Gonzalez Juanes et al v. Lyzwinski et al

Filing 84

MEMORANDUM-DECISION, ORDER, AND JUDGMENT: DENYING defendants' 69 Motion to vacate the 58 Order enforcing the Settlement Agreement and Release; DENYING defendants' application for sanctions and attorneys fees in connection with its earlier 53 motion to enforce the settlement agreement; Warning DEFENDANT MAREK LYZWINSKI THAT FAILURE TO COMPLY WITH THIS ORDER AND THE SETTLEMENT AGREEMENT MAY RESULT IN THE IMPOSITION OF SANCTIONS AGAINST HIM AND/OR A FINDING OF CONTEMPT; and DISMISSING this action based on the enforceable settlement agreement in effect pursuant to the procedure set forth in N.D.N.Y.L.R. 68.2(a). Signed by U.S. Magistrate Judge Andrew T. Baxter on 7/12/2013. [Copy served upon attorney Brent L. Vannoy via regular mail] (mae)

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF NEW YORK
____________________________________
JUAN A. GONZALEZ JUANES, et al.,
Plaintiffs,

No. 8:10-CV-459 (ATB)

v.
MAREK LYZWINSKI, et al.,
Defendants.
____________________________________
MICHAEL R. WOLFORD, ESQ., for Plaintiffs
THOMAS W. PLIMPTON, ESQ., for Defendants
ANDREW T. BAXTER, U.S. Magistrate Judge
MEMORANDUM-DECISION, ORDER, AND JUDGMENT
Presently before this court is the defendants’ motion under Fed. R. Civ. P. 60(b)
for relief from this court’s prior order enforcing a settlement agreement between the
parties (Dkt. No. 69), plaintiffs’ response in opposition (Dkt. No. 73), and defendants’
reply (Dkt. No. 76). Defendants have resisted going forward with the September 2012
settlement agreement (Dkt. No. 53-2), based on recent objections to the settlement
raised by Jose Luis Barriguete Hermosillo (“Barriguete”), co-owner, with plaintiff
Juan A. Gonzalez Juanes (“Gonzalez”), of plaintiff Executive Express Aviation S.A.
de C.V. (“EEA”). After several unsuccessful efforts to settle the dispute between the
parties, in which separate counsel for Barriguete1 was an informal participant, plaintiff

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Barriguete has never been a party to this action and his lawyer has not tried to enter an
appearance on behalf of EEA or otherwise attempted to intervene in any formal way.

Gonzalez unilaterally agreed to indemnify defendant Marek Lyzwinski (“Lyzwinski”)
against any claims by Barriguete arising from defendants’ execution of the settlement
agreement. (Dkt. No. 83). Based on that agreement by plaintiff Gonzalez, and for the
reasons set forth below, defendants’ motion (Dkt. No. 69) for relief from the February
7, 2013 Order (Dkt. No. 58) enforcing the settlement agreement is denied. The court
also orders that this case be administratively closed based on the settlement agreement
between the parties, subject to re-opening within ninety (90) days, upon motion of a
named party, if further intervention from the court with respect to the enforcement of
the settlement agreement is required.
I.

RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
This diversity action arose from a failed commercial transaction involving the

