Auld-Susott, et al. v. Galindo, et al.

UNITED STATES DISTRICT COURT
DISTRICT OF HAWAII
EVAN AULD-SUSOTT, as Trustee for
(1) IRREVOCABLE LIFE INSURANCE
TRUST OF JOHN L. SUSOTT AND
KATHRYN C. SUSOTT UAD 8/17/1988
AS RESTATED, EXEMPT TRUST FBO
DANIEL C. SUSOTT, and
(2) IRREVOCABLE LIFE INSURANCE
TRUST OF JOHN L. SUSOTT AND
KATHRYN C. SUSOTT UAD 8/17/1988
AS RESTATED, NON-EXEMPT TRUST
FBO DANIEL C. SUSOTT; and
JOHN L. SUSOTT,
Plaintiffs,
vs.
LAURYN GALINDO and DANIEL C.
SUSOTT,
Defendants.
CIVIL 20-00270 LEK-RT
ORDER DENYING DEFENDANTS’MOTION TO AMEND OR
ALTER (VACATE) THE JUDGMENT ENTERED ON
AUGUST 28, 2023, [FILED 9/25/23 (DKT. NO. 191)]
On September 25, 2023, Defendants Lauryn Galindo
(“Galindo”) and Daniel C. Susott (“D. Susott” and collectively
“Defendants”) filed their Motion to Amend or Alter (Vacate) the
Judgment Entered on August 28, 2023 (“Motion”). 	The Motion is
brought pursuant to Federal Rules of Civil Procedure 59(e).
[Motion at 2.] 	The Court has considered the Motion as a non-
hearing matter pursuant to Rule LR7.1(d) of the Local Rules of
Practice for the United States District Court for the District
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of Hawaii (“Local Rules”). 	Further, it is not necessary for
Plaintiffs Evan Auld-Susott, as Trustee for (1) Irrevocable Life
Insurance Trust of John L. Susott and Kathryn C. Susott UAD
8/17/1988 as Restated, Exempt Trust FBO Daniel C. Susott, and
(2) Irrevocable Life Insurance Trust of John L. Susott and
Kathryn C. Susott UAD 8/17/1988 as Restated, Non-Exempt Trust
FBO Daniel C. Susott; and John L. Susott (collectively
“Plaintiffs”) to respond to the Motion. 	Defendants’ Motion is
hereby denied for the reasons set forth below.
BACKGROUND
The instant matter has had a long history, and the
Court here will repeat only those parts of the lengthy docket
necessary for the instant Motion: 	after summary judgment was
granted in favor of Plaintiffs, the amended final judgment was
entered on March 3, 2023; [Amended Final Judgment in a Civil
Case, filed 3/3/23 (dkt. no. 141);] Defendants filed an appeal
on March 10, 2023; [Notice of Appeal, filed 3/10/23 (dkt.
no. 142);] the Ninth Circuit Court of Appeals vacated and
remanded the claims against D. Susott and ruled that Galindo “is
bound by the findings made in connection with the 2019
judgment[,]” but that “the district court’s summary judgment [is
vacated] in its entirety, leaving it to that court on remand to
reexamine . . . the extent to which summary judgment may be
warranted . . .”; [Ninth Circuit Court of Appeals Memorandum,
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filed 4/13/23 (dkt. no. 151) (“Memorandum Disposition”), at 5-6
(emphasis omitted);] the mandate was filed on May 5, 2023;
[Ninth Circuit Court of Appeals Mandate, filed 5/5/23 (dkt. no.
156);] Defendants filed a motion for summary judgment on May 17,
2023; [Defs.’ Motion for Summary Judgment, filed 5/17/23 (dkt.
no. 158);] Plaintiffs filed a motion seeking dismissal without
prejudice of claims against D. Susott, summary judgment on two
counts against Galindo, an order maintaining status quo, and
dismissal without prejudice on one count against Galindo;
[Pltfs.’ Motion for [1] Dismissal Without Prejudice of Claims
Against Defendant Daniel C. Susott; [2] Summary Judgment on
Counts I and III of the Complaint Against Lauryn Galindo; and
[3] Order Maintaining Status Quo and [4] Dismissing Count II
Against Lauryn Galindo Without Prejudice If the Remainder this
Motion is Granted, filed 5/21/23 (dkt. no. 162);] Plaintiffs’
motion seeking dismissal of certain claims and summary judgment
against Galindo was granted, and Defendants’ motion seeking
summary judgment was denied on July 26, 2023; [Order: 	Granting
Plaintiffs’ Motion Seeking Dismissal and Summary judgment;
Denying Defendants’ Motion for Summary Judgment; and Denying as
Moot Defendants’ Motion to Response Ownership of the Apartment
to Defendant Galindo, filed 7/26/23 (dkt. no. 184);] Defendants
filed two motions for reconsideration on August 8, 2023; [Defs.’
