Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_10-cv-01029/USCOURTS-azd-2_10-cv-01029-3/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 28:0158 Notice of Appeal re Bankruptcy Matter (BAP)

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WO

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

In re Gorilla Companies LLC, et al., 

 Debtors. 

Robb M. Corwin; Jillian C. Corwin; and 13 

Holdings, LLC, 

Appellants, 

vs. 

Gorilla Companies LLC, 

Appellee. 

No. CV-10-01029-PHX-DGC

No. AP-09-00266-RJH 

No. BK-09-02898-RJH 

No. BK-09-02901-CGC 

No. BK-09-02903-GBN 

 No. BK-09-02905-CGC 

 ORDER

On March 22, 2010, the bankruptcy court entered final judgment in favor of 

Gorilla Companies LLC on the claims against it and on its own claims for breach of 

contract, breach of the covenant of good faith and fair dealing, negligent 

misrepresentation, fraud, and unjust enrichment. Doc. 1 at 17-21; Appellants’ Excerpt of 

Record Exhibit (“ER”) 112. Gorilla was awarded more than $4.7 million in damages 

(including prejudgment interest) and nearly $1.8 million in attorneys’ fees. Id. Robb 

and Jillian Corwin and 13 Holdings, LLC appealed to this Court. Doc. 1 at 12-16. In an 

order dated March 11, 2011, the Court affirmed in part and reversed in part. Doc. 75. 

Case 2:10-cv-01029-DGC Document 82 Filed 06/14/11 Page 1 of 4
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 Appellants have filed a motion for rehearing pursuant to Rule 8015 of the Federal 

Rules of Bankruptcy Procedure. Doc. 77. The motion is fully briefed. Docs. 78, 79. 

For reasons stated below, the motion will be granted in part and denied in part.1

I. Legal Standard.

 While Rule 8015 provides a mechanism for rehearing bankruptcy appeals, the rule 

does not set forth a standard of review. Courts in this Circuit and others have looked to 

Rule 40 of the Federal Rules of Appellate Procedure for guidance. See In re Fowler, 394 

F.3d 1208, 1214 (9th Cir. 2005); In re Hessco Indus., Inc., 295 B.R. 372, 375 (B.A.P. 9th 

Cir. 2003); In re Lee, 432 B.R. 212, 216 (D.S.C. 2010); Rothrock v. Turner, 435 B.R. 70, 

77 (D. Me. 2010) (collecting cases). That rule provides, in pertinent part, that the motion 

for rehearing “must state with particularity each point of law or fact that the [movant] 

believes the court has overlooked or misapprehended[.]” Fed. R. App. P. 40(a)(2). If the 

court “finds that it has not considered an important aspect of the case, then a rehearing is 

warranted.” McMullen v. Schultz, 443 B.R. 236, 241 (D. Mass. 2011). “A motion for 

rehearing ‘is not a means by which to reargue a party’s case or to assert new grounds for 

relief.’” Forrest Spicewood Dev., LLC, No. 1:10cv096, 2011 WL 915174, at *1 

(W.D.N.C. Mar. 3, 2011) (citation omitted); see In re Hessco, 295 B.R. at 375.

II. Discussion.

 Appellants seek a rehearing on two issues: the viability of Gorilla’s unjust 

enrichment claim and the propriety of the $57,986 EBITDA deduction for employee 

reclassification costs. Doc. 77 at 2. The Court will address each issue below. 

A. The Unjust Enrichment Claim. 

The bankruptcy court found that the $1.4 million prepayment should be repaid 

under alternative legal theories: fraud, breach of contract, and unjust enrichment. ER 2 

 

1

 The requests for oral argument are denied because the issues have been fully briefed and oral argument will not aid the Court’s decision. See Fed. R. Civ. P. 78; Fed. 

R. Bank. P. 8012; In re Branford Partners, LLC, 2010 WL 3521907, at *1 (C.D. Cal. 

Sept. 6, 2010). 

