Securities & Exchange Commission v. Kaleta et al

Filing 294

MEMORANDUM AND ORDER DENIED 286 MOTION to Modify Bar Order as to 210 Order (Signed by Judge Nancy F. Atlas) Parties notified.(sashabranner, 4)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
v.
ALBERT FASE KALETA and
KALETA CAPITAL
MANAGEMENT, INC., et al.,
Defendants,
and
BUSINESSRADIO NETWORK, L.P.
d/b/a BizRadio and DANIEL
FRISHBERG FINANCIAL
SERVICES, INC., d/b/a DFFS
CAPITAL MANAGEMENT, INC.,
Relief Defendants.

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CIVIL ACTION NO. 4:09-3674

MEMORANDUM AND ORDER
This case is before the Court on certain BizRadio Noteholders’ Motion to
Modify Court’s Bar Order and Request for Expedited Oral Hearing (the “Motion”)
[Doc. # 286].1 Party in Interest David Wallace (“Wallace”) and Court-Appointed

1

The BizRadio Noteholders are identified in Exhibit A to the Motion [Doc.
# 286-1].

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Receiver Thomas L. Taylor, III (the “Receiver”), each filed Responses
[respectively, Docs. # 289 and 290]. The Court held oral argument on September
24, 2015 (the “Hearing”). The Motion is ripe for determination. After considering
the parties’ briefing, all matters of record, and the applicable legal authorities, the
Court denies the Motion.
I.

BACKGROUND
In 2009, the Securities and Exchange Commission commenced an action

against Albert Kaleta, Daniel Frishberg, and Kaleta Capital Management under the
anti-fraud provisions of the federal securities laws.2 The Court appointed Thomas
L. Taylor, III, as Receiver for Defendant Kaleta Capital Management and Relief
Defendants BusinessRadio Network, L.P. d/b/a BizRadio and Daniel Frishberg
Financial Services, Inc. d/b/a DFFS Capital Management, Inc. (“Relief
Defendants”).3 This case arose from claims associated with dealings by Wallace,
Costa Bajjali (“Bajjali”), and affiliated entities (collectively, the “Wallace Bajjali
Parties”) in securities offerings and other transactions related to the Relief
Defendants. After detailed analysis of potential claims of the Receivership Estate
against the Wallace Bajjali Parties, evaluation of the associated risks and costs of
2

Complaint [Doc. # 1].

3

Agreed Order Appointing Receiver [Doc. # 7-1]; Order Modifying Order
Appointing Receiver [Doc. # 34].

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litigation, and assessment of the collectability of any judgment that might be
obtained, the Receiver and the Wallace Bajjali Parties reached an agreement to
settle the Receivership claims (the “Settlement Agreement”). On August 1, 2012,
the Court entered an Order approving the Settlement Agreement,4 concluding it
provided a reasonable opportunity for the Receiver to maximize the recovery to the
Receivership Estate while minimizing litigation risks and costs.5
The BizRadio Noteholders made loans to Relief Defendant BizRadio
through the Wallace Bajjali Parties.6 The Settlement Agreement includes a Bar
Order, which restrains the BizRadio Noteholders from prosecuting claims against
the Wallace Bajjali Parties related to those loans.

Instead, the BizRadio

Noteholders may “participate in the claims process for the Receiver’s ultimate
distribution of assets from the Receivership Estate.”7 The Bar Order was entered
after the Court carefully considered and overruled numerous objections by the
BizRadio Noteholders.8 Before making its rulings, the Court reviewed in camera
4

Order Approving Settlement and Entering Final Bar Order and Injunction [Doc.
# 210].

5

Memorandum and Order [Doc. # 170], at 5–6.

6

Id., at 3.

7

Id., at 9; Order Approving Settlement and Entering Final Bar Order and Injunction
[Doc. # 210], at 4, § V.

8

Memorandum and Order [Doc. # 170].

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certain financial statements and documents from Wallace (the “Wallace Financial
Affidavit”) and Bajjali.9 The Fifth Circuit affirmed the Court’s approval of the
Settlement Agreement and the Bar Order. SEC v. Kaleta, 530 F. App’x 360 (5th
Cir. 2013).
Pursuant to the Settlement Agreement, two of the Wallace Bajjali Parties,
LFW Fund and West Houston Fund (the “Funds”), executed two sets of notes (the
“Notes”), all of which Wallace and Bajjali personally guaranteed (the
“Guarantees”).10 The Funds defaulted on the Notes in 2014.11 The Receiver
instituted separate suits for breach of the terms of the Notes and he obtained a
default judgment against LFW Fund and summary judgment against Bajjali. The
Receiver also sued West Houston Fund and Wallace on the Notes and Wallace’s
Guarantee. Wallace and West Houston Fund initiated bankruptcy proceedings in
March and April 2015, respectively. These bankruptcies’ automatic stays have
prevented entry of judgment against these parties.

