Collins v. D.R. horton, Inc.

• Decision Date: 05 March 2003
• Docket Number: No. CV-99-330-PHX-ROS.,CV-99-330-PHX-ROS.
• Citation: 252 F.Supp.2d 936
• Parties: Julie E. COLLINS; Robert B. Ryan, Plaintiffs, v. D.R. HORTON, INC., Defendant.
• Court: U.S. District Court — District of Arizona

252 F.Supp.2d 936

Julie E. COLLINS; Robert B. Ryan, Plaintiffs, v. D.R. HORTON, INC., Defendant.

No. CV-99-330-PHX-ROS.

United States District Court, D. Arizona.

March 5, 2003.

Lawrence Allen Katz, Monica Linn Goebel, Steptoe & Johnson, LLP, Phoenix, AZ, for plaintiffs.

Lisa Marie Coulter, Lonnie J. Williams, Jr., Kristin Major Siciliano, Snell & Wilmer LLP, Phoenix, AZ, for defendant.

ORDER

SILVER, District Judge.

Pending before the Court is Plaintiffs' Motion for Partial Reconsideration of the Court's March 29,2002 Order granting Defendant's Motion to Dismiss/Compel Arbitration. For the reasons stated below, the Court denies the Motion.

Background

On February 29,1999, Plaintiffs, former employees of Defendant, filed a Complai against Defendant alleging breach of contract, promissory estoppel, and fraud arising out of an employment agreement ("Agreement"). According to Plaintiffs, Defendant forced them to resign their positions and failed to pay them various sums allegedly owed under the terms of the Agreement. Although the Agreement includes a compulsory arbitration provision, on March 15, 1999, Defendant filed a timely response to Plaintiffs' claims. The parties then filed a Joint Proposed Case Management Plan, which provides, among other things, that "[a]ny Motion by Defendant directed at obtaining an Order to compel arbitration of Plaintiffs' claims must be filed by May 31,1999." (See 7/21/99 Sched. Order at 2)(adopting parties' stipulated dates).

Over the course of the next year, the litigation proceeded in accordance with the Scheduling Order. The parties engaged in extensive discovery, and on July 31, 2000, Defendant filed two motions for partial summary judgment. On August 2,2000, Plaintiffs also moved for partial summaryjudgment. While these motions were pending, Defendant filed a motion to consolidate this case with another case involving an employment agreement in which it is also the Defendant. See Hickcox v. D.R. Horton, Inc., CIV-99-329-PHSRB. On March 30,2001, this Court denied the three motions for summary judgment. On July 2, 2001, Judge Susan R. Bolton denied the motion to consolidate.

Meanwhile, on May 14, 1999, Defendant moved in Hickcox to dismiss the plaintiffs claims and compel arbitration based on the parties' employment agreement. However, on May 27, 1999, the Ninth Circuit held that the Federal Arbitration Act ("FAA") does not apply to employment contracts. Craft v. Campbell Soup Co., 177 F.3d 1083, 1093 (9th Cir.1998).¹ Accordingly, the Hickcox Court denied Defendant's Motion to Dismiss on the basis of craft and Arizona law, which rendered compulsory arbitration provisions in employment contracts unenforceable.

On March 21,2001, the Supreme Court issued its decision in Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 121 S.Ct. 1302, 149 L.Ed.2d 234(2001). The Supreme Court held that, contrary to the Ninth Circuit's reasoning in Craft, the FAA does apply to employment contracts. Under Circuit City, otherwise valid compulsory arbitration provisions are now enforceable. On July 30,2001, Defendant filed a Motion with this Court to Dismiss/Compel Arbitration based on Circuit City. On March 29,2002, the Court granted this Motion. (Doc. # 219).

The day before the Court entered its Order compelling arbitration, on March 28,2002, a jury returned a verdict in favor of plaintiff Hickcox in the related case before Judge Bolton. On April 5,2002 judgement was entered in the Hickcox case for (1) $87,500.00 in damages on the breach of contract claim; (2) $87,000.00 in damages on the fraud claim; and (3) punitive damages of $4,100,000.00. On June 27,2002, Judge Bolton ordered remittitur of the punitive damage award to plaintiff Hickcox on the fraud claim from $4.1 million to $1.0 million.

On May 21, 2002, Plaintiff filed the present Motion for Partial Reconsideration/Modification of March 29,2002 Order. (Doc. #220). Plaintiff argues that (1) since the Court rendered its decision newly discovered evidence requires reconsideration, and (2) the Court committed clear error in finding Plaintiffs' fraud claims subject to arbitration. Defendant filed its Response on October 25, 2002 (Doc. # 226), and Plaintiff replied on November 15,2002 (Doc. # 227).

Discussion

Jurisdiction exists pursuant to 28 U.S.C. 1332, diversity jurisdiction. Both parties agree that federal substantive law governs arbitrability, while Arizona substantive law applies to Plaintiffs' contract and fraud claims.