intended purchase and sale of a helicopter. Plaintiffs, representing the would-be
purchaser(s), sued the defendants for the return of a $300,000 deposit paid by EAA,
asserting claims of conversion, unjust enrichment, breach of contract, and breach of an
implied covenant of good faith and fair dealing. (Am. Compl., Dkt. No. 21). The
defendants/seller(s), in turn, filed a counterclaim, alleging that the plaintiffs breached
the terms of agreements between the parties and failed to negotiate in good faith
towards the consummation of the intended transaction. (Answer to Am. Compl. with
Countercl. ¶¶ 47-54, Dkt. No. 22). The facts underlying this dispute, which occurred
in 2008, are detailed in this court’s June 22, 2012 Memorandum-Decision and Order
(Dkt. No. 45 at 3-8) denying plaintiffs’ Partial Motion for Summary Judgment, and
will not be repeated here.
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Plaintiff Gonzalez filed this action in April 2010, on his own behalf and on
behalf of EEA, without naming EEA co-owner Barriguete as a plaintiff. During a
deposition in January 2011, plaintiff Gonzalez testified that Mr. Barriguete had
authorized Mr. Gonzalez to initiate the lawsuit, but that the two men had not spoken
for several months because of disagreements regarding the operation of the business
not related to the lawsuit. (Wolford Aff. ¶ 20, Dkt. No. 73 & Ex. 4, Dkt. No. 73-4).
In response to defendants’ written discovery demands, in September 2011, plaintiffs
produced corporate records of EEA, in Spanish, representing that they showed Mr.
Gonzalez and Mr. Barriguete were each 50% owners of the corporation and that, at an
EEA board meeting, Mr. Gonzalez was named the sole administrator of the
corporation in lieu of a Board of Directors. (Plimpton Affirm. ¶ 4, Dkt. No. 69-1 &
Ex. 1., Dkt. No. 69-2 at 4-5).
In connection with the pending Rule 60(b) motion, plaintiffs provided partial
translations and/or English summaries of the EEA corporate records. These records
confirm that Mr. Gonzalez and Mr. Barriguete each became 50% co-owners of EEA
following their purchase of the company on August 16, 2006, and establish that both
initially had powers of attorney to commence litigation and pursue collections on
behalf of the corporation. (Gonzalez Decl. ¶¶ 2, 4, Dkt. No. 73-5). The translation of
an August 17, 2010 EEA board meeting indicates that Mr. Barriguete’s position as a
director and his power of attorney on behalf of EEA were terminated at that time, and
that plaintiff Gonzalez was then named sole administrator of EEA, with the sole power
of attorney for the corporation regarding disputes and collections. (Gonzalez Decl. ¶
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5; LeBlanc Decl. ¶¶ 2-4, 9, Dkt. No. 73-8 & Ex. 1, Dkt. No. 73-10).
On the eve of trial in this matter, the parties negotiated a settlement, which was
finalized in a written agreement in September 2012. In the Settlement Agreement and
Release (Dkt. No. 53-2), defendants agreed to pay “Plaintiffs” (defined to include Mr.
Gonzalez and the entity, EEA) a total sum of $210,000, $15,000 of which was paid
immediately, with the balance secured by mortgages on two properties owned by
individual defendant Lyzwinski. (Dkt. No. 53-2 at 2). If by July 30, 2013, defendants
still owe plaintiffs $150,000, a deed to one of Mr. Lyzwinski’s properties (at 29 Maine
Road in Plattsburgh, New York), must be turned over to plaintiffs’ attorney, who
could then sell the property in satisfaction of $150,000 of defendants’ obligations
under the agreement. (Settlement Agr. ¶¶ 1, 2).2 The deed, to be held in escrow by
defendants’ attorney prior to July 30, 2013, “will reflect a transfer to Plaintiff Juan A.
Gonzalez Juanes as Grantee.” (Settlement Agr. ¶ 1). The written agreement includes
a comprehensive release, in favor of defendants, by all plaintiffs, as well as
defendants’ release of any claims against plaintiff. (Settlement Agr. ¶ 4).
Because of delays by Mr. Lyzwinski in executing and filing the two mortgages
specified in the settlement agreement, plaintiffs filed a motion to enforce the
agreement on January 4, 2013 (Dkt. No. 53), to which defendants responded (Dkt. No.