9

See Index of Documents Delivered for In Camera Inspection [Doc. # 165].

10

Details regarding the Notes and the Guarantees can be found in the Court’s
Memorandum and Order dated February 27, 2012 [Doc. # 170].

11

A third entity, Spring Cypress Investments, L.P., also executed notes pursuant to
the Settlement Agreement, which it paid in full in 2013, but its total liability was
under $10,000. See Status Report of the Receiver Dated July 16, 2014 [Doc.
# 269], at 6.

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The BizRadio Noteholders obtained relief from the automatic stay in the
Bankruptcy Court to allow them to request modification of the Bar Order in this
Court so they can challenge the dischargeability of and potentially pursue their
claims in Wallace’s individual bankruptcy proceeding.12 See Reply to Receiver
[Doc. # 291], at 4, 7.
The BizRadio Noteholders contend that they should be relieved from the Bar
Order because the materials the Court reviewed in camera and relied on in
approving the proposed settlement contain “false and misleading” statements.
Motion [Doc. # 286], at 3. The Noteholders have not seen the materials submitted
in camera in 2012 that contain the allegedly false and misleading statements.
Instead, the Motion is based on information allegedly learned by or statements
made by the Receiver regarding the Wallace Financial Affidavit, see id.,
bankruptcy schedules filed by Wallace and various business entities in related
bankruptcy proceedings after entry of the Bar Order (the “Bankruptcy Schedules,”
Motion, Exh. B [Doc. # 286-2]), and the BizRadio Noteholders’ “beliefs”
regarding alleged overvaluations of certain development projects in Amarillo and
Joplin in the Wallace Financial Affidavit.

Motion [Doc. # 286], at 3.

The

BizRadio Noteholders have also referred to allegations of misrepresentations
12

The Motion does not request relief regarding West Houston Fund, Bajjali, and
LFW Fund.

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regarding the probability of success of a potential IPO involving Wallace and
Bajjali. Reply to Wallace [Doc. # 292], at 5.
In response, the Receiver denies ever learning or stating “any such purported
facts.” Receiver’s Response [Doc. # 290], at 12. The Receiver explains that he
has compared the Bankruptcy Schedules to the original Wallace Financial
Affidavit and found the original disclosures to be adequate. Id., at 12–13. The
Receiver also states that the Amarillo and Joplin projects were “always . . .
considered prospective in nature” and that the “Settlement Agreement and Bar
Order were not premised upon the success of those projects.” Id. at 13.
In considering this Motion, the Court again reviewed in camera the Wallace
Financial Affidavit. At the Hearing, the Court heard oral argument on the Motion,
during which the parties clarified and narrowed the issues.
II.

ANALYSIS
The BizRadio Noteholders request that the Court lift the Bar Order so they

may pursue claims on their own behalf.

They seek relief pursuant to four

subsections of Federal Rule of Civil Procedure 60 to modify the Bar Order: Rule
60(b)(3), (b)(5), (b)(6), and (d)(3). The BizRadio Noteholders have not satisfied
the requirements of any of these subsections.

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A.

Rule 60(b)(3)

Rule 60(b)(3) provides that a court may relieve a party from a final judgment
or order where there was “fraud . . . , misrepresentation, or misconduct by an
opposing party.” A motion pursuant to Rule 60(b)(3) must be brought within “no
more than a year after the entry of the judgment or order.” FED. R. CIV. P.
60(c)(1). The Court “must not extend” this one-year deadline. FED. R. CIV. P.
6(b)(2). The Court entered the Bar Order on August 1, 2012, which is more than
three years before the BizRadio Noteholders filed their Motion. The Rule 60(b)(3)
argument is therefore time-barred and relief under that provision is denied.
B.

