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United States ex rel. Atlas Copco Compressors LLC v. RWT LLC

United States District Court, D. Hawaii

July 13, 2017

UNITED STATES OF AMERICA, ex rel. ATLAS COPCO COMPRESSORS LLC Plaintiff,
v.
RWT LLC and ARCH INSURANCE COMPANY Defendants.

          ORDER DENYING PLAINTIFF'S MOTION FOR RECONSIDERATION AND GRANTING PLAINTIFF'S MOTION FOR INTERLOCUTORY APPEAL AND STAY PENDING THAT APPEAL

          Alan C. Kay Sr. United States District Judge

         For the reasons set forth below, the Court denies Plaintiff's Motion for Reconsideration, ECF No. 51. The Court grants Plaintiff's Motion for Interlocutory Appeal and Stay Pending that Appeal, ECF No. 51.

         BACKGROUND

         On May 4, 2016, Plaintiff Atlas Copco Compressors LLC (“Plaintiff”) filed a Complaint against RWT LLC (“RWT”) and Arch Insurance Company (“Arch, ” and together with RWT, “Defendants”). Plaintiff alleged that Defendants violated the Miller Act, 40 U.S.C. §§ 3131, 3133. The alleged violation was based on a subcontract in which Plaintiff agreed to supply RWT four compressors and two air dryers (the “equipment”) for a U.S. Department of Defense project at Pearl Harbor.

         On May 17, 2017, the Court issued an Order denying Defendants' Motion for Summary Judgment and denying Plaintiff's Motion for Summary Judgment (“the May 17, 2017 Order”). ECF No. 50. The Court incorporates the procedural and factual background as well as the defined terms of the May 17, 2017 Order.

         On May 30, 2017, Plaintiff filed a Motion for Reconsideration or Alternatively for Interlocutory Appeal and Stay Pending that Appeal (“Motion”) pursuant to Federal Rule of Civil Procedure 59(e), Local Rule 60.1, and 28 U.S.C. § 1292(b). ECF No. 51. In the May 17, 2017 Order, the Court held that Plaintiff did not meet the requirements necessary to establish its Miller Act claim. May 17, 2017 Order at 21. Plaintiff's Motion for Reconsideration recasts the central issue to be whether the inspection and force majeure provisions in the General Terms and Conditions of Sale in the Purchase Order constituted a waiver of Plaintiff's Miller Act rights.

         Defendants filed a Memorandum in Opposition to Plaintiff's Motion for Reconsideration (“Opposition”) on June 13, 2017. ECF No. 53. On June 27, 2017, Plaintiff filed its Reply to Defendants' Opposition (“Reply”). ECF No. 54. Pursuant to Local Rule 7.2(d), this matter is suitable for disposition without a hearing.

         STANDARD

         I. Reconsideration

         A party may ask the court to reconsider and amend a previous order pursuant to Federal Rule of Civil Procedure 59(e). White v. Sabatino, 424 F.Supp.2d 1271, 1274 (D. Haw. 2006) (Kay, J.). Rule 59(e) offers “an extraordinary remedy, to be used sparingly in the interests of finality and conservation of judicial resources.” Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir. 2003) (internal quotation marks and citation omitted). In the Ninth Circuit, a successful motion for reconsideration must accomplish two goals. First, “a motion for reconsideration must demonstrate some reason why the court should reconsider its prior decision.” Na Mamo O‘Aha ‘Ino v. Galiher, 60 F.Supp.2d 1058, 1059 (D. Haw. 1999). Second, it “must set forth facts or law of a strongly convincing nature to induce the court to reverse its prior decision.” Id.

         Courts have established three grounds justifying reconsideration: (1) an intervening change in controlling law; (2) the availability of new evidence; and (3) the need to correct clear error or prevent manifest injustice. Allstate Ins. Co. v. Herron, 634 F.3d 1101, 1111 (9th Cir. 2011); Mustafa v. Clark County Sch. Dist., 157 F.3d 1169, 1178-79 (9th Cir. 1998). The District of Hawaii has implemented these standards in Local Rule 60.1.

