Hammes Co. Healthcare v. Tri-City Healthcare Dist.
| Decision Date | 13 December 2011 |
| Docket Number | CASE NO. 09-CV-2324 JLS (CAB),CASE NO. 09-CV-2334 JLS (CAB) |
| Court | U.S. District Court — Southern District of California |
| Parties | HAMMES COMPANY HEALTHCARE, LLC; HC TRI-CITY I, LLC, Plaintiffs and Cross-Defendants, v. TRI-CITY HEALTHCARE DISTRICT; LARRY ANDERSON; PAMELA SMITH; et al., Defendants and Counter-claimants. AND RELATED ACTION. |
Presently before the Court are several motions in two related cases, Hammes Co. Healthcare, LLC and HC Tri-City I, LLC v. Tri-City Healthcare District, et al., Case No. 09-CV-2324 JLS (CAB) [] and Tri-City Healthcare District v. HC Tri-City I, LLC, Case No. 09-CV-2334 JLS (CAB) []. Defendant Tri-City Healthcare District (Tri-City) in the lead case is the Plaintiff in the related case. Conversely, Plaintiff HC Tri-City I, LLC (HC) in the lead case is the Defendant in the related case. Hammes Co. Healthcare, LLC (Hammes) is also a Plaintiff in the lead case.
Tri-City filed a motion for leave to file a second amended complaint (2334 ECF No. 36) and a motion for summary judgment (2334 ECF No. 37) in the related case. Subsequently, Hammes and HC filed a motion for reconsideration (2324 ECF No. 89), motion to issue order,injunction, or transfer (2324 ECF No. 91), and Hammes filed a motion for summary judgment (2324 ECF No. 92) in the lead case. Also before the Court are the parties' oppositions and replies to these motions. The Court held oral argument on these matters on December 1, 2011, and took the matter under submission.
Several other motions are also pending in these cases. On October 17, 2011, HC moved for summary judgment in the related case. (2334 ECF No. 42.) On October 19, 2011, Tri-City moved for sanctions in the lead case. (2324 ECF No. 101.) On November 16, 2011, Hammes filed an ex parte motion to dismiss Defendant Larry Anderson on November 16, 2011 (2324 ECF No. 106; 2334 ECF No. 47), which Tri-City opposed.
Having considered the parties' arguments and the law relating to the instant motions, the Court rules as follows:
The Court has already elaborated much of the relevant background in its previous order in the lead case, incorporated here for convenience. (See July 11, 2011 Order, 2324 ECF No. 85.)
These actions arise from the failed development of an outpatient surgery center and medical office building adjacent to the Tri-City Medical Center and Hospital in Oceanside, California (the project). Hammes is a healthcare facility design and development company that works with hospitals and medical districts throughout the country. HC is a special purpose entity formed for the purpose of leasing the real property upon which the medical office building was to be located and constructing the medical office building.
Tri-City is a public entity duly organized under California law. Larry Anderson and Pamela Smith, also parties to these actions in association with Tri-City, are Tri-City's Chief Executive Officer and Director of Business Development, respectively.
In May 2005, Hammes and Tri-City entered into a letter of intent regarding the project's development. The letter of intent outlined the transaction's proposed terms and directed Hammes to engage in certain pre-construction services related to the project. The agreement further provided that Tri-City would reimburse Hammes for its initial development costs and pay a breakage fee if, inter alia, Tri-City decided at its sole discretion not to proceed with the project.
In July 2007, HC entered into a ground lease with Tri-City. The ground lease provided that HC would lease for fifty-five years the real property upon which the medical office building was to be located. The ground lease provided three contingencies—two that were waivable at HC's option, and one that was a non-waivable condition precedent to construction of the medical office building.
In July 2008, HC entered into a space lease with Pacific View Surgery Center, LLC (Pacific View). Pacific View, a joint venture between Tri-City and its physicians, was to occupy approximately 38% of the medical office building after its completion. Tri-City also signed the space lease, but did so solely as a guarantor of Pacific View's obligations thereunder.
