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Utah Reverse Exchange, LLC v. Donado

United States District Court, S.D. Alabama, Southern Division

January 30, 2017

UTAH REVERSE EXCHANGE, LLC, et al., Plaintiffs,
LINDA DONADO, et al., Defendants.



         This matter is before the Court on the Rule 59(e) motion of the plaintiffs[1] to alter or amend the judgment. (Doc. 129). The defendants have filed a response, (Doc. 130), and the motion is ripe for resolution.

         Trial was bifurcated, with a jury deciding the claims regarding the Mexico property and the Court resolving the claims regarding the Utah property. The plaintiffs sought a declaration that they owed the defendants nothing, while the defendants sought, under theories of breach of contract and promissory estoppel, specific performance of a promise to transfer to them a 25% mineral interest in the Utah property. The Court found that the defendants established their claim for breach of contract but that recovery was barred because they failed to establish the partial-performance exception to the Utah statute of frauds. The Court found that the defendants established their claim for promissory estoppel, that the plaintiffs preserved no statute-of-frauds defense as to that claim, and that they failed to establish as an affirmative defense that the defendants' recovery was barred for want of a broker's license. (Doc. 126).

         As the plaintiffs acknowledge, (Doc. 129 at 8-9), “[a] Rule 59(e) motion cannot be used to relitigate old matters, raise argument or present evidence that could have been raised prior to the entry of judgment.” Arthur v. King, 500 F.3d 1335, 1343 (11th Cir. 2007) (internal quotes omitted). “The only grounds for granting a Rule 59 motion are newly-discovered evidence or manifest errors of law or fact.” Id. (internal quotes omitted). The trial court's ruling on such a motion is reviewable only for abuse of discretion. Id. As this Court has noted in a related context, “[m]otions to reconsider serve a valuable but limited function. They do not exist to permit losing parties to prop up arguments previously made or to inject new ones, nor to provide evidence or authority previously omitted. They do not, in short, serve to relieve a party of the consequences of its original, limited presentation.” Nelson v. Whirlpool Corp., 668 F.Supp.2d 1368, 1379 (S.D. Ala. 2009) (internal quotes omitted).

         The plaintiffs assert that, in ruling in favor of the defendants on the promissory estoppel claim regarding the Utah property, the Court committed manifest errors of law and/or fact. The Court's challenged rulings, however, properly addressed the arguments the plaintiffs actually asserted at and after trial, and their post-judgment effort to argue now what they failed to argue then is precisely what is barred under Rule 59(e).

         A. Promissory Estoppel Claim.

         As noted, the Court found that the defendants established all elements of this claim: (1) a promise, (2) which the promisor should have reasonably expected to induce action or forbearance of a definite and substantial character, and (3) which did in fact produce such action or forbearance by the promise, resulting in (4) injustice that can be avoided only by enforcing the promise. (Doc. 126 at 10-12). The Court then pointed out that the plaintiffs, rather than addressing the 2005 promise on which this claim was based, focused exclusively on a separate, vastly different promise made in 2010, with the result that they “offer[ed] no relevant response” to the defendants' showing. (Id. at 12-13). The 2005 promise, made by Breland on behalf of himself and all of the plaintiffs, was to transfer to the defendants the 25% mineral interest in exchange for their work in acquiring the Utah property. The 2010 promise, made by Breland on behalf of himself and all of his entities, was to use all their assets to satisfy all his obligations to the defendants (which included not only the 25% mineral interest but also money related to transactions other than the Utah property), in exchange for the defendants' work in Breland's bankruptcy proceedings and for their not filing a claim in those proceedings.[2]

         The plaintiffs now insist that, by addressing the 2010 promise, “they were directing their arguments necessarily to the 2005 promise to transfer a 25% mineral interest to the Donados because that promise was a part of the obligations … that they claimed Breland owed them.” (Doc. 129 at 11). The question, however, is not whether the two promises are completely unrelated but whether the arguments the plaintiffs made regarding the 2010 promise have any relevance to the 2005 promise. Patently, they do not.

         The plaintiffs' only argument regarding the 2010 promise was that the defendants could not have relied to their detriment on that promise because: (1) they were paid by Adrian Zajac for their work in trying to sell the Utah property to his company out of the bankruptcy proceedings; and (2) they insist it was not necessary for them to file a claim in Breland's bankruptcy in order to pursue claims against Breland's entities. (Doc. 108 at 13-16; Doc. 112 at 14-17). The defendants' detrimental reliance on the 2005 promise, as found by the Court, consisted of mineral exploration activity on the Utah property, most or all of which occurred before the 2010 promise was even made. (Doc. 126 at 11). The plaintiffs' arguments regarding detrimental reliance, which do not come within a country mile of addressing the defendants' reliance on the 2005 promise, are thus irrelevant.

