Opinion
Case No. 01 B 16034 (AJG)
January 30, 2003
ORDER DENYING MOTION BY FRONTERA GENERATION LIMITED PARTNERSHIP FOR NEW TRIAL, OR, ALTERNATIVELY, TO ALTER OR AMEND JUDGMENT
On December 10, 2002, this Court entered an order (the "Setoff Order") granting a motion filed by Electric Reliability of Texas Council, Inc. ("ERCOT") for relief from the automatic stay to permit it to setoff mutual obligations with the Debtor. On December 19, 2002, pursuant to F.R.Bankr.P. 9023 and Fed.R.Civ.P. 59, Frontera Generation Limited Partnership ("Frontera") filed a motion seeking entry of an order granting a new trial or, alternatively, opening the order, taking additional testimony, amending findings of fact and conclusions of law, or making new findings and conclusions, and directing the entry of a new order.
Fed.R.Civ.P. 59(a)(2) provides that a court may grant a new trial in a nonjury case for the same grounds as is done in jury actions under Fed.R.Civ.P. 59(a)(1). Burzynski v. Travers, 111 F.R.D. 15, 17 (E.D.N.Y. 1986) citing, 11 CHARLES ALAN WRIGHT ARTHUR. MILLER, FEDERAL PRACTICE PROCEDURE, § 2805. Pursuant to Fed.R.Civ.P. 59(a)(2), "on a motion for a new trial in an action tried without a jury, the court may open the judgment if one has been entered, take additional testimony, amend findings of fact and conclusions of law or make new findings and conclusions, and direct the entry of a new judgment." A new trial in a nonjury case should only be afforded in instances where there has been "manifest error of law or mistake of fact, and a judgment should not be set aside except for substantial reasons." Ball v. Interoceanica Corp., 71 F.3d 73, 76 (2d Cir. 1995), citing, 11 CHARLES ALAN WRIGHT ARTHUR R. MILLER, FEDERAL PRACTICE PROCEDURE, § 2804, at 53 (2d ed. 1995). "A motion for a new trial may not be granted unless it is reasonably clear that prejudicial error has crept into the record or that substantial justice has not been done." Schwartz v. Fortune Magazine, 193 F.R.D. 144, 145 (S.D.N.Y. 2000), citing, Metromedia v. Fugazy, 753 F. Supp. 93, 96 (S.D.N.Y. 1990). Thus, harmless error is not sufficient. Fed.R.Civ.P. 61. ("[N]o error or defect in any ruling or order or in anything done or omitted by the court . . . is ground for granting a new trial or for setting aside a verdict or for vacating, modifying, or otherwise disturbing a judgment or order, unless refusal to take such action appears to the court inconsistent with substantial justice. The court at every stage of the proceeding must disregard any error or defect in the proceeding which does not affect the substantial rights of the parties.") The moving party has the burden of showing entitlement to a new trial. Schwartz v. Fortune Magazine, 193 F.R.D. at 145-46. A court has broad discretion in deciding whether to grant a new trial. Ball v. Interoceanica Corp., 71 F.3d at 76.
A motion to alter or amend a judgment pursuant to F.R.Civ.P. 59(e) may be based upon (1) an intervening change in the controlling law, (2) the availability of new evidence, (3) to correct manifest errors of law or fact upon which the judgment is based, or (4) to prevent manifest injustice. Cray v. Nationwide Mut. Ins. Co., 192 F. Supp.2d 37, 39 (W.D.N.Y. 2001); Atlantic States Legal Foundation, Inc. v. Karg Bros. Inc., 841 F. Supp. 51, 53 (S.D.N.Y. 1993). The rule is properly invoked when the ruling court overlooked matters or controlling decisions which, had it considered such matters, might reasonably have impacted its decision. Houbigant, Inc. v. ACB Mercantile, Inc. (In re Houbigant), 190 B.R. 185, 187 (Bankr.S.D.N.Y. 1996). Fed.R.Civ.P. 59(e) is not, however, to be used to attempt to re-litigate factual matters that have already been decided or to present new legal theories based upon evidence that was available to be used during the first trial. Wallace v. Brown, 485 F. Supp. 77, 78 (S.D.N.Y. 1979). The motion can only be granted if the movant presents newly discovered evidence that was not available at the time of the trial, or there is evidence in the record that establishes a manifest error of law or fact. Cray v. Nationwide Mut. Ins. Co., 192 F. Supp.2d 37, 39 (W.D.N.Y. 2001). In the latter case, a motion to amend a judgment pursuant to Fed.R.Civ.P. 59(e) is properly granted when the movant shows that it was based on manifest errors of law or fact. Bowers v. Andrew Weir Shipping, Ltd., 817 F. Supp. 4, 5 (S.D.N.Y. 1993). However, "the moving party has a heavy burden to establish factual error sufficiently serious to merit an amendment." Wallace v. Brown, 485 F. Supp. 77, 79 (S.D.N.Y. 1979). Whether to grant or deny a motion to alter or amend a judgment is within the court's discretion. Atlantic States Legal Foundation, Inc. v. Karg Bros. Inc., 841 F. Supp. 51, 55 (S.D.N.Y. 1993).
