WDH LLC v. Sobczak-Slomczewski

Filing 16

MEMORANDUM OPINION AND ORDER Signed by the Honorable Robert M. Dow, Jr. on 12/5/2017. The Bankruptcy Court's Order is AFFIRMED. Civil case terminated. I.Mailed notice(cdh, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
)
)
)
Debtor.
____________________________________ )
)
WDH LLC,
)
)
Plaintiff-Appellant,
)
)
v.
)
)
ROBERT SOBCZAK- SLOMCZEWSKI,
)
)
)
Defendant-Appellee.
ROBERT SOBCZAK-SLOMCZEWSKI,

Case No. 17-CV-1565
Judge Robert M. Dow, Jr.

On appeal from the U.S. Bankruptcy Court
for the Northern District of Illinois,
Eastern Division
Bankr. Case No. 13-A-972
Judge Donald Cassling

MEMORANDUM OPINION AND ORDER
This case is on appeal from the United States Bankruptcy Court for the Northern District
of Illinois, Eastern Division, Case No. 13-A-972. Plaintiff-Appellant WDH LLC (“Appellant”)
appeals from the Bankruptcy Court’s April 28, 2017 order denying Appellant’s motion for relief
and correction of judgment (the “Order”). See App. 228.1 For the reasons set forth below, the
Bankruptcy Court’s Order is AFFIRMED.
I.

Background
Debtor/Defendant-Appellee Robert Sobczak-Slomczewski (“Debtor”) was a principal of

Dells Hospitality, Inc. d/b/a Hilton Garden Inn Wisconsin Dells (“Dells”). Dells borrowed $12.6
million (the “Loan”) from Bear Stearns Commercial Mortgage, Inc. (“Bear Stearns”) to fund the
acquisition of the Hilton Garden Inn Hotel in Lake Delton, Wisconsin (the “Hotel”). Debtor, in
his individual capacity, agreed to indemnify Bear Stearns against certain losses that it might

1

Citations to documents filed in the docket in this case, No. 17-CV-1565, are to the docket entry number,
in brackets, followed by any applicable page references, such as “[7] at 5,” except that citations to the
appendix to Appellant’s brief are to the appendix’s pagination, such as “App. 228.”

suffer in connection with the Loan. The Loan was subsequently acquired by Maiden Lane
Commercial Mortgage-Backed Securities Trust 2008-1 (the “Trust”).
Debtor defaulted on the Loan. The Trust therefore began foreclosure proceedings in
Wisconsin state court. The Hotel eventually was sold at auction to Appellant, which is a limited
liability company owned by the Trust. Appellant subsequently assigned to Maiden Lane, LLC
(“Maiden Lane”) all of its right, title, and interest in all payments, guarantees, claims, demands,
causes of action, remedies, and judgments to which it is entitled against Debtor.
While he was in default under the Loan and the foreclosure proceedings were pending,
Debtor transferred more than $677,000 of Hotel revenues that had been pledged as cash
collateral to secure repayment of the Loan. Upon discovering these transfers, Appellant sued
debtor in Wisconsin state court for indemnification, conversion and embezzlement (the
“Wisconsin Case”). Debtor removed the action to the United States District Court for the
Western District of Wisconsin (“Wisconsin District Court”). On March 20, 2013, the Wisconsin
District Court granted summary judgment for Appellant (the “Wisconsin Order”), concluding
that Debtor committed conversion and embezzlement and awarding Appellant $667,000 in actual
damages. The Wisconsin District Court also ordered Appellant to submit proof of exemplary
damages and any documentation needed for the court to consider an award of additional
damages.
On April 22, 2013, Debtor filed a petition for Chapter 7 bankruptcy (No. 13 B 16661) in
the Bankruptcy Court for the Northern District of Illinois (the “Bankruptcy Court”). Without
ruling on exemplary damages, the Wisconsin District Court dismissed the Wisconsin Case
“without prejudice subject to its reopening upon the completion of bankruptcy proceedings
where all issues have not been rendered fully dispositive.” App. 20.

