At Home Claims, LLC v. Equinix, Inc. et al

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-1-	MEMO RE MOTION FOR RECONSIDERATION
UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re
AT HOME CORPORATION,
Debtor.
AT HOME CLAIMS, LLC,
Plaintiff,
vs.
EQUINIX, INC. PACIFIC SHORES
DEVELOPMENT, LLC, and TICKETS.COM,
Defendants.
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Case No: 01-32495 TEC
Chapter 11
Adv. Proc. No. 09-3205 TC
MEMORANDUM RE PLAINTIFF’S MOTION FOR RECONSIDERATION
Upon due consideration, and for the reasons stated below, the
court denies Plaintiff’s Motion for Reconsideration (the Motion to
Vacate). 	This memorandum shall constitute the court’s findings of
fact and conclusions of law.
FACTS
On February 3, 2010, Plaintiff filed its second amended
complaint, seeking to recover for harm allegedly suffered by
Signed and Filed: June 30, 2010
________________________________________
THOMAS E. CARLSON
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
July 01, 2010
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 09-03205 Doc# 60 Filed: 06/30/10 Entered: 07/01/10 15:06:17 Page 1 of 4

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-2-	MEMO RE MOTION FOR RECONSIDERATION
beneficiaries of the General Unsecured Creditors Liquidating Trust
(GUCLT). 	On February 17, 2010, Defendants filed a joint motion to
dismiss the second amended complaint (the Motion to Dismiss),
arguing that Plaintiff lacked standing to assert the alleged
claims, because the GUCLT is like a corporation, and because the
alleged misconduct occurred before Plaintiff acquired its interest
in the GUCLT.
On April 26, 2010, after a hearing on the Motion to Dismiss,
the court entered a memorandum decision and order (the Dismissal
Order) granting the Motion to Dismiss without leave to amend. 	The
court reasoned that, because Plaintiff did not own the GUCLT trust
interests on the date of the wrongdoing alleged in the second
amended complaint, Plaintiff failed to satisfy the continuous-
share-ownership requirement created by Cal. Corp. Code § 800(b)(1)
and Fed. R. Civ. Proc. 23.1. 	The court determined that Plaintiff
was bound by the continuous-ownership doctrine, because the GUCLT
is a type of “unincorporated association” under Cal. Corp. Code §
18035, because the GUCLT is like a corporation in that the
interests of the trust holders are freely transferrable, because
the price of the transferred claim should reflect any prior bad
acts by the trustee, and because allowing prosecution of the second
amended complaint would constitute a windfall and encourage
speculative litigation.
Plaintiff did not appeal the Dismissal Order. 	Nor did
Plaintiff timely file a motion to alter or amend judgment under
Rule 59(e).
On May 19, 2010, twenty-three days after entry of the
Dismissal Order, Plaintiff filed the Motion to Vacate, seeking to
vacate the Dismissal Order pursuant to Federal Rules of Civil
Case: 09-03205 Doc# 60 Filed: 06/30/10 Entered: 07/01/10 15:06:17 Page 2 of 4

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1 In its reply papers, acknowledging that the Motion to Amend
was filed more than 14 days after entry of the Dismissal Order,
Plaintiff expressly abandoned its motion under Rule 59(e) and all
arguments that the Dismissal Order was based on an error of law.
2 Rule 60(b)(1) is incorporated into the Federal Rules of
Bankruptcy Procedure via Fed. R. Bankr. Proc. 9024.
3 Rule 60(b)(2) allows the court to vacate an order when a
party presents newly discovered evidence that could not with
reasonable diligence have been discovered in time to move for a new
trial under Rule 59(b). 	Plaintiff does not contend that the Letter
-3-	MEMO RE MOTION FOR RECONSIDERATION
Procedure 59(e) and 60(b). 	In support of the Motion, Plaintiff
introduced a March 17, 2003 letter written by GUCLT counsel to the
Securities and Exchange Commission (the Letter). 	In the Letter,
GUCLT counsel argues that the GUCLT beneficial interests do not
constitute “securities” within the meaning of the Exchange Act, and
are not the type of instrument included within the ordinary meaning
of the term security.
The sole basis under which Plaintiff now seeks to amend the
Dismissal Order is Rule 60(b)(1). 1 	Specifically, Plaintiff urges
that entry of the Dismissal Order was manifestly unjust, because
Defendants are judicially estopped from taking an inconsistent
position before this court and the SEC regarding whether the
beneficial trust interests represent an ownership interest in the
GUCLT.
LAW
Rule 60(b)(1) 2 provides that “[o]n motion and just terms, the
court may relieve a party . . . from a final judgment, order, or
proceeding for the following reasons: (1) mistake, inadvertence,
surprise, or excusable neglect.” 	In its opposition to the Motion
to Dismiss, Plaintiff did not argue judicial estoppel. 	Plaintiff
could have made this argument, because it knew about the Letter at
the time of the hearing, 3 and because the Exchange Act of 1934 was
Case: 09-03205 Doc# 60 Filed: 06/30/10 Entered: 07/01/10 15:06:17 Page 3 of 4

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is newly discovered evidence.
4 Plaintiff also could have appealed the Dismissal Order or
filed a timely motion to alter amend the Order.
5 The court assumes without deciding that counsel for the
GUCLT was acting as agent for the supervisory trust board members
in connection with the Letter.
6 Cal. Corp. Code § 800(a) provides in pertinent part as
follows: “As used in this section, . . . ‘shares’ includes
memberships in an unincorporated association.”
-4-	MEMO RE MOTION FOR RECONSIDERATION
enacted prior to the hearing on the Motion to Dismiss. 4 	Under these
particular facts, the court determines that Plaintiff’s failure to
make a legal argument is not excusable neglect within the meaning
of Rule 60(b)(1). 	See Allmerica Fin. Life Ins. & Annuity Co. v.
Llewellyn, 139 F.3d 664 (9th Cir. 1997).
Had Plaintiff made the newly asserted judicial estoppel
argument in opposition to the Motion to Dismiss, the court likely
would not have found in Plaintiff’s favor, because the GUCLT 5 has
not relied upon contradictory arguments to prevail in different
fora. 	It is not inconsistent to argue that the broad definition of
share under Cal. Corp. Code § 800(a) 6 means something different from
the definition of equity security under 15 U.S.C. § 78c(a)(11).
Because Plaintiff has not demonstrated a basis to vacate the
Dismissal Order, the Motion to Vacate is denied.
**END OF MEMORANDUM**
Case: 09-03205 Doc# 60 Filed: 06/30/10 Entered: 07/01/10 15:06:17 Page 4 of 4