In re General Plastics Corp.

• Decision Date: 11 July 1995
• Docket Number: Bankruptcy No. 91-12375-BKC-AJC. Adv. No. 91-0579-BKC-AJC-A.
• Citation: 184 BR 996
• Parties: In re GENERAL PLASTICS CORP., Debtor. CAPITAL FACTORS, INC., Plaintiff, v. GENERAL PLASTICS CORP., Defendant.
• Court: U.S. Bankruptcy Court — Southern District of Florida

184 B.R. 996 (1995)

In re GENERAL PLASTICS CORP., Debtor CAPITAL FACTORS, INC., Plaintiff, v. GENERAL PLASTICS CORP., Defendant.

Bankruptcy No. 91-12375-BKC-AJC. Adv. No. 91-0579-BKC-AJC-A.

United States Bankruptcy Court, S.D. Florida.

July 11, 1995.

COPYRIGHT MATERIAL OMITTED

Michael D. Ullman, Ullman & Ullman, North Miami Beach, FL, for plaintiff.

Paul D. Friedman, Friedman Rodriguez & Ferraro, D. Jean Ryan, Miami, FL, for defendant.

MEMORANDUM OPINION ON MOTION OF GENERAL PLASTICS AND FRIEDMAN TO RECONSIDER ORDER ALLOWING SANCTIONS UNDER COUNTS V AND VI

JACK B. SCHMETTERER, Bankruptcy Judge, Sitting by Designation.

INTRODUCTION

Following bifurcated trial on liability before the Court, Findings of Fact and Conclusions of Law ("Findings and Conclusions") were made and entered. Capital Factors, Inc. v. Homeline Corp. (In re General Plastics Corp., 158 B.R. 258 (Bankr.S.D.Fla. 1993)) (Schmetterer, J., sitting by designation). It was then determined that Plaintiff-Counterdefendant Capital Factors, Inc. ("Capital Factors") was not liable to Defendant-Counterplaintiff General Plastics Corp. ("General Plastics") on Counts II, III, V, and VI of General Plastics' counterclaim. It was further ordered that final judgment would be entered in favor of Capital Factors on these counts, dismissing them when the case was completed.

The remaining damage issues were set for trial, but the parties entered into a settlement stipulation ("Stipulation"), approved November 1, 1993. Pursuant thereto, it became unnecessary to try the damage issues. However, there remained for ruling the pending motion filed by Capital Factors (as amended), seeking sanctions in the form of attorneys' fees and expenses on Counterclaim Counts II, III, V, and VI, pursuant to Fed.R.Bankr.P. 9011 and Fla.Stat. ch. 772.11 (1994). Following consideration of filings by the parties and for reasons stated in an opinion ("Opinion"), the motion for sanctions was allowed as to Counts V and VI (alleging conversion and civil theft) and denied as to Counts II and III. Capital Factors, Inc. v. General Plastics Corp. (In re General Plastics Corp.), 170 B.R. 725 (Bankr.S.D.Fla. 1994)) (Schmetterer, J., sitting by designation).

The parties were then ordered to make further filings as to the amounts of the sanctions to be considered. They have done so, but General Plastics and its counsel, Paul D. Friedman ("Friedman"), have also moved for reconsideration of the rulings allowing sanctions as to Counts V and VI. That motion was briefed and considered. Following initial briefing, Friedman argued that he had been denied an opportunity to state arguments and assert facts on his own behalf. The briefing schedule was then reopened for the purpose of taking any briefings and filings that he sought to make in that regard. His supplemental filings and that of Capital Factors have now been made and considered.

Friedman supported his position with several affidavits. While Capital Factors questioned the accuracy of these affidavits in certain particulars, it filed no contrary affidavits showing fact issues and did not request time for discovery. Therefore, pursuant to prior procedural order governing this sanction proceeding, well-pleaded factual assertions in the affidavits filed by Friedman are taken as uncontested. However, the legal conclusions and opinions contained in those affidavits are viewed as additional arguments or viewpoints that have been considered.

Because of the settlement stipulation, the instant motion is moot as to General Plastics albeit not formally withdrawn. What is decided here affects only Friedman.

For reasons stated below, the motion of General Plastics and Friedman for reconsideration of the order allowing Rule 9011 sanctions as to Counterclaim Counts V and VI is entirely denied.

DISCUSSION

1. Standards for Reconsideration Under Fed.R.Civ.P. 59, Fed.R.Bankr.P. 9023

The purpose of a motion for reconsideration "is to allow the court to reevaluate the basis for its decision. Such motions are appropriate when the court has made an error in interpreting facts or law or when there has been a significant change in the law or facts since the submission of the issue to the court." Keyes v. National R.R. Passenger Corp., 766 F.Supp. 277, 280 (E.D.Pa. 1991) (citations omitted).