Motion for Reconsideration of this Court’s Order Denying Their
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Motion for Summary Judgment, filed 8/8/23 (dkt. no. 186); Defs.’
Motion for Reconsideration of this Court’s Order Dismissing
Defendant Daniel C. Susott or Alternatively, Not Reinstating
Him, filed 8/8/23 (dkt. no. 187);] Defendants were denied
reconsideration of the order dismissing certain claims and
granting summary judgment in favor of Plaintiffs and denying
summary judgment to Defendants on August 28, 2023; [Order
Denying Defendants’ Motions for Reconsideration, filed 8/28/23
(dkt. no. 188);] and final judgment was entered in favor of
Plaintiffs as to Counts I and III, terminating D. Susott as a
defendant, and dismissing Count II against Galindo on August 28,
2023, [Judgment in a Civil Case, filed 8/28/23 (dkt. no. 189)].
Defendants filed the instant Motion on September 25, 2023, and
their Notice of Appeal on September 26, 2023, [dkt. no. 193].
DISCUSSION
A party may file a motion to alter or amend a judgment
no later than 28 days after entry of the judgment. 	Fed. R. Civ.
P. 59(e). 	The guiding principles in considering a Rule 59(e)
motion are:
A district court has considerable discretion
when considering a motion to amend a judgment
under Rule 59(e). 	McDowell v. Calderon, 197 F.3d
1253, 1254 n.1 (9th Cir. 1999) (quoting 11
Charles Alan Wright, Arthur R. Miller & Mary Kay
Kane, Federal Practice and Procedure § 2810.1 (2d
ed. 1995)). 	There are four grounds upon which a
Rule 59(e) motion may be granted: 1) the motion
is “necessary to correct manifest errors of law
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or fact upon which the judgment is based; ”
2) the moving party presents “newly discovered or
previously unavailable evidence;” 3) the motion
is necessary to “prevent manifest injustice;” or
4) there is an “intervening change in controlling
law.” 	Id.
Turner v. Burlington N. Santa Fe R.R. Co., 338 F.3d 1058, 1063
(9th Cir. 2003) (emphasis in Turner). 	Moreover, Rule 59(e)
“offers an ‘extraordinary remedy, to be used sparingly in the
interests of finality and conservation of judicial resources.’”
Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir. 2003) (quoting
12 James Wm. Moore et al., Moore’s Federal Practice § 59.03[4]
(3d ed. 2000)). 	A motion to amend a previous order “should not
be granted, absent highly unusual circumstances, unless the
district court is presented with newly discovered evidence,
committed clear error, or if there is an intervening change in
the controlling law.” 	Id. (quotation marks and citation
omitted).
Defendants bring the instant Motion on the basis that
the Court committed clear error, there is newly discovered
evidence, and they have suffered manifest injustice. 	See
Motion, Mem. in Supp. at 4. 	The Court addresses each in turn.
I. 	Motion to Dismiss D. Susott Without Prejudice
Defendants argue that Plaintiffs’ motion to dismiss
D. Susott should not have been granted, that he should have
remained in the case, and that if he had remained in the case,
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then summary judgment against Galindo should not have been
granted. 	[Id. at 5.] 	D. Susott submits that he has been
injured due to the granting of summary judgment against Galindo
because he has a written agreement executed in April 2023 in
which he agreed to reimburse Galindo for fees and costs, loss of
the apartment, and any award against her in the instant
litigation. 1 	[Id. at 7.] 	His dismissal, he submits, deprived
him of “using his excellent defenses against [the fraudulent
transfer claims].” 	[Id. at 8.] 	Thus, he has suffered
“tremendous plain legal prejudice.” 	[ I d. at 9.]
