Securities and Exchange Commission v. Radius Capital Corp. et al

Filing 412

OPINION AND ORDER denying 405 Motion for Reconsideration. Signed by Judge John E. Steele on 8/11/2017. (RKR)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
SECURITIES
COMMISSION,

AND

EXCHANGE

Plaintiff,
v.

Case No: 2:11-cv-116-FtM-29MRM

RADIUS CAPITAL CORP.
ROBERT A. DIGIORGIO,

and

Defendants.
OPINION AND ORDER
This matter comes before the Court on defendant Robert A.
Digiorgio’s Motion for Reconsideration of Opinion and Judgment of
Dkt 386 Based on New Opinion of 11th Circuit (Doc. #405) filed on
October 12, 2016.
filed

an

The Securities and Exchange Commission (SEC)

Opposition

to

Digiorgio’s

Renewed

Motion

for

Reconsideration of Judgment (Doc. #406), and defendant filed a
Reply (Doc. #407) without leave of Court 1.
On February 6, 2014, a jury found in favor of the SEC and
against defendant on all claims.
the

Court

issued

an

Opinion

(Doc. #333.)

and

Order

On April 20, 2015,

(Doc.

#386)

enjoining

defendants 2, and finding defendants jointly and severally liable

1

See M.D. Fla. R. 3.01(c). Although leave of Court to reply
was not obtained prior to its filing, the Court will accept and
consider the Reply.
2

The Injunction (Doc. #387) was issued under separate cover
on the same day.

for disgorgement in excess of $1.4 million, plus pre-judgment
interest from November 1, 2006, and a civil penalty in excess of
$1.2 million.

Defendant appealed the final orders.

(Doc. #392.)

On June 27, 2016, defendant filed an Amended Counter Reply on
Appeal, and on June 29, 2016, the Eleventh Circuit affirmed all
appealed matters.

(Doc. #402.)

A Petition for Rehearing and

Suggestion for Rehearing En Banc filed on August 10, 2016 was
denied.

(See COA Dkt. #15-12004-GG.)

Defendant did not raise the

statute of limitations issue on appeal in the first instance, nor
did he seek to add the issue on appeal based on Graham 3 while still
on appeal.
On September 1, 2016, after the Eleventh Circuit affirmed but
before a mandate had issued, the Court denied defendant’s Motion
for Reconsideration of Opinion and Judgment of Dkt 386 Based on
New Opinion of 11th Circuit (Doc. #399) because defendant sought
reconsideration more than a year after the decision, and more
specifically because he did so before the Eleventh Circuit had
issued a mandate on appeal.

The Eleventh Circuit issued the

Mandate on October 7, 2016, and defendant renewed the request for
reconsideration.

3

(Doc. #404.)

SEC v. Graham, 823 F.3d 1357 (11th Cir. 2016).

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Jurisdiction
A non-final order may be revised at any time before the entry
of a final judgment.

Fed. R. Civ. P. 54(b).

“The courts have

delineated three major grounds justifying reconsideration: (1) an
intervening change in controlling law; (2) the availability of new
evidence; (3) the need to correct clear error or prevent manifest
injustice.”

Sussman v. Salem, Saxon & Nielsen, P.A., 153 F.R.D.

689, 694 (M.D. Fla. 1994) (citations omitted).

In this case, a

final decision had issued and there was no “intervening change” in
the law because Graham was issued more than one year after the
final Opinion and Order determining disgorgement.

As a result,

defendant cannot seek reconsideration on this basis.
“[T]he findings of fact and conclusions of law by an appellate
court are generally binding in all subsequent proceedings in the
same case in the trial court or on a later appeal.”

SEC v. Lauer,

610 F. App'x 813, 817 (11th Cir. 2015) (citation omitted) (emphasis
added).
of

on

Although a district court may address issues not disposed
appeal,

Transamerica

Leasing,

Inc.

v.

Inst.

of

London

Underwriters, 430 F.3d 1326, 1331 (11th Cir. 2005), it is also
“clear that Rule 60(b) may not be used to challenge mistakes of
law which could have been raised on direct appeal,” Am. Bankers
Ins. Co. of Florida v. Nw. Nat. Ins. Co., 198 F.3d 1332, 1338 (11th
Cir. 1999) (citation omitted).

