Gleichman v. Scarcelli

• Decision Date: 02 March 2018
• Docket Number: DOCKET NO. BCD-CV-17-11
• Court: Maine Superior Court
• Parties: PAMELA W. GLEICHMAN, et al., Plaintiffs, v. ROSA SCARCELLI, et al., Defendants.

PAMELA W. GLEICHMAN, et al., Plaintiffs, v. ROSA SCARCELLI, et al., Defendants.

DOCKET NO. BCD-CV-17-11

Superior Court of Maine

March 2, 2018

STATE OF MAINE

CUMBERLAND, ss.

SUPERIOR COURT

BUSINESS AND CONSUMER COURT

LOCATION: PORTLAND

ORDER ON PLAINTIFF'S MOTION FOR PARTIAL RECONSIDERATION OF SUMMARY JUDGMENT ORDER

Plaintiffs Pamela W. Gleichman ("Gleichman") and Karl S. Norberg ("Norberg") have moved for partial reconsideration of this Court's summary judgment decision entered November 2, 2017. Defendants Rosa Scarcelli ("Scarcelli") and Preservation Holdings, LLC (collectively, the "Scarcelli Defendants") and Defendants Stanford Management, LLC ("Stanford") and Acadia Maintenance, LLC ("Acadia") (collectively, the "Entity Defendants") oppose the motion. The Court heard oral argument on the motion on February 15, 2018. John Campbell, Esq. appeared for Plaintiffs, G. Toby Dilworth, Esq. appeared for the Scarcelli Defendants, and James Wagner, Esq. appeared for the Entity Defendants.

PROCEDURAL HISTORY

On November 2, 2017, this Court entered a combined order (the "Combined Order") granting in part and denying in part the Scarcelli Defendants' and the Entity Defendants' (collectively, "Defendants"¹) motions for partial summary judgment. The Combined Order awarded summary judgment for the Defendants on Count X (Declaratory Judgment as to GN Holdings) and Count VII (Rescission, Nullification and Avoidance of Transfer to Scarcelli ofMembership Interests in Stanford Management, LLC). Plaintiffs do not move the Court to reconsider those awards in the instant motion. The Court's disposition as to the remaining counts on which Defendants moved for summary judgment was more complex. Relevant here, the Court granted summary judgment in favor of all Defendants as to the claims brought by Norberg as trustee of the Scarcelli-Norberg Holdings ("SNH") Trust in Count IV (Breach of Fiduciary Duty-Derivative Action), Count V (Oppression and Breach of Fiduciary Duties- Owed to Pam, Karl, and SNH Trust), and Count VI (Injunction and/or Dissolution of Stanford, etc.).²

STANDARD OF REVIEW

"A motion for reconsideration of the judgment shall be treated as a motion to alter or amend the judgment." M.R. Civ. P. 59(e). Courts should order relief pursuant to M.R. Civ. P. 59(e) when it is "reasonably clear that prejudicial error has been committed or that substantial justice has not been done." Cates v. Farrington, 423 A.2d 539, 541 (Me. 1980). "Under Rule 59(e), the trial court is free . . . to alter or amend its judgment when convinced it was erroneous, and substitute the proper judgment in its place." Most v. Most, 477 A.2d 250, 258 (Me. 1984). A trial court's ruling on a motion for reconsideration is reviewable for an abuse of discretion. Shaw v. Shaw, 2003 ME 153, ¶ 12, 839 A.2d 714.

DISCUSSION

The issue the Court must decide on this motion for reconsideration is superficially simple: what causes of action were before the Court on Defendants' motions for partial summary judgment?

The Combined Order granted summary judgment in favor of Defendants by applying thedoctrine of claim preclusion, one of the two branches of res judicata. (Combined Order at 11-16.) See Pearson v. Wendell, 2015 ME 136, ¶ 23, 125 A.3d 1149. Claim preclusion prevents relitigation of claims if: "(1) the same parties or their privies are involved in both actions; (2) a valid final judgment was entered in the prior action; and (3) the matters presented for decision in the second action were, or might have been litigated in the first action." Portland Water Dist. v. Town of Standish, 2008 ME 23, ¶ 8, 940 A.2d 1097. "[A] voluntary dismissal with prejudice constitutes a valid final judgment for purposes of claim preclusion." Darney v. Dragon. Products Co., 592 F. Supp. 2d 180, 184 n.3 (D. Me. 2009) (citing United States v. Cunan, 156 F.3d 110, 114 (1st Cir. 1998)).

These same parties were involved in a prior action. Scarcelli sued Gleichman and Norberg in 2011, and on June 17, 2013, these Plaintiffs filed an amended counterclaim and third-party complaint (the "Counterclaim") in that lawsuit against Scarcelli, naming Stanford as a third-party defendant. The Counterclaim was in many respects virtually identical to the Plaintiffs' Second Verified Amended Complaint (the "Complaint") filed in this case, alleging inter alia breaches of fiduciary duty on the part of Scarcelli and seeking judicial dissolution of Stanford. The Counterclaim was disposed of in a mutually executed stipulation of dismissal filed on October 30, 2013 (the "Stipulation of Dismissal"). Gleichman's claims were dismissed without prejudice. Norberg's claims—both individually and as trustee of the SNH Trust—were dismissed with prejudice.

