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Lilly v. Change Healthcare Solutions LLC

United States District Court, W.D. Washington, Seattle

February 23, 2017

MARC LILLY, NOT IN HIS INDIVIDUAL CAPACITY BUT AS THE REPRESENTATIVE FOR THE FORMER SHAREHOLDERS OF VIEOSOFT, INC., Plaintiff,
v.
ENVOY, LLC; EMDEON, INC.; EMDEON BUSINESS SERVICES, LLC; TOM GROOM named as an indispensable party, Defendants.

          ORDER DENYING PLAINTIFF'S MOTION FOR RELIEF FROM JUDGMENT

          RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         THIS MATTER comes before the Court on Plaintiff's Motion for Relief from Judgment pursuant to Federal Rules of Civil Procedure 59(e) and 60(b). Dkt. #101. Plaintiff asserts that this Court committed manifest error by failing to address his claim for the minimum payment due under the contract at issue, and by failing to fairly credit the evidence he presented in opposition to summary judgment when construing the contract. Id. Defendants oppose the motion, noting that Plaintiff did not make a claim for the minimum payment due in his Complaint, and that Plaintiff merely reasserts the same arguments this Court already rejected with respect to interpreting the contract language. Dkt. #103. For the reasons set forth below, the Court agrees with Defendants and DENIES Plaintiff's motion.

         II. BACKGROUND

         The Court has previously set forth the pertinent background facts to this dispute and incorporates them by reference herein. See Dkt. #99 at 2-10.

         III. DISCUSSION

         A. Rule 59(e)

         A motion for relief from judgment under Rule 59(e) should be granted when the Court: “(1) is presented with newly discovered evidence; (2) committed clear error or the initial decision was manifestly unjust; or (3) if there is an intervening change in the controlling law.” In re Syncor ERISA Litigation, 516 F.3d 1095, 1100 (9th Cir. 2008) (citation omitted). In the instant case, Plaintiff argues that the Court committed clear error by dismissing his breach of contract claim without “resolving the termination fee breach.” Dkt. #101 at 6. The Court disagrees.

         First, Plaintiff was not the moving party on summary judgment. The Court noted Plaintiff had argued in his opposition brief that Defendants breached the contract in part by failing to pay the guaranteed termination fee; however, Plaintiff did not ask the Court to make any ruling in his favor. See Dkt. #85. In fact, he did not cross-move for summary judgment on any of his claims, nor did he file his own motion for summary judgment. He did not even ask the Court to find alternatively that he was due the termination fee if the Court ruled in Defendants' favor on their motion. Instead, he simply asked the Court to deny summary judgment on the breach of contract claim. Dkt. #85 at 25.

         Moreover, Plaintiff did not raise such a breach of contract claim based on the failure to pay the termination fee in his Complaint. While Plaintiff lists several alleged breaches of the contract as the basis of his claim, he does not include the failure to pay the guaranteed termination payment. See Dkt. #1 at ¶ ¶ 73-77. Indeed, Plaintiff acknowledges that he did not raise the claim in his Complaint because he thought at the time Defendants would pay the termination fee as promised. Dkt. #104 at 2. He also acknowledges that he never amended his Complaint to add such a claim, asserting that he was not required to because Defendants had fair notice of the claim. Id.

         Plaintiff misconstrues the law regarding fair notice. As this Court has previously stated:

“summary judgment is not a procedural second chance to flesh out inadequate pleadings.” Wasco Prods., Inc. v. Southwall Techs., Inc., 435 F.3d 989, 992 (9th Cir. 2006). Where a plaintiff “fail[s] to assert any factual allegations in its complaint” to support a theory or claim, the plaintiff's “provision of affidavits and declarations supporting [that theory or claim] at the summary judgment stage is ineffectual.” La Asociacion de Trabajadores de Lake Forest v. City of Lake Forest, 624 F.3d 1083, 1088-89 (9th Cir. 2010). Indeed, courts routinely decline to consider evidence proffered in response to a motion for summary judgment when the evidence is untethered from the factual allegations made in the complaint. See id.; In re TFT-LCD (Flat Panel) Antitrust Litig., No. M 07-1827 SI, 2012 U.S. Dist. LEXIS 160337, 2012 WL 5411590, at *2 (N.D. Cal. Nov. 6, 2012); Edinger v. City of Westminster, No. SA CV 14-0145-DOC (RNB), 2015 U.S. Dist. LEXIS 167801, 2015 WL 8770002, at *7 (C.D. Cal. Dec. 14, 2015) (“Because these allegations [of retaliatory speech] have not been properly pleaded, they are not properly before the Court in response to a motion for summary judgment.”); Corona v. Time Warner Cable, Inc., No. CV 13-5521 PSG (VBKx), 2014 U.S. Dist. LEXIS 186736, 2014 WL 11456535, at *4 (C.D. Cal. Oct. 16, 2014) (finding that the plaintiff's complaint did not encompass the theory raised in response to a motion for summary judgment). When a complaint fails to contain factual allegations later raised in opposition to a motion for summary judgment, the defendant may not have fair notice of “‘the grounds upon which [the plaintiff's claim] rests.” TFT-LCD Antitrust Litig., 2012 U.S. Dist. LEXIS 160337, 2012 WL 5411590, at *2 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)) and declining to consider breach of a contract other than the purchase orders identified in the complaint in response to a motion for summary judgment because the complaint did not give the defendant fair notice). The rationale for this rule rests primarily on the threat of prejudice from a late change in the plaintiff's theory, but the court need not make a finding of prejudice to reject a plaintiff's new theory. See Id. (rejecting argument based on factual allegations not in complaint without making a finding of prejudice); City of Lake Forest, 624 F.3d at 1088-89.

Roufa v. Constatine, 2017 U.S. Dist. LEXIS 4966, *26-28 (W.D. Wash. Jan. 11, 2017).

         Further, Plaintiff relies on an Eastern District of California case, Franco v. United StatesForest Serv., that is not helpful to his motion. Dkt. #104 at 2. Notwithstanding that such authority is not binding on this Court, Plaintiff fails to set forth ...


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