Frontera argues that this Court's conclusion that EPMI was not Frontera's agent for certain purposes was manifest error and that all of the Court's findings pointed to EPMI being Frontera's agent. However, the Court finds that it does not even have to reach the issue of whether or not EPMI was Frontera's agent for all purposes because whether or not EPMI was Frontera's agent for only certain or all purposes would not have impacted on this Court's decision to lift the automatic stay to allow ERCOT and EPMI to setoff mutual debts. This is because the Court found that the debts between ERCOT and EPMI were mutual based upon the QSE Agreement which governed the rights and responsibilities between ERCOT and EPMI. The Court found that "the QSE Agreement expressly provided that `[f]or the transfer of any funds under this Agreement directly between ERCOT and [EPMI] . . . (A) [EPMI] appoints ERCOT to act as its agent with respect to such funds transferred.'" The Court, further found that "with respect to the direct transfers of funds between EPMI and ERCOT in either direction, they each maintained the same capacities and the respective debts were mutual." That is, whether there was a transfer of funds from EPMI to ERCOT or from ERCOT to EPMI, ERCOT functioned as EPMI's agent and it had the same capacity whichever way the funds flowed. As ERCOT functioned in the same capacity viz a viz EPMI, there was mutuality of debt between these two entities and they could setoff their debts.
Moreover, the circumstances determine whether an entity is the agent of the agent, or the agent of the principal. Janes v. CPR Corp., 623 S.W.2d 733, 740 (Tex.Civ.App.-Houston (1st Dist.) 1981, writ ref'd n.r.e.). In the instant case, the circumstances and the express agreements provided that ERCOT functioned as EPMI's agent in the context of direct transfers of funds between them. As a market participant, Frontera was fully informed of the relationship established between EPMI and ERCOT pursuant to the QSE Agreement. Frontera entered into an RE agreement with ERCOT and agreed to abide by the Protocols, to which the form QSE Agreement was attached. The ERCOT Protocols mean the document adopted by ERCOT, including any attachments or exhibits referenced. [See ERCOT Protocols § 1.1]. Thus, Frontera agreed to abide by the terms of the QSE Agreement. Pursuant to the Protocols, Frontera entered into an Energy Management Services Agreement with EPMI to represent it for purposes of scheduling and settlement with ERCOT. Thus, by participating in ERCOT and entering into an RE Agreement and the Energy Management Services Agreement, Frontera consented to the arrangement between EPMI and ERCOT. In as much as Frontera was fully informed of the agency relationship between EPMI and ERCOT concerning the direct transfer of funds between them and consented to such, Frontera is bound by the acts of EPMI.
Furthermore, even if this arrangement involved a sub-agency relationship, it is similar to the situation when there is a dual agency relationship. See e.g., GXG, Inc. v. Texacal Oil Gas, 977 S.W.2d 403, 410 (Tex.App.-Corpus Christi 1998, pet. denied, (Aug. 27, 1998) (finding that dual agency normally requires the fully informed consent of both principals). See also, Grundmeyer v. McFadin, 537 S.W.2d 764, 772 (Tex.Civ.App.-Tyler 1976, writ ref'd n.r.e.) (finding that where principals are aware of the facts of the dual relation assumed by the agent, they are bound by agents' acts in their behalf). Here, Frontera was fully informed of the agency relationship between ERCOT and EMPI concerning direct transfer of funds between them and was fully aware that certain of the funds being transferred from ERCOT to EPMI were attributable to funds due Frontera. In addition, Frontera was aware that other direct transfers of funds between ERCOT and EPMI involved funds due other RE's who used QSE's other than EPMI. As such, Frontera consented to the arrangement and is bound by it. Indeed, Frontera agreed to abide by the terms of the form QSE Agreement which was attached to the ERCOT Protocols and formed a part of it. As direct transfers of funds between EPMI and ERCOT in either direction involve an express agency relationship of ERCOT to EPMI, there is mutuality of debt between the two entities and they may setoff the debts.
Although Frontera is correct in its assertion that the record is inconclusive on the issue of whether the Frontera funds were commingled, in light of the finding of an express agency between ERCOT and EMPI which defined their roles and respective capacities in the context of direct transfers of funds between them, the Court's finding on the commingling issue is harmless error and does not impact its decision to lift the automatic stay to allow ERCOT and EPMI to setoff the mutual debts.
Considering the express agency relationship between ERCOT and EPMI concerning direct transfers of funds to which Frontera consented and which resolves the issue of mutuality of debt between ERCOT and EMPI, there is no reason to address the other arguments raised by Frontera in its request for reconsideration as they would not impact the Court's ruling concerning the motion to lift the automatic stay to allow for the setoff of these mutual debts.
Finally, with respect to Frontera's contention that this Court did not consider Frontera's request for consideration of this controversy within the context of the adversary proceeding between Frontera, EPMI and ERCOT, the Court finds that there was no reason to await a resolution of the issues in the adversary proceeding to resolve the lift stay summary proceeding before this Court. Frontera has not shown that any of its substantive rights relating to the adversary proceeding have been compromised by the resolution of the lift stay motion. In the Setoff Order, the Court found that the debts between EPMI and ERCOT were mutual debts subject to setoff, and the Court lifted the automatic stay to allow the parties to effectuate the setoff. Aside from that, Frontera retains whatever rights it has if successful in its action against ERCOT, including any right to collect from ERCOT. Thus, the Court effectively denied Frontera's request to combine the motion to lift the automatic stay with the adversary proceeding when it ruled on the motion. Based upon the foregoing, it is hereby
Ordered, that Frontera's motion for a new trial or, alternatively, to alter or amend judgment is denied.