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Leland Oil & Gas, LLC v. Azar

United States District Court, D. North Dakota

September 25, 2017

Leland Oil & Gas, LLC, and K and R Roustabout, Inc., Plaintiffs,
v.
Marsha Azar and Saul Azar dba Illinois Energy, and Bensun Energy, LLC, Defendants.

          ORDER DENYING RULE 60(B)(6) MOTION TO SET ASIDE THE JUDGMENT

          CHARLES S. MILLER, JR., MAGISTRATE JUDGE UNITED STATES DISTRICT COURT.

         I. INTRODUCTION

         A. Procedural history

         This case commenced in December 2014, with the filing of a complaint by plaintiffs Leland Oil & Gas, LLC (“Leland Oil”) and K and R Roustabout, Inc. (“K and R Roustabout”). Defendant Bensun Energy, LLC (“Bensun Energy”) never appeared and eventually a default judgment was entered against it. (Doc. Nos. 44-46). Defendant Saul Azar made two requests for additional time to respond to the complaint following service. The court granted these requests but indicated that any further request would likely be denied. (Doc. Nos. 16-18). Finally, on April 13, 2015, an answer was filed on behalf of both Saul and Marsha Azar (collectively the “Azars”). (Doc. No. 19).

         After the parties submitted their proposed litigation plan, [1] the court issued its progression order dated June 11, 2015, in which it set forth milestones for completion of discovery, disclosure of experts and their reports, and deadlines for filing pretrial motions as requested by the parties in their proposed scheduling plan. On the same date, the court set the trial for May 17, 2016.

         On October 23, 2015, the plaintiffs filed a motion for partial summary against Marsha and Saul Azar, dba Illinois Energy, that was limited to addressing issues of liability. (Doc. No. 35). The motion was supported by affidavit testimony and other evidence establishing a basis for why the plaintiffs were entitled to the partial summary judgment they requested. (Doc. No. 36). When, after approximately three months, there was no response by the Azars, the court entered an order granting the partial summary judgment on January 22, 2016. In its order, the court referenced the court's local rule governing dispositive motions which provides that failure to respond may deemed an admission that the motion is well-taken and subject to a summary ruling. (Doc. No. 44). See D.N.D. Civ. L. R. 7.1(F).

         On May 13, 2017, the Friday before the trial that was set to commence on Tuesday May 17, 2016, the Azars' attorney filed a motion to withdraw indicating that he had been discharged by the Azars the day prior. (Doc. No. 50). The motion was supported by affidavits executed by both Saul and Marsha Azar in which they agreed to the withdrawal and acknowledged being aware of the trial date.

         The court held a hearing on the motion to withdraw on Monday, May 16, 2017. The plaintiffs appeared with their counsel and Saul Azar appeared with the Azars' counsel. Marsha Azar did not appear even though she acknowledged in her earlier affidavit she was aware of the trial date. (Doc. Nos. 47 & 65).

         During the hearing and in a letter that the court received as an exhibit, Saul Azar contended he had not been informed of the trial date until May 10, 2016, and that he had not been aware of it previously. He also indicated he needed more time to obtain an expert to defendant against the claim for lost profits being made by Leland Oil.

         The court then inquired of Azars' counsel whether he had provided his clients with notice of the trial date and counsel stated he had some time ago, both in writing and by phone call, and then again more recently. (Id.). The court also inquired of the plaintiffs what their position was with respect to the request for a continuance. Plaintiffs objected, stating that they had already traveled some distance for the trial and had arranged for their expert to be present the next day. They also added that the Azars throughout the case had been basically “no shows” in that they had not responded to the motion for partial summary judgment, they had not responded to the plaintiffs' discovery requests, and Saul Azar had failed to show up for his deposition. (Id.).

         After considering what was presented at the hearing and not believing Saul Azar's contention that he never had been advised of the trial date until May 10, 2016, the court refused to continue the trial and gave the Azars a choice: either proceed pro se or proceed with their chosen counsel. (Id.). The next day, May 17, 2016, Saul Azar attended the trial, electing at that point to proceed with his attorney. (Doc. Nos. 53 & 66). Marsha Azar was again a “no show.”

         Shortly after the trial, the Azars retained new counsel who formally made their appearance on July 1, 2016. On the same date, they also filed a “Motion to File Posttrial Evidence” without, however, indicating what evidence they wanted to present. Also, notable with respect to what follows: (1) transcripts of both the trial and the hearing in which the court denied the request to continue were filed on July 19, 2016. (Doc. Nos. 65-66); (2) the Azars' new counsel were the ones who filed the Azars' proposed findings and conclusions as well as both an opening posttrial brief and a reply brief (Doc. Nos. 67, 68, & 72); and (3) no further request was made by Azars' new counsel during the next seven months before the court reached its decision to reopen the record based on the reasons set forth in the present motion, including that the court should (a) consider additional evidence based upon the original counsel's gross neglect and backed by a proffer of evidence or (b) consider additional evidence backed by an offer of proof or to reconsider the court's earlier grant of partial summary judgement on the grounds that the court had procedurally erred in granting it.