Rule 60(b)(5)

Rule 60(b)(5) provides that a court may relieve a party from a final judgment
or order where “applying [the judgment or order] prospectively is no longer
equitable.” Rule 60(c)(1) allows Rule 60(b)(5) motions to be made within a
“reasonable time” of the final judgment or order. Here, the BizRadio Noteholders
rely most heavily on events within the last year, so their Rule 60(b)(5) arguments
are timely.
Rule 60(b)(5) requires that the BizRadio Noteholders show a change in
circumstances that creates conditions sufficiently inequitable to outweigh the
policy in favor of finality of judgments. See Halliburton Energy Servs., Inc. v. NL
Indus., 618 F. Supp. 2d 614, 651 (S.D. Tex. 2009) (Rosenthal, J.) (“The inquiry
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[under Rule 60(b)(5)] . . . is whether the changes are so important that dangers [the
injunction was designed to prevent], once substantial, have become attenuated to a
shadow. No doubt the defendants will be better off if the injunction is relaxed, but
they are not suffering hardship so extreme and unexpected as to justify . . . saying
that they are the victims of oppression.” Id. (quoting United States v. Swift, 286
U.S. 106, 119 (1932))); Hesling v. CSX Transp., Inc., 396 F.3d 632, 638 (5th Cir.
2005) (“The purpose of Rule 60(b) is to balance the principle of finality of a
judgment with the interest of the court in seeing that justice is done in light of all
the facts.”).13 Equity grants the Court flexibility to weigh factors as relevant to a
particular case, but “in private commercial litigation[,] the need for finality of
judgments and the sanctity of bargains” will be particularly “important.” 12-60
MOORE’S FEDERAL PRACTICE - CIVIL § 60.47 (3d ed. 2015).

The BizRadio

Noteholders have failed to show that the balance of the equities has tipped in their
favor.

13

See Valentine Sugars, Inc. v. Sudan, 34 F.3d 320, 322 (5th Cir. 1994)
(“Modification is only cautiously to be granted; that the dangers which the decree
was meant to foreclose must almost have disappeared; that hardship and
oppression, extreme and unexpected are significant; and that the movant's task is
to provide close to an unanswerable case.” (quoting Roberts v. St. Regis Paper
Co., 653 F.2d 166, 173 (5th Cir. Unit B 1981))); W.L. Gore & Assocs. v. C.R.
Bard, Inc., 977 F.2d 558, 561 (Fed. Cir. 1992) (“Lest the finality of judgments and
the policy of ending litigation be unduly impeached, such modification requires
not only that circumstances have changed, but that unexpected hardship and
inequity have resulted.”).

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At the Hearing, counsel for the BizRadio Noteholders advanced three
theories for finding the Bar Order inequitable: (1) Wallace, Bajjali, and the Funds
have not paid on the Notes,14 (2) the basis for the Settlement Agreement was
“questionable” from the beginning, and (3) there have been “shenanigans”
regarding the information provided to the Court.15 The BizRadio Noteholders
further contend that modification would be equitable because Wallace has
significant future earning capacity, which would permit the BizRadio Noteholders
to recover on their claims, which they assert are worth $30 million.
1.

Previously Litigated Arguments

The Court has previously ruled on several of the BizRadio Noteholders’
arguments. Rule 60(b) does not permit the Court to revisit the merits of its earlier
findings. See Gen. Universal Sys., Inc. v. Lee, 379 F.3d 131, 157 (5th Cir. 2004)
(explaining that a party “may not use a Rule 60(b) motion as an occasion to

14

See, e.g., Reply to Receiver [Doc. # 291], at 5 (“[T]he Bar Order was intended to
advance the Receiver’s goal of ‘collect[ing] as many assets as possible for
distribution among all defrauded investors.’ This goal was frustrated by the
breach of the settlement agreement wherein the Receiver has collected nothing
while unjustly depriving the Noteholders of their rights to pursue same.”); Reply
to Wallace [Doc. # 292], at 3 (“The Bar Order is now being used as a sword to gut
the BizRadio Noteholders claims, as well as the Receiver’s efforts to collect on
behalf of all stakeholders . . . .”).

15

The BizRadio Noteholders did not advance the second and third grounds under the
auspices of Rule 60(b)(5) in their briefing. In any event, in the interest of justice,
the Court will consider these arguments under the Rule 60(b)(5) theory.

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relitigate its case”). The BizRadio Noteholders raised the issue of Wallace’s future
earning capacity in their Objections to the Settlement Agreement and in their
Motion for Reconsideration of the Court’s Order overruling the objections.16 The
Court twice rejected the argument as speculative.17
Now, as in 2012, some of BizRadio Noteholders’ claims are not subject to
the Bar Order, as explained by the Receiver.18 The BizRadio Noteholders have not

16

Investor’s Objection to Receiver’s Motion for Order Approving Proposed
Settlement and for Ancillary Orders [Doc. # 124], at 3; Investors’ Motion for
Reconsideration of Order Approving Settlement with the Wallace Bajjali Parties
and Request for Evidentiary Hearing [Doc. # 179], at 3 (claiming that Wallace and
Bajjali “expect to have unencumbered assets in excess of $30 million each within
five months of the settlement”).

