 2007).
does not explicitly clarify on which ground he bases his
Motion, but he does state that the “Motion [was] filed
to prevent manifest error by the Court.” (DE 56 at 1.)
The Court assumes that Sparks' is arguing that the Court
erred in applying the law.
“manifest error” is the “wholesale
disregard, misapplication, or failure to recognize
controlling precedent on the part of the court.”
Dorger v. Allstate Ins. Co., No. CIV.A. 2:08-56-DCR,
2009 WL 2136268, at *2 (E.D. Ky. July 16, 2009) (citing
Oto v. Metro. Life Ins. Co., 224 F.3d 601, 606 (7th
Cir. 2000)). The movant must establish that the Court's
error was “so egregious that an appellate court could
not affirm the judgment.” Id. at 2.
Sparks' Motion argues-for the first time-that the Loan
Agreement required Fifth Third to pay off liens filed by
subcontractors and hold back a retainage sufficient to pay
off all subcontractors' liens.
arguments that the Loan Agreement required Fifth Third to pay
off all liens filed by subcontractors and hold back a
retainage sufficient to pay off all subcontractors' liens
are not procedurally proper under Fed.R.Civ.P. 59(e) because
the arguments-which could have been raised-were not raised
prior to the entry of judgment. In the present Motion, Sparks
asserts that the Loan Agreement ¶ 3.B. (iii)(C) requires
that “Fifth Third retain sufficient funds to pay off
all mechanics' liens and other expenses related to the
Project.” (DE 52 at 3.) Sparks further asserts that
“such a mandate requires that the Bank know what the
claims, charges, liens and encumbrances were, so that it
would know to retain sufficient funds to pay them.” (DE
52 at 4.) These arguments are blatantly absent from the
Complaint and all other pleadings filed by Sparks. In fact,
Sparks' Complaint and response to Fifth Third's
motion for judgment on the pleadings do not cite or otherwise
reference ¶ 3.B. (iii)(C) of the Loan Agreement at all.
Complaint lists a breach of contract claim in which he states
precisely how the contract was allegedly breached. The
Complaint provides, in relevant part:
24. By allowing Mr. Sparks to choose an option on Exhibit A
that did not require him to personally approve each draw
request, Fifth Third contractually assumed the duty of doing
everything that Mr. Sparks was required to do under the
Agreement, including approving each draw request, and in so
doing, ensure that the subcontractors who had performed work
on the project had been paid, to avoid the filing of
mechanics' or materialmen's liens on the property.
25. Kentucky law, both under the Uniform Commercial Code and
under the common law, imputes a duty of good faith and fair
dealing in every contract.
26. Fifth Third had a contractual duty to take all reasonable
steps in fulfilling its obligations under the Agreement,
including the obligation to ensure that subcontractors had
been paid from the draws, so that these subcontractors would
not be authorized to file liens against the property.
27. Fifth Third breached its contractual duty to ensure
that the subcontractors had been paid, and failed to require
lien releases, payment receipts, or other evidences that the
subcontractors had been paid.
28. Mr. Sparks has been monetarily damaged by the breach of
contract of Fifth Third, in that he has been required to pay
attorneys' fees and costs to defend himself against
mechanics' lien claims, and to settle certain claims by
subcontractors asserting liens on the property.
29. This Court should enter a monetary judgment against Fifth
Third, in favor or Mr. Sparks, for his compensatory damages
caused by ...