54). On February 7, 2013, the court entered an order enforcing the settlement
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If, by July 30, 2013, the defendants still owe the plaintiffs more than $30,000, plaintiffs
may sell the property at 29 Maine Road, but would be required to remit funds to the defendants
to the extent that the sales proceeds exceed the amounts due under the agreement. (Settlement
Agr. ¶ 2). To the court’s knowledge, defendants have not made any payments to plaintiffs
beyond the initial $15,000 payment, which is being held in escrow by plaintiffs’ attorney.
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agreement and directing defendant Lyzwinksi to execute and file the two mortgages.
(Dkt. No. 58).
On February 15, 2013, defense counsel wrote the court seeking additional time
to file the subject mortgages, based on a terse February 11th e-mail from Mr.
Barriguete, claiming that Mr. Gonzalez had been removed as a director of EEA and
had no authority to represent the company with respect to the settlement agreement.
(Dkt. No. 59). The court, the parties, and, to some extent, counsel for Mr. Barriguete
thereafter engaged in a protracted, and ultimately unsuccessful effort to resolve the
dispute regarding the settlement of this action, during which the issue of who
controlled EAA at critical times was further explored. (Dkt. Nos. 59-68, 78-83).
There are some unresolved factual questions and significant issues as to the
legality of Mr. Barriguete’s efforts to regain control of EEA. However, assuming Mr.
Barriguete successfully divested Mr. Gonzalez of his authority to act on behalf of
EEA, he did not accomplish that any earlier than January 31, 2013, well after plaintiff
Gonzalez finalized the settlement of this action on behalf of himself and EEA.
Brent L. Vannoy, Mr. Barriguete’s attorney, alleges that his client’s efforts to
remove Mr. Gonzalez from the control of EEA began in 2010. (Plimpton Affirm. ¶ 7
& Ex. 2, Dkt. No. 69-3).3 However, Attorney Vannoy concedes that EEA took no
relevant corporate action until October 22, 2012, and January 7, 2013, when Mr.
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Defendants’ attorney suggests that the struggle between Mr. Barriguete and plaintiff
Gonzalez over the control of EEA may have affected the course of the transaction involving the
helicopter that led to this lawsuit. (Plimpton Affirm. ¶¶ 11, 15). However, it is clear that the
relevant events relating to the helicopter transaction all occurred in 2008, well before Mr.
Barriguete allegedly began his efforts to divest Mr. Gonzalez of control of EEA.
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Barriguete obtained court orders in Mexico which, Mr. Vannoy claims, effectively put
Barriguete in control of EEA. (Id.). Plaintiffs presented an affidavit of Jacques Y.
LeBlanc, an attorney familiar with the Mexican legal system and fluent in Spanish,
who interpreted the two court orders and stated that they authorized Mr. Barriguete to
hold shareholder meetings on November 22, 2012 and January 31, 2013, but did not
put him in control of EEA. (LeBlanc Aff. ¶¶ 10-12, Dkt. No. 73-8).
It was clearly not until the EEA shareholder meeting that Mr. Barriguete
purported to conduct on January 31, 2013, that the corporation took any concrete
action to remove Mr. Gonzalez’s authority to act on behalf of EEA. (Plimpton
Affirm., Ex. 2 at 2; LeBlanc Aff., Ex. 3, Dkt. No. 73-11 at 1-3; Gonzalez Decl. ¶ 7).
Attorney LeBlanc contends that this shareholder meeting, conducted without any
representation of plaintiff Gonzalez or the 50% of EEA shares he owned, was not
lawful. (LeBlanc Aff. ¶¶ 13-18). Plaintiff Gonzalez states that he was not aware of
any efforts by Mr. Barriguete to revoke his authority to act on behalf of EEA between
2010 and 2013 and did not receive notice of the shareholder meetings Barriguete
arranged. (Gonzalez Decl. ¶¶ 10-11). In any event, there is no persuasive evidence
suggesting that plaintiff Gonzalez lacked the legal authority to settle this lawsuit on
behalf of himself and EEA in September 2012.
II.

