Opinion ID: 781162
Heading Depth: 2
Heading Rank: 1

Heading: Does Color Tile Committee Have Standing to Bring These Claims?

Text: 17 The District Court dismissed the claims against Coopers, even though it found that Color Tile Committee had standing to bring those claims. On appeal, Coopers argues that the District Court's decision can be affirmed on the alternative ground that the District Court misinterpreted Texas law and should have held that Color Tile Committee lacked standing to bring those claims. Indeed, [b]ecause standing is jurisdictional under Article III..., it is a threshold issue in all cases since putative plaintiffs lacking standing are not entitled to have their claims litigated in federal court. Shearson Lehman Hutton, Inc. v. Wagoner, 944 F.2d 114, 117 (2d Cir.1991). We therefore first address the issue of standing. 18 As assignee of the Color Tile bankruptcy estate, Color Tile Committee stands in the shoes of [Color Tile] and has standing to bring any suit that [Color Tile] could have instituted had it not petitioned for bankruptcy. Id. at 118 (citing 11 U.S.C. §§ 541, 542). Conversely, Color Tile Committee cannot sue for claims that could have been brought by Color Tile's creditors. Id. Furthermore, state law determines whether a right to sue belongs to [Color Tile] or to the individual creditors. In re Mediators, Inc., 105 F.3d 822, 825 (2d Cir.1997); see also In re Educators Group Health Trust, 25 F.3d 1281, 1284 (5th Cir.1994) ( Educators ). 19 The District Court concluded that Texas law should be applied to determine whether Color Tile Committee's claims against Coopers for breach of fiduciary duty and breach of contract belong to Color Tile or to its creditors, see Color Tile I, 80 F.Supp.2d at 135, and the parties do not contest that conclusion in this appeal. In Educators, the Fifth Circuit, interpreting Texas law, 4 held that the trustee of a bankrupt health insurance trust — rather than the bankrupt trust's creditors — had standing to pursue state court actions in which it was alleged that the defendants (third-party administrators of the trust) breached their contract with the trust and breached their fiduciary duties to the trust. 25 F.3d at 1285-86. One of the arguments rejected by the Fifth Circuit was that the causes of action listed in the complaint are not the property of the estate because the debtor's representatives participated in the acts or omissions giving rise to the causes of actions. Id. at 1286. Implicit in this argument, the court opined, was the notion that a debtor cannot raise a cause of action for which the defendant may have a valid defense on the merits. Id. In rejecting that notion, the Fifth Circuit found no support for the proposition that a defense on the merits of a claim brought by the debtor precludes the debtor from bringing the claim. Id. According to the court, [t]hat the defendant may have a valid defense on the merits of a claim brought by the debtor goes to the resolution of the claim, and not to the ability of the debtor to assert the claim. Id. 20 The parties agree that the unspecified valid defense referenced by the court in Educators is the in pari delicto defense. In a somewhat cryptic footnote, however, the Fifth Circuit stated that it could not conclude from the allegations in the complaint whether representatives of [the bankrupt trust] actually participated in the acts or omissions giving rise to the causes of action, and for that reason the court found misplaced the ... reliance on [the Second Circuit's decision in Wagoner ] because, in Wagoner, it was `uncontested' that the management of the debtor corporation cooperated with the third-party defendant in stripping the corporation of its assets. Id. n. 7 (quoting Wagoner, 944 F.2d at 120). 21 Here, the District Court relied on Educators in concluding that Color Tile Committee had standing to sue Coopers for breach of fiduciary duty and breach of contract. See Color Tile I, 80 F.Supp.2d at 137. The parties agree that Educators is the only case interpreting Texas law with respect to whether Color Tile Committee has standing to bring the claims it alleges against Coopers, but they disagree over whether Color Tile Committee has standing under this decision, given both Color Tile Committee's allegation that Color Tile's Board and controlling shareholders approved the Transaction and the contents of the footnote distinguishing our decision in Wagoner. Despite the footnote, the Fifth Circuit's decision plainly supports the District Court's conclusion that Color Tile Committee had standing to sue Coopers, regardless of the complicity of Color Tile in Coopers' alleged misconduct. The dicta in the footnote distinguishing Wagoner does not change this result, for it distinguishes a decision of this Court that did not purport to apply Texas law. 5 Accordingly, we find that, under Texas law, Color Tile Committee had standing to bring Color Tile's breach of fiduciary duty and breach of contract claims against Coopers. 