17

See Memorandum and Order [Doc. # 170], at 19–20 (“The Objectors have not
established with any specificity . . . the extent of Messrs. Wallace and Bajjali’s
potential future earnings.”); Hearing Minutes and Order [Doc. # 209] (denying the
BizRadio Noteholders’ Motion for Reconsideration [Doc. # 179]).

18

See Memorandum and Order [Doc. # 170], at 21 (“The Court concludes that the
Objectors’ claims arising from ‘real estate’ or ‘equity investment’ transactions
would not be barred by the Bar Order . . . .”); September 24, 2015 Hearing. The
BizRadio Noteholders do not explain in any detail or substantiate their valuation
of their potential claims that are enjoined by the Bar Order. See, e.g., Reply to
Receiver’s Response [Doc. # 291], at 4 (reciting nature of claims without citation
to record); see also Memorandum and Order [Doc. # 170], at 21 (“[T]he
Objectors’ have failed to provide factual detail, evidence, or meaningful analysis
of the value or likelihood of success of their alleged claims against the [Wallace
Bajjali] Parties.”). It is noted that the BizRadio Noteholders’ representations
regarding the value of their claims has changed with each round of briefing
challenging the Settlement Agreement. At the Hearing, counsel for the BizRadio
Noteholders referenced claims worth up to $30 million. At the time of the Motion
for Reconsideration, the BizRadio Noteholders only valued their claims at $20
million. See Doc. # 179, at 2. In their original Objections, they valued their
(continued…)
10

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shown that circumstances have changed regarding their potential claims generally,
or against Wallace, that are subject to the Bar Order.
The BizRadio Noteholders’ contention that the basis for the Settlement
Agreement was “questionable” similarly retreads familiar ground in contravention
of Rule 60(b). The Court recalls the complex, fact-intensive and costly claims the
Receiver considered asserting against Wallace (and affiliated entities).

Any

settlement had to be viewed in context. Litigation risk and expense to prosecute
these claims were substantial. Collection of any recovery was also expected to be
costly and difficult. The Court determined that the Settlement Agreement was
sufficiently favorable to the Receivership and claimants, including the BizRadio
Noteholders, to warrant approval. The Court nevertheless also recognized in 2012
that Wallace’s financial circumstances were questionable. The Court has carefully
reviewed the evidence it had before it in 2012 regarding Wallace’s financial
condition.

It was clear that Wallace and Bajjali, had several large potential

projects, but they were at very early stages and were, by definition, speculative.
Included here were the nascent business ventures in Amarillo and Joplin and the
potential IPO. Wallace disclosed he held numerous but not necessarily lucrative

(continued…)
claims at around $15 million. See Doc. # 124, at 3. Moreover, it is not apparent
how the prospects of collection on any judgments have improved over time.

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personal assets and investments at the time.

The Court recognized the risks

inherent in collection under the Settlement Agreement, but found that those risks
were acceptable under the circumstances, because a settlement that confirmed and
liquidated the Wallace Bajjali Parties’ liability on various complex litigation
theories was advantageous to prolonged, risky, and, likely, expensive, litigation of
the Receivership Estate’s claims against these defendants.19 Rule 60(b)(5) is not a
vehicle to second-guess those rulings.
2.

Alleged False and Misleading Statements

The BizRadio Noteholders also contend that Wallace made false and
misleading statements in 2012 and thus continued enforcement of the Bar Order is
inequitable.

The BizRadio Noteholders focus on three alleged misstatements.

None of these theories holds merit.
First, the BizRadio Noteholders point to Wallace’s interest in a skating rink.
Review of the record has revealed there was adequate disclosure of Wallace’s
interest in the entity that owns the asset.20

19

See Memorandum and Order [Doc. # 170], at 15 (“The Receiver . . . establishes
without contradiction that the agreed quantification of these obligations is a
material benefit to the Receivership Estate because the WB/KCM Note
transactions were ‘chaotic and poorly documented’ and ‘not readily susceptible to
proof’ and there are possible defenses that could be raised to complicate the
litigation.”).