A motion for voluntary dismissal is examined pursuant
to Rule 41(a)(2) which provides, in pertinent part, that
an action may be dismissed at the plaintiff’s
request only by court order, on terms that the
court considers proper. 	If a defendant has
pleaded a counterclaim before being served with
the plaintiff’s motion to dismiss, the action may
be dismissed over the defendant’s objection only
if the counterclaim can remain pending for
independent adjudication. 	Unless the order
states otherwise, a dismissal under this
paragraph (2) is without prejudice.
Fed. R. Civ. P. 41(a)(2). 	The granting of voluntary dismissal
is reviewed for abuse of discretion, and a motion for voluntary
1 These are the same arguments raised in Defendants’ Motion
for Reconsideration of this Court’s Order Dismissing Defendant
Daniel C. Susott or Alternatively, Not Reinstating Him, [filed
8/8/23 (dkt. no. 187), at Mem. in Supp. pgs. 8-11,] and that
motion was denied on August 28, 2023, [order, filed 8/28/23
(dkt. no. 188)].
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dismissal under Rule 41(a)(2) should be granted “unless a
defendant can show that it will suffer some plain legal
prejudice as a result.” 	Smith v. Lenches, 263 F.3d 972, 975 (9th
Cir. 2001) (citing Waller v. Fin. Corp. of Am., 828 F.2d 579,
583 (9th Cir. 1987); Hamilton v. Firestone Tire & Rubber Co.,
679 F.2d 143, 145–46 (9th Cir. 1982)).
When Plaintiffs filed their motion to dismiss
D. Susott voluntarily and without prejudice, D. Susott had not
pleaded a counterclaim before being served with that motion. 2
Thus, his “excellent defenses to fraudulent transfer” are not
hampered. 	Plaintiffs are entitled to abandon their federal
court claim against D. Susott and, if litigation ensues in state
court, he will still be able to defend himself in that forum.
As to his argument that summary judgment was only
granted against Galindo only because he was dismissed from the
litigation, and therefore he has suffered legal prejudice
because of his agreement to indemnify Galindo for fees, costs,
and any award against her in the instant litigation, he has
failed to demonstrate he has suffered legal prejudice.
We have previously held that “legal
prejudice” means “prejudice to some legal
interest, some legal claim, some legal argument.”
Westlands [Water Dist. v. United States], 100
2 D. Susott and Galindo filed their Answer to Complaint on
August 13, 2020, and their First Amended Answer to Complaint on
September 3, 2020. 	[Dkt. Nos. 18, 20.] 	Neither response
asserted counterclaims.
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F.3d [94,] 97 [(9th Cir. 1996)]. 	In so holding,
we also explained that “[u]ncertainty because a
dispute remains unresolved” or because “the
threat of future litigation . . . causes
uncertainty” does not result in plain legal
prejudice. 	Id. at 96–97. 	Also, plain legal
prejudice does not result merely because the
defendant will be inconvenienced by having to
defend in another forum or where a plaintiff
would gain a tactical advantage by that
dismissal. Hamilton, 679 F.2d at 145.
Id. at 976 (some alterations in Smith). 	D. Susott’s agreement
with Galindo was executed by him on April 28, 2023. 	[Defs.’
Separate and Concise Statement of Material Facts in Opposition
to Plaintiffs’ Motion for Summary Judgment Against Defendant
Lauryn Galindo, filed 6/7/23 (dkt. no. 170), Exh. A
(Reimbursement Agreement).] 	He states that he is liable to her
for fees, costs and prejudgment interest, possible loss of the
apartment, and claims for emotional distress and punitive
damages because of his “conduct in 2016[.]” 	[Id.] 	This
agreement, at most, is a threat of future litigation and
therefore insufficient to demonstrate prejudice to a legal
claim, interest or argument. 	Moreover, whether to grant a
voluntary dismissal under Rule 41(a)(2) is determined under the
case law and rules applicable to that issue (i.e., Rule
41(a)(2)), which is separate and apart from the determination of
whether summary judgment is appropriately granted in favor of
Plaintiffs and against Galindo (i.e., Fed. R. Civ. P. 56(b)).
