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Poole v. Transcontinental Fund Administration

United States District Court, D. South Carolina, Greenville Division

January 25, 2016

David C. Poole, Plaintiff,
v.
Transcontinental Fund Administration, Ltd., Defendant.

OPINION AND ORDER

Bruce Howe Hendricks United States District Judge

This matter is before the Court on Defendant Transcontinental Fund Administration, Ltd.’s (“Defendant” or “TFA”) Motion to Reconsider (ECF No. 83). On March 23, 2015, the Court issued an Order (ECF No. 78) denying Defendant’s Renewed Motion to Dismiss (ECF No. 36), granting Plaintiff David C. Poole’s (“Plaintiff”) Motion for Leave to Amend Complaint (ECF No. 37), and denying Plaintiff’s Motion to Strike Defendant’s Sur-Reply Memorandum (ECF No. 50). Defendant now requests the Court reconsider its Order and grant the Renewed Motion to Dismiss, or in the alternative grant Defendant leave to file an immediate interlocutory appeal pursuant to 28 U.S.C. § 1292(b). (ECF No. 83 at 1.) For the reasons set forth below, the Motion to Reconsider is denied.

DISCUSSION

I. Legal Standard

The Order denying Defendant’s Renewed Motion to Dismiss is an interlocutory order under Fed.R.Civ.P. 54(b). “Motions for reconsideration of interlocutory orders are not subject to the strict standards applicable to motions for reconsideration of a final judgment.” Am. Canoe Ass’n v. Murphy Farms, Inc., 326 F.3d 505, 514 (4th Cir. 2003) (citation omitted). “This is because a district court retains the power to reconsider and modify its interlocutory judgments . . . at any time prior to final judgment when such is warranted.” Id. at 514-15 (citing Fayetteville Investors v. Commercial Builders, Inc., 936 F.2d 1462, 1469 (4th Cir.1991); see also United States v. Duke Energy Corp., 218 F.R.D. 468, 473-74 (M.D. N.C. 2003) (“A court may revisit interlocutory orders at any time prior to final judgment under Fed.R.Civ.P. 54(b) or its inherent authority.”).

The Fourth Circuit Court of Appeals has not specifically articulated the standard for evaluating a motion for reconsideration filed under Rule 54(b). Long v. O’Reilly’s Auto. Stores, Inc., C/A No. 6:12-901-MGL, 2014 WL 2864589, at *2 (D.S.C. June 23, 2014). Although the strict standards applicable to motions for reconsideration brought pursuant to Fed.R.Civ.P. 59 do not apply, “District courts in the Fourth Circuit look to the standards of motions under [Rule 59] for guidance.” Id. (citing R.E. Goodson Constr. Co., Inc. v. Int'l Paper Co., C/A No. 4:02-4184-RBH, 2006 WL 1677136, at *1 (D.S.C. June 14, 2006); Akeva L.L.C. v. Adidas Am., Inc., 385 F.Supp.2d 559, 565-66 (M.D. N.C. 2005)); see also Pure Fishing, Inc. v. Normark Corp., C/A No. 3:10-2140-CMC, 2012 WL 4009628, at *1 (D.S.C. Sept. 12, 2012) aff’d, 564 F. App’x 601 (Fed. Cir. 2014) (“This court finds the standard applicable to reconsideration of final orders useful, though non-binding.”). As with a motion under Rule 59, “appropriate reasons for granting reconsideration under Rule 54 are: (1) to follow an intervening change in controlling law; (2) on account of new evidence; or (3) to correct a clear error of law or prevent manifest injustice.” Long, 2014 WL 2864589 at * 2. “The ultimate responsibility of the federal courts, at all levels, is to reach the correct judgment under law.” Am. Canoe Ass’n, 326 F.3d at 515.