2

On July 18, 2013, Appellant filed an adversary proceeding (No. 13-A-972) in the
Bankruptcy Court. See App. 40. The adversary complaint asked the Bankruptcy Court to
determine the dischargeability of the Wisconsin Order under 11 U.S.C. § 523(a)(4) and (6). The
complaint alleged that Appellant had “obtained summary judgment against the Debtor” in the
Wisconsin District Court “on March 20, 2013 in the amount of at least $677,000.00, plus
interest, costs, disbursements, reasonable attorneys’ fees, and treble damages.” App. 41.2 In its
prayer for relief, Appellant asked the Bankruptcy Court to “[d]etermine and adjudge that
Debtor’s indebtedness to [Appellant] is excepted from the Debtor’s general discharge pursuant to
11 U.S.C. § 523(a)(4) and/or (a)(6).” App. 49.
Appellant moved for summary judgment in the adversary proceeding.

In its

memorandum in support of summary judgment, Appellant explained that it was “a creditor of
[Debtor] by virtue of . . . obtaining summary judgment against . . . Debtor” in the Wisconsin
Case “on March 20, 2012 in the amount of at least $677,000.00.” App. 131-132. Appellant
requested that the Bankruptcy Court “enter an order determining that [Appellant]’s Wisconsin
District Court Judgment is not subject to the Debtor’s General Discharge.”
Appellant’s brief did not discuss treble damages or attorneys’ fees.

App. 149.

The proposed order

submitted with the motion for summary judgment requested a declaration that “[t]he debt owed
by Robert Sobczak-Slomczewski to [Appellant] in the amount of $677,000.00, together with all
related fees and costs, is allowed [in] full and held to be non-dischargeable pursuant to 11 U.S.C.
§§ 523(a)(4) and 523(a)(6).” [10] at 8.

2

This allegation was not entirely accurate. While the Wisconsin District Court determined that Debtor
was liable for “at least $677,000,” it held only that “[a]dditional damages may also be available . . . for
attorney’s fees and treble damages.” App. 14 (emphasis added). The court explained that Appellant did
“not enumerate those” damages and ordered further briefing. Id.

3

On August 5, 2014, the Bankruptcy Court granted Appellant’s motion for summary
judgment, concluding that “the $667,000 debt owed by the Debtor to [Appellant] is nondischargeable under § 253(a)(4) and (a)(6).” App. 203. Debtor appealed the Bankruptcy Court’s
judgment to the District Court, which dismissed the appeal as untimely. The Seventh Circuit
affirmed, and the Supreme Court denied Debtor’s petition for writ of certiorari.
On September 4, 2016, Appellant filed a motion in the Wisconsin District Court to
reopen its lawsuit against Debtor to seek additional damages under the Wisconsin Order. The
Wisconsin District Court reopened the case. It awarded Appellant treble damages and postjudgment interest, but denied Appellant’s request for attorneys’ fees, for a total award of
$2,033,370.43 (the “Additional Damages Order”). See App. 26. The Wisconsin District Court
declined to address whether the additional damages were non-dischargeable in bankruptcy,
instead noting that “[t]he bankruptcy court found only that this court’s award [of] $667,000 in
actual damages was dischargeable, . . . without addressing (and apparently without being asked
to address) the potential of an award of treble damages or attorneys’ fees.” App. 29.
On November 29, 2016, Appellant filed a motion to reopen the Bankruptcy Court
adversary proceeding for the purpose of modifying the court’s previous order (the “Motion to
Reopen”) and a motion for relief and correction of judgment pursuant to Federal Rules of Civil
Procedure 60(a) and 60(b)(6) (the “Rule 60 Motion”). Appellant argued that the judgment
should be corrected to reflect that the additional damages awarded by the Wisconsin District
Court were non-dischargeable.
On February 15, 2017, the Bankruptcy Court granted the Motion to Reopen (which was
unopposed), but denied the Rule 60 Motion. The Bankruptcy Court determined that Appellant
was not entitled to relief under Rule 60(a)—which authorizes a court to “correct a clerical