         On February 27, 2017, the court made its findings of fact and conclusions of law. On the same date, the court entered a final judgment in favor of the plaintiffs and against defendants Marsha and Saul Azar. (Doc. Nos. 75-76).

         Thereafter, no direct appeal was taken. Further, despite having all of the information available to them necessary to make the present motion within a month or so of the trial, Azars' new counsel did not file the present motion until June 14, 2017, which was another 4½ months. (Doc. No. 80).

         B. Other background

         The court entered judgment in this case on two separate, but related, claims. The first was a claim by Leland Oil that the Azars had breached an agreement pursuant to which the Azars had sold Leland Oil and Bensun Energy, LLC (“Bensun Energy”) two oil and gas wells - the Davis State and the Sullivan. More specifically, the claim was that the Azars breached the sales agreement by failing to timely file with the North Dakota Industrial Commission (“NDIC”) a properly completed Notice of Transfer of Oil and Gas Wells-Form 15 (“Notice of Transfer”) that would allow the purchasers to operate the two wells and realize upon the benefit of what they had purchased. As detailed in the court's findings and conclusions and as discussed further below, the sales agreement was consummated in June 2012, and an acceptable Notice of Transfer was not filed by the Azars until February 2016 - shortly after the court granted partial summary judgment in which it held that the Azars were in breach for not having completed and filed the required Notice of Transfer. With respect to this claim, the court awarded damages in the amount of $89, 905.48 - far less than approximately $1.2 million that Leland Oil requested at the conclusion of the trial.

         The second claim in the case had to do with an obligation undertaken as part of the agreement for the purchase of the Davis State and Sullivan wells by Leland Oil and Bensun Energy, which was that they had agreed to do rehabilitative work, at the Azars' expense, on another well owned by the Azars - the McMahen State. To fulfill that obligation, Leland Oil had K and R Roustabout, an affiliated company, do the work, but the Azars failed to pay for it. At the commencement of the trial, K and R Roustabout and the Azars stipulated to the entry of judgment on that claim in favor of K and R Roustabout in the amount of $19, 552.80. (Doc. No. 66, pp. 5-6). In fact, Saul Azar presented a confession of judgement that he had signed for that amount. (Id.; Ex. D2).

         Other relevant background is set forth in the court's findings, conclusions, and order for judgment. (Doc. No. 75); Leland Oil & Gas, LLC, v. Marsha Azar and Saul Azar dba Illinois Energy, Case No. 1:14-cv-161, 2017 WL 752142 (D.N.D. Feb. 2, 2017) (“Leland Oil”).

         II. LAW GOVERNING RULE 60(b)(6) MOTIONS

         Fed. R. Civ. P. 60(b) provides an opportunity for a disappointed litigant to seek relief from a final order or judgment by invoking one of six enumerated grounds. Here, the Azars rely upon the sixth “catch all” ground, which, in pertinent part, provides:

On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for . . . any other reason that justifies relief.

         To prevail on a Rule 60(b)(6) motion, a movant is required to demonstrate the existence of “extraordinary circumstances.” E.g., Gonzalez v. Crosby, 545 U.S. 524, 535 (2005); Ackermann v. United States, 340 U.S. 193, 199 (1950); United States v Young, 806 F.2d 805, 806 (8th Cir. 1986). The reason for this extremely high burden is to promote the finality of judgments. Id.; see also City of Duluth v. Fond du Lac Band of Lake Superior Chippewa, 702 F.3d 1147, 1155 (8th Cir. 2013) (Rule 60(b)(6) is an “extraordinary remedy for exceptional circumstances.”). It is also in part for this reason that Rule 60(b)(6) cannot be used as a substitute for an appeal or the exercise of other available legal remedies. E.g., In re Zimmerman, 869 F.2d 1126, 1128 (8th Cir. 1989) (“[Rule 60(b)(6)] is not a substitute for other legal remedies. Such relief is to be granted only when exceptional circumstances prevented the moving party from seeking redress through the usual channels.”); Young, 806 F.2d at 806 (“Rule 60(b) is not available as a substitute for appeal.”).

         III. DISCUSSION

         The Azars contend the court should set aside its judgment in this case for two reasons. First, they contend that their trial counsel was grossly negligent and abandoned them “pretrial.” Second, they argue that the court procedurally erred when it granted partial summary judgment in favor of Leland Oil.

         A. Attorney gross negligence/abandonment

         1. Introduction

         The Azars claim that their trial counsel's purported gross negligence and abandonment of them “pretrial” constitutes extraordinary circumstances thereby entitling them to relief pursuant to Rule 60(b)(6). The court disagrees for two reasons - either of which is sufficient to deny the motion. First, the court does not believe that the particular circumstances of this case arise to the level of extraordinary circumstances such as would justify relief pursuant to Rule 60(b)(6). Second, the Azars have failed to demonstrate even a reasonable probability that the claimed deficiencies would likely have changed the result.

         2. The claims of attorney misconduct when considered against the Azars ...


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