In this case, Graham was decided

while defendant was still before the Eleventh Circuit.

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Therefore,

the issue is precluded by defendant’s failure to raise the issue
on appeal.
Rule 60(b) Relief - Generally
For relief from a final judgment or order, the Court may
relieve a party for the reasons listed in Fed. R. Civ. P. 60(b) if
made within a reasonable time, and no more than a year after the
entry of judgment for the first three reasons, including mistake
or excusable neglect, newly discovered evidence, and fraud.

As

the motion was not filed within a year of the judgment, and this
deadline is jurisdictional 4, defendant’s arguments based on the
first three reasons under Rule 60(b) are rejected.
Defendant argues that the motion is otherwise filed within a
reasonable time of the mandate, and shortly after Graham was
decided, and therefore timely filed.

The other listed bases under

Rule 60(b) are not restricted by the one year limit.

Defendant

argues that the judgment is void under Rule 60(b)(4), and under
the catchall “any other reason that justifies relief” of Rule
60(b)(6), the disgorgement amount is inconsistent with Graham.
Rule 60(b)(4) - Void Judgment
“[A]

void

judgment

is

one

so

affected

by

a

fundamental

infirmity that the infirmity may be raised even after the judgment
becomes final.”

United Student Aid Funds, Inc. v. Espinosa, 559

4

Tundell v. Merck & Co., No. 3:06CV375/MCR/MD, 2008 WL
2385508, at *1 n.4 (N.D. Fla. June 9, 2008).

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U.S. 260, 270 (2010).

A judgment is not “void” simply because it

was erroneous, and should be applied “in the rare instance where
a judgment is premised either on a certain type of jurisdictional
error or on a violation of due process that deprives a party of
notice or the opportunity to be heard.”

Espinosa, 559 U.S. at

271.
Defendant

argues

that

it

is

a

jurisdictional

challenge

because the Court did not have jurisdiction for actions prior to
March 7, 2006, as time barred.

(Doc. #407, p. 3.)

reliance on BellSouth 5 is misplaced.

Defendant’s

In that case, a statute was

amended after the entry of judgment, but before the decision of
the Eleventh Circuit thus requiring the appellate court to review
the judgment below based on the new version of the law.

Graham

was decided while still on appeal, but defendant in this case did
not present the argument to the Eleventh Circuit while he was still
on appeal.

Rather, defendant sought reconsideration before the

undersigned.
The Court finds that defendant is unable to demonstrate that
the judgment is void because, as defendant recognizes, “it was
settled” at the time that the statute of limitations did not apply,
and jurisdiction 6 was therefore present.

“A judicial construction

5

BellSouth Telecomms., Inc. v. Town of Palm Beach, 252 F.3d
1169, 1178 (11th Cir. 2001).
6

There is some question as to whether a time bar would even
be jurisdictional, or only an affirmative defense that can be

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of a statute is an authoritative statement of what the statute
meant before as well as after the decision of the case giving rise
to that construction.”
298, 312–13 (1994).

Rivers v. Roadway Exp., Inc., 511 U.S.

The Court’s decision was not overruled, it

would simply be incorrect under the current interpretation of the
statute.

The motion will be denied on this basis.

Rule 60(b)(6) - Any Other Reason for Relief
By the use of “other reason”, Rule 60(b)(6) necessarily
precludes from consideration any of the grounds articulated in (1)
through (5) of Rule 60.
(11th Cir. 2013).

Lillo v. Bruhn, 522 F. App'x 508, 509

The purpose of Rule 60(b) is “to do substantial

justice”, but vacating a judgment should not be undertaken lightly,
and is in the “sound discretion of the district court.”

Griffin

v. Swim-Tech Corp., 722 F.2d 677, 680 (11th Cir. 1984).

Rule

60(b)(6), in particular, is considered an “extraordinary remedy”
requiring a showing of “exceptional circumstances”, and extreme
hardship.
On

Id.