A. Legal Standard

The Court possesses discretion to reconsider and vacate its order granting dismissal. See Barber v. Hawaii, 42 F.3d 1185, 1198 (9th Cir.1994); United States v. Nutri-cology, Inc., 982 F.2d 394, 396 (9th Cir.1992). Motions for Reconsideration are disfavored, however, and are not the place for parties to make new arguments not raised in their original briefs. See Northwest Acceptance Corp. v. Lynnwood Equip., Inc., 841 F.2d 918, 925-26 (9th Cir.1988). Nor is it the time to ask the Court to rethink what it has already thought. See United States v. Rezzonico, 32 F.Supp.2d 1112, 1116 (D.Ariz.1998)(citing Above the Belt, Inc. v. Mel Bohannan Roofing, Inc., 99 F.R.D. 99, 101 (E.D.Va. 1983)). Accordingly, courts grant such motions only in rare circumstances. See Sullivan v. Faras-RLS Group, Ltd., 795 F.Supp. 305, 308-09 (D.Ariz.1992).

Because there was no trial, the Court will construe Plaintiffs Motion for Reconsideration as a motion to alter or amend judgment pursuant to Fed.R.Civ.P. 59(e) and for relief from judgment pursuant to Fed.R.Civ.P. 60(b).

Any motion to alter or amend judgment pursuant to Rule 59(e) must "be filed no later than 10 days after entry of judgment." In addition, the motion must provide (1) a valid reason why the Court should reconsider its prior decision, and (2) facts or law of a strong convincing nature to induce the Court to reverse its prior decision. See, e.g., All Haw. Tours Corp. v. Polynesian Cultural Ctr., 116 F.R.D. 645, 648-49 (D.Haw.1987). The Court may grant such a motion if the Court "(1) is presented with newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law." Sch. Dist. No. U. Multnomah County, Or. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir.1993), cert, denied, 512 U.S. 1236, 114 S.Ct. 2742, 129 L.Ed.2d 861 (1994) (citation and internal quotation marks omitted).

The Court may grant a motion for relief from judgment pursuant to Rule 60(b) only "upon a showing of (1) mistake, surprise, or excusable neglect; (2) newly discovered evidence; (3) fraud; (4) a void judgment; (5) a satisfied or discharged judgment; or (6) extraordinary circumstances which would justify relief." Id. at 1263; see Fed.R.Civ.P. 60(b); Allmerica Fin. Life Ins. & Annuity Co. v. Llewellyn, 139 F.3d 664, 666 (9th Cir.1997)(stating that party must show "extraordinary circumstances" to obtain relief under Rule 60(b)(6)).

B. Analysis

Plaintiffs argue for reconsideration on two grounds: (1) clear error and (2) newly discovered evidence. The Court finds neither of Plaintiffs' arguments persuasive.

1. The Court Did Not Commit Clear Error in Finding Plaintiffs' Fraud Claims Arbitrable

Plaintiffs first ground for seeking modification consists of a claim that "the Court committed clear error when it compelled arbitration, under Plaintiffs' Employment Agreements, of their claims arising out of Defendant's separate and independent promise of 30,000 shares." (Reply p. 2) (Doc. # 227).

To support this assertion, Plaintiffs cite to Arizona state court cases and other non-Ninth Circuit cases where the courts found claims for torts not subject to arbitration clauses because they lacked a significant relationship with the parties' contract. See, e.g., Dusold v. Porto-John Corp., 167 Ariz. 358, 362, 807 P.2d 526, 530 (Ariz.App. 1990); Sutton v. Hollywood Entertainment Corn., 181 F.Supp.2d 504, 512 (D.Md. 2002); Hersman, Inc. v. Fleming Companies, Inc., 19 F.Supp.2d 1282, 1287 (D.Ala. 1998); Greenwood v. Sherfield, 895 S.W.2d 169, 176 (Mo.Ct.App.1995); Seifert v. U.S. Home Corp., 750 So.2d 633, 642-43 (Fla. 1999).

Moreover, Plaintiffs contend that the Court misplaced reliance on Simula, Inc. v. Autoliv, Inc., 175 F.3d 716 (9th Cir. 1999), because that case involved an integration clause that fully incorporated prior agreements into a later agreement containing an arbitration clause. Here, Plaintiffs assert the prior agreement between Plaintiffs and D.R. Horton promising 30,000 shares was never integrated into the later employment agreement containing an arbitration clause between Plaintiffs and Continental. Plaintiffs also argue that, unlike in Simula, Plaintiffs' claims concerning the promised 30,000 shares are not predicated on a misuse or violation of their later employment agreements.

The Court finds Plaintiffs' attempts to distinguish Simula and rely on noncontrolling authority unpersuasive. Despite Defendant's reliance on several state court cases for "guidance," the Ninth Circuit establishes that "[f]ederal substantive law governs the question of arbitrability." Simula, 175 F.3d at 719. "Every court that has construed the phrase `arising in connection with' in an arbitration clause has interpreted that language broadly." Id. at 721. "[T]he language `arising in connection with' reaches every dispute between the parties having a significant relationship to the contract and all disputes having their origin or genesis in the contract." Id. "To require arbitration, [Plaintiffs'] factual allegations need only `touch maters' covered by the contract containing the arbitration clause and all doubts are to be resolved in favor of arbitrability." Id. (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 624 n.13, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985)).

Here, Plaintiffs' factual allegations contained in their Complaint establish the requisite connection between Plaintiffs'...