20

At the Hearing, the Receiver explained that he had been surprised by the
disclosure of Wallace’s interest in an “ice skating rink” on the Bankruptcy
(continued…)
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Second, the BizRadio Noteholders speculate about possible discrepancies
between the Wallace Financial Affidavit and the Wallace Bankruptcy Schedules.
The Court credits the Receiver and his counsel’s statements that the Receiver’s
close comparison of these materials revealed no material differences. 21
Third, the BizRadio Noteholders claim that Wallace overstated the value of
the Amarillo and Joplin projects and the likelihood of an IPO. The record is clear
that Wallace’s submissions made apparent, and both the Court and the Receiver
were well aware of, the many contingencies relating to those projects, which
contingencies made the projects’ outcome and profitability uncertain.22

The

(continued…)
Schedules, which he did not recall from the Wallace Financial Affidavit. Upon
further review, the Receiver determined that this interest had been disclosed in a
different way in the Wallace Financial Affidavit.
21

At the Hearing, Bankruptcy counsel for the Receiver explained that the Receiver
had considered whether there were any false or misleading statements in
Wallace’s financial disclosures that would, for example, enable the Receiver to
request that the Notes could be non-dischargeable debt pursuant to section 523 of
the Bankruptcy Code. Counsel, with non-verbal endorsement by the Receiver at
the Hearing, stated that there were no such arguments that met the standards of
Federal Rule of Civil Procedure 11. See also Receiver’s Response [Doc. # 290],
at 13.

22

The Court and the Receiver’s reliance on proceeds of the Amarillo and Joplin
projects was secondary under the Settlement Agreement. It was hoped that these
projects could provide funds for the “Cash Flow Notes,” which were negotiated as
“additional consideration” for the Settlement Agreement. See Memorandum and
Order [Doc. # 170], at 8 (emphasis added); see also Receiver’s Response [Doc.
# 290], at 13–24.

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BizRadio Noteholders have not shown that any misrepresentations by Wallace that
render continued enforcement of the Bar Order inequitable.
3.

Nonpayment of the Notes and Guarantees

The BizRadio Noteholders’ argument that the nonpayment of the Notes and
Guarantees is a basis for Rule 60(b)(5) relief is similarly unavailing. The Receiver
accepted certain risks inherent in the Settlement Agreement as a tradeoff for
eliminating other litigation difficulties. The Wallace Bajjali Parties’ failure to
perform according to the Settlement Agreement and the bankruptcy filings by
some of these parties are among the risks of any contract with parties with limited
liquid and/or illiquid assets, particularly at a time when the country was trying to
overcome a major financial recession, as in 2012. The Settlement Agreement has
not been shown to be inequitable.
The Receiver is aware the Settlement Agreement with Wallace and the other
Wallace Bajjali Parties has not been particularly successful thus far. But the
Receiver has not abandoned his efforts to obtain funds from these parties for the
Receivership Estate. The Receiver currently seeks to collect on the Notes and
Guarantees in new actions. Receiver’s Response [Doc. # 290], at 6–7. He has
obtained a default judgment against LFW Fund and summary judgment against
Bajjali.

He is pursuing the Receivership’s rights as a creditor in various

bankruptcy proceedings.
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The BizRadio Noteholders assert that some of their claims against the
Wallace Bajjali Parties are non-dischargeable because the claims are grounded in
fraud theories. They contend that they and the Receiver could obtain more from
Wallace individually under these putative fraud claims than they will obtain
through the Receivership based on the Settlement Agreement’s Notes and
Wallace’s Guarantee, which are dischargeable obligations in bankruptcy.
reasons explained above, this contention is pure speculation.23

For

The Receiver

persuasively responds that, without the Bar Order, the settlement agreement would
fall apart due to lack of consideration, and would require relitigation of the settled

23

As noted above, if the BizRadio Noteholders were to pursue their claims, they
would face the same proof and evidentiary problems that persuaded the Receiver
and the Court that the Settlement Agreement’s liquidated and quantified Notes
were superior to litigating complex inchoate or speculative claims, and then trying
to collect any judgment.
Furthermore, the BizRadio Noteholders thus far appear to rely only on the Court’s
finding that they lacked a perfected security interest in the BizRadio properties.
See Reply to Receiver [Doc. # 291], at 4 & n.1 (“The Court all but agreed with
[the] fact [that the BizRadio Noteholders would have a suit against the Wallace
Bajjali Parties] in connection with the sale of the Radio State assets to Salem
Coummications [sic], by denying the Noteholders’ security interest and equitable
subrogation arguments on the basis that David Wallace and WB Development
Partners failed to comply with their responsibility to perfect the security
interest.”). The Court’s comments obviously were not definitive rulings on
Wallace and WB Development Partners’ responsibilities or potential liabilities.
See Memorandum and Order [Doc. # 156].