4

mistake or a mistake arising from oversight or omission,” Fed. R. Civ. P. 60(a)—because “the
Final Order, finding only $667,000.00 non-dischargeable, was an accurate reflection of the
Court’s intention at the time.” App. 233. The Court rejected Appellant’s argument that, by
requesting a “non-dischargeability award of ‘at least’ $667,000.00, it thereby reserved its right to
seek an amount greater than $677,000.00 at some unspecified date,” explaining that Appellant’s
summary judgment motion “never specifically requested or provided evidence for any specific
sum over that amount that should be awarded.” App. 232-233.
The Bankruptcy Court also rejected Appellant’s argument that it was entitled to relief
under Rule 60(b)(6)—Rule 60’s “catchall” provision for “any other reason that justified relief”
but that is not specifically provided for in the rule. Fed. R. Civ. P. 60(b)(6). The Bankruptcy
Court determined that Appellant did not file his motion within a reasonable time, because
Appellant “was aware of its right to pursue potential additional damages, at the very least, on
March 20, 2013,” when the Wisconsin District Court issued an order in which it “acknowledged
that causes of action of the type found in that case generally make treble damages mandatory.”
App. 234-236. According to the Bankruptcy Court, “[o]nce aware of its entitlement to seek that
relief, [Appellant] could have explicitly requested that this Court include in its Final Order a
provision declaring non-dischargeable any additional damages made by the Wisconsin District
Court in the Wisconsin Order.”

App. 236. “Having failed to do that in the adversary

proceeding,” the Bankruptcy Court further explained, Appellant “could have preserved its rights
by filing a motion for rehearing or clarification within fourteen days of this Court’s entry of the
Final Order,” or “could have filed a motion under Rule 60(b)(1) for ‘mistake, inadvertence,
surprise, or excusable neglect’ after the issuance of the Final Order within one year of its entry.’”
App. 236-237 (quoting Fed. R. Civ. P. 60(b)(1)).

5

The Bankruptcy Court concluded that, even if Appellant’s motion under Rule 60(b)(6)
had been timely, the facts that it alleged did not “rise to the level of extraordinary
circumstances.’” App. 237. The Bankruptcy Court acknowledged that its denial of the motion
“may result in what one could describe as a dischargeability ‘windfall’ for the Debtor,” while
noting in a footnote that “[w]indfall is perhaps too strong a word to use in these circumstances”
given that Appellant “still has the right to pursue the Debtor for up to $677,000.00.” App. 237.
Nonetheless, the Bankruptcy Court explained, “that ‘windfall’ is the result of [Appellant’s] own
litigation decisions, and an ‘extraordinary circumstance’ for purposes of Rule 60(b)(6) cannot
stem from the actions of the movants themselves.” App. 237-238 (citing Ackermann v. United
States, 340 U.S. 193, 196 (1950)).
Appellant filed a notice of appeal from the Bankruptcy Court’s Order on February 28,
2017. Appellant raises the following issues on appeal:
1. Whether the Bankruptcy Court erred in denying relief pursuant to Fed. R. Civ. P.
60(a).
2. Whether the Bankruptcy Court erred by holding that WDH did not seek relief pursuant
to Fed. R. Civ. P. 60(b)(6) within a reasonable period of time.
3. Whether the Bankruptcy Court erred in denying relief pursuant to Fed. R. Civ. P.
60(b)(6) by holding that WDH failed to demonstrate that the situation presented rose to the level
of “extraordinary circumstance.”
II.

