Cerx Pharmacy Partners, LP v. Provider Meds, LP (In re Providerx of Grapevine, LLC)

• Citation: 507 B.R. 132
• Decision Date: 13 March 2014
• Docket Number: Adversary No. 13–03015–BJH.,Bankruptcy No. 12–38039–BJH.
• Court: United States Bankruptcy Courts. Fifth Circuit. U.S. Bankruptcy Court — Northern District of Texas
• Parties: In re PROVIDERX OF GRAPEVINE, LLC, Debtor. CERx Pharmacy Partners, LP, Plaintiff, v. Provider Meds, LP, et al., Defendants, v. Cary Lorimer and Stewart Stephens, Third Party Defendants.

507 B.R. 132

In re PROVIDERX OF GRAPEVINE, LLC, Debtor.

CERx Pharmacy Partners, LP, Plaintiff,

v.Provider Meds, LP, et al., Defendants,

v.Cary Lorimer and Stewart Stephens, Third Party Defendants.

Bankruptcy No. 12–38039–BJH.

Adversary No. 13–03015–BJH.

United States Bankruptcy Court,

N.D. Texas,

Dallas Division.

Signed March 12, 2014.

Filed and Entered March 13, 2014.

William G. Whitehill, Gardere Wynne Sewell LLP, Dallas, TX, for Plaintiff.

Kevin S. Wiley, Jr., Law Offices of Kevin S. Wiley Jr., Dallas, TX, for Defendants/Third Party Defendants.

David W. Elmquist, Reed & Elmquist, P.C., Waxahachie, TX, for Trustee.

MEMORANDUM OPINION GRANTING MOTION FOR RECONSIDERATION AND, UPON RECONSIDERATION, ADDRESSING MOTIONS FOR PARTIAL SUMMARY JUDGMENT

BARBARA J. HOUSER, Bankruptcy Judge.

Before the Court are the Plaintiff's Amended Motion for Reconsideration or New Trial and Brief (the “Motion for Reconsideration”) [Dkt. No. 136] filed by CERx Pharmacy Partners, LP (“CERx”) in which CERx requests that this Court modify its Memorandum Opinion entered August 2, 2013 (the “Original Memorandum Opinion”), the Trustees' Response to Plaintiff's Amended Motion for Reconsideration or New Trial [Dkt. No. 139] filed by the Chapter 7 trustees of the various debtor-Defendants' bankruptcy estates (collectively, the “Trustees”),¹ and the various replies and post-hearing briefs related thereto. The Court held a hearing on the Motion for Reconsideration on January 8, 2013. At the conclusion of the hearing, the Court ordered additional briefing on several issues. The last of those briefs was filed on January 17, 2014. The Motion for Reconsideration is now ripe for ruling.

I. PROCEDURAL HISTORY

On June 17, 2013, the Court held a hearing to consider the Defendants' Partial Motion for Summary Judgment [Dkt. No. 53] and brief in support (“Defendants' Brief”) [Dkt. No. 54] filed by ProvideRx of Grapevine, LLC, Provider Meds, LP (“PM”), Provider Technologies, Inc. (“PT”), OnSite RX of Phoenix, LLC, W PA Onsite RX, LLC, ProvideRx of Midland, LLC, ProvideRx of Waco, LLC, ProvideRx of San Antonio, and Reef Gillum as trustee of the Gillum Family Master Heritage Trust (collectively with OnSiteRx, Inc.,² the “Defendants”), Plaintiff's Motion for Partial Summary Judgment [Dkt. No. 66] and brief in support (“Plaintiff's Brief”) [Dkt. No. 67] filed by CERx, and the responses and replies related thereto.

At the conclusion of the hearing, this Court orally granted CERx's request for entry of a judgment against the Gillum Family Master Heritage Trust (“GFMHT”) ³ for $10,301,130.81, plus interest at a rate of $4,739.36 per day since March 31, 2013, for sums GFMHT owes CERx under various continuing, unconditional, and unlimited payment guaranties GFMHT executed in favor of CERx covering PM's debts to CERx. The Court also orally granted CERx's request for a judgment in this amount against PT, as PM's general partner, for the debts owed to CERx by PM. Accordingly, on June 26, 2013, this Court entered a Partial Summary Judgment [Dkt. No. 100] reflecting these rulings. The Court also requested supplemental briefing from the parties on several remaining issues at the conclusion of the hearing. By agreement of the parties, the last of those supplemental briefs was submitted on July 3, 2013, and the motions were taken under advisement.

The Court issued the Original Memorandum Opinion on August 2, 2013, in which it found that: (1) the loan documents are unambiguous and, as a matter of law, PM did grant CERx a security interest in all of its IP Assets (as defined on p. 7); (2) although CERx's security interest attached to PM's IP Assets, the collateral description contained in the UCC–1 financing statement filed by CERx with the Texas Secretary of State was insufficient to perfect CERx's security interest in PM's IP Assets, other than the Patent Applications (as defined on p. 21); (3) pursuant to its Notice of Disposition (as defined on p. 23), CERx only disposed of PM's Patent Applications; (4) thus, as of its bankruptcy petition date, PM held title to all of its IP Assets, other than the Patent Applications, subject to CERx's unperfected security interest; and (5) because CERx failed to perfect its non-Patent Application security interests, such interests were unperfected when PM filed its bankruptcy case and are subject to avoidance pursuant to 11 U.S.C. § 544(a)(1). Original Memorandum Opinion at 3. On September 12, 2013, CERx filed the Motion for Reconsideration.

