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Strong v. Cochran

United States District Court, D. Utah, Central Division

December 30, 2019

D. RAY STRONG, as Liquidating Trustee of the Consolidated Legacy Debtors Liquidating Trust, the Castle Arch Opportunity Partners I, LLC Liquidating Trust, and the Castle Arch Opportunity Partners II, LLC Liquidating Trust, Plaintiff,



         On September 23, 2019, the court ruled on two motions for partial summary judgment, one from Plaintiff D. Ray Strong and one from Defendant Robert Geringer. Strong v. Cochran, No. 2:14-cv-00788-TC-EJF, 2019 WL 4601636 (D. Utah Sept. 23, 2019). Mr. Geringer and Defendants Jeff Austin and William Davidson now ask the court to either clarify or reconsider that order. (ECF Nos. 346, 347, 349, 350.) Mr. Geringer has also filed a motion for additional discovery under Rule 56(d). (ECF No. 367.)

         Mr. Strong contends that that there is nothing to reconsider or clarify from the order. Instead, he moves for the court to bifurcate trial so that the few triable issues of fact remaining for his second cause of action can be resolved. (ECF No. 337.) [1]

         For the reasons stated below, the motions for clarification and reconsideration are granted in part and denied in part. The motion for additional discovery and the motion to bifurcate trial are both denied.

         I. Clarification

         A. Mr. Strong's Motion for Summary

         On March 13, 2018, Mr. Strong moved for summary judgment on his second claim for breach of certain state securities laws. (ECF No. 221.) In ruling on the motion, the court reached the following conclusions:

1. California law applies to Mr. Strong's claims. Triable issues of fact exist about whether Utah law also applies.
2. CAREIC violated California's securities fraud statute when it failed to disclose Mr. Clawson's past SEC violations in the CAS, CASDF, and Series E PPMs. Triable issues of fact exist about whether [the] other misrepresentation or omissions violated California's securities fraud statute.
3. Mr. Austin, Mr. Clawson, Mr. Davidson, and Mr. Geringer are all liable for the failure to disclose Mr. Clawson's past, because (a) they are all directors of, or filled similar roles with, CAREIC; (b) privity is not required to establish liability; and (c) there are no triable issues of fact about whether they reasonably should have been aware of Mr. Clawson's past.
4. Although Mr. Strong has shown that Defendants are liable for at least one omission in their securities offerings, triable issues of material fact remain regarding whether claims arising from these securities offerings are barred by the statute of limitations.

Strong, 2019 WL 4601636 at *20. Because of this last issue, the court denied the motion.

         Defendants[2] now ask the court to clarify that only this final conclusion-that questions of fact exist regarding the statute of limitations-is binding going forward. (Def's Mot. Clarify at 2 (ECF No. 347).) They contend that all of the court's other conclusions should be treated as dicta, rather than as the law of the case. In other words, Defendants maintain that the applicability of California law, the materiality of Mr. Clawson's prior SEC violations, Defendants' roles as directors of CAREIC, and Defendants' knowledge of Mr. Clawson's prior SEC violations all remain disputed issues to be raised at trial.

         That was not the court's intent. To the extent the court was unclear before, the court now clarifies that each of the conclusions listed above are binding for purposes of this litigation.[3] See Fed.R.Civ.P. 56(g) (“If the court does not grant all the relief requested by the motion, it may enter an order stating any material fact . . . that is not genuinely in dispute and treating the fact as established in the case.”). Defendants claimed, both in their motions and at the hearing, that they had no notice that the court was going to enter an order that addressed issues beyond their statute of limitations defense. They suggest that their oppositions to Mr. Strong's motion would have been handled differently had they known what was actually at stake. (See Def.'s Mot. Clarify at 4 (“Had he been alerted to the possibility that the Court might enter such binding determinations on specific issues, Mr. Geringer could and would have responded to the motion in a different manner, rather than strategically rely[ing] on selective evidence and affirmative defenses to defeat the motion as a whole.”).) Defendants note that the official comment to Rule 56(g) specifically cautions courts against issuing orders that disregard the tactical choices of nonmoving parties:

[Under] Subdivision (g) . . . the court may decide whether to apply the summary-judgment standard to dispose of a material fact that is not genuinely in dispute. The court must take care that this determination does not interfere with a party's ability to accept a fact for purposes of the motion only. A nonmovant, for example, may feel confident that a genuine dispute as to one or a few facts will defeat the motion, and prefer to avoid the cost of detailed response to all facts stated by the movant. This position should be available without running the risk that the fact will be taken as established under subdivision (g) or otherwise found to have been accepted for other purposes.

Fed. R. Civ. P. 56(g), Advisory Committee's Note to 2010 Amendments.

         This warning has little relevance here. Defendants did address every aspect of the second claim, thoroughly and at length. The claim that they lacked sufficient notice has no legitimate basis in fact. The court reviewed over 1, 500 pages of briefs and evidence filed by Defendants in opposition to Mr. Strong's motion, as well as another 1, 000 pages submitted in support of Mr. Geringer's own motion for summary judgment, which effectively served as an additional opposition. In those briefs, Defendants made specific arguments regarding every element of Mr. Strong's second cause of action. Defendants clearly foresaw that the summary judgment order could include conclusive findings on disputes other than the statute of limitations, and they responded accordingly.

