Beaver v. Tarsadia Hotels

Decision Date01 July 2014
Docket NumberNo. 11CV1842–GPC KSC.,11CV1842–GPC KSC.
Citation29 F.Supp.3d 1294
CourtU.S. District Court — Southern District of California
PartiesDean BEAVER, et al., Plaintiffs, v. TARSADIA HOTELS, et als., Defendants.

Donald Eugene Chomiak, Talisman Law, P.C., Glendale, CA, Michael Lawrence Schrag, Tyler R. Meade, Meade & Schrag LLP, Berkeley, CA, Michael Rubin, Altshuler Berzon LLP, San Francisco, CA, Wendy C. Fostvedt, Fostvedt Legal Group, LLC, Basalt, CO, for Plaintiffs.

Alicia Natalie Vaz, Perry Hughes, Cox Castle & Nicholson, Los Angeles, CA, Frederick H. Kranz, Jr., Lynn T. Galuppo, Cox Castle & Nicholson, Irvine, CA, Daniel M. Benjamin, Chrysta L. Elliott, John J. Rice, Thomas W. McNamara, Ballard Spahr LLP, San Diego, CA, for Defendants.


GONZALO P. CURIEL, District Judge.

Before the Court is Plaintiffs'1 motion for reconsideration of two rulings in the Court's order filed on October 16, 2013. (Dkt. No. 133.) In that order, the Court denied Plaintiffs' motion for summary judgment based on the “unlawful” prong of California's Unfair Competition Law (“UCL”) and granted Tarsadia Defendants2 and Defendant Playground Destination Properties, Inc.'s (“Playground”) motions for summary judgment as to all causes of action3 except the negligence cause of action. (Dkt. No. 128.) On November 12, 2013, Plaintiffs filed an amended motion for reconsideration. (Dkt. No. 138.) Tarsadia Defendants and Playground filed their oppositions on March 7, 2014. (Dkt. Nos. 146, 147.) A reply was filed on March 14, 2014. (Dkt. No. 148.)

In the Court's order on the parties' motions for summary judgment, the Court requested supplemental briefing on the negligence cause of action. (Dkt. No. 128.) Pursuant to the Court's direction, the parties filed supplemental briefs on the negligence cause of action. (Dkt. Nos. 134, 135, 136.)

A hearing was held on April 18, 2014. (Dkt. No. 149.) Michael Rubin, Esq., Michael Reiser, Esq. and Tyler Meade, Esq. appeared on behalf of Plaintiffs. Alicia Vaz, Esq. and Frederick Kranz, Esq. appeared on behalf of Tarsadia Defendants; and Daniel Benjamin, Esq. appeared on behalf of Defendant Playground. Based on the reasoning below, the Court GRANTS in part and DENIES in part Plaintiffs' motion for reconsideration; and GRANTS Tarsadia Defendants and Playground's motions for summary judgment on the negligence cause of action.

A. Legal Standard on Motion for Reconsideration

A district court may reconsider a grant of summary judgment under either Federal Rule of Civil Procedure (“Rule”) 59(e) or Rule 60(b). Sch. Dist. No. 1J, Multnomah County, Or. v. ACandS, Inc., 5 F.3d 1255, 1262 (9th Cir.1993). Plaintiffs do not assert which rule they move under but it appears that Plaintiffs are moving under Rule 59(e) based on the standard they assert.

Federal Rule of Civil Procedure 59(e) provides for the filing of a motion to alter or amend a judgment. Fed.R.Civ.P. 59(e). A motion for reconsideration, under Federal Rule of Civil Procedure 59(e), is “appropriate if the district court (1) is presented with newly discovered evidence; (2) clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law.” Sch. Dist. No. 1J, Multnomah County, Or., 5 F.3d at 1263 ; see also Ybarra v. McDaniel, 656 F.3d 984, 998 (9th Cir.2011).

In addition, Local Civil Rule 7.1(i)(1) provides that a motion for reconsideration must include an affidavit or certified statement of a party or attorney “setting forth the material facts and circumstances surrounding each prior application, including inter alia: (1) when and to what judge the application was made, (2) what ruling or decision or order was made thereon, and (3) what new and different facts and circumstances are claimed to exist which did not exist, or were not shown upon such prior application.” Local Civ. R. 7.1(i)(1).

The Court has discretion in granting or denying a motion for reconsideration. Fuller v. M.G. Jewelry, 950 F.2d 1437, 1441 (9th Cir.1991). A motion for reconsideration should not be granted absent highly unusual circumstances. 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir.1999). “A motion for reconsideration cannot be used to ask the Court to rethink what the Court has already thought through merely because a party disagrees with the Court's decision.” Collins v. D.R. Horton, Inc., 252 F.Supp.2d 936, 938 (D.Az.2003) (citing United States v. Rezzonico, 32 F.Supp.2d 1112, 1116 (D.Az.1998) ).