Legal Standard
Appellant moved for relief and to correct the Bankruptcy Court’s judgment in Adversary

Case No. 13-A-00972 pursuant to Rules 60(a) and 60(b)(6) of the Federal Rules of Civil
Procedure. Rule 60 is made applicable in bankruptcy proceedings pursuant to Federal Rule of
Bankruptcy Procedure 9024.
Rule 60(a) authorizes the court to “correct a clerical mistake or a mistake arising from
oversight or omission whenever one is found in a judgment, order, or other part of the record.”
6

Fed. R. Civ. P. 60(a). Rule 60(a) applies only where the alleged “‘flaw lies in the translation of
the original meaning to the judgment.’” Shuffle Tech Intern., LLC v. Wolff Gaming, Inc., 757
F.3d 708, 710 (7th Cir. 2014) (quoting United States v. Griffin, 782 F.2d 1393, 1396 (7th Cir.
1986)). “‘[I]f the judgment captures the original meaning but is infected by error, then the
parties must seek another source of authority to correct the mistake.’” Id. (quoting Griffin, 782
F.2d at 1396-97). Rule 60(a) does not contain a time limitation.
Relief from judgment under Rule 60(b) is “an extraordinary remedy and is granted only
in exceptional circumstances.” Bakery Machinery & Fabrication, Inc. v. Traditional Baking,
Inc., 570 F.3d 845, 848 (7th Cir. 2009). It “cannot be used . . . to make arguments that could
have been made earlier.” Scholz Design, Inc. v. Jaffe, 242 F.R.D. 449, 451 (N.D. Ill. 2007).
Rule 60(b) authorizes a court to “relieve a party . . . from a final judgment, order, or proceeding”
for five specific reasons—set out in subsections 60(b)(1) through 60(b)(5)—and for “any other
reason that justifies relief”—as allowed by subsection 60(b)(6). Fed. R. Civ. P. 60(b).
Subsections 60(b)(1) and 60(b)(6) are relevant here. A court may grant relief from
judgment under subsection 60(b)(1) due to “mistake, inadvertence, surprise, or excusable
neglect.” Fed. R. Civ. P. 60(b)(1). This subsection “encompasses mistakes by judicial officers as
well as litigants.” Alexan v. Burke, 62 F. Supp. 3d 784, 788 (N.D. Ill. 2014) (citing Brandon v.
Chi. Bd. of Educ., 143 F.3d 293, 295 (7th Cir. 1998)).
Subsection 60(b)(6) is a “catch-all” provision, Banks v. Chicago Bd. of Educ., 750 F.3d
663, 668 (7th Cir. 2014), which is “fundamentally equitable in nature.” Ramirez v. United
States, 799 F.3d 845, 851 (7th Cir. 2015). “It thus requires the court to examine all of the
circumstances, bearing in mind the need for the party invoking the rule to demonstrate why
extraordinary circumstances justify relief,” including but limited to “the diligence of the

7

petitioner” and “whether alternative remedies were available but bypassed.” Id. “‘Inherent in
the structure of Rule 60(b) is the principle that the first three clauses and the catchall clause [in
Rule 60(b)(6)] are mutually exclusive. Thus, if the asserted grounds for relief fall within the
terms of the first three clauses of Rule 60(b), relief under the catchall provision is not available.’”
York v. United States, 55 F. Supp. 3d 1028, 1030–31 (N.D. Ill. 2014) (quoting Wesco Prods. Co.
v. Alloy Auto. Co., 880 F.2d 981, 983 (7th Cir. 1989)) (alterations in York).
“A motion under Rule 60(b) must be made within a reasonable time—and for reasons (1),
(2), and (3) no more than a year after the entry of the judgment or order or the date of the
proceeding.” Fed. R. Civ. P. 60(c)(1). “The time limitation in Rule 60(c) is jurisdictional and
cannot be extended.” Censke v. United States, 314 F.R.D. 609, 611 (N.D. Ill. 2016) (citing
Arrieta v. Battaglia, 461 F.3d 861, 864 (7th Cir. 2006)). “Thus, if the ground asserted for relief
from a prior judgment falls within one of the enumerated grounds for relief that are subject to the
one-year time limit of Rule 60(c)(1), relief under Rule 60(b)(6) is not available.” Id.
This Court reviews the Bankruptcy Court’s denial of motions under Rule 60(a) and Rule
60(b) for an abuse of discretion. See Bershad v. McDonough, 469 F.2d 1333, 1336 (7th Cir.
1972) (Rule 60(a)); Philos Techs., Inc. v. Philos & D, Inc., 645 F.3d 851, 854 (7th Cir. 2011)
(Rule 60(b)(6)). The Bankruptcy Court has particularly “great latitude in making a Rule 60(b)
decision because that decision ‘is discretion piled on discretion.’” Bakery Machinery, 570 F.3d
at 848 (quoting Swaim v. Moltan Co., 73 F.3d 711, 722 (7th Cir. 1996)). Under this rule, an
abuse of discretion “is established only when no reasonable person could agree with the district
court; there is no abuse of discretion if a reasonable person could disagree as to the propriety of
the court’s action.’” Id. (quoting Williams v. Hatcher, 890 F.2d 993, 995 (7th Cir. 1989)).

