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Centerboard Securities LLC v. Benefuel Inc.

United States District Court, N.D. Texas, Dallas Division

March 23, 2017

BENEFUEL, INC., Defendant.


          A. JOE FISH Senior United States District Judge

         Before the court are the defendant's motions (1) to alter or amend the judgment, or (2) for a new trial (docket entry 204). For the reasons stated below, the defendant's motions are denied. The court set forth the background of this case in two recent opinions. See Memorandum Opinion and Order Granting in Part and Denying in Part Defendant's Motion for Summary Judgment (docket entry 139); Memorandum of Decision (“Opinion”) (docket entry 200).

         I. ANALYSIS

         A. Legal Standard

         Motions for a new trial or to alter or amend the judgment must clearly establish either a manifest error of law or fact or must present newly discovered evidence. Simon v. United States, 891 F.2d 1154, 1159 (5th Cir. 1990) (citations omitted). Such motions may not be used to relitigate issues that were resolved to the movants' dissatisfaction, Salinas v. Wal-Mart Stores Texas, LLC, No. 3:10-CV-1691-L, 2010 WL 5136106, at *5 (N.D. Tex. Dec. 16, 2010) (Lindsay, J.) (citing Forsythe v. Saudi Arabian Airlines Corporation, 885 F.2d 285, 289 (5th Cir. 1989)), nor may they be used to raise arguments or present evidence that could have been presented prior to entry of judgment, Schiller v. Physicians Resource Group Inc., 342 F.3d 563, 567 (5th Cir. 2003). A motion for a new trial may be appropriate, however, to prevent manifest injustice. Amir-Sharif v. Commissioners of Dallas, No. 3:07-CV-0175-G, 2007 WL 1308314, at *1 (N.D. Tex. May 4, 2007) (Fish, C.J.) (citing Fresh America Corporation v. Wal-Mart Stores, Inc., No. 3:03-CV-1299-M, 2005 WL 1253775, at *1 (N.D. Tex. May 25, 2005) (Lynn, J.)). The burden rests with the party seeking a new trial to show that “prejudicial error has crept into the record or that substantial justice has not been done. . . .” Sibley v. Lemaire, 184 F.3d 481, 487 (5th Cir. 1999), cert. denied, 529 U.S. 1019 (2000).

         The decision to alter or amend the judgment under Rule 59(e) is within the district court's discretion. Stroman v. Thaler, No. 3:05-CV-1616-D, 2009 WL 3295128, at *1 (N.D. Tex. Oct. 9, 2009) (Fitzwater, C.J.) (citations omitted). “[W]hile a district court has considerable discretion in deciding whether to reopen a case in response to a motion for reconsideration, such discretion is not limitless.” Templet v. Hydrochem Inc., 367 F.3d 473, 479 (5th Cir.), cert. denied, Irvin v. Hydrochem, Inc., 543 U.S. 976 (2004). Reconsideration of a judgment is an extraordinary remedy that should be used sparingly. Stroman, 2009 WL 3295128, at *1. “Indeed, the remedy is so extraordinary that the standard under Rule 59(e) favors denial of motions to alter or amend a judgment.” Berry v. Indianapolis Life Insurance Company, No. 3:08-CV-0248-B, 2009 WL 1979262, at *1 (N.D. Tex. July 8, 2009) (Boyle, J.) (citations and internal quotation marks omitted). There are, however, two important judicial imperatives that the court must consider on a Rule 59 motion: “1) the need to bring litigation to an end; and 2) the need to render just decisions on the basis of all the facts.” Templet, 367 F.3d at 479 (citations omitted). “The task for the district court is to strike the proper balance between these competing interests.” Id.

         B. Application

         Benefuel has three primary contentions: (1) that the term “investment” is ambiguous and only includes equity transactions; (2) that “current investor” is ambiguous and that the court erred by holding that “current investor” did not include Koch Industries, Inc. and all of its affiliates; and (3) that the court erred by not applying the pro rata ownership clause when calculating the success fee. Defendant's Motion for a New Trial and to Alter or Amend the Judgment (docket entry 204); Defendant's Brief in Support of Its Motion for a New Trial and to Alter or Amend the Judgment (“Defendant's Brief”) at 1, 6, 10 (docket entry 205).

         1. “Investment”

         a. Whether the Term “Investment” Is Ambiguous

         Benefuel contends that the court erred when it held that the term “investment” includes both equity and debt. Defendant's Brief at 1-2. When analyzing whether a term is ambiguous, courts look to whether the term is susceptible to the interpretation submitted by one of the parties. Seaford Golf & Country Club v. E.I. duPont de Nemours & Company, 925 A.2d 1255, 1261-62 (Del. 2007). In the opinion, the court rejected Benefuel's proposed interpretation of “investment, ” concluding that limiting the term “investment” to equity transactions is an unreasonable. Opinion at 17-18. The breadth of the term “investment” precluded the court from restricting its definition solely to equity. Id. The court looked to the plain meaning of the term “investment, ” examined the proposed definitions submitted by the parties, and concluded that the term “investment” was not reasonably susceptible to the definition submitted by Benefuel. See Opinion at 17-19. Thus, Benefuel has failed to show that the court erred in holding that the term “investment” was not ambiguous.

         b. Extrinsic Evidence

         Benefuel contends that the court erred by “fail[ing] to consider evidence of the parties' communications in addition to drafts of the agreement.” Defendant's Brief at 2. However, the court considered and rejected the extrinsic evidence before it. Opinion at 19-22. Benefuel contends that the parties intended for the term “investment” to include both debt and equity because “the goal of the agreement was to raise equity” and that was understood by Kevin Singer at Centerboard. Defendant's Brief at 2-3. Benefuel also contends that the pricing of the success fee, 7%, is evidence that the parties intended for “Transaction” to refer to only equity and not debt. Id. at 4. Moreover, Benefuel contends that equity is the only investment vehicle that would have made sense because it did not have income to make loan payments. Id. at 2-3.

         However, the parties' communications are inconclusive and fail to show that the term “investment” can be reasonably limited to just equity. At most, the communications submitted by Benefuel show that equity was the preferred source of funding. Benefuel failed to mention that Benefuel's CEO, Robert Tripp, told chairman, Tom Ryley, that he “[w]as fine with” removing the words “preferred equity” as a limitation to the term “investment.” See PTE 7. Other internal communications show that Benefuel believed that the term “investment” was not limited to equity. In an email, Tripp wrote that Centerboard “saw various ways to potentially finance this and didn't want it to be restricted to just equity” and that the engagement “contemplated any vehicle with respect to funding Beatrice.” PTE ...

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