APPLICABLE LAW
Defendants argue that they are entitled to relief from this court’s order

enforcing the settlement agreement under Fed. R. Civ. P. 60(b) (1), (2), (3) and (6)
based on surprise; newly discovered evidence; fraud, misrepresentation, or misconduct
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by the opposing counsel; and “any other reason that justifies relief.” (Plimpton
Affirm. ¶ 2). Rule 60(b) sets forth the grounds on which a court, in its discretion, may
rescind or amend a final judgment or order. It provides, in pertinent part:
On motion and just terms, the court may relieve a party or its legal
representative from a final judgment, order, or proceeding for the following
reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly
discovered evidence that, with reasonable diligence, could not have been
discovered in time . . .; (3) fraud . . ., misrepresentation, or misconduct by an
opposing party; . . . or (6) any other reason that justifies relief.
Fed. R. Civ. P. 60(b). The Second Circuit has instructed that Rule 60(b) is
“extraordinary judicial relief” and can be granted “only upon a showing of exceptional
circumstances.” Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1986).
The burden of proof under Rule 60(b) “is on the party seeking relief from
judgment [.]” United States v. Int’l Bhd. of Teamsters, 247 F.3d 370, 391 (2d Cir.
2001). Generally, for a Rule 60(b) motion to prevail, a three-part test must be met.
First, there must be “highly convincing” evidence supporting the motion. Second, the
moving party must show good cause for failing to act sooner. Third, the moving party
must show that granting the motion will not impose an undue hardship on the other
party. Dunn v. Kaladjian, 279 F.R.D. 79, 83 (E.D.N.Y. 2011) (citations omitted).
“When the parties submit to an agreed-upon disposition instead of seeking a resolution
on the merits, . . . the burden to obtain Rule 60(b) relief is heavier than if one party
proceeded to trial, lost, and failed to appeal.” Nemaizer v. Baker, 793 F.2d at 63.
Although the defendants seeks relief under Rule 60(b)(1) based on “surprise,”
this claim is clearly based on “newly discovered evidence” from Barriguete and is
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more appropriately addressed under Rule 60(b)(2). See State Street Bank and Trust
Co. v. Inversiones Errazuriz Limitada, 374 F.3d 158, 178 (2d Cir. 2004) (“Where a
claim ‘sounds very much like a claim regarding newly discovered evidence,’ the claim
is ‘controlled by 60(b)(2)’ and should not be labeled as if brought under . . . Rule
60(b)[(1)]”). To obtain relief under the “onerous standard” of Rule 60(b)(2),
the movant must demonstrate that (1) the newly discovered evidence was of
facts that existed at the time of trial or other dispositive proceeding, (2) the
movant must have been justifiably ignorant of them despite due diligence, (3)
the evidence must be admissible and of such importance that it probably would
have changed the outcome, and (4) the evidence must not be merely cumulative
or impeaching.
U.S. v. International Broth. of Teamsters, 247 F.3d at 392.
“Under Rule 60(b)(3), a district court may relieve a party from a final judgment
for ‘fraud.’ In addition, Rule 60(b) allows a court to set aside a judgment for fraud on
the court.” State St. Bank and Trust Co. v. Inversiones Errazuriz Limitada, 374 F.3d
at 176. “‘[A] Rule 60(b)(3) motion cannot be granted absent clear and convincing
evidence of material misrepresentations,’ . . . and to prevail ‘a movant must show that
the conduct complained of prevented the moving party from fully and fairly presenting
his case.’” Entral Group Intern., LLC v. 7 Day Café & Bar, 298 F. App’x 43, 44 (2d
Cir. 2008) (citations omitted). Rule 60(b)(6) “is properly invoked only when there are
extraordinary circumstances justifying relief, . . . when the judgment may work an
extreme and undue hardship, . . . and when the asserted grounds for relief are not
recognized in clauses (1)-(5) of the Rule. . . . ” Nemaizer v. Baker, 793 F.2d at 63.

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III.

ANALYSIS
The defendants have not met their burden of proof to produce “highly

convincing” evidence demonstrating “exceptional circumstances” supporting their
Rule 60(b) motion to vacate this court’s prior order enforcing the settlement
agreement between the parties. Even if Mr. Barriguete’s efforts to divest plaintiff
Gonzalez of his authority to act on behalf of EEA in late January 2013 prove to be
legally effective, the defendants have offered no convincing evidence suggesting that
Mr. Gonzalez lacked the authority to commence the lawsuit of behalf of EEA in 2010
or to enter into the settlement agreement in September 2012.
Nor have the defendants established that vacating the order enforcing the
settlement agreement would not create an undue hardship for plaintiff Gonzalez, who
remains a co-owner of EEA,4 and who, without any assistance from Mr. Barriguete,
successfully initiated, prosecuted, and settled this lawsuit at his own expense over a
period of more than two years. (Gonzalez Aff. ¶ 6). Allowing defendants to take
advantage of the recent dispute between the co-owners of EEA to unwind the
settlement would prejudice the named plaintiffs by forcing them to resume expensive
and time-consuming litigation.
Defendants will not be unfairly prejudiced by the enforcement of the settlement
agreement which they voluntarily negotiated with plaintiffs in order to avoid an

