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denying reconsideration of an order holding that a decision granting summary judgment against a defendant "would become void at the moment the amended complaint supersedes the prior complaints, because it is based on the prior complaints that would have no legal effect"
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09 Civ. 5076 (KNF) 09 Civ. 9574 (KNF)
05-24-2013
TERESA LARA BENAVIDEZ, MARIA DE LOURDES GALVEZ, JAMIE HUERTA, FLORA ZURITA, MARIA DE LOURDES VASCONEZ ALARCON, LABRARMY GARCIA, and ESTEBAN NADER, on behalf of themselves and all others similarly situated, Plaintiffs, v. PIRAMIDES MAYAS INC., MAMA MEXICO MIDTOWN REALTY LLC, SHADDAI INC., MAMA MEXICO ENGLEWOOD REALTY LLC, JUAN ROJAS CAMPOS, and LAURA CHAVEZ, Defendants. GUILLERMO PAEZ, EMILIANO ESPINOZA, and PEDRO NASARIO, on behalf of themselves and all others similarly situated, Plaintiffs, v. PIRAMIDES MAYAS INC., MAMA MEXICO MIDTOWN REALTY LLC, SHADDAI INC., MAMA MEXICO ENGLEWOOD REALTY LLC, JUAN ROJAS CAMPOS, and LAURA CHAVEZ, Defendants.
MEMORANDUM AND ORDER
On April 15, 2013, the Court: (1) granted the plaintiffs' motion to amend the complaints in the instant actions; (2) determined that the amended complaints supersede the third-amended complaint (case No. 09 Civ. 5076, Docket Entry No. 75) and the first-amended complaint (case No. 09 Civ. 9574, Docket Entry No. 31); (3) vacated the February 15, 2012 Memorandum and Opinion and Order granting partial summary judgment to the plaintiffs based on the third-amended complaint (case No. 09 Civ. 5076, Docket Entry No. 75) and the first-amended complaint (case No. 09 Civ. 9574, Docket Entry No. 31); (4) directed the plaintiffs to file and serve the amended complaints on all defendants named in the amended complaints; and (5) determined that the plaintiffs' motions, (i) for judgment by default, (ii) to dismiss claims against Laura Chavez, and (iii) for an award of damages, attorneys' fees and costs, are moot. Before the Court is the plaintiffs' motion, made pursuant to Local Civil Rule 6.3 of this court, for reconsideration of that part of the Court's April 15, 2013 order
in which it held that Plaintiffs' proposed amended complaints rendered the Court's February 15, 2012 order granting partial summary judgment to Plaintiffs ("S.J. Order") void and for an order that: (1) The amended complaints do not render the S.J. Order void; (2) The filing and service of the amended complaints on Plaza Mexico, Inc. will not supersede the prior complaints with respect to the Defendants that are currently named in the case [sic]; and/or (3) Such other relief as the Court deems just and proper.
Plaintiffs' Contentions
The plaintiffs contend the Court should reconsider its ruling that the partial summary judgment order is void, for four reasons. First, the amended complaints repeat the same allegations and raise the same claims against the defendants as those on which the court ruled through the partial summary judgment order and are limited to "reinstating Plaza Mexico as a Defendant and eliminating Laura Chavez [("Chavez")] as a Defendant"; thus "the amended complaints are not different from the complaints on which the [c]ourt rendered its summary judgment decision and should not render the S.J. Order void." Second, even if the amended complaints are different from the complaints on which partial summary judgment was rendered, Rule 15(b)(2) of the Federal Rules of Civil Procedure "anticipate[s] that parties may amend their pleadings post-judgment without rendering the judgment void." Third, "the rulings in the S.J. Order persist under the law of the case doctrine." According to the plaintiffs, no compelling reason exists that warrants voiding the February 15, 2012 partial summary judgment order, since "[t]here has been no change in the controlling law, the evidence on which the Court granted summary judgment against Piramides Mayas Inc., Shaddai Inc., and [Juan Rojas] Campos [("Campos")] is the same today as it was when the [c]ourt ruled, and the S.J. Order was correctly decided." Fourth, "the amended complaints cannot supersede the prior complaints," until the amended complaints are served, and "[i]f Plaintiffs do serve the amended complaints, they will do so only with respect to Plaza Mexico, which would ensure that the prior complaints are not superseded with respect to the other Defendants." The plaintiffs contend that "[t]he Second Circuit has confirmed that plaintiffs may proceed against different defendants under different complaints, so long as each defendant is properly served with the complaint pursuant to which judgment is sought against it." Moreover, the plaintiffs assert in a footnote to their memorandum of law, "[s]erving the amended complaints on Plaza Mexico and proceeding against the other Defendants based on the prior complaints will also preserve the certificates of default that the Clerk of Court entered against Shaddai Inc., Piramides Mayas Inc., Mama Mexico Midtown Realty LLC, and Mama Mexico Englewood Realty LLC."
