Can IV Packard Square LLC v. Harbor Real Estate Company, L.L.C. et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 23-cv-00934-CYC
CAN IV PACKARD SQUARE LLC,
Plaintiff,
v.
HARBOR REAL ESTATE COMPANY, LLC, and
CRAIG E. SCHUBINER,
Defendants.
_____________________________________________________________________________
ORDER
_____________________________________________________________________________
Cyrus Y. Chung, United States Magistrate Judge.
Contending that this Court’s denial in part of his motion to compel, ECF No. 93, amounts
to manifest injustice, defendant Craig E. Schubiner moves for reconsideration of that ruling. ECF
No. 127. But his attacks on that ruling provide no basis to reconsider it. For the reasons that
follow, the motion is DENIED.
BACKGROUND
The background of this case is recounted more extensively in this Court’s opinion
resolving the defendants’ motion for summary judgment. Can IV Packard Square LLC v. Harbor
Real Estate Co., Civ. No. 23-cv-00934-MEH, 2024 WL 4474768 (D. Colo. Aug. 16, 2024). For
purposes of this motion, a more succinct summary suffices.
According to the Complaint, in October 2014, plaintiff Can IV Packard Square LLC
made a construction loan to a limited liability company Schubiner controlled. ECF No. 4 ¶ 6.
Schubiner executed a Non-Recourse Carve Out Guaranty (the “Guaranty”) providing that the
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plaintiff could collect against him personally under specified circumstances. Id. In December
2019, a Michigan state court found such conditions to be satisfied, entering a roughly $14
million judgment against Schubiner. See id. at 34-35.
This case concerns the plaintiff’s attempts to collect on that judgment. In March 2020, the
plaintiff domesticated the Michigan judgment. Id. at 40-41 & ¶ 20. Days later, Schubiner
conveyed a property in Aspen, Colorado (the “Property”) to defendant Harbor Real Estate
Company, LLC for no consideration, allegedly to place the property out of the reach of the
judgment. Id. ¶ 21-24. The plaintiff therefore filed this action in April 2023, asserting claims for
fraudulent transfer, unjust enrichment, and reverse corporate veil-piercing. Id. ¶¶ 30-77.
The defendants moved to dismiss, claiming primarily that the issue had already been
litigated in Michigan state court. ECF No. 17. Then-Chief Magistrate Judge Michael E. Hegarty
denied the motion, finding that the Property was not the subject of a Michigan judgment. Can IV
Packard Square LLC v. Harbor Real Estate Co., Civ. No. 23-cv-00934-MEH, 2023 WL
11956417, at *7-8 (D. Colo. Sept. 12, 2023). Nine days later, the defendants sought
reconsideration, ECF No. 33, and Judge Hegarty denied that motion. Can IV Packard Square
LLC v. Harbor Real Estate Co., Civ. No. 23-cv-00934-MEH, 2023 WL 11955275, at *2 (D.
Colo. Oct. 10, 2023). The defendants then moved for summary judgment, contending that a
Michigan court rule precluded this litigation. ECF No. 37. Judge Hegarty denied that motion on
August 16, 2024. Can IV Packard Square, 2024 WL 4474768, at *8. The following Monday,
Schubiner moved to stay this case pending an appeal. ECF No. 99. Noting that the denial of
summary judgment was not an appealable final order, Judge Hegarty denied that motion. Can IV
Packard Square LLC v. Harbor Real Estate Co., Civ. No. 23-cv-00934-MEH, 2024 WL
4472039, at *1-2 (D. Colo. Aug. 21, 2024).
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In the meantime, the discovery conflict that is the subject of this motion was brewing. At
a status conference on August 6, 2024, Judge Hegarty granted Schubiner leave to file a motion to
compel certain discovery allegedly relevant to an affirmative defense of unclean hands. ECF
Nos. 91 at 2 & 104 at 44-47. Schubiner did so, seeking the following categories of documents:
1. 	Plaintiff’s investment committee minutes relating to Schubiner or his
properties.