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at 541, 599; ER 112 at 3480-41. The Court reversed with respect to the fraud and breach 

of contract claims, but agreed with the bankruptcy court (ER 2 at 541) that where the 

contract itself does not explicitly require repayment of monies not due, the doctrine of 

unjust enrichment applies. Doc. 75 at 8. 

 Because the parties’ relationship was governed by contract, Appellants argue, the 

unjust enrichment claim necessarily fails. Doc. 77 at 4-7. Appellants made this same 

argument in their opening brief: “Because a contract exists, the unjust enrichment 

judgment should be vacated.” Doc. 52 at 15-16 n.4. The Court considered the argument, 

and continues in its view that the $1.4 million prepayment should be repaid under the 

doctrine of unjust enrichment. See U.S. Bank Nat’l Ass’n v. Casa Grande Regional Med. 

Ctr., No. CV 04-1707-PHXNVW, 2006 WL 1698288, at *6 (D. Ariz. June 16, 2006) 

(finding reimbursement of overpayment warranted on unjust enrichment claim where the 

parties’ contracts in no way prohibited reimbursement and the claim did not seek to 

subvert any express contractual provision). Appellants further argue that no evidence 

supports the “enrichment” element of the unjust enrichment claim (Doc. 77 at 7), but 

impermissibly make this argument for the first time in their motion for rehearing. See 

In re Hessco, 295 B.R. at 375. The motion for rehearing will be denied with respect to 

the unjust enrichment claim. 

B. The $57,986 EBITDA Deduction.

 The Court affirmed the bankruptcy court’s conclusion (ER 2 at 595) that no audit 

was required in order to make the $57,986 adjustment to EBITDA for the costs of 

reclassifying independent contractors to employees during the pre-closing period. Doc. 

75 at 11. In so holding, the Court found that “Appellants do not dispute that no audit was 

performed because, on advice of counsel, the Board decided only two days after the 

closing date to reclassify all independent contractors to employees.” Id. (citing Doc. 70 

at 22-23). Appellants argue, correctly, that this factual finding is supported by no 

evidence. Doc. 77 at 7-8. 

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 Appellants have waived this evidentiary challenge, Gorilla contends, by failing to 

raise it in their appellate briefs. Doc. 78 at 12. To the contrary, Appellants specifically 

argued in their reply brief that “there is no evidence to support” the assertion that “there 

was a decision made by the Board of Managers[.]” Doc. 74 at 17. 

 Gorilla asserts that the trial testimony of Gorilla CEO Brad Kramer establishes 

that “Gorilla converted all independent contractors to employees” (Doc. 78 at 12), but 

that testimony shows that the decision to reclassify was made not by the Board, but by 

Kramer himself. See ER 1 at 36-42, 55-56. Moreover, the reclassification occurred in 

July 2008 (id. at 41), more than a year after the closing period (see ER 10 at 982). As 

previously explained (Doc. 75 at 10), costs associated with the reclassification of 

independent contractors to employees may be deducted from EBITDA only for the period 

prior to closing. See ER 10 at 982. The Court will grant the motion for rehearing with 

respect to the $57,986 EBITDA deduction. 

IT IS ORDERED:

 1. Appellants’ motion for rehearing (Doc. 77) is granted in part and denied 

in part. The motion is granted with respect to the $57,986 adjustment to EBITDA for 

the costs of reclassifying independent contractors to employees and denied as to the 

unjust enrichment claim. 

 2. The Court’s March 11, 2011 order (Doc. 75) affirming in part and reversing 

in part the judgment entered by the bankruptcy court (Doc. 1 at 17-21; ER 112) is 

amended as follows: The bankruptcy court’s judgment is reversed with respect to the 

$57,986 adjustment to EBITDA for employee reclassification (see Doc. 75 at 13, ¶ 1). 

 Dated this 14th day of June, 2011. 

Case 2:10-cv-01029-DGC Document 82 Filed 06/14/11 Page 4 of 4