At the conclusion of the January 8, 2014 hearing on the Motion for Reconsideration,⁴ the Court ordered additional briefing on the issues of: (1) whether the Court could read the Transmittal Letter (as defined on p. 22) in conjunction with the Notice of Disposition in order to determine the scope of CERx's December 13, 2012 disposition of collateral, and (2) whether failure to provide a notice of disposition to all parties required to be given notice under the Texas UCC is grounds to void or otherwise rescind the disposition of collateral. Further, CERx was to include within its post-hearing brief citations to the portions of the summary judgment record connecting the source code referenced in the Transmittal Letter to the Source Code (as defined on p. 20) at issue here. As noted previously, CERx and the Trustees submitted their post-hearing briefs on January 17, 2014. Notably, the Trustees' brief expressly conceded CERx's argument on both points:

As a result, with respect to the validity of the foreclosure as to the ownership interest, if any, of Provider Meds, the Trustees believe that the answer to issue (1) is “yes” and that the answer to issue (2) is “no.” Since the Trustees agree with the Court's tentative rulings with respect to the validity of the foreclosure as to the ownership interests, if any, of Provider Meds, we believe that there is no need to submit briefing on these issues.

Briefing of Legal Issues Discussed at January 8, 2014 Hearing [Dkt. No. 150] at 1. Further, CERx's post-hearing brief provided the Court with sufficient references to the summary judgment record to show that the source code referenced in the Transmittal Letter is the Source Code at issue here. ⁵See Plaintiff's Brief Tracing the Source Code Referred to in CERx's Transmittal Letter to the Source Code in the Court's Registry [Dkt. No. 149] at ¶ 5.

II. LEGAL ANALYSISA. The Motion for Reconsideration

CERx failed to cite to the rule of procedure under which it would have the Court revisit the Original Memorandum Opinion, only stating that the Motion for Reconsideration is brought to correct a manifest error of law. Plaintiff's Reply Regarding its Amended Motion for Reconsideration or New Trial and Brief (“Reply Regarding Motion for Reconsideration”) [Dkt. No. 142] at 1. To decide which rule of procedure applies to the Motion for Reconsideration, and thus the relevant legal standard to apply, the Court must consider the nature of its decision as set forth in the Original Memorandum Opinion. If it was a final judgment, Fed.R.Civ.P. 59(e) would apply. However, the Original Memorandum Opinion was an interlocutory decision, as it addressed partial summary judgment motions and did not finally dispose of all issues raised in this adversary proceeding. See Moody v. Seaside Lanes, 825 F.2d 81, 85 (5th Cir.1987) (explaining that only the resolution of an entire adversary proceeding is “final”). Interlocutory orders are reconsidered under Fed.R.Civ.P. 54(b), as made applicable to adversary proceedings by Fed. R. Bankr.P. 7054(a). SeeFed.R.Civ.P. 54(b) (“[A]ny order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties ... may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.”).

Although the precise standard for evaluating a motion to reconsider under Rule 54(b) is unclear, whether to grant such a motion rests within the discretion of the court and the standard appears to be less exacting than that imposed by Rules 59 and 60. Dos Santos v. Bell Helicopter Textron, Inc. Dist., 651 F.Supp.2d 550, 552 (N.D.Tex.2009). “Even so, considerations similar to those under Rules 59 and 60 inform the Court's analysis.” Id. That is, considerations such as whether the movant is attempting to rehash its previously made arguments or is attempting to raise an argument for the first time without justification bear upon a court's review of a motion for reconsideration under Rule 54(b). Id.

CERx summarizes its argument in its Reply Regarding Motion for Reconsideration, where it argues that portions of the Original Memorandum Opinion reflect a manifest error of law because:

(1) a defect in the sale process would be an affirmative defense that PM never pled, was not raised in the motions or briefs, and was not properly before the Court; (2) the Opinion fails to recognize that actual notice would suffice; (3) Trustees admit that PM had actual notice; and (4) sufficiency of notice does not affect the transfer of title. For these reasons alone, the Court should modify the Opinion to hold that CERx acquired all of PM's IP Assets no later than by the December 13, 2012 sale.

Reply Regarding Motion for Reconsideration at ¶ 2.

As discussed in more detail below, the Court agrees that it erred in analyzing the sufficiency of the notice CERx provided to PM prior to conducting a public sale of the collateral PM had pledged to secure repayment of its notes under the May 6 Loan Documents. In the Original Memorandum Opinion, the Court read the Notice of Disposition in isolation and concluded that PM only received notice of CERx's intent to dispose of the Patent Applications. The Court now recognizes that the Notice of Disposition must be read together with the Transmittal Letter, and when these documents are read together PM did, in fact, have actual notice of CERx's intent to dispose of all of...