Securities and Exchange Commission v. Fox

Filing 57

OPINION AND ORDER by Judge Claire V Eagan ; denying 54 Motion to Reconsider; denying 54 Motion to Vacate Order/Judgment; denying 54 Motion for New Trial (Re: 52 Opinion and Order, Ruling on Motion for Judgment, Ruling on Motion for Miscellaneous Relief, 53 Judgment, ) (RGG, Chambers)

UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF OKLAHOMA
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.
BRIAN D. FOX,
Defendant.

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Case No. 11-CV-0211-CVE-PJC

OPINION AND ORDER
Now before the Court is Defendant’s Motion to Reconsider and/or Vacate Order Granting
Summary Judgment Dated November 2, 2012; Motion for New Trial and/or Motion to Reconsider
and Vacate and Brief in Support with Supporting Brief (Dkt. # 54). On November 2, 2012, the
Court entered an opinion and order (Dkt. # 52) granting plaintiff’s motion for entry of judgment
based on defendant’s consent, and entered judgment (Dkt. # 53) against defendant for monetary
damages and injunctive relief. Defendant argues that the Court erred when it found that his consent
to entry of judgment was valid, and he renews his challenge to the facts stated in plaintiff’s amended
complaint.
On April 8, 2011, plaintiff Securities and Exchange Commission (SEC) filed this case
against Brian D. Fox alleging six claims under the Securities and Exchange Act of 1934 (Exchange
Act), and plaintiff subsequently filed an amended complaint (Dkt. # 9) adding a seventh claim under
the Exchange Act. Fox retained an attorney, James Bryant, to represent him. Dkt. # 11. Fox did
not file an answer or other responsive pleading to the amended complaint. Plaintiff filed a motion
for entry of default (Dkt. # 15) against Fox, and the motion was granted. Plaintiff sought a default
judgment against Fox. Fox filed a response in opposition to the motion for default judgment, and

he requested an extension of time to file an answer to the amended complaint. Dkt. # 19. The Court
denied plaintiff’s motion for default judgment, and Fox was permitted to file an answer. Dkt. # 22.
Fox appeared for his deposition on June 20, 2012 and, according to plaintiff, the “first half of the
deposition had gone poorly for Fox.” Dkt. # 48, at 2. Bryant asked plaintiff’s counsel to adjourn
the deposition while he consulted with his client, and plaintiff’s counsel presented Fox with a
consent form and a proposed judgment. After meeting with his attorney for an hour and a half, Fox
signed the consent form before a notary public and he agreed to the entry of the proposed judgment.
By signing the consent form, Fox agreed to the entry of a judgment awarding plaintiff disgorgement
and a civil penalty in an amount to be determined by the Court, and he waived the right to challenge
the factual allegations of the amended complaint. Dkt. # 40-1.
Plaintiff filed an “unopposed” motion for entry of the proposed judgment. Dkt. # 40. The
Court reviewed the proposed judgment and found that it did not state the amount of disgorgement
or the civil penalty that defendant would be required to pay. Dkt. # 41. The Court directed the
parties to submit an amended proposed judgment or advise the Court if additional briefing as to the
amount of disgorgement and civil penalty would be necessary. Plaintiff’s counsel was unable to
contact defense counsel concerning the preparation of an amended proposed judgment, and the
Court entered a briefing schedule on the issue of disgorgement. Dkt. # 43. Plaintiff filed a brief
asking the Court to order disgorgement in the amount of $320,000, plus $59,841.38 in prejudgment
interest, and to impose a third-tier civil penalty. Fox filed a pro se response stating that he believed
he had agreed to the entry of a judgment that did not include any monetary relief, and he claimed
that his attorney failed to advise him that he would be required to pay disgorgement and a civil
penalty if he signed the consent form. Dkt. # 46, at 2. He also argued that he was unaware that he

