United States District Court, M.D. Louisiana
TROY LILLIE ET AL.
STANFORD TRUST CO. ET AL.
RULING AND ORDER
A. JACKSON JUDGE.
the Court is the Motion for Reconsideration (Doc.
147) of the Court's Ruling (Doc. 146) denying
Plaintiffs' Motion for a Federal Rule of Civil Procedure
56(d) Continuance (Doc. 130) and granting SEI's Motion
for Summary-Judgment (Doc. 127). Also before the Court is
Plaintiffs' Memorandum in Response (Doc. 149) to the
Court's directive that Plaintiffs show cause why the
Court should not grant summary judgment in favor of the
Insurer Defendants. For the reasons that follow, the Court
DENIES Plaintiffs' Motion for
Reconsideration (Doc. 147), GRANTS summary judgment
in favor of the Insurer Defendants under Federal Rule of
Civil Procedure 56(f), and by separate order ENTERS
JUDGMENT against Plaintiffs in accordance with
Federal Rule of Civil Procedure 58.
Court stated the facts of this case in a prior ruling and
will not restate them here. (Doc. 146 at pp. 1-15). At issue
now is the soundness of the Court's ruling denying
Plaintiffs' request for a Rule 56(d) continuance and
granting SEI's motion for summary judgment.
ruling rested on two conclusions. (Id.). The first:
Plaintiffs failed to show that they were entitled to a Rule
56(d) continuance under the law of this Circuit.
(Id. at p. 8). The second: SEI met its Rule 56(a)
burden by pointing to the absence of evidence supporting the
control element of Plaintiffs' control-person claim under
Section 714(B) of the Louisiana Securities Law, and
Plaintiffs offered no evidence of control in rebuttal.
(Id. at p. 13).
the first conclusion, the Court denied Plaintiffs'
request for a Rule 56(d) continuance on the ground that
Plaintiffs' supporting declaration was deficient. (Doc.
146 at pp. 7-8). The Court began by explaining that, under
the law of this Circuit, the party requesting a Rule 56(d)
continuance must "set forth a plausible basis for
believing that specified facts, susceptible of collection
within a reasonable time frame, probably exist and indicate
how the emergent facts, if adduced, will influence the
outcome of the pending summary judgment motion."
(Id. at p. 7) (citing Am. Family Life Assur. Co.
of Columbus v. Biles, 714 F.3d 887, 894 (5th Cir.
Court next considered the declaration submitted by
Plaintiffs' lead counsel, Philip Preis. (Id.).
The Court found the declaration deficient in several
respects; the declaration failed to (1) identify
"specified facts" further discovery may disclose,
(2) "set forth a plausible basis" for believing
that the unspecified facts were "susceptible of
collection within a reasonable time frame," and (3)
state that the unspecified facts would "influence the
outcome" of SEI's summary judgment motion.
(Id.). Because the Preis Declaration did not
establish what Rule 56(d) and the law of this Circuit
require, the Court denied Plaintiffs' Rule 56(d)
continuance request and proceeded to the
merits. (Id. at p. 8).
the second conclusion, the Court granted SEI's motion for
summary judgment on the ground that SEI offered evidence that
it lacked control over Stanford Trust Company's
securities-law violations, and Plaintiffs offered no relevant
evidence in rebuttal. (Id. at pp. 9-13). Central to
that conclusion were the contract between SEI and Stanford
Trust Company and the testimony of Al Del Pizzo,
then-President of SEI Private Trust. (Id.). Based on
that contract and testimony, the Court found that SEI met its
initial burden of pointing to the absence of evidence
supporting the control element of Plaintiffs' Section
714(B) control-person claim. (Id. at p. 11) (citing
In re La. Crawfish Producers, 852 F.3d 456, 462 (5th
the Court found that Plaintiffs failed to come forward with
evidence of control. (Id. at p. 13). Instead, the
Court observed, Plaintiffs advanced erroneous theories of
Section 714(B) liability. (Id. at pp. 11-13). For
example, Plaintiffs repeatedly-and incorrectly-theorized that
SEI could have Section 714(B) liability for
"enabling" R. Allen Stanford's Ponzi scheme.