The Stipulation of Dismissal was the prior judgment on which Defendants based their claim preclusion argument in their motions for partial summary judgment. The Scarcelli Defendants' motion for partial summary judgment requested that the Court grant summary judgment in their favor on Counts IV, V, and VI of the Complaint on that ground. (Scarcelli's Mot. Summ. J. at 19.)Pursuant to M.R. Civ. P. 7(b)(3)(2), the Scarcelli Defendants included with their motion a draft order which specifically stated the relief to be granted by the motion: "Judgment is entered in favor of Rosa Scarcelli and Preservation Holdings, LLC on Counts IV, V, VI, VII, and X of Plaintiff's Second Verified Amended Complaint." However, the Scarcelli Defendants narrowed the scope of their requested relief in the body of their memorandum of law in support of their motion, writing that "Plaintiffs are barred from relitigating any claims arising from Ms. Scarcelli's alleged breach of fiduciary duties owed to Stanford, Acadia, and Plaintiffs up until the date of the Stipulation of Dismissal . . . .³" (Scarcelli's Mot. Summ. J. at 16 (emphasis added).)

In their oppositions to Defendants' motions for summary judgment, Plaintiffs' main argument was that the Stipulation of Dismissal was not a "valid judgment" and therefore claim preclusion did not bar their claims. (Pl's Opp. Scarcelli Mot. Summ. J. at 8-12, 14-17; Pl's Opp. Stanford Mot. Summ. J. 2-16.) This argument was unavailing because it did not apply any of the recognized exceptions to the general rule that a final judgment is a valid judgment. N.E. Bank N.A. v. Crochere, 438 A.2d 266, 268, 268 n. 7 (Me. 1981). However, Plaintiffs also raised the argument that res judicata could not preclude claims as to continuing wrongs, because claims based on conduct that post-dated the entry of the Stipulation of Dismissal could not have been litigated in the first action.⁴ Portland Water Dist, 2008 ME 23, ¶ 8, 940 A.2d 1097. (Pl's Opp. Scarcelli Mot.Summ. J. 13-14.) This aspect of Plaintiffs' argument went unchallenged in the Scarcelli Defendants' reply brief, which concerned itself exclusively with parrying Plaintiffs' collateral attack on the prior judgment.⁵

The issue before the Court thus comes into sharper focus. Even if the Defendants were moving for summary judgment on Counts IV-VI in toto when they filed their motion, based on the concession in their memoranda⁶ and their silence on the issue in their reply brief, did the Plaintiffs waive the argument that summary judgment could not be awarded on res judicata grounds to the extent that those counts state claims based on Scarcelli's conduct after the entry of the Stipulation of Dismissal. Based on the transcript of the oral argument on the motions for summary judgment, it is apparent that they were not asking the Court to rule on any causes of action that may have accrued after the filing of the Stipulation of Dismissal:

THE COURT: Isn't there some post-November 2013 conduct that is at issue in this case though? (Mot. Tr. 12 (Sep. 14, 2017).)

* * *

MR. DILWORTH: Now, after November 12th, 2013, they may have a claim that there was another thing that Rosa Scarcelli did that gave rise to a new cause of action.

THE COURT: Right.

MR. DILWORTH: That may be the case, but if you grant this motion, everything up to that day is out of the case.

THE COURT: And your position would be that the she would—that the plaintiffs would have to file a new action to—a new cause of action to argue that Ms. Scarcelli did something actionable after November 2013?

MR. DILWORTH: I don't think they have to restart the case, but they have to identify to us what it is after—

THE COURT: What the cause is.

MR. DILWORTH: —November 12th, because I think John will tell you that he has alleged things. I think—the reason why we brought this case is—brought this motion at this time is for discovery purposes. It's going to limit discovery tremendously. We think we're going to save a lot of time and effort, and further litigation about issues that happened before November of 2013.

THE COURT: Okay. Understood.

MR. DILWORTH: But we don't think that it will necessarily kick out everything. Now, there may be issues of claim—excuse me—of issue preclusion that will extend beyond, but that's—

THE COURT: That's not before me now.

MR. DILWORTH: That's not before you now, because that needs to be developed a little bit more on the—

THE COURT: Understood.

MR. DILWORTH: —discovery.

THE COURT: Okay. (Mot. Tr. 13-14 (Sep. 14, 2017) (emphasis added).)

* * *

MR. DILLWORTH: Mr. Campbell says that none of the arguments—or none of the issues after 2013 are barred. That may be true for some issues, but if issue preclusion applies, then obviously he's already litigated those issues. Those issues have been resolved. We're not asking you to make an order on that at this point.

THE COURT: Okay. (Mot. Tr. 28 (Sep. 14, 2017) (emphasis added).)

As to Norberg's claims, the Combined Order granted summary judgment to the Defendants in full on Counts IV-VI.⁷ This Court ruled that Plaintiffs had failed to establish a prima facie case that anything Scarcelli did after the entry of the Stipulation of Dismissal in the prior action couldstate a claim under those Counts. Here, on reconsideration, this Court...