D. Susott had not filed a counterclaim at the time he was served
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with the motion to voluntarily dismiss him and failed to
demonstrate legal prejudice. 	Thus, the Court concludes that no
error or mistake of law occurred, nor did manifest injustice
result. 	Therefore, the Motion’s request to alter, amend or
vacate the order granting voluntary dismissal of Plaintiffs’
claims against D. Susott is denied.
II. 	Newly Discovered Evidence
Defendants next argue that his counsel’s receipt of a
letter from Plaintiffs’ counsel notifying Defendants of their
intent “to pursue claims for attorney’s fees and prejudgment
interest[]” is newly discovered evidence necessary to support
altering, amending or vacating this Court’s prior order.
[Motion, Mem. in Supp. at 9; Motion, Decl. of Wayson W.S. Wong,
Exh. A (Letter to Wayson Wong from Peter Knapman, Esq., dated
9/11/23). 3 ]
Federal Rule of Civil Procedure 60(b) states that
(b) 	Grounds for Relief from a Final
Judgment, Order, or Proceeding. 	On motion and
just terms, the court may relieve a party or its
legal representative from a final judgment,
order, or proceeding for the following reasons:
(1) 	mistake, inadvertence, surprise,
or excusable neglect;
(2) 	newly discovered evidence that,
with reasonable diligence, could not have
3 A letter that Plaintiffs’ counsel was required by Local
Rule 54.2 to write and send.
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been discovered in time to move for a new
trial under Rule 59(b);
(3) 	fraud (whether previously called
intrinsic or extrinsic), misrepresentation,
or misconduct by an opposing party;
(4) 	the judgment is void;
(5) 	the judgment has been satisfied,
released, or discharged; it is based on an
earlier judgment that has been reversed or
vacated; or applying it prospectively is no
longer equitable; or
(6) 	any other reason that justifies
relief.
The decision of whether to grant or deny a motion for relief
from a final judgment is a matter of the district court’s
discretion. 	Fantasyland Video, Inc. v. Cnty. of San Diego, 505
F.3d 996, 1001 (9th Cir. 2007).
Where Rule 60(b)(2) is invoked, then:
Relief from judgment on the basis of newly
discovered evidence is warranted if (1) the
moving party can show the evidence relied on in
fact constitutes “newly discovered evidence”
within the meaning of Rule 60(b); (2) the moving
party exercised due diligence to discover this
evidence; and (3) the newly discovered evidence
must be of “such magnitude that production of it
earlier would have been likely to change the
disposition of the case.” 	Coastal Transfer Co.
v. Toyota Motor Sales, U.S.A., Inc., 833 F.2d
208, 211 (9th Cir. 1987).
Feature Realty, Inc. v. City of Spokane, 331 F.3d 1082, 1093
(9th Cir. 2003). 	That the opposing party would seek an award of
attorney’s fees and prejudgment interest is not “newly
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discovered evidence” within the meaning of Rule 60(b) because
both are permitted by state law. 	See Haw. Rev. Stat. §§ 607-14,
636-16. 	In addition, the Court previously granted a motion for
attorney’s fees, costs and prejudgment interest. 	See, e.g.,
Order Denying Defendants’ Objections an Adopting, As Modified,
the Magistrate Judge’s Findings and Recommendation to Grant
Plaintiffs’ Motion for Taxation of Attorney’s Fees and Award of
Prejudgment Interest, filed 1/30/23 (dkt. no. 138). 	That
Plaintiffs as prevailing parties in the instant action are
seeking attorney’s fees and prejudgment interest can hardly come
as a surprise to Defendants.
Therefore, the Court concludes that Defendants fail to
show evidence that constitutes “newly discovered evidence” and
denies the Motion as to this argument.
III. Granting Motion for Summary Judgment Based on Preclusion
Defendants contends that it was clear error to grant
summary judgment in favor of Plaintiffs and against Galindo
because the Court relied on “facts found in the First Case as
facts for the Second Case and determined that plaintiffs were
entitled to summary judgment against [Galindo].” 	[Motion, Mem.
in Supp. at 14 (citation omitted).] 	He also submits that was
manifestly unjust for “this Court . . . [to] have made or proved
plaintiffs’ claims for them.” 	[Id.] 	Defendants are mistaken.