8

III.

Analysis
A.

Whether the Bankruptcy Court erred in denying relief pursuant to Fed. R.
Civ. P. 60(a).

Appellant argues that it is entitled to relief from judgment under Rule 60(a) because “the
Bankruptcy Court Order mistakenly omitted a finding that the District Court Order in its entirety
was not subject to the Debtor’s general discharge.” [7] at 8. This argument necessarily fails
because the Bankruptcy Court’s Order makes clear that its “Final Order, finding only
$667,000.00 non-dischargeable, was an accurate reflection of the Court’s intention at the time.”
App. 233. In short, there was no mistake.
Appellant also argues that the Bankruptcy Court abused its discretion in denying relief
under Rule 60(a) because its ruling was based on the erroneous finding that “Appellant never
asked the Bankruptcy Court to include additional damages in its order.” [7] at 8. However, the
Bankruptcy Court did not say that “Appellant never asked” for any additional damages to be
covered by its order; instead, it rejected Appellant’s argument that, by requesting a “nondischargeability award of ‘at least’ $667,000.00, it thereby reserved its right to seek an amount
greater than $677,000.00 at some unspecified date.” App. 232-233. Id. The Bankruptcy Court
explained that in its summary judgment briefing, Appellant “never specifically requested or
provided evidence for any specific sum over that amount that should be awarded.” App. 232233. That is entirely accurate. Appellant did not include any discussion of the possibility of a
treble damages award in its summary judgment briefs, and its proposed order did not address
treble damages or interest. It would have been simple enough for Appellant to brief the issue and
include language in the proposed order finding nondischargeable any additional damages that the
Wisconsin District Court might subsequently award, thereby alerting the Bankruptcy Court to the
issue.
9

Appellant argues further that, “[k]nowing that the Wisconsin District Court had clearly
left open the possibility of additional damages following Appellant’s submissions, the
Bankruptcy Court committed clear error by intending to limit its nondischargeability order only
to $677,000.” [7] at 12. Even assuming that were true, it would not entitle Appellant to relief
under Rule 60(a). Rule 60(a) is applicable only where the Court’s alleged error “lies in the
translation of the original meaning to the judgment”—not where “the judgment captures the
original meaning but is infected by error.” Shuffle Tech, 757 F.3d at 710; see also American
Federation of Grain Millers, Local 24 v. Cargill Inc., 15 F.3d 726, 728 (7th Cir. 1994). In other
words, “Rule 60(a) allows a court to correct records to show what was done, rather than change
them to reflect what should have been done.” Blue Cross and Blue Shield Ass’n v. American
Express Co., 467 F.3d 634, 637 (7th Cir. 2006) (emphasis in original).
Appellant also asserts that “where additional damages, as in this case, are essentially a
matter of right, courts have readily granted motions to correct judgments pursuant to rule 60(a).”
[7] at 12. As support, Appellant cites—but never discusses—five out-of-circuit cases. Even if
those cases supported Appellant, this Court could not follow them rather than the Seventh Circuit
precedent discussed in the preceding paragraph. The Bankruptcy Court intended to limit its
dischargeability order to $677,000 and, under this Circuit’s precedent, Rule 60(a) cannot be used
to “correct” that intentional choice.
In any event, the out-of-circuit cases that Appellant cites involved very different facts and
do not help its argument. In four of the cases, a district court used Rule 60(b)(4) to add statutory
prejudgment interest to a judgment that it had previously rendered. In two of those cases, the
courts expressly recognize that the district court’s original intent was to add interest, and in the
other two the award of statutory damages was characterized as a mere ministerial act. See Pogor

