Nat'l Oilwell Varco, L.P. v. Sadagopan

NATIONAL OILWELL VARCO, L.P., Plaintiff, v. SADEESH SADAGOPAN, MAJED HAMDAN, and KHALED ZANTOUT Defendants.

CIVIL ACTION NO. H-16-2261

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

ENTERED: November 2, 2018

October 31, 2018

MEMORANDUM AND OPINION ON THE MOTIONS FOR RECONSIDERATION

I. Background

After two years of briefing, motions, jurisdictional discovery, and hearings, the court issued a ruling on August 13, 2018, granting National Oil Well Varco's motion for default judgment. (Docket Entry No. 132). The court found that NOV was entitled to recover from Sadeesh Sadagopan, Majed Hamdan, and Khaled Zantout, jointly and severally, the following remedies:

1. $12,220,102.37 in actual damage;

2. post-judgment interest at 2.44% per annum as provided by law from entry of judgment until paid; and

3. costs of court under in Rule 54(d) of the Federal Rules of Civil Procedure.

(Id. at 37-38). On August 23, 2018, NOV moved for reconsideration, asking the court to amend or correct the Memorandum and Opinion and the final judgment to deny the defendants' dollar-for-dollar settlement credit. (Docket Entry No. 135). The defendants responded, and NOV replied. (Docket Entries No. 138, 140). On September 10, Majed Hamdan and Khaled Zantout moved for reconsideration of the court's denial of their choice-of-law defense, the exclusion of their declarations, and the damages computation.

After reviewing the parties' motions, responses, and replies; the record; and the applicable law, the court amends the Memorandum and Opinion as set out below, but does not change the result or amend the final judgment. The parties' motions for reconsideration are granted in part and denied in part, for the reasons stated in detail below.

II. The Legal Standard

The Federal Rules of Civil Procedure do not formally recognize a motion to reconsider. See St. Paul Mercury Ins. Co. v. Fair Grounds Corp., 123 F.3d 336, 339 (5th Cir. 1997) ("[T]he Federal Rules of Civil Procedure do not recognize a general motion for reconsideration."). Motions to reconsider are treated as motions to alter or amend a judgment under Rule 59(e) of the Federal Rules of Civil Procedure, or motions for relief from judgment under Rule 60(b), depending on when the motion is filed. Demahy v. Schwarz Pharm. Inc., No. 11-31073, 2012 WL 5261492, at *2 n.2 (5th Cir. Oct. 25, 2012) (citing Tex. A&M Research Found. v. Magna Transp., Inc., 338 F.3d 394, 400 (5th Cir. 2003)). A motion for reconsideration is considered under Rule 59(e) if it is filed within 28 days of the court's ruling, and under Rule 60(b) if it is filed after that. Demahy, 2012 WL 5261492, at *2 & n.2 (citing Tex. A&M, 338 F.3d at 400).

A Rule 59(e) motion "calls into question the correctness of a judgment." Templet v. HydroChem Inc., 367 F.3d 473, 478-79 (5th Cir. 2004). A Rule 59(e) motion "'must clearly establish either a manifest error of law or fact or must present newly discovered evidence' and 'cannot be used to raise arguments which could, and should, have been made before the judgment issued.'" Rosenzweig v. Azurix Corp., 332 F.3d 854, 863-64 (5th Cir. 2003) (quoting Simon v.United States, 891 F.2d 1154, 1159 (5th Cir. 1990)). The court has "considerable discretion" in addressing a motion for reconsideration. Templet, 367 F.3d at 479. Changing an order or judgment under Rule 59(e) is an "extraordinary remedy" that courts should use sparingly. Id.; see also 11 WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE § 2810.1 at 124 (2d ed. 1995). The Rule 59(e) standard "favors denial of motions to alter or amend a judgment." S. Constructors Grp., Inc. v. Dynalectric Co., 2 F.3d 606, 611 (5th Cir. 1993). A motion to reconsider may not be used to relitigate matters or to raise arguments or present evidence that could have been raised before the entry of the judgment or order. 11 WRIGHT & MILLER § 2810.1 at 127-28.

III. Analysis

A. NOV's Motion to Reconsider the Dollar-for-Dollar Settlement Credit

1. Chapter 33 of the Texas Civil Practices and Remedies Code

The issue is the applicability of Chapter 33 of the Texas Civil Practices and Remedies Code. Two provisions of Chapter 33 were discussed in the court's earlier Memorandum and Opinion:

§ 33.012(a). If the claimant is not barred from recovery under Section 33.001, the court shall reduce the amount of damages to be recovered by the claimant with respect to a cause of action by a percentage equal to the claimant's percentage responsibility.

§ 33.012(b). If the claimant has settled with one or more persons, the court shall . . . reduce the amount of damages to be recovered by the claimant with respect to a cause of action by the sum of dollar amounts of all settlement.

TEX. CIV. PRAC. & REM. CODE § 33.012. This court found that § 33.012(a) did not apply because NOV proved actual damages resulting from the defendants' fraudulent schemes that furthered the conspiracy. (Docket Entry No. 132 at 36). The court applied § 33.012(b) and found the defendants entitled to a credit for the settlement between NOV and FM of $5,750,000.