(Id.). The Court explained that "enabling"
is not the standard; control is. (Id. at pp. 11-12)
(citing LA. Rev. STAT. § 51:702(4) and Heck v.
Triche, 775 F.3d 265, 283 (5th Cir. 2014)). Plaintiffs
also tried to swap proof of an alleged "cradle-to-grave
relationship" for actual evidence of control.
(Id. at p. 12). The Court explained that SEI's
Section 714(B) liability turns on its ability to control
Stanford Trust Company's securities-law violations, not
on the duration of the business relationship between the
entities. (Id.). Finally, Plaintiffs argued that SEI
could have Section 714(B) liability because it failed to
perform due diligence on the marketing and valuation of the
Stanford International Bank certificates of deposit.
(Id.). This too was erroneous. As the Court
explained, a Section 714(B) defendant's due diligence
does not become relevant until that defendant is adjudged a
control person. (Id. at p. 13) (citing Tran-s
Pac. Interactive, Inc. v. U.S. Telemetry Corp., 2017
WL 1376592, at *6, 2016-1298 (La. Ct. App. 1st Cir. 4/12/17),
reh'g denied (May 1, 2017), writ
denied, 2017-0914 (La. 9/29/17), 227 So. 3d 294).
on Plaintiffs' erroneous interpretation of Section 714(B)
and failure to marshal relevant evidence of control, the
Court concluded that Plaintiffs failed to show a genuine
dispute of material fact warranting trial. (Doc. 146 at p.
13). The Court accordingly entered summary judgment in
SEI's favor. (Id.).
Plaintiffs move the Court to reconsider. (Doc. 147).
Plaintiffs contend the Court improperly applied Section
714(B) and in so doing "unjustly depriv[ed]" them
of the chance to test their claims to a jury. (Docs. 147 at
p. 1; 147-2 at p. 1). Plaintiffs also point to what they call
a "startling admission" that SEI described itself
as a "Business Service Provider" for Stanford Trust
Company. (Doc. 147-2 at p. 2).
to Plaintiffs, this "startling admission" derives
from documents SEI produced in spring 2019-well beyond the
close of summary judgment briefing. (Id.). SEI
opposes. (Doc. 154). It contends that Plaintiffs have long
known it was a "Business Service Provider" for
Stanford Trust Company and that Plaintiffs offer no valid
reason-legal or otherwise-for reconsideration. (Doc. 154 at
Court may revise an interlocutory order at any time for any
reason before entering judgment. United States v.
Renda, 709 F.3d 472, 479 (5th Cir. 2013). The
Court's Ruling (Doc. 146) did not adjudicate all claims
or decide the rights and liabilities of all parties; it is
therefore interlocutory. See FED R. CIV. P. 54(b), Because
requests to reconsider interlocutory orders under Rule 54(b)
require the Court to consider the policies behind Rule 59(e)
requests to alter or amend judgment, the Court applies the
Rule 59(e) standard to Rule 54(b) motions to reconsider.
See, e.g., eTool Deu., Inc. v. Nat'l Semiconductor
Corp., 881 F. Supp. 2d 745, 748 (E.D. Tex. 2012). To
support relief under that standard, Plaintiffs must
"clearly establish" that the Court's ruling was
"manifestly erroneous" or offer newly discovered
evidence justifying reconsideration. Schiller v.
Physicians Res. Grp., Inc., 342 F.3d 563, 567 (5th Cir.
Sua Sponte Summary Judgment
giving notice and a reasonable time to respond, the Court may
grant summary judgment for a nonmovant. FED. R. ClV. P.
56(f); see Celotex Corp. v. Catrett,477 U.S. 317,
326 (1986) ("[D]istrict courts are widely acknowledged
to possess the power to enter summary judgments sua
sponte, so long as the ...