Legal Standard
The Local Civil Rules of this court provide for a motion for reconsideration or reargument, requiring the movant to set forth, in a memorandum of law, "concisely the matters or controlling decisions which counsel believes the Court has overlooked." Local Civil Rule 6.3.
The standard for granting such a motion is strict, and reconsideration will generally be denied unless the moving party can point to controlling decisions or data that the court overlooked-matters, in other words, that might reasonably be expected to alter the conclusion reached by the court. . . . Admittedly, a motion to reconsider should
not be granted where the moving party seeks solely to relitigate an issue already decided."To be entitled to reargument under Local [Civil] Rule [6.3, the movant] must demonstrate that the court overlooked controlling decisions or factual matters that were put before the court on the underlying motion." Ashley Meadows Farm, Inc. v. Am. Horse Shows Ass'n, Inc., 624 F. Supp. 856, 857 (S.D.N.Y. 1985).
Shrader v. CSX Transp. Inc., 70 F.3d 255, 257 (2d Cir. 1995).
Application of Legal Standard
The plaintiffs do not contend, explicitly, that the Court overlooked any controlling decisions or matters put before it in their motion to amend the complaints. They do not challenge the Court's finding that, in their motion to amend the complaints, the "plaintiffs do not address the effect of the amended complaints on . . . the partial summary judgment they obtained against" Piramides Mayas Inc., Shaddai Inc. and Juan Rojas Campos.
The Plaintiffs' First Ground for Reconsideration
With respect to the first ground for reconsideration proffered by the plaintiffs, namely that "the amended complaints are not different from the complaints on which the [c]ourt rendered its summary judgment decision and should not render the S.J. Order void," the plaintiffs fail to make citation to any authority supporting their argument. The plaintiffs believe, erroneously, that the April 15, 2013 determination to void the February 15, 2012 partial summary judgment order was based on differences or similarities between the proposed amended complaints and the prior complaints. The Court's determination to void the February 15, 2012 partial summary judgment order was not based on differences or similarities between the proposed amended complaints and the prior complaints, but on the rule that "an amended complaint ordinarily supersedes the original and renders it of no legal effect," as stated in the April 15, 2013 order. Moreover, the plaintiffs fail to explain how any differences or similarities between the amended complaints and the prior complaints are relevant to the rule that "an amended complaint ordinarily supersedes the original and renders it of no legal effect," based on which the Court voided the February 15, 2012 partial summary judgment order. Accordingly, reconsideration, based on the plaintiffs' first ground, is not warranted.
The Plaintiffs' Second Ground for Reconsideration
The plaintiffs' second ground for reconsideration is that Rule 15(b)(2) of the Federal Rules of Civil Procedure "anticipate[s] that parties may amend their pleadings post-judgment without rendering the judgment void." It is not clear how Rule 15(b)(2) supports the plaintiffs' motion to reconsider the vacatur of the February 15, 2012 order. Rule 15(b)(2) of the Federal Rules of Civil Procedure does not apply here, as the plaintiffs' motion to amend the complaint was not made during or after trial. Moreover, the plaintiffs do not seek reconsideration of the Court's grant of the plaintiff's motion to amend the complaints. Therefore, reconsideration, based on the plaintiff's second ground, is not warranted.
The Plaintiffs' Third Ground for Reconsideration
The plaintiffs' third ground for reconsideration is that "the rulings in the S.J. Order persist under the law of the case doctrine," unless an "intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice" exists, and "[n]one of the circumstances that would warrant a deviation apply here," and the "S.J. Order was correctly decided." The plaintiffs concede, as they must, that a partial summary judgment grant is an interlocutory order that "may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities." Fed. R. Civ. P. 54(b); see Novick v. AXA Network, LLC, 642 F.3d 304, 314 (2d Cir. 2011) (partial summary judgment is an interlocutory decision). They appear to suggest that the Court abused its discretion when it vacated the February 15, 2012 order granting partial summary judgment to the plaintiffs, because no compelling reason existed to do so. However, the plaintiffs failed to raise the law of the case doctrine in their motion to amend.
Moreover, the plaintiffs are correct in asserting that a court should adhere to a decision it made at an earlier stage of the litigation, "absent 'cogent' or 'compelling' reasons" for not doing so, and that "[t]he major grounds justifying reconsideration are 'an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice.'" Doe v. New York City Dep't of Soc. Servs., 709 F.2d 782, 789 (2d Cir. 1983) (citations omitted). Accordingly, the Court did not overlook the law of the case doctrine; on the contrary, it found a compelling reason to vacate the February 15, 2012 order, namely, its determination that the amended complaints supersede the pleadings on which the February 15, 2012 order was based, rendering them "of no legal effect." The February 15, 2012 partial summary judgment order was rendered against certain defendants, including Campos. The plaintiffs sought to amend the complaints on which the partial summary judgment was granted, including against Campos, who is a named defendant in the amended complaints, but they contend, for the first time in the instant motion, that they do not intend to serve Campos with the amended complaints.