10

v. Makita U.S.A., Inc., 135 F.3d 384, 388 (6th Cir. 1998) (holding that “Rule 60(a) applies under
the circumstances found in this case where the language of the judgment awards interest as
required by law but leaves the actual calculations for later”); L.I. Head Start Child Development
Services, Inc. v. Economic Opportunity Comm’n of Nassau County, Inc., 956 F. Supp. 2d 402,
415-16 (E.D.N.Y. 2013) (court would correct judgment under Rule 60(a) to include prejudgment
interest where the court had intended to include prejudgment interest in the original judgment at
the time it was entered); Lee v. Joseph E. Seagram & Sons, Inc., 592 F.2d 39, 41-42 (2d Cir.
1979) (plaintiffs who had prevailed in diversity action seeking damages for breach of contract,
and who later sought award of interest under Rule 60(a), were entitled to post-judgment interest
due to failure of clerk of court to comply with New York statute that required clerk to add to a
judgment in any action interest from date of verdict to entry of judgment, but were not entitled to
award of interest which accrued prior to verdict); Glick v. White Motor Co., 458 F.2d 1287,
1293-94 (3d Cir. 1972) (addition of prejudgment interest under Michigan statute is merely
ministerial act that can be corrected through Rule 60(a)). In the fifth case, Frederick v. Mobil Oil
Corp., 765 F.2d 442, 450 (5th Cir. 1985), the Fifth Circuit held that the district court did not err
in using Rule 60(a) to correct its judgment to shift damages from one party to the other, because
this “simply correct[ed] an oversight with respect to the amount of [one party’s] lien.”
Here, the Bankruptcy Court was asked to make a nondischargeability determination with
respect to an order entered by the Wisconsin District Court, which was not a ministerial task.
The Wisconsin District Court was charged, in the first instance, with determining whether treble
damages and interest should be awarded, and it had not made that determination at the time the
Bankruptcy Court entered its Order. As the Bankruptcy Court explained, Appellant “could have
explicitly requested that th[e] [Bankruptcy] Court include in its Final Order a provision declaring

11

non-dischargeable any additional damages made by the Wisconsin District Court in the
Wisconsin Order.” App. 236. Having failed to do so, Appellant cannot use a Rule 60(a) motion
to correct its own error.
For these reasons, the Bankruptcy Court did not abuse its discretion by denying Appellant
relief under Rule 60(a).
B.

Whether the Bankruptcy Court erred in holding that WDH did not seek
relief pursuant to Fed. R. Civ. P. 60(b)(6) within a reasonable period of time.

Appellant next argues that the Bankruptcy Court committed an abuse of discretion when
it held that WDH did not seek relief under Rule 60(b)(6) within a reasonable period of time.
Appellant explains that it “sought relief soon after the Wisconsin District Court entered its final
monetary judgment,” which added treble damages and post-judgment interest to its prior award.
[7] at 14. Appellant also blames Debtor for the Wisconsin District Court’s delay in issuing its
final award, “first because of the stay imposed by . . . Debtor’s bankruptcy filing, . . . and then by
. . . Debtor’s myriad appeals of the Bankruptcy Court Order.” Id.
This Court cannot conclude that the Bankruptcy Court abused its discretion in finding
unpersuasive Appellant’s explanation for its delay. Appellant is unable to explain why it needed
the Wisconsin District Court’s final monetary judgment or an exact dollar amount of treble
damages or interest before asking the Bankruptcy Court to find nondischargeable any damages
of these types that the Wisconsin District Court ultimately might award.3 The Bankruptcy Court
determined, and Appellant does not dispute, that Appellant knew of its right to pursue treble
damages by March 20, 2013 at the latest. App. 234-235. (And Appellant would have known all
along that it could request post-judgment interest.)
3

At that point, Appellant “could have

It appears that Appellant could have requested an exact dollar amount of treble damages, since its
adversary complaint—which was filed before the Wisconsin District Court issued its final award—stated
that it was entitled to $1.354 million in treble damages.