Plaintiffs move for reconsideration arguing that the Court's ruling that 1) Plaintiffs' claims under California's Unfair Competition Law, California Business & Professions Code section 17200 et seq. are governed by a three year statute of limitations set forth under the Interstate Land Sales Full Disclosure Act (“ILSA”) rather than the four year statute of limitations in section 17208 of the UCL is based on “clear error”; and 2) that scienter is required to establish a violation of the ILSA's anti-fraud provision should be reconsidered based on “an intervening change in the controlling law.” (Dkt. No. 138 at 16.)

Tarsadia Defendants oppose both issues while Playground only opposes the reconsideration of the UCL claim since the fraud claim against it was previously dismissed with prejudice.

B. California's Unfair Competition Law, UCL

Plaintiffs' argument is two pronged. First, Plaintiffs contend that the California legislature intended the UCL's four year statute of limitations to apply to all UCL claims, including those based on federal law with shorter limitations period. This argument is based on the California legislature's freedom to enact any laws as long as those protections do not violate the Supremacy Clause. Second, nothing in the ILSA preempts the UCL or its four year statute of limitations. Specifically, they argue that the ILSA invites states to enact parallel laws that are stricter than the ILSA under 15 U.S.C. § 1708 and § 1713. Since the ILSA has no preemptive effect, which is the only way federal law can displace state law, courts have the authority to apply Plaintiffs' UCL four year statute of limitations even though it borrows from a federal statute, ILSA, with a shorter three year statute of limitations.

Tarsadia Defendants and Playground4 oppose arguing that Plaintiffs have failed to meet the standard for reconsideration of “clear error” and are merely improperly repeating their arguments in prior briefing. Second, they assert that when Congress has established a time limit for enforcing a federal right, that limitations period must apply.

California's Unfair Competition Law prohibits any “unlawful, unfair or fraudulent business act or practice.” Cal. Bus. & Prof.Code § 17200. “Each of these three adjectives [unlawful, unfair or fraudulent] captures a separate and distinct theory of liability.” Rubio v. Capital One Bank, 613 F.3d 1195, 1203 (9th Cir.2010) (quotation marks omitted). The UCL's coverage is broad, sweeping and embracing of anything that can be properly called a business practice and at the same time forbidden by law. Cel–Tech Comms., Inc. v. Los Angeles Cellular Tel. Co., 20 Cal.4th 163, 180, 83 Cal.Rptr.2d 548, 973 P.2d 527 (1999). “It governs ‘anti-competitive business practices' as well as injuries to consumers, and has a major purpose ‘the preservation of fair business competition.’ Id. (citations omitted) The California Supreme Court explained that while the unfair competition law is broad and sweeping, “it is not unlimited” and plaintiffs may not “plead around” an “absolute bar to relief” by “recasting the cause of action as one for unfair competition.” Id. at 182, 83 Cal.Rptr.2d 548, 973 P.2d 527. For example, courts may not impose their own notions of what is fair or unfair, specific legislation may limit the court's power to declare conduct unfair, and when specific legislation provides a safe harbor, plaintiffs may not use the general unfair competition law to “assault that harbor.” Id. However, the limitation is narrow. Chabner v. United Omaha Life Ins. Co., 225 F.3d 1042, 1048 (9th Cir.2000). “To forestall an action under the unfair competition law, another provision must actually ‘bar’ the action or clearly permit the conduct.” Cel–Tech Comms., Inc., 20 Cal.4th at 183, 83 Cal.Rptr.2d 548, 973 P.2d 527.

C. Statute of Limitations
1. Unlawful Prong of the UCL

Under the “unlawful” prong, the UCL incorporates other laws and treats violations of those laws as unlawful business practices independently actionable under state law. Chabner, 225 F.3d at 1048 (citing Cel–Tech Comms., Inc., 20 Cal.4th at 180, 83 Cal.Rptr.2d 548, 973 P.2d 527 ). Violation of almost any federal, state or local law may serve as the basis for an “unlawful” UCL claim. Saunders v. Superior Court, 27 Cal.App.4th 832, 838–39, 33 Cal.Rptr.2d 438 (1994). “To state a cause of action based on an unlawful business act or practice under the UCL, a plaintiff must allege facts sufficient to show a violation of some underlying law.” Prakashpalan v. Engstrom, Lipscomb and Lack, 223 Cal.App.4th 1105, 1133, 167 Cal.Rptr.3d 832 (2014) (“unlawful practices are practices ‘forbidden by law, be it civil or criminal, federal, state, or municipal, statutory, regulatory or court-made.’).

In this case, the underlying law are the disclosure provisions of the ILSA, 15 U.S.C. §§ 1703(a)(1)(A) & (B) and § 1703(d). (See Dkt. No. 81.) These provisions have a three year statute of limitations from the date of signing of the contract, which was either on May 18, 2006 or December 12, 2006. See 15 U.S.C. § 1711(a), (b). The Complaint in this case was filed on May 18, 2011 in San Diego Superior Court. Under the three year ILSA statute of limitations, Plaintiffs' cause of action would be time–barred. However, it is undisputed that the cause of action...

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