4

Although Mr. Barriguete attempted to dilute plaintiff Gonzalez’s interest in EEA at the
January 31, 2013 shareholder meeting, Mr. Gonzalez’s substantial ownership stake in the
corporation was not extinguished. (LeBlanc Aff. ¶ 18 & Ex. 3, Dkt. No. 73-11 at 1, 7 (resolution
purported to reduce Gonzalez interest in EEA from 50% to 25%)).
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imminent trial and the threat of greater liabilities. In the settlement agreement, EEA
clearly releases the defendants from any claims and plaintiff Gonzalez has agreed to
indemnify defendant Lyzwinski if Mr. Barriguete were to make any claims against
that defendant for carrying through with the terms of the settlement agreement.5
To the extent the defendants move for relief under Rule 60(b) based on newly
discovered evidence that plaintiff Gonzalez lacked the authority to act on behalf of
EEA, they also fail to meet their substantial burden of proof. As early as January
2011, Mr. Gonzalez disclosed that he was having conflict with Mr. Barriguete
regarding the operation of EEA. The records that plaintiff Gonzalez disclosed in
response to defendants’s subsequent discovery demands documented his claims of
authority to bind EAA in connection with this lawsuit; he maintained that authority, at
least through January 2013–well after he entered into the settlement agreement. The
plaintiffs have offered no evidence rebutting plaintiff Gonzalez’s representations that
he was not aware of Mr. Barriguete’s legal efforts to take over the control of EEA
between 2010 and 2012. Defendants were free to follow up with respect to the
disclosed rift between the co-owners of EEA, and their lack of diligence in failing to
do so precludes them from belatedly seeking to escape the obligations that they freely
assumed in the settlement agreement. The dispute between Mr. Gonzalez and Mr.
Barriguete, which began no earlier than 2010, had no impact on the relevant events of
2008 or the merits of the claims against the defendants. If the defendants had learned

5

Defendant Lyzwinski is the sole owner of corporate defendant, Southern Winds
Aviation, LLC. (Am. Compl. ¶ 9, Dkt. No. 21; Answer to Am. Compl. ¶ 9, Dkt. No. 22).
10

more about Mr. Barriguete’s recent efforts to regain control over EEA, that would
likely not have changed the calculation that led defendants to settle on the terms on
which they agreed.
Similarly, the defendants have no basis to attack the order enforcing the
settlement agreement based on alleged fraud, misrepresentations, or misconduct by
plaintiff Gonzalez. Defendants have not presented clear and convincing evidence of
material misrepresentations by plaintiff Gonzalez that prevented them from fully and
fairly presenting their case. As noted above, the defendants have not established that
plaintiff Gonzalez misrepresented the nature of his relationship with Mr. Barriguete or
the status of Mr. Gonzalez’s authority to represent EEA in the lawsuit. And, Mr.
Barriguete’s efforts to regain corporate control of EEA in or after 2010 had no impact
on the merits of the claims against the defendants; so a fuller understanding of those
efforts would not have aided defendants in presenting their case.6
Plaintiffs have requested sanctions and attorney’s fees relating to their earlier
motion to enforce the settlement agreement (Dkt. No. 53), and their more recent
efforts to oppose this Rule 60(b) motion. Defendant Lyzwinski clearly has not been
timely with respect to his compliance with the terms of the agreement relating to the
two properties in Plattsburgh, New York, that he pledged to secure defendants’
promise to pay. Mr. Lyzwinski’s earlier delays in executing the required mortgages
6