22 II. Was the Affirmative Defense of In Pari Delicto Established As a Matter of Texas Law by the Facts Pled in the Second Amended Complaint? 23 A complaint should not be dismissed pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted `unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.' Cooper v. Parsky, 140 F.3d 433, 440 (2d Cir. 1998) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). A court's task in ruling on a Rule 12(b)(6) motion `is merely to assess the legal feasibility of the complaint, not to assay the weight of the evidence which might be offered in support thereof.' Id. (quoting Ryder Energy Distribution Corp. v. Merrill Lynch Commodities Inc., 748 F.2d 774, 779 (2d Cir.1984)). Furthermore, a court must accept as true all factual allegations in the complaint. Id. Finally, a complaint can be dismissed for failure to state a claim pursuant to a Rule 12(b)(6) motion raising an affirmative defense if the defense appears on the face of the complaint. Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 74 (2d Cir.1998) (citing 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure §§ 1277, 1357 (1990 & Supp. 1998)). We review de novo a dismissal for failure to state a claim. Cooper, 140 F.3d at 440. 24 The common-law defense of in pari delicto derives from the Latin in pari delicto potior est conditio defendantis; in other words, where the wrong of the one party equals that of the other, the defendant is in the stronger position, and a court will not administer a remedy. 34 Tex. Jur.3d Equity § 31 (2002). As one Texas court described the basis for this ancient rule: 25 [W]hile a court of equity will on swift wings fly to relieve the innocent from wrong and injury, it travels with leaded feet and turns a deaf ear, when called on to furnish a cloak of righteousness to cover sin, and, where both parties are equally guilty, neither can be said to come with clean hands, and the court will relieve neither, but leave the parties where they are found. 26 Grant v. Grant, 286 S.W. 647, 650 (Tex. Civ.App.1926). On appeal, Color Tile Committee argues that the District Court erred in dismissing both its breach of contract and breach of fiduciary duty claims at the pleading stage. 27 In dismissing the Second Amended Complaint on the ground that the affirmative defense of in pari delicto had been established as a matter of Texas law, the District Court did not make any distinctions between the applicability of that defense to Color Tile Committee's breach of contract claims and its breach of fiduciary duty claims. We analyze separately the applicability of this defense to each of these claims below.
28 On appeal, Color Tile Committee argues that in pari delicto generally has been rejected by courts as applying to breach of contract claims, absent an allegation that the breached contract was unlawful. See, e.g., In re Olympia Brewing Co. Sec. Litig., No. 77-C-1206, 1985 WL 3928, 1985 U.S. Dist. LEXIS 13,796 (N.D.Ill. Nov. 18, 1985). Moreover, Color Tile Committee argues that we should construe the absence of any reported Texas cases in which in pari delicto was raised as an affirmative defense to claims that a lawful contract was breached as evidence that Texas courts would not permit the defense to be raised in these circumstances. 29 Coopers urges that we affirm the dismissal of the breach of contract claims on two alternative grounds. First, Coopers argues that Color Tile Committee did not raise this argument in its opposition to Coopers' motion to dismiss the Second Amended Complaint and only raised it for the first time in a footnote to its legal memorandum in support of its Rule 54(b) motion. Consequently, Coopers argues that the argument has been waived and that we should not consider it. In the alternative, Coopers argues that Color Tile Committee's claims — regardless of how they are pled in the Second Amended Complaint — are really accounting malpractice claims, and thus should be subject to in pari delicto. Alternatively, Coopers argues that Texas does not permit accounting malpractice claims to be pled as breach of contract claims. 30 Generally, we will not consider an argument on appeal that was raised for the first time below in a motion for reconsideration. Nat'l Union Fire, Ins. Co. v. Stroh Cos., 265 F.3d 97, 115-16 (2d Cir. 2001). This waiver rule, is one of prudence, however, and not jurisdictional. Baker v. Dorfman, 239 F.3d 415, 420 (2d Cir.2000) (internal quotation marks omitted). We retain broad discretion to consider issues not timely raised below. Id. (internal quotation marks omitted). In determining whether to consider such issues, we are more likely to exercise our discretion when either (1) consideration of the issue is necessary to avoid manifest injustice or (2) the issue is purely legal and there is no need for additional factfinding. Id. (internal quotation marks omitted). While the latter exception might seem applicable here on its face, we decline to reach Color Tile Committee's contract claims arguments. 