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U.S. Securities and Exchange Commission v. Big Apple Consulting USA, Inc.

United States District Court, M.D. Florida, Orlando Division

December 2, 2019

U.S. SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
BIG APPLE CONSULTING USA, INC., MJMM INVESTMENTS, LLC, MARC JABLON, MATTHEW MAGUIRE, MARK C. KALEY and KEITH JABLON, Defendants.

          ORDER

          JOHN ANTOON II UNITED STATES DISTRICT JUDGE

         Defendant Mark C. Kaley, appearing pro se, filed the instant Motion for Relief from Judgment in Favor of Securities and Exchange Commission (Mot. Relief, Doc. 259) on October 15, 2019, and Plaintiff U.S. Securities and Exchange Commission (SEC) filed a Response (Doc. 262). Kaley then filed a letter (Doc. 264) that both requested to reply and replied. The Court construes Kaley's letter as a motion for leave to reply and grants the request, accepting the remainder of the letter and his subsequent Reply (Doc. 266) as his Reply. Kaley also filed a Motion to Stay Pending State Court Action (Mot. Stay, Doc. 265). For the following reasons, the Court denies Kaley's Motion for Relief from Judgment and his Motion to Stay Pending State Court Action.

         I. Background

         Judgment in favor of the SEC was entered in 2013 after a jury trial. Kaley was ordered to pay a civil monetary penalty of $156, 500 plus post-judgment interest. (Doc. 259 at 1; Doc. 262 at 2). Kaley appealed but the judgment was affirmed. (Doc. 248). According to the SEC, it has collected $9, 161.71 through federal tax return offsets; Kaley has made no voluntary payments; and the total amount owed as of November 14, 2019, is $148, 846.28. (Doc. 262 at 2). Kaley now moves to be relieved from the judgment based on Fed.R.Civ.P. 60(b)(5) & (6). He also moves for the Court to stay a pending state court foreclosure action under 28 U.S.C. § 2283.

         II. Discussion

         A. Motion for Relief from Judgment

         Rule 60(b) provides six grounds for relief from judgment. Relevant to this Order, "[o]n motion and just terms, the court may relieve a party . . . from a final judgment" under Rule 60(b)(5) if "the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable" or under 60(b)(6) for "any other reason that justifies relief." Fed.R.Civ.P. 60(b)(5) & (6). "By its very nature, the rule seeks to strike a delicate balance between two countervailing impulses: the desire to preserve the finality of judgments and the incessant command of the court's conscience that justice be done in light of all the facts." Seven Elves, Inc. v. Eskenazi, 635 F.2d 396, 401 (5th Cir. 1981)[1] (internal quotation omitted).

         "Motions under Rule 60(b) are directed to the sound discretion of the district court." Id. at 402. In analyzing a Rule 60(b) motion, courts should keep in mind the importance of "preserving the principle of the finality of judgments" as they consider the following factors: (1) "[t]hat final judgments should not lightly be disturbed"; (2) that the rule is not a substitute for appeal; (3) "that the rule should be liberally construed in order to achieve substantial justice"; (4) the timeliness of the motion; (5) whether the case was decided on the merits; (6) if the judgment was after a trial on the merits, did the movant have "a fair opportunity to present his claim or defense; (7) whether there are intervening equities that would make it inequitable to grant relief; and (8) any other factors relevant to the justice of the judgment under attack." Id.

         1. Fed.R.Civ.P. 60(b)(5)-ludgment No Longer Equitable

         Kaley argues that he should be relieved from the Judgment under the last portion of Rule 60(b)(5) because it is no longer equitable to hold him accountable for the civil monetary penalty imposed against him. However, the judgment against Kaley cannot be relieved under Rule 60(b)(5) because it does not have a prospective effect. "Cook v. Birmingham News, 618 F.2d 1149, 1152 (5th Cir. 1980) held that Rule 60(b)(5) can be applied only to judgments that are prospective in effect." United States v. Evler, 778 F.Supp. 1553, 1557 (M.D. Fla. 1991). Gibbs v. Maxwell House, then "established that, within the Eleventh Circuit, the relief contemplated by a Rule 60(b)(5) motion is relief from orders with prospective application, and that judgments awarding current monetary damages for past wrongdoings are properly considered retroactive, not prospective in nature." Id. (citing Gibbs v. Maxwell House, 738 F.2d 1153 (11th Cir. 1984)); see Gibbs. 738 F.2d at 1156 ("That [defendant] remains bound by the dismissal is not a 'prospective effect' within the meaning of Rule 60(b)(5) any more than if [defendant] were continuing to feel the effects of a money judgment against him."). As one court has explained:

Virtually every court order causes at least some reverberations into the future, and has, in that literal sense, some prospective effect; even a money judgment has continuing consequences, most obviously until it is satisfied, and thereafter as well inasmuch as everyone is constrained by his or her net worth. That a court's action has continuing consequences, however, does not necessarily mean that it has 'prospective application' for the purposes of Rule 60(b)(5).

Twelve John Does v. Dist. of Columbia, 841 F.2d 1133, 1138 (D.C. Cir. 1987).

         Kaley's civil monetary penalty falls within the category of money judgments meant to remedy a past wrong, not the category of judgments having a prospective effect. Further, as explained in more detail below, there are no exceptional circumstances requiring relief; Kaley has not shown "that unforeseen conditions have produced such extreme and unexpected hardship that the decree is oppressive." Eyler, 778 F.Supp. at 1556 (quoting United States v. City of Fort Smith, 760 F.2d 231, 233 (8th Cir. 1985)).

         2. Fed. R. Civ. P. 60(b)(6)-Other Reasons ...


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