The Ninth Circuit Court of Appeals ruled that
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Galindo, however, is bound by the findings made
in connection with the 2019 judgment.
Nonetheless, because the district court’s
ultimate conclusions and remedy were predicated
on its across-the-board application of preclusion
principles, we vacate the district court’s
summary judgment in its entirety, leaving it to
that court on remand to reexamine in the first
instance the extent to which summary judgment may
be warranted given that preclusion principles
apply only as against Galindo.
[Memorandum Disposition at 5-6 (italics in original) (bold
emphasis added).] 	In other words, the Court’s findings filed on
February 28, 2019 are considered proven facts as against
Galindo. 	See Auld-Susott, et al. v. Galindo, CV 16-00450 LEK-
WRP (“CV 16-450”), Findings of Fact and Conclusions of Law,
filed 2/28/19 (dkt. no. 167). 4 	In addition, the Ninth Circuit
determined that “the preclusion principles” apply to Galindo,
and that this Court had to examine anew only as to whether
preclusion applied to D. Susott. 	Therefore, the Court concludes
that Defendants fail to show clear error in granting summary
judgment in favor of Plaintiffs and against Galindo and merely
disagree with the Court’s ruling. 	The Motion is therefore
denied as to this argument.
4 Galindo’s appeal in CV 16-450 was denied and this Court’s
judgment was affirmed. 	See CV 16-450, Ninth Circuit Court of
Appeals Memorandum, filed 7/9/21 (dkt. no. 194).
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IV. 	Defendants’ Motion for Summary Judgment
Defendants argue that it was clear error not to rule
on Defendants’ motion for summary judgment before ruling on
Plaintiffs’ motion for summary judgment, and because D. Susott
had strong legal arguments that “plaintiffs had released
[D. Susott] from any individual or personal liability on their
judgments on August 1, 2016 (well after the 2010
transfer) . . . .” 	[Motion, Mem. in Supp. at 24.] 	Defendants
fail to recognize that Plaintiffs were granted their request to
voluntarily dismiss D. Susott without prejudice. 	As a result,
there were no remaining claims against him in the instant
lawsuit. 	Defendants have failed to show that the granting of
this dismissal was improper or a mistake of law. 	As to the
order in which this Court chooses to rule on motions filed
before it, Defendants fail to provide any legal authority
supporting its proposition that the Court was required to rule
on Defendants’ summary judgment motion first. 	As the Court
noted in its order denying Defendants’ request for
reconsideration of the granting of Plaintiffs’ motion for
summary judgment, “the parties did not file cross-motions for
summary judgment, and it was within this Court’s discretion to
address the issues raised in Plaintiffs’ Motion before
addressing the issues raised in the Defendants’ Motion for
Summary Judgment.” 	[Order Denying Defendants’ Motions for
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Reconsideration, filed 8/28/23 (dkt. no. 188), at 9.] 	This
Court is empowered to exercise its discretion in the interest of
judicial economy and deciding the motions before it. 	In this
instance, Plaintiffs provided equitable and legally sound
reasons for their voluntary dismissal of D. Susott without
prejudice, and D. Susott failed to provide any legally sound
basis to deny that request. 	Judicial economy dictated that this
Court address Plaintiffs’ motion for summary judgment before
Defendants’ motion for summary judgment because D. Susott was no
longer a party to this action. 	Moreover, in granting summary
judgment in favor of Plaintiffs, this Court considered the
entire record, in the light most favorable to Galindo, and that
record included the arguments and evidence submitted in support
of Defendants’ motion for summary judgment.
CONCLUSION
For the foregoing reasons, the Court HEREBY DENIES
Defendants’ September 25, 2023 Motion to Amend or Alter (Vacate)
the Judgment Entered on August 28, 2023.
IT IS SO ORDERED.
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DATED AT HONOLULU, HAWAII, October 3, 2023.
EVAN AULD-SUCOTT, ETC., ET AL. VS. LAURYN GALINDO, ET AL; CV 20-
00270 LEK-RT; ORDER DENYING DEFENDANTS’ MOTION TO AMEND OR ALTER
(VACATE) THE JUDGMEMT ENTERED ON AUGUST 28, 2023, [FILED 9/25/23
(DKT. NO. 191)]
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