31 Our discretion to decide purely legal issues derives from the Supreme Court's pronouncement that where the proper resolution is beyond any doubt, an appellate court may legitimately exercise its discretion to hear an issue not addressed below. Singleton v. Wulff, 428 U.S. 106, 120-21, 96 S.Ct. 2868, 49 L.Ed.2d 826 (1976) (stating that this discretion is left primarily to the ... courts of appeals and is subject to no general rule); see also J.C. v. Reg. Sch. Dist. 10 Bd. of Educ., 278 F.3d 119, 125 (2d Cir.2002) (describing the exception under which an appellate court will reach a purely legal question as a subset of the court's discretion outlined in Singleton to resolve issues where the proper outcome is beyond any doubt). Most pure issues of law are issues where proper resolution is beyond any doubt. 32 Here, of course, the proper resolution of the legal issues concerning the applicability of the in pari delicto defense to the claims styled by Color Tile Committee as breach of contract claims is far from beyond any doubt. First, it is not beyond doubt whether the claims styled as breach of contract claims in the Second Amended Complaint are, indeed, breach of contract claims, as opposed to malpractice claims. For example, in Hirsch v. Arthur Andersen & Co., 72 F.3d 1085 (2d Cir.1995), we held that the breach of contract claims brought against an accounting firm relating to due diligence performed in connection with a corporate acquisition sounded only in malpractice and not in contract, notwithstanding how they were pled in the complaint. 6 The law in Texas is not so settled, however. Texas courts plainly disfavor breach of contract claims brought against accountants in connection with their performing traditional auditing services. See, e.g., FDIC v. Ernst & Young, 967 F.2d 166, 172 (5th Cir.1992); Univ. Nat'l Bank v. Ernst & Whinney, 773 S.W.2d 707, 710 (Tex.App.1989). There are no Texas cases on point, however, concerning whether this disfavored treatment extends to breach of contract claims (like those pled in the Second Amended Complaint) brought against accountants in connection with consulting services that fall outside their traditional tax and auditing services. Color Tile Committee directs our attention to dicta in Southwestern Bell Telephone Co. v. DeLanney, 809 S.W.2d 493, 494 n. 1 (Tex.1991), where the Texas Supreme Court labeled a suit filed against a yellow pages owner for failing to list the plaintiff's name as a breach of contract claim but opined that some contracts involve special relationships that may give rise to duties enforceable [in] tort[]. But, to the extent that this question turns on the language of the consulting contract between Color Tile and Coopers, we face the additional obstacle that the contract has not been furnished to us. 7 At bottom, the record lacks the information required to determine the precise nature of this contract, so deciding whether this contract in particular moves Coopers beyond the malpractice-only position articulated in Sledge and into the contract-based liability exception left open in DeLanney would require ill-advised guesswork on our part. 33 Second, were we to decide that these claims are really malpractice claims dressed up as breach of contract claims, it is not beyond doubt whether such claims are barred by the in pari delicto defense under Texas law. Color Tile Committee asserts that the defense is not available in negligence or malpractice cases, as the defense is not compatible with the Texas Proportionate Responsibility Act passed in 1978. See Tex. Civ. Prac. & Rem.Code Ann. §§ 33.001 et seq. (Vernon 2002). As discussed above, the District Court relied on the Fifth Circuit's decision in Educators, which held that in pari delicto is a valid Texas-law defense to claims for breach of duty of care owed, see 25 F.3d at 1286, brought by a bankruptcy estate. 8 While the Fifth Circuit never mentioned the doctrine of in pari delicto, the District Court in the case at bar observed that [t]he parties are in agreement that the affirmative defense to which the Fifth Circuit refer[red] ... [was] the equitable defense of in pari delicto.  Color Tile I, 80 F.Supp.2d at 137. 