2. 	Communications regarding Schubiner or his properties between the law firm
representing the plaintiff in this matter and
a. 	First American Title Company, a title search company relating to the
Property;
b. 	Attorneys who represented a receiver who was appointed over the
construction project that was the subject of the original construction
loan;
c. 	Albert Berriz, the owner of the company for which the receiver
worked; and
d. 	A Michigan court clerk;
3. 	Communications regarding Schubiner or his properties between the plaintiff
and
a. 	Investors in the plaintiff;
b. 	A real estate firm retained to sell the construction project that was the
subject of the original loan;
c. 	The co-CEOs of the plaintiff; and
d. 	Certain employees of the plaintiff.
ECF No. 93. At a hearing on November 14, 2024, Judge Hegarty heard argument on the fully-
briefed motion to compel. ECF No. 119 at 60-81. Judge Hegarty granted the motion insofar as it
requested First American Title Company communications. Id. at 74. Otherwise, noting that the
unclean hands doctrine must “relat[e] in some significant way to the subject matter of the cause
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of action” and that it “does not exclude all wrongdoers from a court of equity,” id. at 70, Judge
Hegarty denied the remainder of the motion to compel. Id. at 81.
This motion followed.
DISCUSSION
Though styled as a motion to “alter” or “amend” Judge Hegarty’s November 14, 2024
Order, ECF No. 127, Schubiner’s motion is best characterized as a motion to reconsider. See id.
at 8-10. Courts in this District have applied different standards on motions for reconsideration of
non-final orders. See United Fire & Cas. Co. v. Boulder Plaza Residential, LLC, No. 06-cv-
00037-PAB-CBS, 2010 WL 420046, at *3 (D. Colo. Feb. 1, 2010) (listing cases applying Rule
59(e) standard, Rule 60(b) standard, and “law of the case” standard). Generally, though, “[a]
motion for reconsideration is an extreme remedy to be granted in rare circumstances.” Menocal
v. Geo Grp., Inc., No. 14-cv-02887-JLK, 2015 WL 13614120, at *1 (D. Colo. Aug. 26, 2015)
(quotation omitted). Courts may grant motions to reconsider where there is “(1) an intervening
change in the controlling law, (2) new evidence previously unavailable, and (3) the need to
correct clear error or prevent manifest injustice.” Servants of the Paraclete v. Does, 204 F.3d
1005, 1012 (10th Cir. 2000). A motion for reconsideration should not be used as a vehicle to
revisit issues already addressed or to advance arguments that could have been raised in the prior
briefing. Id.
Schubiner levies five arguments against Judge Hegarty’s ruling. None are persuasive.
First, Schubiner attacks Judge Hegarty’s method of resolving his motion to compel as
overly cursory. ECF No. 127 at 11. It was not. Judge Hegarty had a fully-briefed motion to
compel before him, see ECF Nos. 93, 105, 106, took oral argument on the motion, ECF No. 119
at 60-81, and announced principles of law broadly indicating that Schubiner’s requests should be
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denied, see ECF No. 119 at 70, 76. No more was necessary. Nor does Schubiner indicate how a
more detailed rejection of his requests was required by law or, for that matter, would have made
any difference. Accordingly, this provides no reason for reconsideration.
Second, Schubiner contends that Judge Hegarty ruled in reliance on material
misrepresentations. ECF No. 127 at 11. That is not what happened. Schubiner points, for
example, to supposed misrepresentations about investment committee documents being
privileged, id., but Judge Hegarty rejected his request for those documents not based on an
assertion of privilege, but because he determined that what the plaintiff said about who owned
the Property affected no claim or defense. ECF No. 119 at 76. Schubiner also complains about
supposed misrepresentations regarding Berriz’s involvement in the underlying construction
project. ECF No. 127 at 11. But Berriz was never mentioned during the November 14, 2014
hearing. See ECF No. 119. Moreover, Schubiner’s reasons for seeking documents relating to
Berriz — that they could show the receiver unjustly aiding the plaintiff’s recovery in the
underlying Michigan judgment — fit neatly within Judge Hegarty’s exclusion of discovery being
sought to prove the unfairness of that judgment. See ECF No. 119 at 64, 70. Indeed, Schubiner
concedes that the purpose of these communications would be to show that the plaintiff
“controll[ed] the receiver even including to secure the underlying judgments.” ECF No. 139 at 6.