April

20,

2015,

this

Court

rejected

as

inapplicable

defendant’s argument that the sale of MBS prior to March 2006 was
barred by the five-year statute of limitations under 28 U.S.C. §
2462, and concluded that the SEC was entitled to disgorgement in

waived. Sec. & Exch. Comm'n v. Graham, 823 F.3d 1357, 1360 n.1
(11th Cir. 2016) (citing John R. Sand & Gravel Co. v. United
States, 552 U.S. 130, 133 (2008)).

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the amount of $1,427,095.00.

(Doc. #386, pp. 15-16.)

Defendant

argues that $399,175.40 7 of the total disgorgement occurred prior
to March 7, 2006, and is now time-barred under § 2462, and Graham’s
extension of the statute of limitations to disgorgement.

Under

Title 28, United States Code, Section 2462,
Except as otherwise provided by Act of
Congress, an action, suit or proceeding for
the enforcement of any civil fine, penalty, or
forfeiture, pecuniary or otherwise, shall not
be entertained unless commenced within five
years from the date when the claim first
accrued if, within the same period, the
offender or the property is found within the
United States in order that proper service may
be made thereon.
28 U.S.C. § 2462.

“Any statute of limitations sought to be applied

against the United States must receive a strict construction in
favor of the Government.”

Sec. & Exch. Comm'n v. Graham, 823 F.3d

1357, 1360 (11th Cir. 2016) (citation omitted).

In Graham, the

Eleventh Circuit found that § 2462 did not apply to the SEC’s claim
for injunctive relief, which was nonpunitive in nature, but did
apply to the declaratory relief sought by the SEC because it was
backwards looking and punitive in nature.
As

to

disgorgement,

the

Eleventh

Graham at 1361, 1363.

Circuit

found

that

it

was

synonymous with forfeiture, or rather that “forfeiture includes

7

This amount is based on defendant’s calculations and not
the amounts determined at trial or the admitted exhibits, and
therefore the amount at issue is further disputed.

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disgorgement”, and therefore § 2462’s statute of limitations did
Id. at 1364. 8

apply.

On June 5, 2017, the Supreme Court agreed with the position
of the Eleventh Circuit in holding that any claim for disgorgement
is a penalty, and thus under § 2462, the action must be commenced
within five years of the date the claim accrued.
137 S. Ct. 1635, 1639 (2017).

Kokesh v. SEC,

On June 6, 2017, the Court directed

the SEC to file a supplemental memorandum addressing the impact of
Kokesh on this case, and directed that defendant could file a
response.

(Doc. #408.)

The SEC filed a Supplemental Memorandum

(Doc. #409), defendant filed a Reply (Doc. #410), and the SEC filed
a Notice of Additional Authority (Doc. #411) relaying a postKokesh decision denying reconsideration, SEC v. Amerindo Inv.
Advisors

Inc.,

No.

05-CV-5231

(RJS),

2017

WL

3017504,

at

*9

(S.D.N.Y. July 14, 2017).
A change in the decisional law is not an “extraordinary
circumstance” sufficient to invoke Rule 60(b)(6).

Arthur v.

Thomas, 739 F.3d 611, 631 (11th Cir. 2014) (citing Gonzalez v.
Crosby, 545 U.S. 524, 536-37 (2005)).

Eleventh Circuit precedent

is clear that a later ruling that is contrary to a ruling that was
correct when it was decided does not constitute an extraordinary

8

This view differed from the view taken by the District of
Columbia Circuit, First Circuit, and Tenth Circuits. See, e.g.,
Sec. & Exch. Comm'n v. Kokesh, 834 F.3d 1158, 1165 (10th Cir.
2016).

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circumstance justifying relief.

Pursuant to Gonzalez and Arthur,

reconsideration must be denied.
Accordingly, it is hereby
ORDERED:
Defendant Robert A. Digiorgio's Motion for Reconsideration of
Opinion and Judgment of Dkt 386 Based on New Opinion of 11th
Circuit (Doc. #405) is DENIED.
DONE and ORDERED at Fort Myers, Florida, this
of August, 2017.

Copies:
Counsel of Record
Defendant

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11th

day