9 In any event, we have found no Texas cases sustaining an in pari delicto defense to malpractice claims — either before or after the enactment of the Texas Proportionate Responsibility Act. 34 Finally, were we to decide that these claims are breach of contract claims, it is not beyond doubt that the in pari delicto defense is available in contract claims where the contract is not alleged either to violate public policy or to be unlawful. This is yet another area of in pari delicto jurisprudence that remains uncharted in Texas. 35 Given all of these unanswered questions concerning issues of first impression under Texas law, the pure legal issue presented on appeal by Color Tile Committee in this diversity case — while perhaps worthy of certification if raised in another context — is by definition subject to contradictory interpretations and thus not beyond any doubt. Accordingly, we decline to reach out, exercise our discretion, and address the merits of a belated argument where there has been no showing made of manifest injustice.
36 Presuming the applicability of some form of the in pari delicto defense to Color Tile Committee's breach of fiduciary duty claims, the District Court observed that Color Tile, through its Board and controlling shareholders, bore at least substantially equal responsibility with Coopers for permitting [the Transaction] to go forward on the basis of inflated projections. Color Tile I, 80 F.Supp.2d at 138. This finding was in accord with the District Court's interpretation of Texas law that the in pari delicto defense applies in situations where the plaintiff bore at least substantially equal responsibility for his injury. Id. The allegations in the Second Amended Complaint relied upon by the District Court in establishing that Color Tile bore substantially equal responsibility with Coopers were that Color Tile's Board approved the [Transaction] knowing that it was based on grossly inflated and exaggerated projections of revenue growth, and that the Investcorp Group (acting as Color Tile's sole shareholder) forced the Transaction on Color Tile against warnings from Color Tile's Management. On appeal, Color Tile Committee argues that the District Court erred in finding, as a matter of law, that the in pari delicto defense applied to its breach of fiduciary duty claims, because the application of this defense is very fact intensive and thus adjudicating its merits on a Rule 12(b)(6) motion to dismiss was inappropriate. 37
38 As an initial matter, we are not as certain as the District Court and the parties that the interpretation of the in pari delicto doctrine applied here by the District Court is one that would be applied by the courts of Texas. There are no Texas cases opining on the applicability of the in pari delicto defense in a factual situation analogous to that alleged by Color Tile Committee. Rather, the cases decided in Texas arise where a party seeks to excuse its failure to perform on the ground that the transaction was unlawful. The Texas courts' response to this defense is that the party seeking to avoid performance may not be able to do so on this ground. See, e.g., Lewis v. Davis, 145 Tex. 468, 199 S.W.2d 146, 151 (Tex.1947); Graham v. Dean, 144 Tex. 61, 188 S.W.2d 372, 373 (1945); Am. Nat'l Ins. Co. v. Tabor, 111 Tex. 155, 230 S.W. 397, 399-400 (1921). The rule in Texas, even in the case of an unlawful transaction, is that courts must decide whether the policy against assisting a wrongdoer outweighs the policy against permitting unjust enrichment of one party at the expense of the other, and this balancing of the equities often depends upon the peculiar facts and the equities of the case, and the answer usually given is that which it is thought will better serve public policy. Lewis, 199 S.W.2d at 151. 39 Texas (and other) federal courts have applied a federal common-law in pari delicto defense that also uses this concept of not allowing wrongdoers to benefit at the expense of the public in adjudicating private rights of action arising under various federal regulatory statutes. For example, in Banc One Capital Partners Corp. v. Kneipper, 67 F.3d 1187, 1197 (5th Cir. 1995), a securities fraud action filed under federal and state securities laws, the court quoted language from the Supreme Court's decision in Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299, 310-11, 105 S.Ct. 2622, 86 L.Ed.2d 215 (1985), to the effect that parties are in pari delicto where the plaintiff bears at least substantially equal responsibility for the violations he seeks to redress. 10 As another court explained, after opining that tension apparently existed between the objectives of federal securities regulatory scheme and this common law equitable defense, the elements of the regulatory version of this defense in the Fifth Circuit are that (1) the fault of the parties must be clearly mutual, simultaneous, and relatively equal; (2) the plaintiff must be an active, essential, and knowing participant in the illegal activity; and (3) the effect on the investing public or on the regulatory scheme, caused by permitting the defense, must be so slight that it does not interfere with the objectives of the securities laws. Miller v. Interfirst Bank Dallas, N.A., 608 F.Supp. 169, 171 (N.D.Tex.1985). 