JMP Sec. LLP v. Altair Nanotechnologies Inc.

• Decision Date: 23 July 2012
• Docket Number: Case No. 11–4498 SC.
• Citation: 880 F.Supp.2d 1029
• Court: U.S. District Court — Eastern District of California
• Parties: JMP SECURITIES LLP, Plaintiff, v. ALTAIR NANOTECHNOLOGIES INC., Defendant.

880 F.Supp.2d 1029

JMP SECURITIES LLP, Plaintiff,

v.ALTAIR NANOTECHNOLOGIES INC., Defendant.

Case No. 11–4498 SC.

United States District Court, N.D. California.

July 23, 2012.

Philip T. Besirof, Jordan Eth, Seth Schreiberg, Morrison & Foerster LLP, San Francisco, CA, for Plaintiff.

J. Daniel Sharp, Steven Edward Wilson, Crowell & Moring LLP, San Francisco, CA, David C. Reymann, Jeffrey J. Hunt, Parr Brown Gee and Loveless, PC, Salt Lake City, UT, for Defendant.

ORDER GRANTING DEFENDANT'S SECOND MOTION FOR JUDGMENT ON THE PLEADINGS

SAMUEL CONTI, District Judge.

I. INTRODUCTION

Now before the Court is the Second Motion for Judgment on the Pleadings brought by Defendant Altair Nanotechnologies Inc. (“Altair”) against Plaintiff JMP Securities LLP (“JMP”). ECF Nos. 37 (“2d MJP”), 42 (“2d Opp'n”), 45 (“2d Reply”). The parties' moving papers supply a choice-of-law analysis that they omitted when briefing Altair's First Motion for Judgment on the Pleadings. ECF Nos. 21 (“1st MJP”), 23 (“1st Opp'n”), 26 (“1st Reply”). The instant motion is suitable for determination without oral argument. Civ. L.R. 7–1(b). As set forth below, the Court GRANTS the motion.

II. BACKGROUND

This Order assumes familiarity with the Court's March 14, 2012 denial of Altair's First Motion for Judgment on the Pleadings. ECF No. 30 (“1st Order”).¹ To summarize, Altair, a technology company, anticipated entering into a substantial financial transaction, though the timing and nature of the transaction were uncertain. On July 8, 2010, Altair hired JMP to serve as its financial advisor for the transaction. The parties formalized their relationship in a written Agreement. ECF No. 1 (“Compl.”) Ex. A (“Agr.”). The Agreement provided JMP with a retainer fee. It also provided JMP with a contingent fee, payable after a completed transaction. The size of this fee would be determined by (1) the type of transaction that Altair consummated and (2) with whom. JMP would receive a certain percentage fee if Altair was sold to or merged with another company (the “sale/merger” fee) ² and another,higher percentage fee if Altair secured a “strategic investment.” In both cases, JMP's fee would be discounted if Altair's partner in the transaction was Yintong Energy Company Limited (“Yintong”) or one of its corporate affiliates. 1st Order at 3–4 (citing and summarizing provisions). In addition to its fee-setting provisions, the Agreement included two more clauses that are relevant to this motion. First, the Agreement contains a choice-of-law clause stating that it “shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to any principles of conflicts of law.” Agr. at 5. Second, the Agreement incorporates an attached Indemnification Agreement indemnifying JMP against claims “relating to or arising out of” the Agreement. Agr. Ex. A (“Indem. Agr.”) at A–1.

In July 2011, Altair and Yintong completed a transaction which, all parties concede, was covered by the Agreement. Roughly $57.5 million changed hands. Compl. ¶ 30. Nevertheless, Altair allegedly has not yet made good on its promise to pay JMP the contingent fee. Id. ¶ 31. The parties cannot agree on what type of transaction Altair completed and, therefore, on the size of JMP's fee.

In September 2011, JMP sued Altair for (1) breach of contract, (2) promissory estoppel, (3) fraud, and (4) negligent misrepresentation. Compl. ¶¶ 39–64. JMP's breach of contract claim is actually two claims in one. The first concerns the size of the fee owed to JMP under the Agreement (the “fee claim”); JMP pled this claim using three alternative theories of breach, each related to a different fee-setting provision in the Agreement. Id. ¶¶ 41–43. The second concerns JMP's alleged contractual right to reimbursement from Altair for JMP's attorney fees in this lawsuit (the “attorney fee claim”). Id. ¶ 44.