12

explicitly requested that [the Bankruptcy] Court include in its Final Order a provision declaring
non-dischargeable any additional damages made by the Wisconsin District Court in the
Wisconsin Order.” App. 236. Debtor’s bankruptcy filing and subsequent appeals did not
prevent Appellant from making such a request.
Appellant also fails to address an important part of the Bankruptcy Court’s ruling on the
timeliness of its Rule 60(b)(6) motion. The Bankruptcy Court correctly observed that, even if
Appellant forgot to ask the Bankruptcy Court in 2013-14 to declare nondischargeable any
additional damages that the Wisconsin District Court might award, it could have corrected its
mistake by filing “a motion under Rule 60(b)(1) for ‘mistake, inadvertence, surprise, or
excusable neglect’ after the issuance of the Final Order within one year of its entry.’” App. 237
(quoting Fed. R. Civ. P. 60(b)(1)); see also Alexan, 62 F. Supp. 3d at 788 (recognizing that Rule
60(b)(1) “encompasses mistakes by . . . litigants”). Since relief was available to Appellant under
subsection 60(b)(1), “relief under [subsection 60(b)(6)’s] catchall provision is not available,” as
these clauses “are mutually exclusive.” York, 55 F. Supp. 3d at 1030-31. Appellant cannot make
an end-run around the one-year time limitation placed on motions under subsection 60(b)(1)—
which is jurisdictional—by claiming that its motion falls under the catchall provision. Censke,
314 F.R.D. at 611.
For these reasons, the Bankruptcy Court did not abuse its discretion by concluding that
Appellant’s motion under Rule 60(b)(6) was not filed within a reasonable time.
C.

Whether the Bankruptcy Court erred in denying relief pursuant to Fed. R.
Civ. P. 60(b)(6) by holding that WDH failed to demonstrate that the situation
presented rose to the level of “extraordinary circumstance.”

Appellant argues that the Bankruptcy Court erred by finding that, even if it had requested
relief under Rule 60(b)(6) within a reasonable time, Appellant failed to make a showing of

13

extraordinary circumstances.

Appellant asserts that denying its Rule 60(b)(6) motion was

“grossly inequitable, given that the delay occasioned in seeking . . . additional damages was of
the Debtor’s own making.” [7] at 19. But, as explained in the proceeding section, and as found
by the Bankruptcy Court, Debtor’s actions did not prevent Appellant from seeking a nondischargeability finding on additional damages when it moved for summary judgment.
Appellant “could have explicitly requested that th[e] [Bankruptcy] Court include in its Final
Order a provision declaring non-dischargeable any additional damages made by the Wisconsin
District Court in the Wisconsin Order.” App. 236. Appellant has offered no response to this
aspect of the Bankruptcy Court’s Order.
Appellant also asserts that “[t]he Bankruptcy Court appears to suggest that Appellant’s
ability to pursue its actual damages of $677,000 against the Debtor [is relevant to] its analysis of
whether its denial of the Correction Motion with respect to the additional damages would be a
‘dischargeability ‘windfall’ for the Debtor.” [7] at 19. According to Appellant, this “suggests
that the Bankruptcy Court relied on forbidden factors in reaching its decision, thus constituting
an abuse of discretion.” Id. The Court is not persuaded. Appellant does not cite any case law
suggesting that a court is forbidden from considering whether the movant has obtained some
measure of relief against a defendant in determining whether further relief should be granted
under Rule 60(a)(6). To the contrary, a court considering a Rule 60(b)(6) should “examine all of
the circumstances, bearing in mind the need for the party invoking the rule to demonstrate why
extraordinary circumstances justify relief.” Ramirez, 799 F.3d at 851 (emphasis added).
In any event, there is nothing in the Bankruptcy Court’s Order suggesting that it denied
Appellant relief because Appellant had already obtained some other relief against the Debtor.
The Bankruptcy Court simply questioned, in a footnote, whether avoiding a judgment for treble