40 In finding that in pari delicto was established in the Second Amended Complaint as a matter of Texas law, the District Court relied exclusively on this regulatory line of in pari delicto cases, see Color Tile I, 80 F.Supp.2d at 137-38, as did the parties in their briefs, even though the facts of the case at bar are not analogous to the facts in these cases. Our research has found no recent Texas case law on point. 11 Indeed, in Kalb, Voorhis & Co. v. American Financial Corp., 8 F.3d 130 (2d Cir.1993) — a case not cited by the District Court or the parties — we previously applied the regulatory interpretation of in pari delicto as the law of Texas in concluding that a creditor of a bankrupt corporation had standing to sue the corporation's former controlling shareholder on a theory that the corporation and defendant were alter egos and that the corporate veil between the two should be pierced. In reaching this conclusion, we rejected the argument that the bankrupt corporation was in pari delicto with its controlling shareholder because the former participated with the latter in its self dealing. Id. With respect to the in pari delicto defense, we held that, where the parties do not stand on equal terms and one party controls the other, the in pari delicto doctrine does not apply. Id. In so holding, we relied on our decision in Ross v. Bolton, 904 F.2d 819, 824 (2d Cir.1990), where we stated that: Where both parties are in delicto, but not in pari delicto, a trial court should make findings regarding the respective amount of blame assigned to each, granting relief to the one whose wrong is less. Kalb cited no Texas case law in support of its decision to apply the regulatory interpretation of in pari delicto found in federal common law to a set of facts not arising in the regulatory context. 41 Given the paucity of recent Texas authority applying the in pari delicto defense to facts such as those giving rise to this appeal, we decline to endorse the interpretation of that defense applied by the District Court and briefed by the parties. We will nevertheless review the District Court's analysis by applying that interpretation because the parties have not urged us to apply a different one and because we can find no Texas authority clearly repudiating or endorsing it. As they have done with their contract-related argument discussed above and for similar reasons, Color Tile Committee has thus waived its argument that the District Court's formulation of Texas' in pari delicto defense is incorrect. But cf. Thompson v. County of Franklin, 314 F.3d 79, 84 (2d Cir.2002) (Winter, J., concurring in the judgment) (declining to decide appeal based on clearly incorrect legal stipulation of federal law by the parties on the ground that doing so would be tantamount to issuing an advisory opinion). 42
43 Turning to the District Court's conclusion that the in pari delicto affirmative defense was established as a matter of Texas law by the facts pled in the Second Amended Complaint, we agree with the District Court that Color Tile, through its Board and controlling shareholders, bore at least substantially equal responsibility with Coopers for permitting [the Transaction] to go forward on the basis of inflated projections. Color Tile I, 80 F.Supp.2d at 138. In particular, the Color Tile Board unanimously approved the Transaction, notwithstanding the Management Directors' express warning that the purchase price was grossly excessive, the projections supporting the Transaction were unrealistic and exaggerated, and the Transaction would impose an imprudent and unmanageable debt structure on Color Tile. Moreover, the Second Amended Complaint alleges that Coopers either deliberately or negligently failed to advise the Board about what the Board already knew. Thus, since the Board allegedly had the same knowledge that Coopers allegedly should have disclosed, the pleadings established at least equal fault on the part of the Board. With respect to Color Tile's controlling shareholders — the Investcorp Group — the Second Amended Complaint is strewn with allegations establishing that the Investcorp Group was responsible for every detail of the Transaction from the decision to purchase the ABF assets, to dictating the terms and the price that Color Tile paid for the ABF assets, to dictat[ing] the terms of the high-interest bond offering, to finally dominat[ing] Color Tile's board of directors and forc[ing] Color Tile to consummate the Transaction. Consequently, Color Tile Committee's pleadings also established that Color Tile's controlling shareholders were at least equally at fault with Coopers. 44 On appeal, Color Tile Committee raises several challenges to the District Court's conclusion that in pari delicto was established as a matter of law in the Second Amended Complaint, none of which we find persuasive.
