Securities and Exchange Commission v. Nadel et al
Filing
976
ORDER ATTACHED denying 966 Motion to Clarify Settlement Orders and cancelling hearing scheduled Thursday, February 21, 2013, at 9:00 a.m. Signed by Judge Richard A. Lazzara on 2/20/2013. (SKH)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.
CASE NO: 8:09-cv-87-T-26TBM
ARTHUR NADEL; SCOOP CAPITAL, LLC;
and SCOOP MANAGEMENT, INC.,
Defendants,
SCOOP REAL ESTATE, L.P.;
VALHALLA INVESTMENT PARTNERS, L.P.;
VALHALLA MANAGEMENT, INC.;
VICTORY IRA FUND, LTD.; VICTORY FUND, LTD.;
VIKING IRA FUND, LLC; VIKING FUND, LLC;
and VIKING MANAGEMENT, LLC,
Relief Defendants.
/
ORDER
Pending before the Court for resolution is the Receiver’s Motion to Clarify
Settlement Orders which, as the Court noted in its order entered February 15, 2013, at
docket 968, was filed by the Receiver “in reaction to a hearing scheduled on February 22,
2013, in the arbitration proceeding involving World Opportunity Fund, L.P., in which that
entity has filed a Motion to Enforce Judgment Credit.” World Fund Opportunity, L.P.
(World Fund), has filed an objection to the motion, which was adopted by other
individuals and entities who are also currently in arbitration proceedings with the
Receiver.1 Although the Court has scheduled an expedited hearing on the motion, after
careful review of the parties’ submissions, together with the procedural history of this
case, the Court is of the opinion that the motion is due to be denied without the need for a
hearing.
The Receiver seeks an order from this Court clarifying the Court’s previous
Settlement Orders (the Orders) entered at dockets 742, 835, and 922 with regard to
settlements reached with Goldman Sachs Execution & Clearing, L.P., Shoreline Trading
Group, LLC, and Holland & Knight, LLC (the Settlement Defendants). The Receiver’s
proposed order granting the motion would, in the Court’s view, preclude World Fund, and
presumably all other individuals and entities currently involved in arbitration proceedings
with the Receiver, from seeking a judgment credit, reduction, or a set-off under the
Orders. World Fund offers substantial and meritorious arguments to the motion,
contending that (1) the issue of entitlement to a judgment credit is for the arbitration panel
to decide and that any ruling by this Court on that issue would be an advisory opinion
prohibited by Article III of the United States Constitution and (2) the time for seeking an
alteration or amendment to the Orders under Rule 59 of the Federal Rules of Civil
Procedure has expired and the requested alterations to the Orders violate World Fund’s
due process rights and would constitute a judicial taking.
1
United States District Judge Elizabeth A. Kovachevich previously ordered that the
Receiver’s “clawback claims” against World Fund and these other individuals and entities be
decided in arbitration. See case number 8:10-cv-203-T-17MAP, docket 49.
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As World Fund correctly argues, if this Court views the motion to clarify as one
seeking to alter the substantive language of the Orders, then the time for seeking such an
alteration has clearly expired under Rule 59, such an alteration would substantially affect
the rights of the Settling Defendants without their consent, and, finally, such an alteration
would irrevocably deprive World Fund of its right to a judgment credit or a claim for
relief against the Settlement Defendants. If, however, the Court views the motion to
clarify through the procedural prism of requesting the Court to make a legal determination
of the consequences of the Settlement Orders, then the effect of granting the motion
would interfere with the arbitration panel’s jurisdictional authority to decide the legal
consequences of the Settlement Orders, the order would be advisory in nature, and the
order would violate Judge Kovachevich’s stay order entered in connection with her order
compelling the Receiver and World Fund to arbitrate the Receiver’s “clawback claims.”
More fundamentally troubling, however, is the inescapable fact that the Court’s
entry of the proposed order of clarification in this action, in which World Fund and the
other individuals and entities have never been a party or privy, have never had their
interests adequately represented, and have never had the opportunity to address and
litigate the issue of their entitlement to a judgment credit prior to the entry of the Orders,
would have no preclusive effect on World Fund’s ability to seek a judgment credit in the
arbitration proceedings. See International Ship Repair & Marine Serv., Inc. v. Northern
Assurance Co. of America, 2013 WL 28380, at *1 (11th Cir. Jan. 3, 2013) (unpublished)
(holding that party which was not a party or privy in an action in which its interests were
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never adequately represented, and did not have an opportunity to litigate the issues
presented in that action, was not bound by the judgment rendered in that case) (citing and
quoting Parklane Hosiery Co. v. Shore, 439 U.S. 322, 327 n.7, 99 S.Ct. 645, 649 n.7
(1979); Wilson v. Attaway, 757 F.2d 1227, 1237 (11th Cir. 1985)). ACCORDINGLY,
for the reasons expressed, it is ORDERED AND ADJUDGED that the Motion to Clarify
Certain Settlement Orders (Dkt. 996) is denied. The hearing scheduled for Thursday,
February 21, 2013, at 9:00 a.m., is cancelled.
DONE AND ORDERED at Tampa, Florida, on February 20, 2013.
s/Richard A. Lazzara
RICHARD A. LAZZARA
UNITED STATES DISTRICT JUDGE
COPIES FURNISHED TO:
Counsel of Record
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