Opinion
Case No. 02-13533 (AJG) Jointly Administered.
October 16, 2005
JAMES T. GROGAN, III, ESQ., Weil, Gotshal Manges, LLP, Houston, Texas, for the Debtors.
U.S. ATTORNEY'S OFFICE, BY: NICOLE GUERON, ESQ., Assistant United States Attorney, New York, New York, for the Government.
SHARI RIEMER, TypeWrite Word Processing Service Staten Island, New York, Court Transcriber.
Upon consideration of the motion of Telnet Communications, Inc. to Reconsider, Alter, Amend And Make Additional Findings Of Fact In Connection With The Court's Memorandum Decision Dated March 25, 2005 Regarding Debtor's Motion To Dismiss Telnet Proof Of Claim No. 8297 ("Motion for Reconsideration"), and Reorganized Debtors' Opposition thereto, and a hearing having been held before the Court regarding the Motion for Reconsideration on June 14, 2005, for the reasons stated more fully on the record on October 5, 2005 (see Transcript attached as Exhibit A ), the Court finds that Telnet has failed to demonstrate any manifest error of law or fact with respect to dismissal of its breach of contract claim or with respect to the dismissal of its claim of tortious interference with contract. The Court further finds that it erred in denying Telnet's request for leave to amend based on the erroneous finding that Telnet failed to respond to debtor's argument and upon Telnet raising a claim for tortious interference with prospective business relationships.
IT IS THEREFORE ORDERED THAT:
Telnet's Motion for Reconsideration is DENIED in all respects except that Telnet is granted leave to amend its complaint solely to conform its allegations to plead a claim for tortious interference with prospective business relationships; and it is
FURTHER ORDERED, that Telnet is granted 60 days from the date this Order is entered upon which to amend its complaint to plead such tortious interference claim; and it is
FURTHER ORDERED, that such amendment is without prejudice to Reorganized Debtors' right to raise any defense to a claim for tortious interference with prospective business relationships including a defense that it may be barred by the filed rate doctrine.
(JUDGE'S DECISION ONLY)
THE COURT: The matter before the Court involves Telnet Communications, Inc., motion to reconsider, alter, amend and make additional findings-of-fact in connection with the Court's memorandum decision dated March 25, 2005 regarding debtor's motion to dismiss Telnet proof of claim No. 8297.
Pursuant to 11 U.S.C. 502(j) and the Federal Rules of Bankruptcy Procedure 8008, 7052, 9023 and 9024, the factual background of this case has been set forth in a memorandum decision, familiarity with which is assumed. The Court's memorandum decision granted the reorganized debtor's motion to dismiss Telnet's proof of claim No. 8297 dismissing all of Telnet's causes of actions. Based on the Court's findings in the memorandum decision, Telnet's request that the Court (1) reconsider its dismissal of the tortious interference claim, (2) reconsider its dismissal of the breach of contract claim, and (3) in the alternative reconsider its denial of leave to amend its complaint to cure any pleading defects.
A hearing regarding this matter was held on June 14, 2005. As an initial matter, the Court enters the attached order submitted on April 25, 2005 to the debtor's notice of settlement of an order regarding memorandum decision dismissing Telnet's proof of claim No. 8297.
Section 502(j) of the Bankruptcy Code provides that a claim that has been allowed or disallowed may be reconsidered for cause. Section 502(j) is implemented by Bankruptcy Rule 3008. Bankruptcy Rule 3008 provides that a party-in-interest may seek reconsideration of an order of the Court that allows or disallows a claim. A creditor's Rule 3008 motion for reconsideration filed within the ten day period during which appeals are permitted under Bankruptcy Rule 8002 should be treated as a Federal Rule of Civil Procedure, Rule 59, made applicable herein through Bankruptcy Rule 9023, motion to amend, rather than a Federal Rule of Civil Procedure 60, made applicable herein through Bankruptcy Rule 9024, motion for relief from judgment, 2005 Collier, pamphlet edition, Bankruptcy Rules, Part 2.
Rule 59 and 52 made applicable herein through Bankruptcy Rule 7052 allow a Court to amend its findings or make additional findings and to amend its judgment accordingly. Both Rules 52 and 59 require a Court in a motion to amend its findings or make additional findings or to amend or alter a judgment shall be filed no later than ten days after entry of a judgment. Rule 59 has a narrow purpose of allowing a Court jurisdiction to rectify its own mistakes within a ten day period following the entry of a judgment. A Rule 52 motion is intended to enable an Appellate court to obtain the correct understanding of the facts determined by the Court which resulted in the Court's conclusion of law and its judgment.
Reconsideration of an order is an extraordinary remedy which should be used sparingly in the interests of finality and conservation of judicial resources. The Court notes that the standard and rules governing motions pursuant to Rules 52 and 59 are essentially identical. Courts have recognized that the following grounds in which to amend findings of judgment: (1) intervening change in controlling law, (2) newly discovered evidence, and (3) clear, legal error, mistaken either law or fact.
Telnet's motion for reconsideration contends that the Court made manifest errors of law and/or fact regarding its claims based on tortious interference with contract and breach of contract and also erroneously denied its request for leave to amend. A motion based on manifest error of law or fact will not be granted except on a showing of some substantial reason. The movant has the burden to demonstrate these manifest errors. To prevail, the movant must present factual matter or controlling decisions the Court overlooked that might materially have influenced its earlier decision. This Rule is narrowly construed and applied strictly against the moving party so as to dissuade repetitive arguments on issues that have already been considered fully by the Court. In addition, the movant may not advance new facts, issues or arguments not previously presented to the Court.
