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Securities and Exchange Commission v. Abs Manager, LLC

United States District Court, S.D. California

December 18, 2014

SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
ABS MANAGER, LLC and GEORGE CHARLES CODY PRICE, Defendants, ABS FUND, LLC [ARIZONA]; ABS FUND, LLC [CALIFORNIA]; CAPITAL ACCESS, LLC; CAVAN PRIVATE EQUITY HOLDINGS, LLC; and LUCKY STAR EVENTS, LLC, Defendants.

ORDER GRANTING PLAINTIFF'S MOTION FOR RECONSIDERATION [Dkt. No. 87.] Relief

GONZALO P. CURIEL, District Judge.

Before the Court is Plaintiff's motion for reconsideration of the Court's order granting Defendants' motion for partial summary judgment on the claims under the Investment Advisers Act. (Dkt. No. 87.) An opposition was filed by Defendants on August 15, 2014. (Dkt. No. 91.) A reply was filed on August 29, 2014. (Dkt. No. 93.) A hearing was held on September 19, 2014. (Dkt. No. 97.) Sam Puathasnanon, Esq. and Lynn Dean, Esq. appeared on behalf of Plaintiff and Mark Chester, Esq. and John Dolkart, Esq. appeared on behalf of Defendants. After a review of the briefs, supporting documentation, the applicable law, and the parties' arguments, the Court GRANTS Plaintiff's motion for reconsideration.

Background

On February 8, 2013, Plaintiff Securities and Exchange Commission ("SEC") filed a complaint against Defendants ABS Manager, LLC and George Charles Cody Price, along with an ex parte application, without notice, for a temporary restraining order ("TRO") and order freezing assets; appointing a receiver over defendant ABS Manager, LLC and the entities it controls and manages; prohibiting the destruction of documents; granting expedited discovery; and requiring an accounting. (Dkt. Nos. 1, 2.) The SEC also filed an ex parte application, without notice, for an order temporarily sealing the entire file until the asset freeze is served. (Dkt. No. 2.) On February 11, 2013, the Court denied Plaintiff's ex parte application for TRO and denied Plaintiffs' ex parte application to temporarily file entire case under seal. (Dkt. No. 3.) On February 19, 2013, Plaintiff filed a motion for preliminary injunction along with an ex parte motion to shorten time for hearing on the motion for preliminary injunction. (Dkt. No. 5.) After briefing by both parties, on February 27, 2013, the Court granted Plaintiffs' ex parte motion and set the matter for hearing on March 15, 2013, which was continued to March 19, 2013 after granting the parties' joint motion to continue the hearing date. (Dkt. Nos. 22. 24, 30.) On March 20, 2013, the Court granted Plaintiff's motion for preliminary injunction and for an order partially freezing assets of ABS Manager and the Funds, preserving documents, and requiring an accounting and denying Plaintiff's motion for an order freezing all funds' asset and personal assets and order appointing a receiver. (Dkt. No. 31.) A preliminary injunction order was filed on April 4, 2013. (Dkt. No. 35.)

The complaint alleges violations of sections 206(1) and 206(2) of the Investment Advisers Act of 1940; violations of section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8; violations of section 17(a) of the Securities Act of 1933 ("Securities Act"); violations of section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5; and violations of section 20(a) of the Securities Exchange Act of 1934. (Dkt. No. 1.)

On June 11, 2014, the Court denied Plaintiff's motion for summary judgment on all causes of action and granted Defendants' motion for partial summary judgment on the first two causes of action as to the SEC's claims under the Investment Advisers Act of 1940 ("IAA"). (Dkt. No. 81.) The Court granted Defendants' motion holding that an exception applied because Plaintiff failed to establish a genuine issue of material fact that the exception under the Investment Advisers Act did not apply. See 15 U.S.C. ยง 80b-2(a)(11)(E).

On July 9, 2014, Plaintiff filed a motion for reconsideration as to the Court's order granting Defendants' motion for partial summary judgment on the claims under the Investment Advisers Act. (Dkt. No. 87.) Defendants filed an opposition and Plaintiff filed a reply. (Dkt. Nos. 91, 93.)

A. Legal Standard on Motion for Reconsideration

A district court may reconsider a grant of summary judgment under either Federal Rule of Civil Procedure ("Rule") 59(e) or Rule 60(b). Sch. Dist. No. 1J, Multnomah County, Or. v. AcandS, Inc., 5 F.3d 1255, 1262 (9th Cir. 1993). Plaintiff moves for reconsideration pursuant to Rule 59(e) arguing that the Court "committed clear error or the initial decision was manifestly unjust." See id. at 1263.

Federal Rule of Civil Procedure 59(e) provides for the filing of a motion to alter or amend a judgment. Fed.R.Civ.P. 59(e). A motion for reconsideration, under Federal Rule of Civil Procedure 59(e), is "appropriate if the district court (1) is presented with newly discovered evidence; (2) 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 County, Or., 5 F.3d at 1263; see also Ybarra v. McDaniel, 656 F.3d 984, 998 (9th Cir. 2011).

In addition, Local Civil Rule 7.1(i)(1) provides that a motion for reconsideration must include an affidavit or certified statement of a party or attorney "setting forth the material facts and circumstances surrounding each prior application, including inter alia: (1) when and to what judge the application was made, (2) what ruling or decision or order was made thereon, and (3) what new and different facts and circumstances are claimed to exist which did not exist, or were not shown upon such prior application." Local Civ. R. 7.1(i)(1).

The Court has discretion in granting or denying a motion for reconsideration. Fuller v. M.G. Jewelry, 950 F.2d 1437, 1441 (9th Cir. 1991). A motion for reconsideration should not be granted absent highly unusual circumstances. 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 1999). "A motion for reconsideration cannot be used to ask the Court to rethink what the Court has already thought through merely because a party disagrees with the Court's decision. Collins v. D.R. Horton, Inc., 252 F.Supp.2d 936, 938 (D. Az. 2003) (citing United States v. Rezzonico, 32 F.Supp.2d 1112, 1116 (D. Az.1998)).

B. Causes of Action under the Investment Advisers Act

Plaintiff argues that the exception Defendants rely on under the IAA does not apply because Defendants provided advisory services and held themselves out to be investment advisers for both private and government-backed investments. Defendants contend that the SEC is rearguing issues on summary judgment without providing any "new" evidence and assert ...


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