45 Color Tile Committee first argues that, under Texas law, in pari delicto can never be established on the pleadings because issues of relative fault are quintessential fact questions for the jury. Color Tile Committee cites no Texas cases on point in support of this position. 12 Indeed, this Court has affirmed the dismissal of breach of fiduciary duty claims on the pleadings upon findings that in pari delicto had been established in the complaints. See In re Mediators, 105 F.3d 822; Hirsch, 72 F.3d 1085. Consequently, there was nothing inherently wrong with the District Court's dismissal of the pleadings on in pari delicto grounds.
46 Color Tile Committee next argues that the District Court improperly attributed the misconduct of Color Tile's controlling shareholders, the Investcorp Group, to Color Tile because the Investcorp Group's interests were adverse to Color Tile's. See Askanase v. Fatjo, 130 F.3d 657, 666 (5th Cir.1997) (knowledge and actions of a corporation's agent will not be imputed to the corporation if the agent was acting adversely to the corporation and entirely for his own or another's purpose so that the agent's endeavors are so incompatible that they destroy the agency). 13 This argument also lacks merit. As the District Court correctly noted, where, as here, the persons dominating and controlling the corporation orchestrated the fraudulent conduct, their knowledge is imputed to the corporation as principal under the sole actor rule, which negates the adverse interest exception when the principal and agent are one and the same. Color Tile I, 80 F.Supp.2d at 138 (citing In re Mediators, 105 F.3d at 827; Ernst & Young, 967 F.2d at 171). This rule imputes the agent's knowledge to the principal notwithstanding the agent's self-dealing because the party that should have been informed was the agent itself albeit in its capacity as principal. Mediators, 105 F.3d at 827. 47 Relying on precedents applying the sole actor rule from this Circuit, Color Tile Committee argues that the sole actor rule does not apply here principally because there were relevant decision makers who were not engaged in the fraud and who would have stopped the Transaction if they had known of Coopers' Negative Conclusions. In particular, the Second Amended Complaint alleges that, if the Management Directors had known of the Negative Conclusions, they could and would have [prevented the Transaction from closing] by going outside the company and informing the company's underwriter and lenders, neither of which would have sold the notes or otherwise financed the Transaction in the face of Coopers' Negative Conclusions. 48 We initially note that the Second Circuit precedents cited by Color Tile Committee did not apply Texas law, so they are not dispositive here. Moreover, in Ernst & Young, the Fifth Circuit rejected a similar argument made by the assignee of a bankrupt corporation's trustee, which was suing the company's outside accountants for negligently auditing the company. The court found that, as a matter of law, the corporation could not have been misled by the auditor's failure to disclose certain negative financial information about the company because the company's sole shareholder committed the fraud that was the cause of the company's dire financial situation and his knowledge of the fraud was imputed to the corporation under the sole actor rule. 967 F.2d at 171. The assignee then argued that the accounting firm's negligence still could have caused losses to the company because, had the audits been accurate, someone, such as [the company's] creditors or government regulators, would have `rescued' the company. Id. The Fifth Circuit responded that this argument was flawed because the company could not claim that it should recover from [the accounting firm] for not being rescued by a third party for something [the company] was already aware of and chose to ignore. Id. Likewise, Color Tile Committee alleged that the Management Directors approved the Transaction knowing that the purchase price and the debt were excessive, and thus the possibility that Color Tile's creditors or underwriter would have rescued Color Tile if informed of the Negative Conclusions is legally irrelevant. Accordingly, the District Court properly concluded that the sole actor rule negated the applicability of the adverse interest exception.