As suggested in the discussion of the applicable law above, defendants may not rely on
the catchall provision in Rule 60(b)(6) because enforcement of the settlement agreement will not
work an extreme and undue hardship on defendants, for the reasons stated above, and because the
asserted grounds for relief are recognized in the more specific clauses in subsections (b)(2) and
(3) of the Rule.
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were plausibly explained by logistical problems relating to his international travel.
The more recent delays were reasonably motivated by defense counsel’s concerns that
the defendants would expose themselves to liability to Mr. Barriguete by complying
with the terms of the settlement agreement negotiated by plaintiff Gonzalez. The
court, at least tacitly, allowed the parties to maintain the status quo until the issue of
who controlled EEA at the relevant times was resolved. Accordingly, the court will
deny plaintiffs’ motion for sanctions and attorney’s fees relating to this motion and the
earlier motion to enforce the settlement agreement. Defendant Lyzwinski is warned
however, that any further delays in compliance with this order and the settlement
agreement will expose him to possible sanctions and/or contempt findings.
It seems likely that Mr. Gonzalez and Mr. Barriguete may end up in litigation
regarding the disposition of any further proceeds from the enforcement of the
settlement agreement between the named plaintiffs and defendants. Any payments
under the settlement agreement would be payable to EEA and Mr. Gonzalez, which
would provide some protection for Mr. Barriguete, the co-owner of EEA, if he, in fact,
currently controls that entity. To the extent the deed to Mr. Lyzwinski’s property at
29 Maine Road in Plattsburgh, New York is tendered to plaintiffs’ counsel under the
agreement, the grantee will be plaintiff Gonzalez only. However, Mr. Barriguete has
United States counsel and can pursue appropriate legal actions with respect to that
property or the sale proceeds.
Any future legal battles between the co-owners of EEA are not, however,
appropriately part of this action. This decision, enforcing the settlement agreement
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between plaintiffs Gonzalez and EEA and the named defendants effectively terminates
this litigation. While the settlement agreement (¶ 8, Dkt. No. 53-2 at 5) contemplates
that I maintain jurisdiction as necessary to enforce any of the obligations undertaken
in the agreement, it does not saddle this court with the burden of resolving the
subsidiary disputes between the co-owners of the plaintiff Mexican corporation,
particularly because Mr. Barriguete has never been a party to the action and made no
effort to join it, while attempting to hijack the settlement. Accordingly, I will also
order that this case be closed, subject to reopening, only as necessary to resolve any
other disputes between the named parties regarding enforcement of the settlement
agreement.
Accordingly, it is hereby
ORDERED, that defendants’ motion under Fed. R. Civ. P. 60(b) (Dkt. No. 69)
to vacate my February 7, 2013 Order enforcing the Settlement Agreement and Release
in this action is DENIED, and it is further
ORDERED, that, upon receipt of an executed document by which plaintiff
Gonzalez indemnifies defendant Lyzwinski from any claim that could be asserted
against him by Jose Luis Barriguete Hermosillo for complying with the terms of the
Settlement Agreement and Release (Dkt. No. 53-2), defendants shall comply with all
of their obligations in that agreement, including, but not limited to, the obligations to
file, within five (5) business days of receipt of the indemnification agreement, the two
mortgages in favor of plaintiffs identified therein and to deliver, to plaintiffs’ attorney
of record, by August 7, 2013, the deed, in favor of plaintiff Gonzalez as grantee, to 29
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Maine Road in Plattsburgh, New York, if defendants have failed to make the payments
required in the agreement by July 30, 2013, and it is further
ORDERED, that defendants’ application for sanctions and attorney’s fees in
connection with its earlier motion to enforce the settlement agreement (Dkt. No. 53)
and the current Rule 60(b) motion is DENIED. HOWEVER, DEFENDANT MAREK
LYZWINSKI IS HEREBY WARNED THAT FAILURE TO COMPLY WITH THIS
ORDER AND THE SETTLEMENT AGREEMENT MAY RESULT IN THE
IMPOSITION OF SANCTIONS AGAINST HIM AND/OR A FINDING OF
CONTEMPT. And, it is further
ORDERED, that, based on the enforceable settlement agreement in effect in
this case, this action is DISMISSED in its entirety without prejudice pursuant to the
procedure set forth in N.D.N.Y.L.R. 68.2(a) of the Local Rules of this court. This
judgment is issued without prejudice to the right of the named parties, by counsel of
record, to secure reinstatement of the case within ninety (90) days after the date of this
judgment by making a showing that doing so is necessary to enforce any of the
obligations of the named parties undertaken in the Settlement Agreement and Release;
and in the event that no request is made for reinstatement within ninety (90) days of
the date of this judgment, the dismissal of this case shall thereafter be with prejudice;
and it is further
ORDERED that the Clerk shall serve copies of this Memorandum-Decision,
Order, and Judgment upon the attorneys for the named parties appearing in this action
and on Brent L. Vannoy, Esq., 4 Houston Center, Suite 100, 1221 Lamar Street,
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Houston, TX 77010, the attorney for non-party Jose Luis Barriguete Hermosillo.

Date: July 12, 2013

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