In November 2011, Altair brought a motion for judgment on the pleadings which challenged JMP's attorney fee, promissory estoppel, fraud, and negligent misrepresentation claims, as well as two of the three theories underpinning the fee claim.³ JMP opposed the motion. Notably, although the parties' papers described the case as a straightforward matter of contract interpretation, they also hinted that it might be something more. First, both parties used New York law to brief the breach of contract claims (that is, the fee and attorney fee claims) but California law to brief the other claims, despite the clause in the Agreement selecting New York law. Second, the briefs contained a series of footnotes in which the parties gestured toward conflict-of-law issues without ever really joining them. To summarize, the parties assured the Court that the case presented no conflicts of law—but that, if it did, the conflict would favor their side. 1st MJP at 16 n. 4; 1st Opp'n at 14 n. 7, 15 n. 8, 21 n. 14; 1st Reply at 8 n. 3, 9 n. 4. These apparent assurances had the opposite of their intended effect and spurred the Court to undertake sua sponte the choice-of-law analysis that the parties seemed pointedly to be avoiding. 1st Order at 8–15.

With one exception, the Court determined that JMP's claims were governed by the substantive law of New York. Id. at 15. Because the parties had briefed the fee claim using New York law, the Court applied that body of law, ultimately denying Altair's motion with respect to that claim. Id. at 15–20. With respect to the promissory estoppel, fraud, and negligent misrepresentation claims, the Court determined that, by briefing California rather than New York law, the parties had failed to place the correct rules of decision before the Court. Id. at 15. Because Altair was the moving party and therefore bore the burden of persuasion, the Court denied Altair's motion with respect to those claims. Id. Finally, with respect to the attorney fee claim, the Court determined that the parties had not adequately briefed the issue of which law applied. Id. at 12–14. The Court therefore denied Altair's motion with respect to that claim. Id. at 14.

Now Altair has filed a Second Motion for Judgment on the Pleadings. The instant motion explicitly articulates the steps of the choice-of-law analysis that the last motion omitted, then refers the Court to the first round of briefing for the merits. With the choice-of-law analysis now fully briefed, the Court can determine whether Altair is entitled to judgment on the pleadings.

III. DISCUSSIONA. JMP's Procedural Challenge

As a preliminary matter, JMP challenges Altair's right to bring the instant motion, saying it is merely a motion for reconsideration filed under a different name.2d Opp'n at 3–5. In this district, motions to reconsider an interlocutory order in a civil case: may only be filed after seeking and receiving the leave of the Court; may not duplicate arguments made the first time around; and must be based on a showing that either (1) the parties excusably erred as to the material facts or controlling law, despite reasonable diligence, (2) the law or facts have materially changed since the order issued, or (3) the court manifestly failed to consider a material fact or dispositive argument presented to it. Civ. L.R. 7–9. JMP argues that, under this standard, the instant motion is both substantively and procedurally improper: substantively improper because Altair offers new arguments that it could have but did not make, and procedurally improper because Altair did not seek leave to file it. JMP urges the Court to deny Altair's motion in summary fashion in the interests of judicial economy and finality.2d Opp'n at 5.

The Court concludes, however, that the values of economy and finality are better served by considering Altair's motion than by summarily rejecting it. First, if the Court were to do as JMP asks and read the instant motion as one for reconsideration, the Court would be inclined to grant it. The Court takes Altair's position to be that the Court erred in concluding that New York substantive law applied to all of JMP's claims, though Altair, understandably but unnecessarily, seems reluctant to say this in so many words. See, e.g., 2d Reply at 6. The Court reached its conclusion after conducting a choice-of-law analysis omitted by the parties. These parties are not, of course, the first people ever to dodge choice-of-law issues, which can be difficult, even arcane. See, e.g., ABF Capital Corp. v. Grove Properties Co., 126 Cal.App.4th 204, 214–15, 23 Cal.Rptr.3d 803 (Cal.Ct.App.2005) (criticizing courts who have “simply passed over” required choice-of-law analysis). For the reasons detailed in the next section, the Court is persuaded that its earlier choice-of-law analysis is worth revisiting.

Given that reality, as well as the failure of both parties (not just Altair) to articulate the choice-of-law issues raised in this case, the Court is inclined to take the instant motion on its own terms. The issues briefed here were not adequately considered by either party's initial papers, and the Court does not discern any improper purpose behind Altair's filing of the instant motion. On the contrary, the motion serves the useful purpose of narrowing the issues for trial or possible settlement, and Altair has been careful only to supplement its previous briefing in conformity with guidance provided by the Court.

Summary denial at this point would only result in wasteful and empty formality, since denying the motion likely would prod Altair to file a motion for reconsideration, which the Court would be inclined to grant. The Court's local rules are meant to streamline the administration of justice, not complicate it. Moreover, those rules do nothing to limit the Court's “inherent procedural power to reconsider, rescind, or modify an interlocutory order for cause seen by it to be sufficient.” City of Los Angeles, Harbor Div. v. Santa Monica Baykeeper, 254 F.3d 882, 889 (9th Cir.2001) (citing Melancon v. Texaco,...