49 Color Tile Committee next argues (for the first time on appeal) that the claims against the Investcorp Group Defendants are irrelevant to the claims against Coopers and thus the former's knowledge and conduct should not be considered when analyzing the legal sufficiency of the claims against Coopers under some form of alternative pleading analysis. In particular, Color Tile Committee relies on our decisions in Adler v. Pataki, 185 F.3d 35 (2d Cir.1999), Henry v. Daytop Village, Inc., 42 F.3d 89 (2d Cir.1994), and MacFarlane v. Grasso, 696 F.2d 217 (2d Cir.1982), for the proposition that allegations that are not explicitly pled as alternative claims should be construed as alternative claims. 50 Because this argument (like the arguments above concerning the applicability of in pari delicto to breach of contract claims) is being raised for the first time on appeal, we decline to consider it. See Baker v. Dorfman, 239 F.3d 415, 420-21 (2d Cir. 2000). Color Tile Committee had the opportunity to raise this argument before the July 31, 1998 dismissal of the First Amended Complaint and before the November 18, 1999 dismissal of the Second Amended Complaint, but chose not to do so. Indeed, in response to the dismissal of the First Amended Complaint, Color Tile Committee chose to pursue an opposite course of action: it pled additional facts to portray the Management Directors as quasi-independent actors who insulated Color Tile from the Investcorp Group Defendants' misfeasance; it persisted in building its case against Coopers with the case against the Investcorp Group Defendants as a foundation. Having elected not to undermine its case against the Investcorp Group Defendants by pleading in the alternative and then having failed to prove the latter's liability on the relevant claims, Color Tile Committee should not be permitted at this late date to proclaim that its unsuccessful allegations against the Investcorp Group Defendants were in the alternative to those against Coopers. Accordingly, we decline to reach this argument under the waiver doctrine articulated above. 14
51 Finally, Color Tile Committee argues that the District Court erred in declining to grant its Rule 54(b) Motion to reconsider its dismissal of Color Tile Committee's breach of fiduciary duty claims and permit it to amend its complaint for the third time in light of conclusions reached in the Color Tile II summary judgment decision. We find that this argument too lacks merit. 52 Rule 54(b) provides, in relevant part, that, prior to entry of a final judgment, an interlocutory order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties. Fed. R.Civ.P. 54(b). We have limited district courts' reconsideration of earlier decisions under Rule 54(b) by treating those decisions as law of the case, which gives a district court discretion to revisit earlier rulings in the same case, subject to the caveat that where litigants have once battled for the court's decision, they should neither be required, nor without good reason permitted, to battle for it again. Zdanok v. Glidden Co., 327 F.2d 944, 953 (2d Cir.1964). Thus, those decisions may not usually be changed unless there is an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent a manifest injustice. Virgin Atl. Airways, Ltd. v. Nat'l Mediation Bd., 956 F.2d 1245, 1255 (2d Cir.1992) (internal quotation marks omitted). We review for abuse of discretion a district court's denial of the Rule 54(b) motion and its denial of leave to amend a complaint. Local 802, Associated Musicians v. Parker Meridien Hotel, 145 F.3d 85, 89 (2d Cir.1998) (leave to amend); Virgin Atl. Airways, 956 F.2d at 1254-55 (Rule 54(b) motion). 