ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR RECONSIDERATION [DOC. 17]
M. JAMES LORENZ, District Judge.
On March 27, 2013, the Court dismissed this action for lack of jurisdiction. Specifically, the Court found that exercising ancillary jurisdiction was improper under Peacock v. Thomas, 516 U.S. 349 (1996). Plaintiffs Dish Network L.L.C., Echostar Techologies L.L.C., and Nagrastar LLC now move for reconsideration under Federal Rule of Civil Procedure 54(b), directing the Court's attention to Thomas, Head & Greisen Employees Trust v. Buster, 95 F.3d 1449 (9th Cir. 1996), cert. denied, 520 U.S. 1116 (1997). Defendants Alan Phu, Alcy Investment LLC, Alcy & AJ Investment LLC, AJ Management LLC, and Cyndi Phu oppose.
The Court noted earlier that this motion will be considered on the papers submitted and without oral argument. See Civ. L.R. 7.1(d.1). (Doc. 18.) For the following reasons, the Court GRANTS IN PART and DENIES IN PART Plaintiffs' motion. (Doc. 17.)
I. LEGAL STANDARD
"Federal Rule of Civil Procedure 54(b) states that a district court can modify an interlocutory order at any time' before entry of a final judgment, and [the Ninth Circuit has] long recognized the well-established rule that a district judge always has power to modify or to overturn an interlocutory order or decision while it remains interlocutory." Credit Suisse First Boston Corp. v. Grunwald, 400 F.3d 1119, 1124 (quoting Tanner Motor Livery, Ltd. v. Avis, Inc., 316 F.2d 804, 809 (9th Cir. 1963)). Although a district court may reconsider its decision for any reason it deems sufficient, generally a motion for reconsideration "is appropriate if the district court: (1) is presented with newly discovered evidence; (2) committed clear error or the initial decision was manifestly unjust; or (3) if there is an intervening change in controlling law." Sch. Dist. No. 1J, Multnomah Cnty. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir.1993); see also Hydranautics v. FilmTec Corp., 306 F.Supp.2d 958, 968 (S.D. Cal.2003) (Whelan, J.). Whether to grant a motion for reconsideration is in the sound discretion of the district court. Navajo Nation v. Norris, 331 F.3d 1041, 1046 (9th Cir.2003) (citing Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir.2000)).
On January 15, 2013, Plaintiffs commenced this action to void fraudulent transfers of assets by Defendants, and recover the assets to satisfy a $64.9 million judgment against Mr. Phu and others. This action-which only asserts state-law claims under California and Texas law-is based on "ancillary subject matter jurisdiction" related to Plaintiffs' attempt to enforce the judgment previously entered by this Court in Dish Network L.L.C. v. Sonicview USA, Inc., No. 09-cv-1553-L(WVG), 2012 WL 1965279 (S.D. Cal. May 31, 2012). The Court subsequently dismissed this action for lack of jurisdiction.
Plaintiffs now move for reconsideration of the dismissal of this action, and Defendants oppose. The Court addresses the pertinent issues below.
A. Ancillary Jurisdiction
Section 1367 codified the case-law doctrines of "pendent" and "ancillary" jurisdiction under the name of "supplemental jurisdiction." 28 U.S.C.A. § 1367, Practice Commentary 759-60. "[A]ncillary jurisdiction typically involves claims by a defending party haled into court against his will, or by another person whose rights might be irretrievably lost unless he could assert them in an ongoing action in federal court." Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 376 (1978). "A plaintiff cannot complain if ancillary jurisdiction does not encompass all of his possible claims... since it is he who has chosen the federal rather than the state forum and must thus accept its limitations." Id.
Under Peacock, "[a]ncillary jurisdiction may extend to claims having a factual and logical dependence on the primary lawsuit, ' but that primary lawsuit must contain an independent basis for federal jurisdiction." 516 U.S. at 355 (citing Owen Equip & Erection, 437 U.S. at 376) (citations omitted). "The court must have jurisdiction over a case or controversy before it may assert jurisdiction over ancillary claims." Id. (citing Mine Workers v. Gibbs, 383 U.S. 715, 725 (1996)). "In a subsequent lawsuit involving claims with no independent basis for jurisdiction, a federal court lacks the threshold jurisdictional power that exists when ancillary claims are asserted in the same proceeding as the claims conferring federal jurisdiction." Id. (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 380-81 (1994); H.C. Cook Co. v. Beecher, 217 U.S. 497, 498-99 (1910)). "Consequently, claims alleged to be factually interdependent with and, hence, ancillary to claims brought in an earlier federal lawsuit will not support federal jurisdiction over a subsequent lawsuit." Id.
However, Thomas, Head provides an alternative route to establish ancillary jurisdiction over an action, which "derives from the long-recognized principle that a federal court may assert authority over non-federal claims when necessary to give effect to the court's judgment.'" 95 F.3d at 1453 (citing Finley v. United States, 490 U.S. 545, 551 (1989)). In Thomas, Head, after the Ninth Circuit found Peacock inapposite, it reasoned that the principle of Riggs v. Johnson County, 73 U.S. (6 Wall.) 166, 187 (1867), remains sound: "Process subsequent to judgment is as essential to jurisdiction as process antecedent to judgment, else the judicial power would be incomplete and entirely inadequate to the purposes for which it was conferred by the Constitution." Thomas, Head, 95 F.3d at 1455. Thus, the district court properly exercises ancillary jurisdiction over parties involved in alleged fraudulent conveyances in supplementary proceedings to set aside the aforementioned alleged fraudulent conveyances. See id.
Here, Plaintiffs assert claims against Defendants for Avoidance and Recovery of Actual and Fraudulent Transfers under only California and Texas law. Accordingly, the Court dismissed this action under Peacock because the fraudulent-transfer claims in this action have no factual or logical interdependence with Sonicview USA, and under the circumstances, no greater efficiencies would be created by the exercise of federal jurisdiction over them. But after reviewing Thomas, Head, Plaintiffs correctly argue that the Court could have exercised ancillary jurisdiction over this action as a supplemental proceeding to set aside an alleged fraudulent conveyance. See Thomas, Head, 95 F.3d at 1455. Therefore, the Court GRANTS Plaintiffs' request for reconsideration insofar as ...