Opinion
Case No. 2:12-cv-00444-GMN-GWF
03-17-2014
GRANT CLEVERLEY, in his individual capacity and on behalf of nominal plaintiff ALLSITE STRUCTURE RENTALS, LLC, also a defendant herein, Plaintiff, v. CHARLES BALLANTYNE, an individual; ALLSITE STRUCTURE RENTALS, LLC, Defendants.
ORDER
This matter is before the Court on Plaintiff's Objections and Request for Partial Reconsideration of Court's Order on Defendants' Partial Motion to Dismiss and/or Strike Second Amended Complaint (#177), filed on February 7, 2014. Defendants filed their Response to Plaintiff's Objections and Request for Partial Reconsideration (#181) on February 24, 2014. Plaintiff filed his Reply (#182) on March 6, 2014. The Court conducted a hearing in this matter on March 14, 2014.
BACKGROUND AND DISCUSSION
In Order (#173), the Court dismissed, with prejudice, that part of Plaintiff's Second Amended Complaint that alleges that Defendant Allsite breached a contractual duty under the terms of the parties' Purchase and Sale Agreement to make a distribution to Plaintiff to pay his 2010 tax liability arising out of his fifty (50) percent ownership interest in Allsite. The Court concluded that such a claim is contrary to the clear terms of the Agreement which states as follows:
SECTION 4. Tax Obligations. Seller is responsible for any and all pro-rata income tax obligations associated with his ownership of the 50% of the Company through the Effective Date. Seller will receive a Form K-1 for year 2011 from the Company and will be responsible for payment of any and all taxes associated with it. Seller is responsible for any and all taxes associated with the sale of the Member Interest, including but not limited to capital gains taxes.
Purchase and Sale Agreement, pg. 4.
Plaintiff concedes that his objection to Order (#173) and request that the District Judge overrule that order does not lie in that the parties consented to have the Magistrate Judge conduct all proceedings in this case including trial, the entry of final judgment and all post-trial proceedings in accordance with 28 U.S.C. §636(c) and Fed.R.Civ.Pro. 73. See Order (#146), filed October 23, 2013. Notwithstanding Plaintiff's procedural error in objecting to the order, the Court has considered Plaintiff's Objections and Request for Partial Reconsideration (#177) under the general standards applicable to motions for reconsideration: Whether the court (1) is presented with newly discovered evidence; (2) committed clear error or its initial decision was manifestly unjust; or (3) there has been an intervening change in controlling law. See Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 880 (9th Cir. 2009). The only factor arguably applicable here is that the Court committed clear error in Order (#173).
Having reviewed the briefs of the parties and heard argument by counsel, the Court finds that there is no basis to conclude that Order (#173) is clearly erroneous or manifestly unjust. To the contrary, the Court remains convinced that the plain language of Section 4 of the Purchase and Sale Agreement, read in accordance with the agreement as a whole, provides that Plaintiff was responsible for the payment of his 2010 tax liability. Accordingly, Defendant did not breach the terms of the Purchase and Sale Agreement by refusing or failing to make such a distribution.
As the Court has previously stated, however, Plaintiff may pursue a claim for damages based on his claim that he was fraudulently induced to enter into the Purchase and Sale Agreement by Defendants' false representations regarding the estimated amount of Plaintiff's 2010 tax liability. Order (#173) also does not preclude Plaintiff from hereafter claiming a right to a distribution to cover a portion of his tax liability if he is successful in establishing that Allsite otherwise breached the Purchase and Sale Agreement and Plaintiff is restored to the ownership of a portion of Allsite. Accordingly,
IT IS HEREBY ORDERED that Plaintiff's Objections and Request for Partial Reconsideration of Court's Order on Defendants' Partial Motion to Dismiss and/or Strike Second Amended Complaint (#177) is denied.
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GEORGE FOLEY, JR.
United States Magistrate Judge