53 The new evidence or intervening change of controlling law that Color Tile Committee referenced in support of its Rule 54(b) argument were findings in the Color Tile II decision that the Investcorp Group Defendants' interests were fully aligned with Color Tile's, they did not act adversely to Color Tile, and hence they did not breach any fiduciary duties to Color Tile, and that the Management Directors were not `forced' to approve the [Transaction] by [the Investcorp Group Defendants] and did not `defer' to their wishes, but ultimately voted for the [Transaction] because they were persuaded that it was in the best interests of Color Tile. Thus, Color Tile Committee argues, neither the Investcorp Group Defendants nor the Color Tile Board engaged in any intentional wrongdoing in connection with the Transaction, and the in pari delicto defense could not be imputed to Color Tile. For the reasons outlined below, the District Court did not abuse its discretion. 54 First, the allegations in the Second Amended Complaint are judicial admission[s] by which Color Tile Committee was bound throughout the course of the proceeding. Bellefonte Re Ins. Co. v. Argonaut Ins. Co., 757 F.2d 523, 528 (2d Cir.1985) (party cannot contradict its own pleading with affidavits); see also Soo Line R.R. Co. v. St. Louis Southwestern Ry. Co., 125 F.3d 481, 483 (7th Cir.1997) (plaintiff can plead himself out of court by alleging facts which show that he has no claim, even though he was not required to allege those facts and judicial efficiency demands that a party not be allowed to controvert what it has already unequivocally told a court by the most formal and considered means possible) (internal quotation marks omitted). 55 Second, there was no new evidence. Color Tile I was decided in November 1999. All of the deposition testimony cited in Color Tile II to support a lack of wrongdoing on the part of the Investcorp Group Defendants was taken months before Color Tile I was decided. Thus, Color Tile Committee had access to the evidence before the order they sought to revise was entered and even used some of it in drafting the Second Amended Complaint. Accordingly, the evidence was not new and it was available before the Second Amended Complaint was dismissed. 56 Third, there was no intervening law. The District Court never found as a matter of law in Color Tile II that the Investcorp Group Defendants were not in pari delicto with Coopers or that they were blameless. Rather, it applied the same substantive law that it had applied in previous rulings on the merits of the Second Amended Complaint and found that the Investcorp Group Defendants were entitled to the benefit of the business judgment rule because Color Tile Committee had failed to satisfy its summary judgment burden of presenting evidence to support its allegations that the Investcorp Group Defendants had breached their fiduciary duties to Color Tile. To be sure, there were facts proffered by the Investcorp Group Defendants tending to show that they were not so culpable, but those facts were not found by the District Court. 57 Fourth, there is no manifest injustice here. As noted above, the deposition testimony cited in Color Tile II to support a lack of wrongdoing on the part of the Investcorp Group Defendants was taken months before Color Tile I was decided. Thus, Color Tile Committee had the opportunity to bring its Rule 54(b) motion long before Color Tile II was decided. Doing so, however, would have undercut its arguments in opposition to the Investcorp Group Defendants' summary judgment motion. Color Tile Committee's decision not to file the Rule 54(b) motion until after summary judgment was entered against it in Color Tile II was a strategic one. Denying Color Tile Committee yet another bite at the apple because this strategy ultimately failed certainly cannot be characterized as manifestly unjust, especially given the subsequent $30 million settlement with the Investcorp Defendants. 58 Finally, the District Court did not abuse its discretion in denying Color Tile Committee leave to amend the complaint because there was a repeated failure to cure deficiencies by amendments previously allowed. Dluhos v. Floating & Abandoned Vessel, Known as New York, 162 F.3d 63, 69 (2d Cir.1998); see also Hirsch, 72 F.3d at 1096; Salinger v. Projectavision, Inc., 972 F.Supp. 222, 236 (S.D.N.Y. 1997) (Three bites at the apple is enough.).