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claims, which expense the Receivership Estate cannot afford.24 More litigation, at
best, would result in a “Pyrrhic victory.” Receiver’s Response [Doc. # 290], at 16.
It is important to keep litigation expenses to a minimum to salvage funds for a pro
rata distribution to all creditors of the Receivership Estate.25 In any event, the
BizRadio Noteholders may continue to seek recovery on their other claims against
Wallace (and others).
The Court was aware of the financial circumstances of the Wallace Bajjali
Parties at the time the Settlement Agreement was approved. While the Settlement
Agreement may not turn out to be lucrative, it was negotiated and concluded as an
arms-length transaction. The interests of finality of judgments and the equities
generally dictate that the Settlement Agreement, including the Bar Order, should
remain in place and the Receiver’s pending suits to collect on the Notes be allowed
to proceed as permitted under federal, state, and bankruptcy laws. The BizRadio
Noteholders’ contentions that Rule 60(b)(5) warrants the lifting of the Bar Order

24

Although the BizRadio Noteholders have only requested modification of the Bar
Order regarding the Wallace Bankruptcy Proceedings, see Motion [Doc. # 286], at
6–7, the Court is aware the BizRadio Noteholders apparently intend to seek
similar relief in other bankruptcies.

25

See Memorandum and Order [Doc. # 170], at 22 (noting that “there are many
others who also claim to have suffered serious losses and damages” and “where
investors are similarly defrauded, equity favors treating them alike”).

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and that the Court should permit them to pursue their individual Biz-Radio-based
claims against Wallace and others is rejected.
C.

Rule 60(b)(6):

Rule 60(b)(6) provides that a court may relieve a party from a final judgment
or order for “any other reason that justifies relief.” A motion pursuant to Rule
60(b)(6) must be made within a “reasonable time” after the judgment or order.
FED. R. CIV. P. 60(c)(1). Rule 60(b)(6), however, cannot be used to circumvent the
rest of Rule 60’s time limits. If a motion under Rule 60(b)(6) is properly brought
under a different subsection of Rule 60(b), it therefore cannot also be brought
under Rule 60(b)(6). Wilson v. Johns-Manville Sales Corp., 873 F.2d 869, 872
(5th Cir. 1989) (per curiam) (“We have held that ‘Relief under subsection (6) is not
available to a movant where . . . the relief sought would have been, if not for the
Rule's time limits, within the coverage of another of the subsections of the Rule.’”
(quoting Kerwit Med. Prods., Inc. v. N&H Instruments, Inc., 616 F.2d 833, 836 n.8
(5th Cir. 1980))). The BizRadio Noteholders’ allegations of false and misleading
statements by Wallace and Bajjali plainly fall within the ambit of Rule 60(b)(3) or
60(b)(5). The Court has already held that the BizRadio Noteholders’ Rule 60(b)(3)
arguments are time-barred and that they have not shown inequitable circumstances
under Rule 60(b)(5). Relief under Rule 60(b)(6) is denied.

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D.

Rule 60(d)(3)

Rule 60(d)(3) preserves a court’s power to “set aside a judgment for fraud on
the court.” Unlike Rule 60(b)(3), Rule 60(d)(3) is not time-limited. The standard
for “fraud on the court,” however, requires a showing of “the most egregious
misconduct” to warrant relief. “Less egregious misconduct, such as nondisclosure
to the court of facts allegedly pertinent to the matter before it, will not ordinarily
rise to the level of fraud on the court.” Rozier v. Ford Motor Co., 573 F.2d 1332,
1338 (5th Cir. 1978). The BizRadio Noteholders rely on allegations of false and
misleading statements which, even if proved, do not “rise to the level of fraud on
the court,” so relief under Rule 60(d)(3) is denied.
III.

CONCLUSION AND ORDER
Based on the foregoing, the Court concludes that the BizRadio Noteholders

have failed to show that the Bar Order should be modified pursuant to Federal Rule
of Civil Procedure 60. Accordingly, it is hereby
ORDERED that BizRadio Noteholders’ Motion to Modify Court’s Bar
Order and Request for Expedited Oral Hearing [Doc. # 286] is DENIED.
SIGNED at Houston, Texas this 29th day of September, 2015.

NAN Y F. ATLAS
SENIOR UNI
STATES DISTRICT JUDGE

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