For reasons that are in dispute, the project was terminated in early 2009, and Tri-City did not reimburse Hammes or HC for any initial development costs that they incurred. The lead case and related case ensued.
In the lead case, Hammes and HC asserted six claims against Tri-City for: (1) breach of the letter of intent, (2) breach of the ground lease and space lease, (3) breach of the implied covenantof good faith and fair dealing, (4) fraud, (5) tortious interference with the space lease, and (6) promissory estoppel. On July 11, 2011, the Court granted Tri-City's motion for summary judgment as to the second through sixth claims, and now only Hammes's claim for breach of the letter of intent remains. (2324 ECF No. 85.) Hammes and HC now move for reconsideration of that order, as well as for an order or injunction, or, in the alternative, a transfer, and Hammes moves for summary judgment of the first claim.
In the related case, Tri-City's operative complaint states two claims against HC, the first for declaratory relief that Tri-City is not liable to HC under the ground lease and that Tri-City is excused from performance under the ground lease, and the second for breach of contract by HC. (Tri-City's Am. Compl., 2334 ECF No. 25.) Tri-City now seeks to amend its complaint a second time to dismiss the second cause of action, leaving only the first claim for declaratory relief. Tri-City also moves for summary judgment of the first cause of action.
Hammes and HC bring the instant request for reconsideration under Federal Rule of Civil Procedure 54(b). (Mem. ISO Mot. for Recons. 5, 2324 ECF No. 89.) That rule provides, in relevant part, "any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities." Fed. R. Civ. P. 54(b).
Generally, a court will reconsider a decision if a party can show (1) new facts, (2) new law, or (3) clear error in the court's prior decision. See, e.g., School Dist. No. 1J, Multnomah Cnty. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993); Hydranautics v. FilmTec Corp., 306 F. Supp. 2d 958, 968 (S.D. Cal. 2003). However, reconsideration "may not be used to raise arguments or present evidence for the first time when they could reasonably have been raised earlier in the litigation." Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000) (citing 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 1999)) (emphasis in original); cf. Brambles USA, Inc. v. Blocker, 735 F. Supp. 1239, 1240 (D. Del. 1990) (). Ultimately, the decision on a motion for reconsideration lies in the Court's sound discretion. Navajo Nation v. Norris, 331 F.3d 1041, 1046 (9th Cir.2003) (citing Kona Enters., 229 F.3d at 883).
HC's1 motion for reconsideration does not raise new law or new facts that could not have reasonably been presented in opposition to the underlying motion for summary judgment. Instead, the motion points to Tri-City's December 11, 2008 board meeting which allegedly ratified the ground lease and approved a six month extension of the otherwise expired pre-leasing contingency. . HC argues that the Court's failure to consider this meeting in its July 11, 2011 Order lead to a "manifest error existing between the evidence and application of law." (Id. at 5.) Thus, HC argues that the Court's July 11, 2011 Order is in clear error.
Tri-City has two primary responses to this board meeting ratification argument. (Opp'n to Mot. for Recons. 2, 2324 ECF No. 98.) First, Tri-City points out that the board meeting is not a "new" fact, that Plaintiffs knew about the board meeting long before they opposed the motion for summary judgment, and that as a result the Court's consideration of this evidence now on motion for reconsideration is improper. Second, Tri-City states that the board meeting did not ratify the ground lease, and that HC's argument directly contradicts the theory it asserted in opposition to summary judgment.
In ruling on HC's instant motion for reconsideration, the Court first examines the underlying decision that the ground lease was null and void in its July 11, 2011 Order. After doing so, the Court concludes that HC has no valid basis for reconsideration and that the June 11, 2011 Order was not in error. Finally, even if it considers HC's additional arguments, the Court rejectsHC's arguments that this decision was in error for failure to consider Tri-City's December 11, 2008 board meeting...
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