The opinion of the court was delivered by: Leslie E. Kobayashi United States District Judge
ORDER DENYING APPELLANT RNI-NV LIMITED PARTNERSHIP'S MOTION FOR RECONSIDERATION PURSUANT TO RULE 59(E), F.R.CIV.P. [DKT. NO. 30]; GRANTING APPELLANT'S MOTION FOR LEAVE TO FILE LATE PETITION FOR REHEARING OR MOTION FOR RECONSIDERATION OF ORDER DISMISSING APPEAL OF NOVEMBER 30, 2011, OR, IN THE ALTERNATIVE, MOTION TO RETROACTIVELY EXTEND THE TIME TO FILE PETITION FOR REHEARING OR MOTION FOR RECONSIDERATION OF ORDER DISMISSING APPEAL PURSUANT TO RULE 26(B) AND RULE 40(A) F.R.APP.P. [DKT. NO. 37]; GRANTING APPELLEE DANE S. FIELD, TRUSTEE'S MOTION TO STRIKE A PORTION OF APPELLANT'S REPLY TO APPELLEE'S OPPOSITION TO MOTION FOR RECONSIDERATION [DKT. NO. 41]; AND GRANTING TRUSTEE'S MOTION TO STRIKE A PORTION OF APPELLANT'S REPLY TO APPELLEE'S OPPOSITION TO MOTION FOR LEAVE TO FILE LATE PETITION FOR REHEARING [DKT. NO. 44]
Before the Court are four matters in this bankruptcy appeal: (1) Appellant RNI-NV Limited Partnership's ("Appellant" or "RNI-NV") Motion For Reconsideration Pursuant to Rule 59(e), F.R.Civ.P. ("Motion for Reconsideration"), filed on December 21, 2011 [dkt. no. 30]; (2) Appellant's Motion for Leave to File Late Petition for Rehearing or Motion for Reconsideration of Order Dismissing Appeal of November 30, 2011, or, in the Alternative, Motion to Retroactively Extend the Time to File Petition for Rehearing or Motion for Reconsideration of Order Dismissing Appeal Pursuant to Rule 26(b) and Rule 40(a) F.R.App.P., filed January 26, 2011 ("Motion for Leave") [dkt. no. 37]; (3) Appellee Dane S. Field, Trustee's ("Appellee" or "the Trustee") Motion to Strike a Portion of Appellant's Reply to Appellee's Opposition to Motion for Reconsideration ("First Motion to Strike"), filed on February 8, 2012 [dkt. no. 41]; and (4) the Trustee's Motion to Strike a Portion of Appellant's Reply to Appellee's Opposition to Motion for Leave ("Second Motion to Strike"), filed on February 15, 2012 [dkt. no. 44]. The Trustee filed his memorandum in opposition to the Motion for Reconsideration on January 9, 2012, and Appellant filed its reply on January 26, 2012. The Trustee filed his memorandum in opposition to the Motion for Leave on February 8, 2012, and Appellant filed its reply on February 14, 2012. Appellant filed its response to the First Motion to Strike on February 14, 2012 and its response to the Second Motion to Strike on February 16, 2012.
The Court finds these matters suitable for disposition without a hearing pursuant to Rule LR7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawai`i ("Local Rules"). After careful consideration of the motions, supporting and opposing memoranda, and the relevant legal authority, Appellant's Motion for Reconsideration is HEREBY DENIED for the reasons set forth below. The Court HEREBY GRANTS Appellant's Motion for Leave and the Trustee's First and Second Motions to Strike.
Appellant seeks reconsideration of the Court's November 30, 2011 Order Dismissing Appeal ("Order"). The parties and the Court are familiar with the factual and procedural background of this case. The Court therefore will only discuss the background that is relevant to the instant motions.
In the Chapter 7 proceedings below, the Trustee brought an adversary proceeding against RNI-NV seeking to recover funds that the debtor, Maui Industrial Loan & Finance Company, Inc. ("Maui Industrial"), paid to RNI-NV (Adv. Pro. No. 10-90069). The complaint in the adversary proceeding alleged four counts, including: (1) violation of the Hawaii Business Corporations Act, Haw. Rev. Stat. § 414-111(c) (Count I); (2) violation of the Hawaii Uniform Fraudulent Transfer Act, Haw. Rev. Stat. Chapter 651C (Count II); (3) violation of 11 U.S.C. § 548 (Count III); and (4) transferee liability pursuant to 11 U.S.C. § 550 (Count IV). The Trustee sought summary judgment on Counts I, II, and IV. The bankruptcy judge granted the Trustee's motion for summary judgment in a May 16, 2011 Memorandum of Decision. On June 1, 2011, the parties stipulated to dismiss Count III. RNINV filed its Notice of Appeal on May 27, 2011 ("Notice of Appeal"), appealing the May 16, 2011 Decision ("Appeal"). The bankruptcy court entered final judgment on June 3, 2011.