Manifest injustice would attend Campos if the amended complaints, naming him as a defendant, were permitted to go forward, while at the same time, the February 15, 2012 partial summary judgment order against him, based on the prior complaints, remained the law of the case. The amended complaints must be served on Campos, see Rule 5(a)(1)(B), and he is entitled to answer or move with respect to the amended complaints. Notwithstanding the plaintiffs' contention that the claims in the amended complaints are the same as those against which the partial summary judgment was granted, Campos may have new evidence that would allow him to defeat the claims against him asserted in the amended complaints. Since "an amended complaint ordinarily supersedes the original and renders it of no legal effect," Int'l Controls Corp. v. Vesco, 556 F.2d 665, 668 (2d Cir. 1977), the amended complaints here supersede the prior complaints, on which the partial summary judgment was granted. Campos would be prejudiced if the partial summary judgment order, imposing liability on him based on the prior complaints, remained in effect, while at the same time, the amended complaints, which he would be entitled to answer, were permitted to go forward. In effect, the plaintiffs seek not only to keep in place the partial summary judgment order finding Campos, among other defendants, liable based on the prior complaints, but also to prevent Campos from answering or moving with respect to the amended complaints against him. This they cannot do, because the resulting prejudice to Campos that would attend if the February 15, 2012 partial summary judgment order was not vacated when the plaintiffs' motion to amend the complaints was granted, would be a manifest injustice. Since the Court had a compelling reason to void the February 15, 2012 order and did not overlook the law of the case doctrine, reconsideration, based on the plaintiffs' third ground, is not warranted.
The Plaintiffs' Fourth Ground for Reconsideration
The plaintiffs contend that "the amended complaints cannot supersede the prior complaints 'until [the] amended complaint[s] [are] served,' which Plaintiffs have not done yet." They maintain that the rule set forth in the Second Circuit's decision, from which the Court quoted in its April 15, 2013 order, "that an amended complaint ordinarily supersedes the original and renders it of no legal effect," Vesco, 556 F.2d at 668, permits the plaintiffs "to proceed against different defendants under different complaints, so long as each defendant is properly served with the complaint pursuant to which judgment is sought against it." The plaintiffs appear to suggest that the Court overlooked the part of the Second Circuit's decision stating that "the original complaint is not superseded until the amended complaint is served." Id. at 669.
In Vesco, the plaintiff filed its initial complaint against Robert L. Vesco ("Vesco") and Vesco & Co., Inc. (the "Company"), in June 1973, and an amended complaint, in September 1973. Id. at 667. On October 5, 1973, the district court entered a default judgment against Vesco, without fixing damages, and, on July 12, 1974, a second default judgment, fixing some damages and leaving the possibility that the plaintiff might be able to prove further damages in subsequent proceedings. See Int'l Controls Corp. v. Vesco, 535 F.2d 742, 744-46 (2d Cir. 1976) (reciting the full text of both default judgment orders). The plaintiff attempted to satisfy the two judgments against Vesco with the corporate assets of the Company and, on August 22, 1975, the district court issued an execution order that pierced the corporate veil on the ground that the Company is an alter ego of Vesco. See id. at 744; Vesco, 556 F.2d at 667. The Company appealed from the August 22, 1975 judgment, and the Second Circuit remanded for clarification, because the July 12, 1974 default judgment was "susceptible to two interpretations, one of which is consistent with Rule 54(b) certification, the other which is not." Vesco, 535 F.2d at 748-49. On remand, the district court issued a judgment, in May 1976, which was subject to the Company's motion to vacate. See Vesco, 556 F.2d at 667. The Company argued in the district court, inter alia, that "the judgment was void because it was entered on the original complaint, which had been superseded and rendered functus officio by the amended complaint." Id. at 668. The district court rejected that argument and the Company appealed.
On appeal, the Second Circuit stated:
The judgments issued by the district court in this case, all of which were incorporated by reference into the May, 1976, judgment challenged here, were based on [the plaintiff]'s original complaint, filed in June, 1973. Prior to any of the judgments, however, [the plaintiff] filed an amended complaint in September, 1973. The district court found that the amended complaint was not properly served on Vesco, a finding not challenged by [the Company] here. The amended complaint, moreover, had to be served on Vesco personally, despite his failure to appear, because it asserted "additional claims for relief." Fed. R. Civ. P. 5(a). These somewhat unusual facts leave us with an apparent question of first impression. It is well established that an amended complaint ordinarily supersedes the original and renders it of no legal effect. Of the authorities stating this rule, however, none focuses on the point in time at which the superseding of the original by the amended complaint occurs. [The Company] argues that the critical point is the filing of the amended complaint, while [the plaintiff] argues, and the court below held, that the original complaint is not superseded until the amended complaint is served. We agree with the court below, at least where, as here, the amended complaint is required to be served under Rule 5(a). It is the rule in this circuit that, "after the filing of (an initial) complaint, the action remains pending in an inchoate state until service is completed. . . . ." This rule implies that an amended complaint, at least one that must be personally served pursuant to Rule 5(a), is also in an "inchoate state" until served.
