Ricatto v. M3 Innovations Unlimited, Inc.

Background

The court previously granted in part and denied in part M3 Innovations Unlimited, Inc. and Kyle Kietrys’s motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). That earlier ruling dismissed all of Michael Ricatto’s claims but did not grant judgment for the defendants on their counterclaim. Ricatto then moved for reconsideration of the dismissal of his claim that the defendants had anticipatorily repudiated certain contracts.

Reconsideration standard

Under Local Civil Rule 6.3 and Federal Rule of Civil Procedure 52(b), a party seeking reconsideration must identify controlling decisions or information the court overlooked that could reasonably change the result. The court explained that reconsideration is generally limited to an intervening change in controlling law, new evidence, or the need to correct a clear error or prevent serious unfairness. It is not a chance to repeat old arguments or present new theories that could have been raised earlier.

Timeliness

The court first held that Ricatto’s motion was untimely. Local Rule 6.3 required the motion to be served within 14 days after the original ruling. Ricatto filed it 28 days after the court’s decision and offered no justification for the delay. The court therefore denied reconsideration on that ground.

Adequate-assurance theory

Ricatto argued that he could state an anticipatory-repudiation claim because the defendants failed to provide adequate assurance of future performance. The court held that this argument had not been raised in Ricatto’s original opposition to the Rule 12(c) motion and could not properly be introduced through reconsideration.

The court also held that the theory was not adequately pleaded. It was not clear that Ricatto was entitled to demand adequate assurance because the contracts were not for the sale of goods, and the court concluded that the loan agreement was not sufficiently similar to the type of contract covered by the limited New York doctrine recognized in Norcon Power Partners. Even assuming Ricatto was entitled to demand assurance because he had adequately alleged insolvency, the court found several pleading defects: he did not allege that he made a written demand for assurance, did not identify when he made such a demand or how long the defendants had to respond, and did not allege that the financial information the defendants provided failed to assure their ability to make loan payments.

Impossibility-of-performance theory

Ricatto also argued that the defendants had voluntarily placed themselves in a position where they could not perform their contractual duties. The court stated that its earlier decision had already recognized that anticipatory repudiation can arise from a voluntary act that makes performance impossible or apparently impossible. The court concluded that Ricatto’s reconsideration motion therefore did not identify overlooked law.

The court further held that Ricatto had not adequately pleaded this theory. The contracts did not require the defendants to use the loaned funds to develop the property. Also, the defendants’ lack of profitability in April 2018 did not establish that they could not make payments beginning in October 2018, particularly because the line-of-credit agreement gave them a contractual right to seek additional funds.

Ready, willing, and able to perform

The court reaffirmed its separate conclusion that Ricatto had not pleaded that he was ready, willing, and able to perform his own contractual obligations. Specifically, the amended complaint did not allege that Ricatto would have continued lending funds but for the defendants’ alleged repudiation. Instead, his April 30, 2018 letter indicated that he would not provide additional funds because he believed the defendants had misused earlier advances.

Disposition

Judge Failla denied Ricatto’s motion for reconsideration. The Clerk of Court was directed to terminate the motion at docket entry 43. The opinion states that the defendants’ counterclaims had not been conclusively adjudicated and that the court had not entered a final judgment against Ricatto at that time.