Third, Schubiner suggests that the plaintiff has exhibited a pattern of discovery
obstruction warranting reconsideration. As a factual matter, that is questionable. There is nothing
improper, for example, about “resisting” discovery requests, ECF No. 127 at 11, if such requests
go beyond what the Federal Rules of Civil Procedure permit. Moreover, as a legal matter, the
remedy for discovery abuse is not then to allow irrelevant discovery. See, e.g., Fed. R. Civ. P.
37(b)(2)(A) (enumerating discovery sanctions, but not providing for an expansion of discovery
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beyond what Fed. R. Civ. P. 26(b)(1) allows). Schubiner provides no authority to the contrary.
This therefore also provides no reason to reconsider.
Fourth, Schubiner rehashes his arguments that his sought discovery advances his
affirmative defenses, particularly his unclean hands defense. Compare ECF No. 127 at 11-12
(“Here, basic discovery will prove unclean hands.”) with ECF No. 93 at 18 (“Defendants’
requests for production are relevant to their unclean hands affirmative defense”). But Judge
Hegarty already rejected that contention, and it is “abundantly clear that a motion for
reconsideration is not a vehicle for a losing party to revisit issues already addressed.” Seabron v.
Am. Family Mut. Ins. Co., No. 11-cv-01096-WJM-KMT, 2012 WL 3028224, at *1 (D. Colo.
July 24, 2012); see Haslett v. Keirton, Inc., No. 21-cv-01112-MEH, 2022 WL 16527941, at *1
(D. Colo. Oct. 28, 2022) (noting that a motion for reconsideration “is not meant to provide the
losing party with the proverbial second bite at the apple.”). Moreover, as Judge Hegarty
explained, “in order for the” unclean hands “doctrine to apply, the allegedly improper conduct
must have an immediate and necessary relation to the claim under which relief is sought.”
Colorado Korean Ass’n v. Korean Senior Ass’n of Colorado, 151 P.3d 626, 629 (Colo. App.
2006); ECF No. 119 at 70. The discovery Schubiner seeks, which largely relates to the plaintiff’s
conduct in other litigation, has no such relation to the plaintiff’s fraudulent-transfer theory in this
case.
Finally, Schubiner suggests that Judge Hegarty’s rulings have hamstrung his ability to
present a defense to such an extent that he is denied due process. His argument rests on faulty
premises. He characterizes, for example, the discovery denied him as “necessary to establish
affirmative defenses.” ECF No. 127 at 14. But Judge Hegarty ruled that the discovery was not
relevant to Schubiner’s asserted defenses, and Schubiner has not presented a persuasive reason to
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reconsider that ruling. Schubiner also protests that Judge Hegarty’s rulings “systematically
denied” him “the means to investigate misconduct.” Id. That misapprehends the purpose of
discovery. Discovery is not a tool to conduct unrestrained investigation of an opponent. Instead,
it exists to obtain evidence “regarding any nonprivileged matter that is relevant to any party’s
claim or defense and proportional to the needs of the case.” Fed. R. Civ. P. 26(b)(1). After due
consideration, Judge Hegarty determined that the requests Schubiner advanced did not
accomplish that objective. That is wholly in keeping with due process.
The short of it is that Judge Hegarty properly found that an invocation of “unclean hands”
did not provide Schubiner with an unfettered right to delve into every alleged bad act of the
plaintiff simply because it was connected to the underlying Michigan judgment. Neither
Schubiner’s bare disagreement with that ruling nor petitioning for a different course of action
because of the size of the plaintiff’s resources, ECF No. 127 at 15, change the propriety of that
finding. There is no reason to reconsider Judge Hegarty’s ruling on Schubiner’s motion to
compel.
CONCLUSION
For the foregoing reasons, the “Corrected Motion to Alter or Amend the November 14,
2024 Minute Order Which in Part Denied Defendant’s Motion To Compel Documents Except
for Communications with First American Title Company,” ECF No. 127, is DENIED.
Entered and dated this 11th day of February, 2025, at Denver, Colorado.
BY THE COURT:
____________________________________
Cyrus Y. Chung
United States Magistrate Judge
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