         A recent Seventh Circuit opinion, Kreg Therapeutics, Inc. v. Vitalgo, 919 F.3d 405 (7th Cir. 2019), is directly on point. There, the plaintiff moved for summary judgment on its entire breach of contract claim. Id. at 411. The district court “decided that . . . [the plaintiff] had established the first three elements of a breach of contract: the existence of a contract, its performance, and [the defendant's] breach. But it found [the plaintiff's] case lacking with respect to the fourth element: damages.” Id. At a status conference the next month, the plaintiff indicated that, in its view, damages were the only unresolved issue remaining for trial. The defendant disagreed, arguing that because the court never cited Rule 56(g) in its order, “the issues of performance and breach should still be on the table.” Id. at 412. The court “admitted that it should have cited Rule 56(g) in its first opinion, but it affirmed that its previous opinion established performance and breach as undisputed facts of the case.” Id.

         On appeal, the Seventh Circuit upheld the district court's order. “Rule 56(g) is ancillary to the ultimate summary-judgment analysis, operating to salvage some results from the time and resources spent in deciding unsuccessful summary-judgment motions. . . . The district court properly used the rule here.” Id. at 415 (internal quotations omitted). While the Seventh Circuit acknowledged that the “best practice” would have been to specifically cite Rule 56(g) in the order, it nevertheless held that “the district court's opinion was clear enough and no one paying reasonable attention to the litigation after the first summary-judgment opinion could have thought [the plaintiff's] performance and [the defendant's] breach were still open questions.” Id.

         The same is true here. The motion put the entirety of Mr. Strong's second claim at issue. Defendants' understood this, as demonstrated by their thorough arguments in opposition to each element of that claim. The court's order clearly and conclusively ruled on most parts of the claim, even though the motion as a whole was ultimately denied because of triable issues regarding the statute of limitations. “[N]o one paying reasonable attention” to the motion for summary judgment could doubt that these issues were properly before the court and had been definitively resolved. Id. Accordingly, the court's conclusions regarding Mr. Strong's partial motion for summary judgment are final and shall not be revisited at trial.

         Closely related to the above, Defendants represent that they would have filed a request under Rule 56(d) to allow further discovery before the motion was heard, had they known how many issues the court was going to address.[4] In fact, in pursuit of this goal, Mr. Geringer has now filed a Rule 56(d) motion. (ECF No. 367.) He suggests that the court could revisit its order once Mr. Geringer has had an opportunity to conduct additional discovery and supplement his earlier opposition to the partial motion for summary judgment.

         For the reasons already discussed, Defendants should have realized-and, based on their briefing, did in fact realize-that every element of the second claim was before the court. If Defendants believed additional discovery was necessary to oppose Mr. Strong's motion, they should have asked for that discovery before the court ruled on the motion.

         In any event, at Defendants' request, multiple extensions to respond to Mr. Strong's motion for summary judgment were provided. (See ECF Nos. 233, 234, 240.) The motion was on March 13, 2018. Defendants opposition briefs were not filed until nearly four months later, between July 6 and July 8 (depending on the Defendant). (ECF Nos. 245, 248, 250.) Clearly, they could have engaged in discovery during that period. Moreover, the motions were not heard by the court for another seven months. (ECF No. 316.) Again, Defendants could have conducted further discovery in that time and then asked for permission to supplement their briefs if needed. This history further supports denying Mr. Geringer's very late request for additional discovery.

         B. Mr. Geringer's Motion for Summary

         Mr. Geringer's motion for partial summary judgment was based on his statute of limitations affirmative defense. The court denied the motion on the first, eighth, and ninth claims, and granted it in part and denied it in part on the second and fourth claims. Strong, 2019 WL 4601636 at *31.

         In general, the discussion above regarding Mr. Strong's motion applies equally here. Where the court fully resolved certain issues (even without fully resolving an entire cause of action or affirmative defense), the court's conclusions are the law of the case and will not be revisited at trial.

         That said, the court does clarify two aspects of its previous order.

         1. Calculating the Statute of Limitations

         First, Defendants complain that for Mr. Strong's first, eighth, and ninth causes of action, the court's order summarily concludes that “the claims are timely.” Id. at *25. Defendants ask whether that means their statute of limitations affirmative defense is completely foreclosed for those claims.

         Reading the opinion in context, that was clearly not the court's intent. The order actually states:

Mr. Geringer argues that all three claims are subject to a four-year statute of limitations.24 He then argues that the first claim accrued, at the latest, upon his resignation from CAREIC on July 9, 2009, and that the eighth and ninth claims accrued, at the latest, when the final investment occurred on May 5, 2009. 25
Using Mr. Geringer's dates, the court concludes the claims are timely.
24 Mr. Geringer reserves the right to assert that some of the claims are actually subject to a three-year statute of limitations at trial but does not contest this issue for purposes of this motion. (See ECF No. 244 at 19.)
25 Again, Mr. Geringer reserves the right to argue at trial that these claims may have accrued earlier but does not press the issue here. (See ECF No. 244 at 20 n.6.)

Id. at *25 n.24, 25.

         These two footnotes explicitly acknowledged that Mr. Geringer had the right to advance different date calculations at trial. Mr. Geringer presented a narrow statute of limitations defense in his motion, in an effort to prevail at summary judgment, and the court rejected it. Clearly, when the order indicates that “the claims are timely, ” it is referring only to the one argument that Mr. Geringer placed before the court; it is not ...

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