         The plaintiffs appear to argue that, even if their arguments as to the 2010 promise are irrelevant to the 2005 promise (as they obviously are), the defendants cannot prevail on their promissory estoppel claim without proving that they also detrimentally relied on the 2010 promise. (Doc. 129 at 11-12). Their theory is that the 2010 promise is the only promise by which Breland bound Osprey, the entity that now holds the 25% mineral interest. (Doc. 129 at 11-12). The Court, however, found that the 2005 promise was made on behalf of all the entity parties, including Osprey. (Doc. 126 at 2 n.2, 3-5, 11). The plaintiffs posit that Breland's 2005 promise was made only on behalf of “the four entities which had taken title … to the Utah property in 2005, ” (Doc. 129 at 11), but they identify no evidence that would even support, much less compel, such a restrictive finding. They note only that Osprey was formed in 2011, so perhaps they mean to suggest that Breland did not or could not bind Osprey before it was formed. Even if that is their point, they never raised it before judgment was entered, [3] and it is far too late to do so now. Nor, even now, do they endeavor to support such a position either factually or legally.

         Moreover, the plaintiffs' arguments regarding the defendants' detrimental reliance on the 2010 promise are plainly meritless. Even if Zajac did pay the defendants for their efforts in connection with his company's bid to buy the Utah property, that is not the benefit Breland promised in return for the defendants' working on his bankruptcy and for not filing a claim therein, and it is both counterintuitive and legally unsupported for the plaintiffs to suggest that there is no injustice in stiffing the defendants simply because a third party provided some[4] compensation.[5]

         The plaintiffs' other argument regarding detrimental reliance makes even less sense. They say the defendants suffered no detriment in refraining from filing a claim in Breland's bankruptcy because they could still pursue claims against his entities (none of which filed for bankruptcy).[6] As this lawsuit demonstrates, proceeding against the entities is fraught with peril that could have been avoided had the defendants insisted that Breland personally make good on his debts and used the power of the Bankruptcy Court to ensure that it happened.

         B. Statute of Frauds.

         As noted, the Court ruled that the statute of frauds barred the defendants from prevailing on their claim for breach of contract. (Doc. 126 at 5-9).[7] The plaintiffs argue the Court committed a manifest error by not rejecting the defendants' promissory estoppel claim on the same basis. They cite a number of cases for the proposition that, if a contract claim is barred by the statute of frauds, a promissory estoppel claim based on the same promise is also barred by the statute of frauds. (Doc. 129 at 12-15). That may or may not be a correct statement of the law, but invoking it now cannot furnish grounds to alter the judgment.

         The plaintiffs, like all litigants, have at all times been the masters of the arguments they elect to assert. When it came to the statute of frauds, the plaintiffs could not possibly have been more explicit. In both their motion for judgment on partial findings and their post-trial brief, the plaintiffs included a section entitled, “The Donados' Breach of Contract Claim is Barred by the Utah Statute of Frauds.” (Doc. 108 at 16; Doc. 112 at 17 (emphasis added)). Nowhere in either brief did the plaintiffs assert that the statute of frauds had any application to the claim for promissory estoppel. The only argument the plaintiffs raised in their section addressing promissory estoppel was the detrimental reliance argument discussed in Part A. (Doc. 108 at 13-16; Doc. 112 at 14-17). The Court in its order pointed out that the plaintiffs “have explicitly limited their invocation of this defense to the contract claim” and concluded that “the plaintiffs have preserved no argument that the promissory estoppel claim is barred by the statute of frauds.” (Doc. 126 at 15).

         The plaintiffs, (Doc. 129 at 12), say they did not waive the statute of frauds as a defense to the promissory estoppel claim because they included in the joint pretrial document a statement that “an oral promise that is void by operation of the statute of frauds will not support an action against the promisor for promissory fraud.” (Doc. 88-1 at 10). Assuming without deciding that “promissory fraud” should be read as “promissory estoppel, ”[8] the quoted statement sufficed to preserve the defense for trial, thus enabling the plaintiffs to invoke it during or after trial if they so chose. But it did not compel the plaintiffs to do so, and it did not excuse the plaintiffs from doing so. Because the plaintiffs did not ask the Court to reject the promissory estoppel claim based on the statute of frauds, the defense was as lifeless as that of laches, which the plaintiffs similarly preserved in the joint pretrial document but ignored in their Rule 50 motion and post-trial brief. As the ...

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