It is well settled that Rules 52 and 59 are not vehicles for relitigating old issues; presenting a case under new theories, securing a rehearing on the merits or otherwise taking a second bite at the apple.
Lastly, a decision to grant or deny a motion to amend the findings of judgment is within the sound discretion of the Court.
With regard to the tortious interference of contract claim, Telnet argues that the Court erroneously held Telnet is not responding to debtor's legal argument and in not pleading the existence of any valid contract between themselves and the third party with which the debtors interfered has failed to state a cause of action for which relief could be granted. Telnet maintains that in its response to debtor's motion to dismiss it addressed debtor's legal arguments and identified Interrecycling [Ph.] as a customer with which Telnet had a contract.
Further, Telnet contends that it cited Hyle Paper Corp. v. Mischer Corp. [Ph.], for the proposition that Texas law does not require an enforceable contract to state a claim for tortious interference.
Lastly, Telnet argues that it informed the Court that Texas also recognized tortious interference with prospective business relations.
The Court acknowledges that it erred in finding that Telnet did not respond to the debtor's legal argument regarding the tortious interference claim. However, the Court was correct in its finding that Telnet did not present the existence of an enforceable contract between itself and Interrecycling or any other third party customer for that matter to state a cause of action for tortious interference or contract.
In addition, Telnet, at the reconsideration hearing conceded to this fact. Mr. Robbins, Telnet's attorney, represented to the Court that "If you're looking for a contract that says Telnet and Interrecycling, I know of none," Transcript, P. 18. Also, in response to the Court's question of ". . . and contractual relationships are not evidenced by any contract, is that right?" Mr. Robbins answered, "There is no specific contract," Transcript. P. 19. Therefore, based on the above, Telnet has failed to demonstrate any manifest error of law or fact by the Court with regard to the tortious interference with contract.
Since the Court erred in denying Telnet's request for leave to amend based on the erroneous findings that Telnet failed to respond to debtor's argument and upon Telnet raising a claim for tortious interference with prospective business relationships, the Court grants Telnet's motion to amend its complaint solely to conform its allegations to plead a claim for tortious interference with prospective business relationships. The Court grants Telnet sixty days upon which to amend its complaint to plead such tortious interference claim.
In addition, such is without prejudice in that the debtor has the right to raise any defense to a claim for tortious interference with respect to business relationships including a defense that it may be barred by the Filed Rate Doctrine.
With regard to Telnet's breach of contract claim, Telnet argues that the Court ignored that the debtor's motion to dismiss did not address the substance of Telnet's claim. Further, Telnet argues that the Court did not provide an explanation other than "generic complaint that they are somehow precluded by the Filed Rate Doctrine." Telnet maintains that the Court ignored its argument that Telnet had two contractual arrangements which are discussed below with the debtor of whom both were not tariff items and were outside the scope of the Filed Rate Doctrine.
First, the debtor unambiguously responded to the substance of Telnet's breach of contract claim. The debtor argued repeatedly that since "Telnet's breach of contract claim was based on the failure of the rebilling software to provide accurate call detail and reports and to bill Telnet accurately, it was governed by the tariff." Thus, it was barred by the Filed Rate Doctrine, See, debtor's motion to dismiss, Paragraph 5 through 14 and debtor's reply to motion to dismiss, Paragraphs 1, 9 and 24. Second, the Court in its memorandum decision, Pages 3 through 4, found that Telnet and the debtor entered into two contractual arrangements; the first contract whereby Telnet would receive commissions for generating new customers for debtor's long distance telephone service and products, identified as "the representation agreement," and a second contract whereby Telnet would receive compensation based on a re-rating mark-up [sic] over the rate Telnet paid to the debtor, identified as "the rebilling agreement." However, the Court also found in the memorandum decision, Page 4, based on "Telnet's representation to the Court that the rebilling agreement superseded the representation agreement and that Telnet would receive compensation under the rebilling agreement in lieu of receiving a commission under the representation agreement," Telnet's response to debtor's motion to dismiss, Paragraph 8, P. 5, see, also, Richard Workman [Ph.] declaration, P. 3. In addition, Telnet never alleged that it operated under the representation agreement before the Court, nor did it allege to the Court that it submitted orders to the debtor under the representation agreement. Moreover, Telnet in its third amended complaint, focused its breach of contract claims solely on a defective service of the rebilling software and never mentioned a breach of contract of the representation agreement. As stated previously, "Telnet represented to the Court that in lieu of receiving commissions under the representation agreement it was to be compensated under the rebilling agreement," Telnet's response to debtor's motion to dismiss, Paragraph 8, P. 4. Again, see, also, Richard Workman declaration, P. 3. Therefore, Telnet solely operated under the rebilling agreement and not under the representation agreement. The breach of contract of the rebilling agreement is governed by the tariff and is based on defective service of the rebilling software. Therefore, any cause of action resulting therefrom is barred by the Filed Rate Doctrine.
Accordingly, the Court finds Telnet has not demonstrated any manifest error of law or fact with respect to its dismissal of the breach of contract claim.
The debtor is to settle an order consistent with this opinion.