14

damages and interest should be characterized as a “windfall,” given that Appellant “still has the
right to pursue the Debtor for up to $677,000.00.” App. 237. Regardless of whether it was
characterized as a windfall for Debtor, the Bankruptcy Court concluded, Appellant’s diminished
potential recovery was “the result of [Appellant’s] own litigation decisions,” and thus did not
constitute extraordinary circumstances. App. 238. The Bankruptcy Court found specifically that
(1) “one of the contributing factors for the Wisconsin District Court’s delay in issuing additional
damages was due to [Appellant’s] failure to enumerate treble damages during the initial trial in
that court”; (2) in summary judgment Appellant “chose only to ask [the Bankruptcy Court] to
accept from discharge an amount of at least $677,000.00, without specifying what other damages
it was seeking”; and (3) Appellant failed to take advantage of “multiple opportunities [it had] to
correct [the order] well before it filed its belated Correction Motion.” App. 238.
The record confirms that Appellant failed to take advantage of several earlier
opportunities to obtain a nondischargeability ruling as to treble damages and post-judgment
interest, including during summary judgment briefing, by filing a motion for clarification or
correction after the Bankruptcy Court decided summary judgment, on direct appeal, or in a
timely-filed motion under Rule 60(b)(1). Appellant’s counsel’s failure to make wise litigation
decisions does not rise to the level of extraordinary circumstances. See Longs v. City of South
Bend, 201 Fed. Appx. 361, 364 (7th Cir. 2006) (“Rule 60(b)(6) is unavailable when attorney
negligence . . . is at issue.” (citations omitted)); Scholz Design, 242 F.R.D. at 451 (explaining
that the catchall provision “cannot be used . . . to make arguments that could have been made
earlier”); Johnsson v. Steege, 2015 WL 5730067, at *5 (N.D. Ill. 2015) (explaining that litigation
decisions that are made “freely and voluntarily” do “not satisfy Rule 60(b)’s requirement of
extraordinary circumstances”); cf. Hill v. Rios, 722 F.3d 937, 938–39 (7th Cir. 2013) (explaining

15

that “a litigant who bypasses arguments on appeal cannot depict his own omission as an
‘extraordinary’ event that justifies post-judgment relief” under Rule 60(b)); Andrews v. Heinold
Commodities, Inc., 771 F.2d 184, 188 (7th Cir. 1985) (“A party cannot use Rule 60(b)(6) as a
substitute for appeal.”).
To be sure, the Court can imagine an alternate scenario in which the Bankruptcy Court
gave more weight to the “windfall” to a Debtor against whom a treble damages award had been
entered and less weight to the failure of Appellant to cover all of its bases prior to filing the
motion to reopen under Rule 60. Put slightly differently, whether to grant the relief requested by
Appellant presented a debatable proposition on which reasonable people—and reasonable
jurists—could differ. In such a circumstance, the result on appeal follows directly from the
standard of review. As the Seventh Circuit has explained, “[i]f the judge can decide either way
because he is within the zone in which he has discretion . . . this implies that two judges faced
with the identical record could come to opposite conclusions yet both be affirmed.” United
States v. Williams, 81 F.3d 1434, 1437 (7th Cir. 1996); see also Rice v. Nova Biomedical Corp.,
38 F.3d 909, 918 (7th Cir. 1994) (“When an issue is governed by a deferential standard of
review, such as abuse of discretion, the implication is that two district judges who reached the
opposite result in identical cases might both be affirmed”).
For these reasons, the Court concludes that the Bankruptcy Court did not abuse its
discretion in holding that Appellant failed to show that extraordinary circumstances warranted
relief under Rule 60(b)(6).

16

IV.

Conclusion
For the foregoing reasons, the Bankruptcy Court’s Order is AFFIRMED.

Dated: December 5, 2017
___________________________
Robert M. Dow, Jr.
United States District Judge

17