Hiles v. NovaStar Mortgage, Inc. et al

Filing 46

ORDER DENYING PLAINTIFF'S MOTION TO VACATE JUDGMENT (Docs. 38 / 41 ). Signed by Judge Timothy S. Black on 7/27/2015. (mr)(This document has been sent by regular mail to the party(ies) listed in the NEF that did not receive electronic notification.)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
MARSHALL G. HILES, individually and
as assignee of the claims of Nathan and
Brittney Honis;
Plaintiff,
vs.
NOVASTAR MORTGAGE, INC., et al.,
Defendants.

:
:
:
:
:
:
:
:
:
:
:

Case No. 1:12-cv-392
Judge Timothy S. Black

ORDER DENYING PLAINTIFF’S MOTION TO VACATE JUDGMENT
(Docs. 38/41)
This civil action is before the Court on pro se Plaintiff Marshall G. Hiles’s motion
to vacate judgment (Doc. 38) and the parties’ responsive memoranda (Docs. 39, 40, 42,
45). 1
I.

BACKGROUND

Plaintiff Marshall G. Hiles, both individually and as an assignee of Nathan and
Brittney Honis, brought this civil action against Defendants NovaStar Mortgage, Inc.,
NovaStar Financial, Inc. (now known as Novation Companies, Inc.), Zurich American
Insurance Company, and Deutsche Bank National Trust Company. On October 10, 2012,
the Court granted Defendants’ motions to dismiss. (Docs. 24, 25). This case was
terminated from the Court’s docket. (Doc. 26).

1

On June 16, 2015, Plaintiff filed a corrected motion to vacate, with a revised certificate of
service. (Doc. 41). The corrected motion does not differ from the original motion with respect
to the arguments advanced by Plaintiff.

On December 10, 2012, Plaintiff, proceeding pro se, filed a notice of appeal.
(Doc. 30). 2 During the pendency of the appeal, Plaintiff moved this Court to admit
evidence post-judgment. (Doc. 31). The Court denied Plaintiff’s request. (See February
8, 2013 Notation Order). On January 13, 2014, the Sixth Circuit affirmed this Court’s
dismissal of Plaintiff’s case. Hiles v. NovaStar Mortgage, Inc., No. 12-4527, Slip. Op.
(6th Cir. Jan. 13, 2014). On May 6, 2014, the Sixth Circuit denied Plaintiff’s petition for
an en banc hearing. (App. Doc. 55.)
On May 15, 2015, Plaintiff, still proceeding pro se, filed the instant motion to
vacate judgment. (Doc. 38). He asks the Court to vacate its orders dismissing his case
(Docs. 24, 25).
II.

STANDARD OF REVIEW

Rule 60(b) provides that relief from a final judgment may be granted 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 to move for a new trial under Rule 59(b);
(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or
misconduct by an opposing party;
(4) the judgment is void;
(5) 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
(6) any other reason that justifies relief.
2

Up until this point, Plaintiff had been represented by counsel. (See Doc. 27).
2

Fed. R. Civ. P. 60(b). Relief from judgment under Rule 60(b)(6)—the catch-all
provision—is available “only in exceptional or extraordinary circumstances which are not
addressed by the first five numbered clauses of the Rule.” Olle v. Henry & Wright Corp.,
910 F.2d 357, 365 (6th Cir. 1990).
Motions made pursuant to Rule 60(b) must be made “within a reasonable time.”
Fed. R. Civ. P. 60(c)(1). Specifically, motions made pursuant to subsections (1), (2), and
(3) must be made “no more than a year after the entry of the judgment or order or the date
of the proceeding.” Id. “[T]he party seeking relief under Rule 60(b) bears the burden of
establishing the grounds for such relief by clear and convincing evidence.” Info–Hold,
Inc. v. Sound Merchandising, Inc., 538 F.3d 448, 454 (6th Cir. 2008).
III.

ANALYSIS

Plaintiff makes four arguments in support of his motion: (1) the dismissal violated
his rights under the Seventh Amendment; (2) this judge was required to recuse himself;
(3) the Court failed to give proper consideration to the fact that Plaintiff was proceeding
pro se; and (4) the lending and foreclosure scheme was fraudulent, and the foreclosure
judgment was obtained as a result of fraud on the court. For the reasons set forth below,
Plaintiff’s arguments are unavailing.
A.

Rule 60(b) Claims
As an initial matter, the Court considers whether Plaintiff’s motion is timely. To

the extent Plaintiff invokes Rule 60(b)(1), (2), or (3), he was required to make his motion
no later than one year after the entry of judgment at issue. Fed. R. Civ. P. 60(c)(1).

3

Plaintiff seeks relief from the Court’s Orders entered on October 10, 2012. Thus, to be
timely under Rule 60(b)(1), (2), or (3), Plaintiff was required to file his motion seeking
relief from these no later than October 10, 2013. Plaintiff filed the instant motion on May
15, 2015.
To the extent Plaintiff invokes the other subsections of Rule 60(b), he is still
required to make his motion “within a reasonable time.” Fed. R. Civ. P. 60(c)(1). “The
reasonableness of the delay ‘depends on the facts of a given case including the length and
circumstances of the delay, the prejudice to the opposing party by reason of the delay,
and the circumstances compelling equitable relief.’” Gen. Med., P.C. v. Horizon/CMS
Health Care Corp., 475 Fed. App’x 65, 76 (6th Cir. 2012) (quoting Olle v. Henry &
Wright Corp., 910 F.2d 357, 365 (6th Cir.1990)). Plaintiff does not explain why his
substantial delay in filing the instant motion was reasonable. 3
Even assuming Plaintiff’s motion was timely, his arguments still fail. Plaintiff
repackages arguments that were presented to and rejected by the Sixth Circuit. For
example, the Sixth Circuit expressly rejected Plaintiff’s claim that a trial should have
been conducted pursuant to the Seventh Amendment. Hiles v. NovaStar Mortgage, Inc.,
No. 12-4527, Slip. Op. at *5 (6th Cir. Jan. 13, 2014). The Sixth Circuit also found that
this judge did not err by failing to recuse himself. Id. at *5–6. Finally, the Sixth Circuit
did not agree with Plaintiff’s contention that the facts of the case—related to alleged
3

