Peoples Nat. Bank v. Purina Mills, Inc., 95-4077-SAC.

• Decision Date: 01 November 1996
• Docket Number: No. 95-4077-SAC.,95-4077-SAC.
• Citation: 946 F.Supp. 889
• Parties: The PEOPLES NATIONAL BANK, Clay Center, Kansas, Plaintiff, v. PURINA MILLS, INC., Defendant.
• Court: U.S. District Court — District of Kansas

946 F.Supp. 889

The PEOPLES NATIONAL BANK, Clay Center, Kansas, Plaintiff, v. PURINA MILLS, INC., Defendant.

No. 95-4077-SAC.

United States District Court, D. Kansas.

November 1, 1996.

Gary H. Hanson, Stumbo, Hanson & Hendricks, Topeka, KS, Tim W. Ryan, Ryan, Condray & Ryan, LLC, Clay Center, KS, for plaintiff.

Kathryn Gardner, Terry L. Malone, Richard K. Thompson, Martin, Pringle, Oliver, Wallace & Swartz, Wichita, KS, for defendant.

MEMORANDUM AND ORDER

CROW, District Judge.

The case comes before the court on the plaintiff's motion for clarification or, in the alternative, reconsideration of the memorandum and order dated June 20, 1996. (Dk. 51). According to the plaintiff Peoples National Bank, Clay Center, Kansas ("Bank"), it and the defendant Purina Mills, Inc. ("Purina") disagree over whether the court's prior order requires the plaintiff to "apply a prorated share (41.7%) of all collateral proceeds solely to Purina's $150,000.00 liability under the [Non-Funded Participation Agreement] NFPA or whether the Bank may apply the proceeds pro rata to all loans held by the Bank, including loans subject to the NFPA." (Dk. 51 at 1). The Bank interprets the court's order as requiring a reallocation of collateral proceeds that still gives the Bank a pro rata share based on both the NFPA and non-NFPA loans. In contrast, Purina interprets the court's order as giving it a 41.7% share in all collateral proceeds without regard to the manner in which the Bank's share is calculated.

STANDARDS GOVERNING MOTION TO RECONSIDER

An appellate court uses an abuse of discretion standard to review a district court's refusal to grant relief on a motion to reconsider. See Hancock v. City of Oklahoma City, 857 F.2d 1394, 1395 (10th Cir. 1988). "A motion to reconsider shall be based on (1) an intervening change in controlling law, (2) availability of new evidence, or (3) the need to correct clear error or prevent manifest injustice." D.Kan. Rule 7.3; see Anderson v. United Auto Workers, 738 F.Supp. 441, 442 (D.Kan.1990). Absent extraordinary circumstances, "revisiting the issues already addressed `is not the purpose of a motion to reconsider.'" Van Skiver v. United States, 952 F.2d 1241, 1243 (10th Cir.1991), cert. denied, 506 U.S. 828, 113 S.Ct. 89, 121 L.Ed.2d 51 (1992). "A motion for reconsideration is not to be used as a vehicle for the losing party to rehash arguments previously considered and rejected." Torre v. Federated Mutual Insurance Co., 906 F.Supp. 616, 618 (D.Kan.1995). A party who fails to present his strongest case in the first instance generally has no right to raise new theories or arguments in a motion to reconsider. Renfro v. City of Emporia, 732 F.Supp. 1116, 1117 (D.Kan.1990), aff'd, 948 F.2d 1529 (10th Cir.1991), cert. dismissed, 503 U.S. 915, 112 S.Ct. 1310, 117 L.Ed.2d 510 (1992). A motion to reconsider advanced for improper purposes "can waste judicial resources and obstruct the efficient administration of justice." United States ex rel. Houck v. Folding Carton Administration Committee, 121 F.R.D. 69, 71 (N.D.Ill.1988).

ANALYSIS

The court does not believe its prior order is ambiguous with respect to the issue argued by the plaintiff. See Peoples Nat. Bank v. Purina Mills, 931 F.Supp. 1525, 1532 (D.Kan.1996). Nonetheless, the court will highlight its relevant holdings and explain those areas where the plaintiff appears to be confused.

The Bank originally argued that it had the common-law right to apply the proceeds from the collateral first to the non-NFPA term note even though the collateral secured both the NFPA loans and the non-NFPA term note. The court found the general rule to be that a creditor enjoyed such a right only "`in the absence of contrary agreement.'" 931 F.Supp. at 1532 (citation omitted). By the terms of the NFPA, the Bank had "expressly agreed that `[a]ny payments received ... by liquidation of collateral, ..., shall be applied to pro rata among the indebtedness held by Bank and the indebtedness held by Purina.'" 931 F.Supp. at 1532-33. This agreement over the application of collateral proceeds necessarily precludes the Bank from claiming the discretionary right to apply the collateral proceeds as it sees fit. Id. at 1533. Having lost on that argument, the Bank now retreats to a middle ground.

The Bank presently argues the court has held or should hold that the collateral proceeds are to be shared ratably and that the Bank's pro rata share is based on the total indebtedness (NFPA and non-NFPA loans) it held in November of 1994. To support its argument, the Bank highlights certain findings from the court's order. The NFPA incorporates the security agreement, and the latter document includes a cross-collateralization provision applicable to all of the Tolls' debt held by the Bank. Purina knew of the non-NFPA loan. According to the Bank, "[i]n light of these facts, the court concluded the NFPA `expressly gives Purina an interest in all listed collateral that is concurrent with the Bank's claimed interest in the same collateral.' (Memorandum, p. 14)." (Dk. 52, at 2). Besides the court's order, the Bank contends a contrary holding would mean the cross-collateralization clause of the security agreement was of no effect and the non-NFPA note was subordinate to the NFPA loans.¹

Once again, the Bank's arguments falter under the weight of the NFPA's own plain terms. In relevant part, the NFPA provides:

In the event of default under the Loan Documents and should the obligations under the Loan Document be accelerated as provided in paragraph 8 hereof, the interests of Bank and Purina in the Loan and any collateral therefor shall be deemed ratably concurrent. Any payments received thereafter from the Borrower or any other parties to the Loan Documents or by liquidation of collateral, application of deposits, or otherwise, shall be applied to pro rata among the indebtedness held by Bank and the indebtedness held by Purina. If any party hereto received payment on the Loan in greater proportion than payments received by the other party hereto on the basis of the percentage of participation on the date the obligations were accelerated, whether the same are voluntary, involuntary, by operation of law, by application of collateral security of any kind or recovery from any guarantor, surety or the like, or by any other means, the parties receiving such greater proportion shall pay to each of the other parties such sums, or shall purchase from each of them such participation in the Loan as shall be necessary to cause the party receiving such greater proportion to share the excess payment ratably with each of the other parties hereto in accordance with their percentage or participation hereunder.

In one of its "whereas" clauses, the NFPA defines "the Loan"...