The parties dispute the applicability of § 33.012(b). Section 33.002 governs Chapter 33's applicability. It states that:

(a) This chapter applies to

(1) any cause of action based on tort in which a defendant, settling person, or responsible third party is found responsible for a percentage of the harm for which relief is sought.

(2) any action brought under the Deceptive Trade Practices-Consumer Protection Act . . . in which a defendant, settling person, or responsible third party is found responsible for a percentage of the harm for which relief is sought.

TEX. CIV. PRAC. & REM. CODE § 33.002(a). NOV argues that "the absence of a proportionate responsibility determination renders Chapter 33 inapplicable in its entirety." (Docket Entry No. 140 at 2). NOV relies on White v. Zhou Pei, 452 S.W.3d 527 (Tex. App.—Houston [14th Dist.] 2014, no pet.), which affirmed the trial court's refusal to grant a settlement credit under § 33.012(b) because there was no percentage-of-responsibility finding at trial. Id. at 533-34; see also Nelson v. Pasol, No. 13-15-00379-CV, 2017 WL 3634059, at*5 (Tex. App.—Corpus Christi Aug. 24, 2017, no pet.) (refusing to apply § 33.012(b) to credit the defendant's settlement with a nonparty bank because the jury did not make a finding that the nonparty was responsible for a percentage of the damages that the plaintiffs sought); Tex. Capital Sec., Inc. v. Sandefer, 108 S.W.3d 923, 925-26 (Tex. App.—Texarkana, June 27, 2003) (chapter 33 did not apply because the defendants were jointly and severally liable).

In Zhou Pei, the trial court refused to apply § 33.012(b) settlement-credit provision after the jury found that the defendants had committed fraud and were jointly and severally liable for the damages. At trial, the jury was not asked to allocate a specific percentage of fault to the defendantsor to a third party. The Texas Court of Appeals affirmed, finding that Chapter 33 did not apply when there was no allocation of responsibility for the harm. Zhou Pei, 452 S. W.3d at 543-44. The dissent argued that the majority's holding made §§ 33.003 and 33.004 inoperative.¹ The dissent also pointed to a Texas Supreme Court decision suggesting that Chapter 33 applies to "all tort claims," without any requirement of a percentage-of-responsibility finding. Dugger v. Arredondo, 408 S.W.3d 825, 831 (Tex. 2013); see also Pemex Exploracion y Produccion v. Murphy Energy Corp., 923 F. Supp. 2d 961, 980 (S.D. Tex. 2013) (same); Werner v. KPMG, LLP, 415 F. Supp. 2d 688, 703 (S.D. Tex. 2006); Challenger Gaming Sols. v. Earp, 402 S.W.3d 290, 292 (Tex. App.—Dallas 2013, no pet.). In none of the cases the dissent cited, however, did the parties dispute Chapter 33's applicability absent a finding of the defendant's percentage of fault. Instead, Zhou Pei has been followed by Texas intermediate appellate decisions, although the Texas Supreme Court has not weighed in.

Even if NOV is correct that § 33.012(b) does not apply in granting the defendants the settlement credit, this dos not change the result. The Texas one-satisfaction rule provides a basis for the defendants to obtain the credit. See Sandefer, 108 S.W.3d at 925-26 (applying the common law one-satisfaction rule to decide the defendants' settlement credit after finding Chapter 33 inapplicable).

2. The Texas One-Satisfaction Rule

"Texas's one-satisfaction rule provides that 'a plaintiff is entitled to only one recovery for any damages suffered.'" GE Capital Commercial, Inc. v. Worthington Nat'l. Bank, 754 F.3d 297, 304 (5th Cir. 2014) (citing Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 390 (Tex. 2000)). A"nonsettling defendant may only claim a credit based on the damages for which all tortfeasors are jointly liable." Id. at 305. The one-satisfaction rule prevents a plaintiff from "receiv[ing] a windfall" where "a settling defendant has already partially contributed" to the plaintiff's recovery. Id. (quoting First Title Co. of Waco v. Garrett, 860 S.W.2d 74, 78 (Tex. 1993)). The issue in applying the rule is whether the plaintiff has suffered a single, individual injury, not what cause of action the plaintiff has asserted. Stewart Title Guar. Co. v. Sterling, 822 S.W.2d 1, 7 (Tex. 1991).

NOV argues that the defendants failed to show that NOV received the settlement funds that the defendants claimed credit for. (Docket Entry No. 135 at 11). NOV cites Krobar Drilling, LLC v. Ormiston, 426 S.W.3d 107 (Tex. App.—Houston [1st Dist.] 2012, pet. denied), which held that "it is the satisfaction of a judgment, not the obtaining of a judgment, that bars further suits." Id. at 112 (emphasis in original). In Krobar Drilling, Krobar sued Kenner for breach of contract and obtained a damage judgment. When Krobar could not collect the judgment from Kenner, Korbar sued Ormiston, a company to which Kenner had conveyed his assets. The Court of Appeals held that the one-satisfaction rule did not bar...