II. Analysis

A. The Court’s Finding That Specific Jurisdiction Lies and the Permissibility of Amendment

Defendant asserts that the Court impermissibly relied upon Plaintiff’s Amended Complaint in finding that specific personal jurisdiction lies. Defendant advances two arguments in support of this assertion. First, Defendant avers that the Court based its personal jurisdiction ruling on the “alleged pre-investment activities” of TFA, specifically Defendant’s participation in the development of the Private Offering Circular and communication with fund manager, James R. McGee (“McGee”), prior to the establishment of the Congaree Offshore Capital, Ltd. fund (“Offshore Fund”) and Plaintiff’s investment therein. (ECF No. 83-1 at 3.) These alleged actions, Defendant argues, underlie Plaintiff’s Securities Act claim, which was introduced in the Amended Complaint, and not any of the original causes of action (Breach of Fiduciary Duty; Breach of Contract; Breach of Contract with Fraudulent Intent). (Id.) Second, Defendant asserts that amendment is improper under the circumstances because it would be filed after the applicable three year statute of limitations. (Id. at 4.) Specifically, Defendant argues that Plaintiff’s Securities Act claim cannot “relate back” to the original complaint’s filing date because it differs in both time and type than Plaintiff’s original causes of action and thus lacks the common core of operative facts necessary for relation back under Fed.R.Civ.P. 15(c)(1)(B). (Id. at 4-5.)

Plaintiff responds first that the jurisdictional discovery conducted in this case revealed the extent of Defendant’s business interactions with the state of South Carolina, and it was those business interactions upon which the Court relied in finding specific personal jurisdiction. (ECF No. 88 at 2.) While it is true, he argues, that those business interactions eventually led to the sale of securities (and thus underlie the Securities Act claim in the Amended Complaint), it is not what was sold but the extent of Defendant’s interactions in support of the sales effort that determined the existence of personal jurisdiction over Defendant. (Id.) With respect to the timeliness of the Securities Act claim, Plaintiff responds that the history of involvement between TFA, McGee, and himself shows that the Securities Act claim arose out of the same conduct, transaction, or occurrence set out in the original pleadings. (Id. at 3.) Plaintiff notes that the Court specifically identified the existence of putative legal infirmities with the Securities Act claim in its Order and indicated that the Court would wait to consider legal arguments against the amendments until after discovery has been conducted. (Id. at 2-3; see ECF No. 78 at 19.) Moreover, Plaintiff asserts that Defendant has relied on the wrong statute of limitations to support its argument that the Securities Act claim is time barred, and that application of the correct statute of limitations renders the Securities Act claim timely, thus eliminating the need to apply rules about relation back. (ECF No. 88 at 3-4.)

The Court agrees with Plaintiff that it was the extent of Defendant’s business interactions with the state of South Carolina that led to a finding that specific personal jurisdiction lies. The Court did not impermissibly rely upon the Amended Complaint when making its ruling. Rather, the Court relied upon the results of the limited discovery conducted specifically for the purpose of determining whether personal jurisdiction was present and the parties’ briefing regarding that jurisdictional discovery. The Court need not rehash here its analysis of Defendant’s purposeful and directed availment of the privilege of conducting business in South Carolina. Suffice to say, Defendant has made no showing of an intervening change in controlling law or the presence of new evidence that changes that analysis. See Long, 2014 WL 2864589 at *2. Nor has Defendant persuaded the Court that its ruling on the personal jurisdiction question was a clear error of law or that a manifest injustice will result from that ruling. See Id. Mindful of its ultimate responsibility to reach the correct judgment under law, see Am. Canoe Ass’n, 326 F.3d at 515, the Court’s position on the personal jurisdiction issue is unchanged and the Motion to Reconsider on these grounds is denied.

Regarding the timeliness of the Securities Act claim, the Court’s position is likewise unchanged. Defendant will, no doubt, assert its statute of limitations arguments again at summary judgment. At risk of being repetitive, the Court has given the purported futility of the Securities Act claim the consideration it deserves at this stage, and will wait to consider legal arguments (including timeliness arguments) against the claim until after discovery has occurred. To the extent the Motion to Reconsider was based on these grounds, it is denied.

B. The Forum Selection Clause

Defendant next asserts that the Court dispatched with the forum selection clause in the Subscription Agreement on improper grounds without substantive treatment. (ECF No. 83-1 at 5.) According to Defendant, the Court cited the applicable law appropriate for determining whether to enforce a forum selection clause, but did not apply that law correctly. (Id.) Defendant further argues that the Court resolved the forum selection question on an improper basis, namely, the fact that this case has been pending in South ...


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