Cypress Engine Accessories, LLC v. HDMS Ltd. Co.

• Citation: 283 F.Supp.3d 580
• Decision Date: 06 October 2017
• Docket Number: CIVIL ACTION NO. H–15–2227
• Parties: CYPRESS ENGINE ACCESSORIES, LLC, Plaintiff, v. HDMS LIMITED COMPANY, d/b/a Premium Power Solutions, et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

283 F.Supp.3d 580

CYPRESS ENGINE ACCESSORIES, LLC, Plaintiff,

v.HDMS LIMITED COMPANY, d/b/a Premium Power Solutions, et al., Defendants.

CIVIL ACTION NO. H–15–2227

United States District Court, S.D. Texas, Houston Division.

Signed October 6, 2017

D. John Leger, Leger Burke, John Paul Venzke, The Venzke Law Firm LLP, Houston, TX, for Plaintiff.

Stephanie Lindsay Holcombe, Jamie Lynn Godsey, Neil Kenton Alexander, Porter Hedges LLP, Houston, TX, Robert Boyd Dunlap, Blackwell and Associates, Shreveport, LA, for Defendants.

MEMORANDUM AND ORDER

Lee H. Rosenthal, Chief United States District JudgeThree motions are pending:

1. Cypress Engine's motion for reconsideration of the court's May 3, 2017 Memorandum and Order interpreting the settlement agreement between Cypress Engine and HDMS, (Docket Entry No. 85);

2. HDMS's motion for summary judgment on its counterclaims against Cypress Engine, (Docket Entry No. 78); and

3. Powertech Marine's motion for summary judgment on Cypress Engine's claims, (Docket Entry No. 77).

Based on the motions and responses, the record, the arguments of counsel, and the applicable law, the court: denies Cypress Engine's motion for reconsideration; grants in part and denies in part HDMS's motion for summary judgment on its counterclaims, and orders that no later than October 13, 2017, HDMS must submit evidence of the fee amount on the DTPA claim, segregating the fees it seeks for defending the DTPA claim from the other fees it incurred or, in the alternative, that the fees were for claims so interrelated that segregation is not required; and grants Powertech Marine's motion for summary judgment.

The reasons for these rulings are set out below.

I. Background

Cypress Engine purchased prechambers, an engine part, from HDMS. After Cypress Engine alleged that the prechambers were defective, Cypress Engine and HDMS negotiated a settlement under which Cypress Engine would return the prechambers within a certain time frame and HDMS would refund the purchase price, less a restocking fee. The negotiations occurred through a series of emails and a signed one-page "outline" of the settlement agreement.

Cypress Engine had unpaid, past-due invoices from HDMS for transactions unrelated to the prechambers purchases. After the parties signed the settlement agreement, HDMS deducted the past-due invoices from the refunded amounts it paid Cypress Engine for the returned prechambers. Cypress Engine filed this suit against HDMS, alleging that it had breached the settlement agreement by taking the offset. Cypress Engine also sued Powertech Marine, alleging that it manufactured the defective prechambers that HDMS had sold.

HDMS counterclaimed, alleging that Cypress Engine had breached the settlement agreement promise not to engage in competing business activities associated with prechambers during the period Cypress Engine was returning prechambers it had bought from HDMS for a refund. HDMS alleged that within days of signing the settlement agreement, Cypress Engine was selling prechambers. HDMS intended to refurbish the returned prechambers and resell them, which would compete with Cypress Engine's sales. HDMS alleges in its counterclaim that Cypress Engine breached the settlement agreement both by selling the prechambers and by filing this lawsuit asserting claims that Cypress Engine had released in the settlement agreement.

HDMS and Cypress Engine cross-moved for summary judgment. (Docket Entry Nos. 53, 55). HDMS moved for summary judgment dismissing Cypress Engine's claims, reserving the right to seek summary judgment on its own counterclaims later. (Docket Entry No. 53). Powertech Marine denies that it was the manufacturer of the prechambers and moved for summary judgment on that basis. (Docket Entry No. 54). On May 3, 2017, the court issued a Memorandum and Order, granting HDMS's motion for summary judgment and dismissing Cypress Engine's claims against HDMS; denying Cypress Engine's motion for summary judgment and motion for leave to amend its answer; and denying Powertech Marine's motion for summary judgment, without prejudice and with leave to reurge. (Docket Entry No. 70).

Cypress Engine has moved for reconsideration of the court's Memorandum and Order, arguing that the court improperly interpreted the settlement agreement. (Docket Entry No. 85). HDMS has moved for summary judgment on its counterclaims against Cypress Engine. (Docket Entry No. 78). Powertech Marine has filed a second motion for summary judgment, seeking a ruling that it is not a proper party. (Docket Entry No. 77). Cypress Engine responded to both motions, (Docket Entry Nos. 84, 86). The court heard argument from counsel, and both Cypress Engine and HDMS supplemented their briefing. (Docket Entry Nos. 89, 90).

Each motion and response is analyzed below.