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waived his right to challenge the allegations of the amended complaint by signing the consent form.
Id.
On November 2, 2012, the Court entered an opinion and order (Dkt. # 52) granting plaintiff’s
motion for entry of judgment. The Court found that defendant was “bound by the terms of the
consent form, and that he may not challenge the facts alleged in the first amended complaint or
[plaintiff’s] right to seek monetary relief.” Dkt. # 52, at 6. The judgment included various types of
injunctive relief and, in particular, Fox was enjoined form serving as an “officer or director of any
issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C.
§ 781] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C.
§ 78o(d)].” Dkt. # 53, at 6. In addition to injunctive relief, the Court ordered Fox to pay
disgorgement in the amount of $320,000, plus prejudgment interest of $59,841.38, and a civil
penalty of $100,000.
Defendant asks the Court to reconsider its decision to grant plaintiff’s motion for entry of
judgment, because the judgment is based on “bogus statements” contained in the amended
complaint. Dkt. # 54, at 4. Defendant’s motion was filed within 28 days of the entry of judgment,
and the Court will treat defendant’s motion as a motion to alter or amend judgment under Fed. R.
Civ. P. 59(e). Under Rule 59(e), a party may ask a district court to reconsider a final ruling or
judgment when the district court has “misapprehended the facts, a party’s position, or the controlling
law.” Barber ex rel. Barber v. Colo. Dep’t of Revenue, 562 F.3d 1222, 1228 (10th Cir. 2009).
“Grounds warranting a motion to reconsider include (1) an intervening change in the controlling
law, (2) new evidence previously unavailable, and (3) the need to correct clear error or prevent
manifest injustice.” Servants of Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000).

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Reconsideration is “not available to allow a party to reargue an issue previously addressed by the
court when the reargument merely advances new arguments or supporting facts which were
available for presentation at the time of the original argument.” FDIC v. United Pac. Ins. Co., 152
F.3d 1266, 1272 (10th Cir. 1998) (quoting Cashner v. Freedom Stores, Inc., 98 F.3d 572, 577 (10th
Cir. 1996)). “A Rule 59(e) motion to reconsider is designed to permit relief in extraordinary
circumstances and not to offer a second bite at the proverbial apple.” Syntroleum Corp. v. Fletcher
Int’l, Ltd., 2009 WL 761322 (N.D. Okla. Mar. 19, 2009).
The Court finds that defendant has not presented a valid basis for the Court to reconsider its
November 2, 2012 opinion and order (Dkt. # 52) or the judgment (Dkt. # 53), and his motion should
be denied. Defendant simply reasserts arguments that have already been considered and rejected,
but the Court has no obligation to consider such arguments when ruling on a Rule 59(e) motion. See
Servants of the Paracletes, 204 F.3d at 1009; Van Skiver v. United States, 952 F.2d 1241, 1243 (10th
Cir. 1991). The vast majority of defendant’s motion is a challenge to the facts alleged in the
amended complaint. However, defendant signed a consent form waiving any right to challenge the
allegations of the amended complaint, and the Court found that the consent form was valid and
enforceable. Dkt. # 52, at 5-6. Defendant again argues that he did not understand the consent form
and that the form was not adequately explained to him by his attorney. Dkt. # 54, at 6-7. The Court
previously found that “defendant had ample time to read the consent form and he was represented
by counsel at [his] deposition,” and he made no allegations that the consent form was invalid due
to fraud or misconduct on the part of plaintiff’s counsel. Dkt. # 52, at 5. Defendant has offered no
new evidence or legal argument that would cause the Court to reconsider its prior decision that
defendant knowingly and voluntarily signed the consent form, and defendant is bound by the terms

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of the consent form. Thus, defendant waived the right to challenge the allegations of the amended
complaint, and the Court will not consider defendant’s challenge to those allegations. The Court
has reviewed defendant’s motion and can discern no other arguments, and his motion to reconsider
should be denied.
IT IS THEREFORE ORDERED that Defendant’s Motion to Reconsider and/or Vacate
Order Granting Summary Judgment Dated November 2, 2012; Motion for New Trial and/or Motion
to Reconsider and Vacate and Brief in Support with Supporting Brief (Dkt. # 54) is denied.
DATED this 2nd day of January, 2013.

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