United States District Court, S.D. Indiana, New Albany Division
HARRISON MANUFACTURING, LLC formerly known as CHILD CRAFT, LLC, Counter Claimants,
JMB MANUFACTURING, INC., doing business as SUMMIT FOREST PRODUCTS COMPANY, and RON BIENIAS, Counter Defendants.
ENTRY ON MOTION FOR RECONSIDERATION
TANYA WALTON PRATT, District Judge.
This matter is before the Court on JMB Manufacturing, Inc.'s ("JMB") and Ron Bienias' ("Mr. Bienias") (collectively, "Counter Defendants") Motion for Reconsideration (Filing No. 261). This action was before the Court on a bench trial on June 10, 2013, which resulted in a ruling for Counter-Claimant Harrison Manufacturing, LLC, ("Child Craft") against Mr. Bienias (Filing No. 234). The Court entered final judgment and awarded damages on April 25, 2014, following a hearing at which Mr. Bienias appeared pro se. (Filing No. 250). Mr. Bienias and JMB, through counsel, now seek reconsideration of the Court's judgment. For the following reasons, the Motion is GRANTED in part and DENIED in part.
I. LEGAL STANDARD
Motions to reconsider under Federal Rule of Civil Procedure 59(e) serve a limited function, to be used "where the Court has patently misunderstood a party, or has made a decision outside the adversarial issues presented to the Court by the parties, or has made an error not of reasoning but of apprehension." Davis v. Carmel Clay Sch., 286 F.R.D. 411, 412 (S.D. Ind. 2012) (quoting Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990)) (additional quotations omitted). To prevail under Rule 59(e), "the moving party must clearly establish (1) that the court committed a manifest error of law or fact, or (2) that newly discovered evidence precluded entry of judgment." Edgewood Manor Apartment Homes, LLC v. RSUI Indem. Co., 733 F.3d 761, 770 (7th Cir. 2013) (internal quotation omitted). "A manifest error' is not demonstrated by the disappointment of the losing party. It is the wholesale disregard, misapplication, or failure to recognize controlling precedent.'" Oto v. Metro. Life Ins. Co., 224 F.3d 601, 606 (7th Cir. 2000) (quoting Sedrak v. Callahan, 987 F.Supp. 1063, 1069 (N.D. Ill. 1997)). Further, "an argument raised for the first time in a Rule 59(e) motion is waived." Estremera v. United States, 442 F.3d 580, 587 (7th Cir. 2006).
Because the facts of this case are set forth at length in the Court's Findings of Fact and Conclusions of Law, (Filing No. 234), the Court will refrain from further recitation.
The Counter Defendants do not offer any newly discovered evidence to support its Rule 59 motion but argue only that the Court misapplied the controlling law and misapprehended the evidence. Specifically, JMB and Mr. Bienias contend the Court committed manifest errors of law in four areas, which the Court will address in turn.
First, Counter Defendants argue that the Court awarded benefit-of-the-bargain damages to Child Craft, which conflicts with the Restatement (Second) of Torts § 552B. They further argue that the Court decided this issue outside of the adversarial process because the Court relied on Trytko v. Hubbell, Inc., 28 F.3d 715 (7th Cir. 1994), which was not cited by the parties in the context of damages. However, "[f]ederal courts are entitled to apply the right body of law, whether the parties name it or not." ISI Int'l, Inc. v. Borden Ladner Gervais LLP, 256 F.3d 548, 551 (7th Cir. 2001). Trytko was cited by Counter Defendants during the liability phase of this trial and is on point for both the liability and damages issues presented in this case. The Court disagrees that citation and reliance upon Trytko was outside the adversarial issues presented by the parties.
In Trytko, the Seventh Circuit described the difference between out-of-pocket and benefitof-the-bargain damages. It stated:
the key distinction between these two measures of damages... is concisely summarized as the difference between reliance and expectancy damages. The limitation on benefit-of-the-bargain damages refers to the expectancy damages caused where a misrepresentation underlies a bargain. In other words, benefit-of-the-bargain damages arise only where the misrepresentation created an expectancy.
The plaintiff is not entitled to recover the expectancy described or contemplated by the misrepresentation because it was not a real loss suffered.
28 F.3d at 724. The Court previously found that because of Mr. Bienias' misrepresentations, Child Craft suffered the total loss of its business, which included a total loss of $5, 046, 988.00. That number included a subset of lost profits for the Vogue Line of $2, 227, 172.00, which the Court reduced by $1 million. Despite that Mr. Bienias did not raise a benefit-of-the-bargain argument earlier, the Court agrees that as it applies to lost profits, these were expectancy damages improperly awarded. Upon reconsideration, the Court finds it was a misapplication of the law to allow any lost profits damages. Recognizing that the Court has already reduced the $2, 227, 172.00 in lost profits by one million dollars; the Court will reduce the overall award by an additional $1, 277, 127.00.
Second, Counter Defendants argue that the economic loss doctrine should bar Child Craft's claims. This issue was thoroughly litigated, and in rendering its decision, the Court carefully considered Indiana precedent and found that Mr. Bienias' position as a broker supplying information was similar enough to the professional identified in Jeffrey v. Methodist Hospitals, 956 N.E.2d 151, 156 (Ind.Ct.App. 2011), to warrant moving forward. The Jeffrey court cited the U.S. Bank, N.A. v. Integrity Land Title Corp., 929 N.E.2d 742, 747 (Ind. 2010), for the proposition that, "[a] professional may owe a duty to a third party with whom the professional has no contractual relationship, but the professional must have actual knowledge that such third person will rely on his professional opinion. " The Court previously found that Mr. Bienias was such a professional providing information. Specifically the Court found:
Mr. Bienias has an extensive work history as it relates to wood and wood processing, including work as quality control manager, manufacturing manager and plant manager for several furniture manufacturing companies. In the early 1990s, Mr. Bienias formed Summit through which he acts as an independent consultant ...