II. Cypress Engine's Motion for Reconsideration

Cypress Engine urges the court to reconsider its interpretation of the parties' settlement agreement and its determination that the agreement consisted of the email exchanges and the one-page outline attached to the final email.

Cypress Engine and HDMS agreed that they had a settlement agreement, but they disputed what that agreement consisted of. The court applied federal and Texas law to conclude that "there is no indication in the email string or the one-page outline that the outline, standing alone, was intended to be the parties' fully integrated agreement." (Docket Entry No. 70 at 9). The one-page outline was attached to the final email from Shawn Bailes, a Cypress Engine employee. The email stated that "[t]he offer and acceptance outlined in this email string constitutes agreement between [HDMS] and Cypress Engine on return quantities, prices, and timetable." (Docket Entry No. 70 at 10). The court ruled that the email string and the one-page outline, taken together, constituted the settlement agreement. Cypress Engine moves for reconsideration of this ruling.

The Federal Rules of Civil Procedure do not formally recognize a motion to reconsider. See St. Paul Mercury Ins. Co. v. Fair Grounds Corp. , 123 F.3d 336, 339 (5th Cir. 1997) ("[T]he Federal Rules of Civil Procedure do not recognize a general motion for reconsideration."). Motions to reconsider are treated as motions to alter or amend a judgment under Federal Rule of Civil Procedure 59(e), or as motions for relief from judgment under Rule 60(b), depending on when the motion is filed. Demahy v. Schwarz Pharm. Inc. , 702 F.3d 177, 182 n.2 (5th Cir. 2012). A motion for reconsideration is considered under Rule 59(e) if it is filed within 28 days of the court's ruling, and under Rule 60(b) if it is filed after that. Id. This motion is considered under Rule 60(b) because it was filed more than 28 days after the court's May 3, 2017 order.

Rule 60(b) of the Federal Rules of Civil Procedure sets out five bases for relief from a final judgment: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence; (3) fraud, misrepresentation, or misconduct of an adverse party; (4) the judgment is void; and (5) satisfaction, discharge, or release of the judgment. Fed. R. Civ. P. 60(b)(1)–(5). Rule 60(b)(6) also allows a court to relieve a party from a final judgment for "any other reason justifying relief from the operation of the judgment." Fed. R. Civ. P. 60(b)(6). Relief under Rule 60(b)(6) is granted only when it is not covered by the five enumerated grounds and when "extraordinary circumstances" are present. Batts v. Tow–Motor Forklift Co. , 66 F.3d 743, 747 (5th Cir. 1995) (citations omitted). "The district court enjoys considerable discretion when determining whether the movant has satisfied any of these Rule 60(b) standards." Teal v. Eagle Fleet, Inc. , 933 F.2d 341, 347 (5th Cir. 1991).

Rule 60(b) allows the trial court to "correct obvious errors or injustices." Fackelman v. Bell , 564 F.2d 734, 736 (5th Cir. 1977). A party moving under Rule 60(b) must show "unusual or unique circumstances." Pryor v. U.S. Postal Serv. , 769 F.2d 281, 286 (5th Cir. 1985). A motion to reconsider may not be used to relitigate matters, raise arguments, or submit evidence that could have been presented before the judgment or order was entered. 11 WRIGHT & MILLER § 2810.1 at 127–28 (footnotes omitted). "A party seeking reconsideration must show more than disagreement with the court's decision and recapitulation of the same cases and arguments already considered by the court." Texaco Exploration & Prod., Inc. v. Smackco, Ltd. , No. Civ. A. 98-2293, 1999 WL 539548, at *1 (E.D. La. July 26, 1999) (citing Plaskon Elec. Materials, Inc. v. Allied–Signal, Inc. , 904 F.Supp. 644, 669 (N.D. Ohio 1995) ). A motion for relief under Rule 60(b) is "not a substitute for the ordinary method of redressing judicial error—appeal." Chick Kam Choo v. Exxon Corp. , 699 F.2d 693, 696 (5th Cir. 1983) (citation omitted).

Cypress Engine fails to identify what part of Rule 60(b) justifies its motion for reconsideration. Cypress Engine seeks to relitigate an issue it litigated and lost, but the motion raises no new legal arguments or new facts. The record does not identify any "unusual or unique circumstances," "mistake, inadvertence, surprise, or neglect," "newly discovered evidence," "fraud, misrepresentation, or misconduct," or other reason to justify reconsideration. The record supports the court's finding as to what made up the settlement agreement.

The motion to reconsider is denied.

III. HDMS's Motion for Summary Judgment

HDMS moves for summary judgment on its counterclaims that Cypress Engine breached the parties' settlement agreement by filing the present lawsuit and by selling prechambers during the buyback period. (Docket Entry No. 78 at 8). HDMS asserts damages in the form of the attorneys' fees it incurred in defending this lawsuit and the profits it lost from Cypress Engine's prechambers sales. (Docket Entry No. 78 at 8).

A. Is HDMS Entitled to Summary Judgment on its Counterclaim That Cypress Engine Breached the...