Korneа v. Miller

Background

Illia Kornea and Octavian Kecenovici, representing themselves, entered into a Joint Venture Agreement with Jeffrey A. Miller, who also represented himself. The agreement concerned the purchase and sale of bulk quantities of marijuana in California. The plaintiffs alleged that Miller failed to distribute all profits from the venture and sued for breach of contract, bad faith, and unethical business practices under California and New York law. Miller asserted counterclaims for breach of the duty of good faith and fair dealing and for interference with contractual relationships.

After earlier rulings, the plaintiffs’ breach-of-contract claim was the only claim remaining. The court later required the plaintiffs to explain why the claim should not be dismissed because the agreement involved illegal marijuana transactions. In its August 11, 2025 Opinion and Order, the court held that the agreement was illegal under the federal Controlled Substances Act and dismissed the breach-of-contract claim. The court also rejected the plaintiffs’ argument that equitable relief—relief based on fairness rather than ordinary contract damages—could be awarded, and denied their motion for sanctions against Miller.

Motions for reconsideration

The plaintiffs filed three motions asking the court to reconsider its August decision under Federal Rules of Civil Procedure 59(e) and 60, a motion to supplement those motions, and two motions to clarify, correct the record, and enforce summary judgment. Reconsideration is an extraordinary remedy generally reserved for situations involving an overlooked controlling decision or fact, a change in controlling law, new evidence, clear error, manifest injustice, or, under the fraud provision discussed by the court, clear and convincing evidence of fraud that prevented a fair presentation of the case.

The court found that the plaintiffs had not identified an intervening change in controlling law or newly available evidence. Instead, they largely repeated arguments about equitable relief and sanctions that the court had already considered. The court also rejected the plaintiffs’ attempt to raise a breach-of-fiduciary-duty claim because that claim was not pleaded in the complaint and had not been presented in response to the court’s request for an explanation. The court added that, even if such a claim had been pleaded, it would depend on the same illegal agreement and would not change the result.

The court further ruled that the agreement’s possible legality under California law did not matter because the prior decision rested on federal law. The court stated that federal marijuana-sale prohibitions remained applicable despite federal policies and legislation concerning enforcement priorities. It also clarified that it had not received any secret or sealed communication from Miller that influenced the decision.

Earlier summary-judgment ruling

The plaintiffs argued that an earlier order granting their summary-judgment motion against Miller’s counterclaims conflicted with the dismissal of their own contract claim. The court rejected that argument. It explained that the earlier order resolved Miller’s claims against the plaintiffs and did not decide the merits of the plaintiffs’ claims against Miller. The August 2025 decision did not disturb the earlier order.

Rule 60(b)(3) argument and disposition

The plaintiffs also sought relief based on their allegation that Miller committed perjury concerning profits from the joint venture. The court denied that request because the plaintiffs had not shown perjury by clear and convincing evidence. The court held that, in any event, the challenged filings did not affect its analysis because the dismissal rested on the illegality of the agreement, not on the disputed profit evidence.

Judge Jeannette A. Vargas denied the plaintiffs’ motions for reconsideration and to correct the record, and the court directed the Clerk of Court to terminate all pending motions. This order addressed the plaintiffs’ requests to revisit the earlier decision; it did not change the court’s prior dismissal of the contract claim or its prior dismissal of Miller’s counterclaims.