         Mere disagreement with a previous order is an insufficient basis for reconsideration. See Leong v. Hilton Hotels Corp., 689 F.Supp. 1572, 1573 (D. Haw. 1988) (Kay, J.). In addition, a Rule 59(e) motion for reconsideration may not present evidence or raise legal arguments that could have been presented at the time of the challenged decision. See Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000). “Whether or not to grant reconsideration is committed to the sound discretion of the court.” Navajo Nation v. Confederated Tribes and Bands of the Yakama Indian Nation, 331 F.3d 1041, 1046 (9th Cir. 2003).

         II. Interlocutory Appeal

         Certification for interlocutory appeal is appropriate where: (1) the order involves a controlling question of law; (2) a substantial ground for difference of opinion exists; and (3) an immediate appeal from the order may materially advance the ultimate termination of the litigation. 28 U.S.C. § 1292(b).

         A movant seeking an interlocutory appeal has a heavy burden to show that “exceptional circumstances justify a departure from the basic policy of postponing appellate review until after the entry of a final judgment.” Coopers & Lybrand v. Livesay, 437 U.S. 463, 475 (1978) (internal quotation marks and citation omitted); see also James v. Price Stern Sloan, Inc., 283 F.3d 1064, 1067 n. 6 (9th Cir. 2002) (“Section 1292(b) is a departure from the normal rule that only final judgments are appealable, and therefore must be construed narrowly.”). Section 1292(b) is only to be used “in exceptional situations in which allowing an interlocutory appeal would avoid protracted and expensive litigation.” In re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1982) (citation omitted). “A court has substantial discretion whether to grant a party's motion for certification.” Pitts v. Sequeira, Civil No. 11-00281 LEK/RLP, 2014 WL 346523, at *2 (D. Haw. Jan. 29, 2014) (citation omitted).

         DISCUSSION

         I. Motion for Reconsideration

         Plaintiff moves for reconsideration to correct clear errors in the Court's May 17, 2017 Order and prevent manifest injustice that would result from those errors. Motion at 1.

         a. Clear Error

         Specifically, Plaintiff claims that the Court made the following errors: (1) failing to find Comment to Section 2.5.1 in the Proposal, as opposed to the General Terms and Conditions of Sale in the Purchase Order, controlling as a matter of law; and (2) failing to find United States ex rel. Walton Tech., Inc. v. Weststar Eng'g, Inc., 290 F.3d 1199 (9th Cir. 2002) controlling authority.

         However, in making these arguments, Plaintiff simply rehashes the same arguments-albeit with a different “spin”-that it initially presented.[1] The Ninth Circuit has made clear that a motion for reconsideration is properly denied when it presents arguments that were already raised in the prior motion. See Backlund v. Barnhart, 778 F.2d 1386, 1388 (9th Cir. 1985); see also United States v. Westlands Water Dist., 134 F.Supp.2d 1111, 1131 (E.D. Cal. 2001) (stating that a motion for reconsideration is not a vehicle to rehash arguments previously presented).

         To the extent that Plaintiff's arguments can be construed as not previously raised, the Court still cannot grant Plaintiff's Motion because “[a] Rule 59(e) motion may not be used to raise arguments . . . for the first time when they could reasonably have been raised earlier in the litigation.” Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000) (emphasis in original); see Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir. 2003) (holding that it is improper to present new legal theories in a motion for reconsideration for the first time when they could reasonably have been raised earlier in the litigation); Reliance Ins. Co. v. Doctors Co., 299 F.Supp.2d 1131, 1154 (D. Haw. 2003), aff'd sub nom. Reliance Ins. Co. v. Doctors Co., 132 F. App'x 730 (9th Cir. 2005) (“A motion for reconsideration is not a proper mechanism for presenting new legal theories that the movant failed to raise with respect to the underlying motion for summary judgment.”). Plaintiff fails to offer any reason why the arguments it offers could not have been raised before. Therefore, the Court denies Plaintiff's Motion because the arguments it presents were previously raised or could have been raised earlier. In addition, even if the Court were to consider these arguments, as discussed in detail herein, Plaintiff's Motion still fails.

         i. Whether Comment to Section 2.5.1 of the Proposal Controls

         First, Plaintiff argues that the Comment to Section 2.5.1 of the Proposal, rather than the General Terms and Conditions of the Purchase Order, controls because between boiler plate terms and the specific terms of the Proposal, the latter should control as a matter of contract law. Plaintiff cites to two cases-Bank of Commerce v. Hoffman, 829 F.3d 542 (7th Cir. 2016) and Aramony v. United Way of Am., 254 F.3d 403, 413-14 (2d Cir. 2001)-to support this proposition. In Hoffman, the court examined one settlement agreement that had conflicting terms. On the one hand, a provision in the settlement agreement absolved defendant of liability arising from some but not all of the properties at issue. 829 F.3d at 546-47. On the other hand, the same agreement had a provision that released defendant from all liabilities. Id. at 547. The court held that the contract was ambiguous and examined extrinsic evidence and the rules of construction to determine the contract's specific meaning. Id. at 547-549. The court, following Illinois state law, ultimately held that where general language is inconsistent and conflicts with specific language, the specific language controls. Id. at 548-49.