In its Order, this Court dismissed the Appeal for lack of appellate jurisdiction, concluding that the Notice of Appeal was untimely pursuant to Fed. R. Bankr. P. 8002 and 8003. Judgment issued on November 30, 2011. The instant motions followed.
I. Appellant's Motion for Reconsideration
Appellant initially seeks reconsideration pursuant to Fed. R. Civ. P. 59(e), arguing that the dismissal of the Appeal must be reconsidered, vacated, or the entire appellate case remanded to the bankruptcy court for the entry of a Report and Recommendation by the Article I Judge. [Mem. in Supp. of Motion for Recon. at 1.] Appellant repeats its previous arguments that the bankruptcy court did not have the authority to enter a final judgment based on the United States Supreme Court decision in Stern v. Marshall, 131 S. Ct. 2594 (2011), and argues that Stern constitutes an "intervening change in the controlling law" for Rule 59(e) purposes. It also argues for the first time that its Notice of Appeal was timely under applicable Ninth Circuit precedent, including In re Bonham, 229 F.3d 750 (9th Cir. 2000).
A. The Trustee's Opposition
The Trustee first argues that Appellant's Motion for Reconsideration was filed on December 21, 2011, seven days after the deadline for filing such a motion. He argues that, although Appellant asserts it filed the Motion for Reconsideration pursuant to Fed. R. Civ. P. 59(e), the rule does not apply to a district court sitting as an appellate court in bankruptcy proceedings. Rather, the Trustee argues that Fed. R. Bankr. P. 8015 applies, which provides in pertinent part: "Unless the district court . . . by local rule or by court order otherwise provides, a motion for rehearing may be filed within 14 days after entry of the judgment of the district court[.]" [Mem. in Opp. to Motion for Recon. at 3-4.] The Trustee asserts that a motion improperly filed pursuant to Rule 59(e) should be "treated as a motion for rehearing under Bankruptcy Rule 8015." [Id. at 4 (citing ECC Sys., Inc. v. Mallinckrodt Inc. (In re ECC Sys., Inc.), 2009 WL 1028061, at *1 (9th Cir. 2009)).] Because Appellant filed its motion twenty-one days after entry of this Court's Order and judgment, the Trustee argues that the Motion for Reconsideration was filed beyond the fourteen-day time limit set forth in Rule 8015 and is untimely. [Id. at 4.]
With respect to the merits, the Trustee argues that Stern is not an "intervening change in the law," because it was decided on June 23, 2011, before the parties filed their briefs in the instant Appeal, and was expressly raised in the briefing and oral argument before this Court. [Id. at 5-7.] He also argues that Appellant did not previously raise its arguments regarding the Ninth Circuit's "pragmatic and flexible finality" standard, and has therefore waived them, but in any event, the standard does not apply to bankruptcy adversary proceedings. [Id. at 8-9.]
In its reply, Appellant argues that its Motion for Reconsideration may be considered on its merits as this Court can waive or excuse strict compliance with the "practice and pleading" Rule 8015. [Reply to Motion for Recon. at 4-9.] It argues that the seven-day delay did not impede an expeditious resolution of this litigation or prejudice the Trustee, and that public policy favors disposition on the merits. [Id. at 11-15.]
Appellant also argues that the Court erred in dismissing the Appeal, which constitutes either a Fed. R. Bankr. P. 9023 "manifest error of law," or a Fed. R. App. P. 40(a)(2) "misapprehension" of a point of law. [Id. at 22.]
C. The Trustee's First Motion to Strike
In its First Motion to Strike, the Trustee argues that, in its reply memorandum, Appellant asserts six pages of argument that this Court misapplied In re Jack Raley Construction, Inc., 17 F.3d 291 (9th Cir. 1994), but that such argument is not responsive to the Trustee's opposition memorandum, nor did Appellant raise the argument in its memorandum in support of its Motion for Reconsideration. He also argues that, when Appellant filed its Motion for Reconsideration, it argued that the Trustee calculated the pre-judgment interest and therefore is judicially estopped from claiming any other amount. In its reply, however, when belatedly raising its analysis of In re Jack Raley Construction, Inc., Appellant argues that the parties stipulated to the amount of the pre-judgment interest. The Trustee asks the Court to strike these matters raised for the first time in Appellant's reply. [First Motion to Strike at 1-4.]
In response to the First Motion to Strike, Appellant states that its discussion in its reply regarding the application of In re Jack Raley Construction, Inc. was to show that this Court committed a manifest error of law or a misapprehension of law. [Mem. in Opp. to First Motion to Strike at 2-3.] Alternatively, if the Court is inclined to strike these arguments, Appellant asks the Court to authorize the Trustee to file a pleading responding to the allegedly "new" arguments. [Id. at 3.]
The Court HEREBY GRANTS the First Motion to Strike, and does not consider matters raised for the first time in Appellant's reply ...