However, motions for reconsideration should not be used to raise arguments which could and should have been raised before the judgment or order is entered. Lussier v. Dugger, 904 F.2d 661, 667 (11th Cir.1990). In the interest of judicial economy and the finality of orders, a court need not allow itself to be imposed upon by the presentation of theories seriatim. Id.

Neither should a motion for reconsideration be employed to reargue the factual and legal arguments already considered by the court:

The Court\'s reconsideration of a prior order is an extraordinary remedy. Exercise of this power must of necessity be used sparingly. When issues have been carefully considered and decisions rendered, the only reason which should commend reconsideration of that decision is a change in the factual or legal underpinning upon which the decision was based. citations omitted. The movant must set forth facts or law of a strongly convincing nature to induce the court to reverse its prior decision. citations omitted.

Taylor Woodrow Const. Corp. v. Sarasota/Manatee Airport Auth., 814 F.Supp. 1072 (M.D.Fla.1993); see also Sussman v. Salem, Saxon & Nielsen, P.A., 153 F.R.D. 689, 694 (M.D.Fla.1994).

A number of issues raised by Friedman are really rearguments of issues earlier decided against him at trial and in the sanction ruling. The Court was under no obligation to pass on the same issues again, but in cautious effort to avoid missing an important point, all of these issues have been reconsidered.

2. Order Denying Plaintiff's Motion to Dismiss Amended Counterclaim Did not Establish Factual Sufficiency of Conversion and Theft Counterclaims in Counts V and VI

Friedman places great weight on a pretrial ruling by another judge that denied dismissal of Counts V and VI.

The effect of denial of Capital Factors' motion to dismiss the amended counterclaim was considered in footnote 2 of the Memorandum Opinion on the motion for sanctions. 170 B.R. at 733 n. 2. Lemaster v. United States, 891 F.2d 115, 121 (6th Cir.1989) (per curiam), was cited there for the proposition that denial of a motion to dismiss is not dispositive of the evidentiary sufficiency of a claim because the facts and legal conclusions alleged in the pleading are accepted as true for purposes of considering such motion.

Counts V and VI of the amended counterclaim of General Plastics were found following trial to be frivolous and sanctionable for three reasons: (1) the officers of General Plastics acknowledged at trial that they had authorized Capital Factors to pay contractually due monies to the Internal Revenue Service ("IRS"); therefore Counterplaintiff had no immediate right or claim to possession of the funds in question and had no basis to charge that Capital Factors stole or converted those monies; (2) the sums due to General Plastics as "purchase price" under the contract were not specifically identifiable so as to be subject to claims of conversion or theft; and (3) the prompt filing by Capital Factors of its action for interpleader absolved it of these claims. Count VI was found to be frivolous on the additional ground that there was no evidence of the intent necessary to prove theft.

Of these issues, the only one before the prior Bankruptcy Judge passing on the motion to dismiss was the second.

On the issue of specifically identifiable property, the opinion and order denying dismissal on motion properly accepted as true for purposes of that ruling General Plastics' allegation that the sums due were specifically identifiable:

Capital Factors maintains that the moneys which General Plastics claims were converted are not capable of separate identification. General Plastics disagrees. In the counterclaim, General Plastics alleges that Capital Factors had on hand a specifically identifiable sum of money belonging to General Plastics and, took that money, knowing that it had no right to take it for its own use, specifically:

the Asset wrongfully converted by Factors is capable of separate identification ...

(See par. 25 of the counterclaim). For the purposes of a motion to dismiss: "the material allegations of the complaint are taken as admitted...." citations omitted. Thus, the court in considering the Motion, must take as true General Plastics\' allegations that a specifically identifiable sum of money is at issue. Hence, General Plastics has sufficiently identified the sum of money it alleges Capital Factors converted, and the Motion, to this extent, must be denied.

Order Denying Capital Factors' Motions to Dismiss (Nov. 1, 1992) at 10-11 (emphasis added).

The motion for sanctions was granted in light of evidence as actually presented at trial. The earlier denial of dismissal based on conclusory notice pleading under federal practice cannot immunize parties or their counsel from sanctions in light of the actual evidence.

3. "Purchase Price" Was Not Specifically Identifiable for Purposes of Conversion and Theft Counts

In the Opinion as to which reconsideration is sought, this Court deemed it

clear at the outset that the sums due General Plastics as "purchase price" under the contract were not specifically identifiable and hence not subject to claims of conversion or theft of a particular fund (see Conclusions at ¶¶ 21-23 ... as General Plastics\' position was directly contradicted by existing law, as found in Belford Trucking Company v. Zagar, 243 So.2d 646 (Fla. 4th Dist.Ct.App.1971)), and its progeny.

170 B.R. at 730-31. Movants now argue that, while Belford Trucking provided some examples of money that is "specifically identifiable," Florida courts have since expanded that list after that case was decided...