         In Aramony, defendant argued that the district court erred in interpreting the terms of an ERISA-governed pension plan as ambiguous. 254 F.3d at 410. The court examined the general provision set forth in Article I under the caption “Purpose of the Plan, ” which said that the purpose was “to provide a mechanism for securing the pension benefit promises made to . . . highly compensated key employees who may receive relatively smaller retirement benefits under the existing pension arrangement than rank and file employees will receive as a result of limitations imposed by the Internal Revenue Code . . .” Id. at 412. The court held that this general purpose clause did not create ambiguity in the contract because of another more specific section of the plan. Id. at 412-13. The court drew upon, inter alia, the “fundamental rule of contract construction that ‘specific terms and exact terms are given greater weight than general language.'” Id. at 413 (citing Restatement (Second) of Contracts § 203(c) (1981)). The court further held that even where there is no “true conflict” between two provisions, “‘specific words will limit the meaning of general words if it appears from the whole agreement that the parties' purpose was directed solely toward the matter to which the specific words or clause relate.'” Id. at 413-14 (citing 11 Richard A. Lord, Williston on Contracts § 32:10, at 449 (4th ed. 1999)). “Contracts would offer very little protection to their signatories if ambiguities of the sort found in the purpose clause could take precedence over carefully spelled out terms.” Id. at 413.

         The Court finds neither Hoffman nor Aramony persuasive here for several reasons. First, and most important, differing from Hoffman, there is no conflict between the two provisions in the contracts in the present case. Comment to Section 2.5.1 of the Proposal states that, “Atlas Copco is offering its standard factory performance test with certificate for each compressor.” Plaintiff CSF, Ex. F (ECF No. 33-10) at 17.[2] The General Terms and Conditions of Sale in the Purchase Order provide that RWT “shall have a reasonable time after receipt of [the equipment] and before payment to inspect [it] for conformity hereto, and performance shall not be deemed accepted until [RWT] has run an adequate test to determine whether the [the equipment] conform[s] to the specifications hereof.” Def. Opp. CSF, Ex. 2 (ECF No. 43-2) at 3.[3] The force majeure clause says, “neither party shall be liable for any failure to perform . . . caused by circumstances beyond its control . . . including . . . government action.” Def. Opp. CSF, Ex. 2 (ECF No. 43-2) at 3. The terms in Comment to Section 2.5.1 in the Proposal, therefore, relate to Plaintiff's inspection and testing of the equipment before RWT received it, whereas the General Terms and Conditions of Sale in the Purchase Order relate to whether RWT has run an adequate test to determine whether the equipment conforms to specifications after RWT received it.[4]

         Second, the contract at issue here is for the sale of goods, which is governed by the UCC rather than common law principles of contract interpretation.[5] See Utah Code § 70A-2-102 (“Unless the context otherwise requires, this chapter applies to transactions in goods . . .”); Hilsen v. Am. Sleep All., LLC, No. 2:15-CV-00714-DBP, 2016 WL 3948065, at *3 (D. Utah July 19, 2016) (applying Utah law and stating that the UCC applies to contracts for the sale of goods); see also Prime Start Ltd. v. Maher Forest Prod., Ltd., 442 F.Supp.2d 1113, 1121 (W.D. Wash. 2006) (applying Washington law and stating that “[t]he Uniform Commercial Code applies to sales of goods, while the common law of contracts governs services agreements”).[6]Neither of the contracts in Hoffman or Aramony was for the sale of goods.

         Third, none of the provisions at issue here feature the broad language discussed in Aramony. Fourth, the cases Plaintiff cites involve different provisions in one contract, whereas the provisions here are in two agreements. Last, neither of the cases Plaintiff cites involves boilerplate provisions. Therefore, the Court did not commit ...


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