Plaintiff contends that he promptly took action following the state court’s entry of judgment in
the foreclosure action and his discovery of the fraud committed during that action. (Doc. 42 at
15). However, the relevant inquiry is whether the instant motion was filed within a reasonable
time of this Court’s dismissal of Plaintiff’s case on October 10, 2012.

4

mortgage fraud—warranted reversal this Court’s Orders. Id. at *4–5 (finding that this
Court properly concluded that Plaintiff’s claims were barred by the doctrine of res
judicata). 4 Plaintiff’s arguments do not provide clear and convincing evidence that the
judgment should be vacated, particularly where these same arguments were previously
presented to the Sixth Circuit and found to be an insufficient basis for reversal.
B.

Fraud on the Court Claim
Plaintiff alleges that counsel in the underlying foreclosure action committed a

fraud on the Hamilton County Court of Common Pleas by submitting documents that
contained false statements and were fraudulent, as a means to establish standing. (See
Doc. 38 at 8, 13–16).
Rule 60(b) does not limit a court’s power to set aside a judgment for fraud on the
court. Fed. R. Civ. P. 60(d). Fraud on the court represents an exception to res judicata.
See United States v. Beggerly, 524 U.S. 38, 46 (1998) (holding that fraud on the court
that is “‘sufficiently gross’ demand[s] a departure from rigid adherence to the doctrine of
res judicata”) (citation omitted). Courts have found that, if a plaintiff believes that a state
court judgment was obtained by fraud on the state court, the plaintiff’s remedy is by way
of a motion for relief from judgment under state law (and before the state court), not by

4

The Sixth Circuit acknowledged that Plaintiff was proceeding pro se before it and did not find
that Plaintiff’s pro se status required reversal. See id.

5

way of a collateral attack on that court’s judgment in federal court. 5 See Perkins v. Wells
Fargo Bank, N.A., No. 2:11-CV-952, 2012 WL 5077712, at *7 (S.D. Ohio Oct. 18,
2012), aff’d, No. 12-4284, Slip. Op. (6th Cir. Mar. 12, 2014) (citing Thyne v. GMAC
Mortg. Corp., No. 3:09–cv–377, 2010 WL 3075185, at *4 (S.D. Ohio Aug.4, 2010)). 6
But see In re Sun Valley Foods Co., 801 F.2d 186, 188–89 (6th Cir. 1986) (finding that a
federal court may entertain a collateral attack on a state court judgment procured through
fraud, deception, accident, or mistake).
In any event, Plaintiff fails to carry his burden to prove that a fraud on the court
occurred. To establish fraud on the court, Plaintiff must show conduct: (1) by an officer
of the court; (2) directed to the “judicial machinery” itself; (3) which was intentionally
false, willfully blind to the truth, or in reckless disregard of the truth; (4) which was a
positive averment or a concealment when under a duty to disclose; and (5) which
deceived the court. Hill v. United States, 2014 WL 223239, at *2 (N.D. Ohio 2014)
(citing Demjanjuk v. Petrovsky, 10 F.3d 338, 348 (6th Cir. 1993)). Plaintiff has the
burden of proving the existence of fraud on the court by clear and convincing evidence.
Carter v. Anderson, 585 F.3d 1007, 1011 (6th Cir. 2009) (citation omitted).

5

In fact, Defendant Deutsche Bank notes that on February 27, 2014, Plaintiff filed a motion to
vacate in the state court foreclosure action, which was denied following oral argument. See
Deutsche Bank National Trust Company v. Nathan Honis, et al., Case No. A0806113, Court of
Common Pleas for Hamilton County, Ohio.
6

See also 11 Charles Alan Wright, et al., Federal Practice and Procedure § 2870, at n. 13 (3d
ed.) (citing Taft v. Donellan Jerome, Inc., 407 F.2d 807 (7th Cir. 1969)); see also Pfotzer v
Amercoat Corp., 548 F2d 51, 52–53 (2d Cir. 1977); Bankers Mortgage Co. v. United States, 423
F.2d 73, 78 (5th Cir. 1970); Potter v. Mosteller, 199 F.R.D. 181, 185 (D.S.C. 2000) aff’d, 238
F.3d 414 (4th Cir. 2000).

6

Plaintiff’s allegations and supporting documentation do not provide clear and
convincing evidence that conduct by counsel in this underlying foreclosure action was
intentionally false, willfully blind to the truth, or in reckless disregard of the truth.
Plaintiff’s exhibits do not prove, for example, that counsel was implicated in the
fabrication of evidence or that counsel himself was dishonest in the underlying
foreclosure action. (See Doc. 38-1, 42-1, and 45-1). Plaintiff fails to carry his heavy
burden to prove, by clear and convincing evidence, that counsel committed a fraud on the
state court.
IV.

CONCLUSION

Accordingly, for the foregoing reasons, Plaintiff Marshall G. Hiles’s motion to
vacate judgment (Docs. 38/41) is DENIED.
IT IS SO ORDERED.
Date: 7/27/15

/s/ Timothy S. Black
Timothy S. Black
United States District Judge

7