Id. at 668-69 (internal citations omitted).
Thus, in this circuit, where "the amended complaint is required to be served under Rule 5(a)," the amended complaint supersedes the original complaint at the moment it is served. Id. at 669. The question is whether the amended complaints here are required to be served under Rule 5(a). If the amended complaints here are required to be served under Rule 5(a), then they supersede the prior complaints at the moment the amended complaints are served. See Vesco, 556 F.2d at 669. If the amended complaints here are not required to be served under Rule 5(a), then Vesco does not govern, since the Second Circuit limited its holding to "the circumstances of [that] case," namely, when the amended complaint is required to be served under Rule 5(a). Id. at 669.
Rule 5(a) provides, in pertinent part, that "a pleading filed after the original complaint, unless the court orders otherwise under Rule 5(c) because there are numerous defendants," must be served on every party. Fed. R. Civ. P. 5(a)(1)(B). However, Rule 5(a) also provides that "[n]o service is required on a party who is in default for failing to appear. But a pleading that asserts a new claim for relief against such a party must be served on that party under Rule 4." Fed. R. Civ. P. 5(a)(2).
No new counsel for Piramides Mayas, Inc., Mama Mexico Midtown Realty LLC, Shaddai Inc. and Mama Mexico Englewood Realty LLC filed a notice of appearance by December 5, 2011, as directed by the November 2, 2011 order, issued in these actions allowing counsel representing the defendants to withdraw. Thereafter, the Clerk of Court entered the default of these defendants "for failure to comply with the Court's November 2, 2011 Order." Therefore, the corporate defendants are in default for their failure to appear by new counsel, and service is not required to be effected on them. See Fed. R. Civ. P. 5(a)(2). The plaintiffs assert that the amended complaints contain "the same claims against the Defendants [as those on] which the Court ruled in the S.J. Order." Thus, no new claims are asserted in the amended complaints that would trigger service of the amended complaint on the corporate defendants who are in default for failing to appear. See Fed. R. Civ. P. 5(a)(2). Given that the corporate defendants are in default for failure to appear and no new claims against them are asserted in the amended complaints, serving the amended complaints on them is not required under Rule 5(a). However, the amended complaints are required to be served on Campos and Chavez, pursuant to Rule 5(a). Since the amended complaints are not required to be served, under Rule 5(a), on the corporate defendants, who are in default, but they are required to be served, under Rule 5(a), on Campos and Chavez, who are not in default, the Vesco rule—that an amended complaint required to be served under Rule 5(a) does not supersede the original complaint until it is served—does not apply in the circumstances of these cases. Consequently, the Court did not overlook the Vesco rule.
Even if the Court were to extend the Vesco rule to apply where, as here, the amended complaints are at the same time (i) not required to be served on some defendants (the corporate defendants who defaulted), under Rule 5(a), and (ii) required to be served on other defendants (individual defendants who did not default), under Rule (5a), the amended complaints would supersede the prior complaints, at least with respect to Campos and Chavez, at the time of service. This means that the February 15, 2012 partial summary judgment order, which includes a finding of liability against Campos, would become void at the moment the amended complaints supersede the prior complaints, because it is based on the prior complaints that would have no legal effect. Therefore, even assuming the Court were to extend the Vesco decision to the circumstances of these cases, the plaintiffs could not proceed, as they wish, by "[s]erving the amended complaints on Plaza Mexico and proceeding against the other Defendants based on the prior complaints." Moreover, in addition to Campos and Chavez who must be served with the amended complaints under Rule 5(a), the April 15, 2013 order directed the plaintiffs to file and serve the amended complaints on all defendants named in the amended complaints. Therefore, serving all the defendants named in the prior complaints as well as the amended complaints, as required by Rule 5(a) and pursuant to the April 15, 2013 order, is not optional.
Conclusion
For the foregoing reasons, the plaintiffs' motion for partial reconsideration of the April 15, 2013 order, Docket Entry No. 171 (case No. 09 Civ. 5076) and Docket Entry No. 95 (case No. 09 Civ. 9574), is denied. Dated: New York, New York
May 24, 2013
SO ORDERED:
/s/_________
KEVIN NATHANIEL FOX
UNITED STATES MAGISTRATE JUDGE Copy mailed to: Juan Rojas Campos
Laura Chavez