Security Alarm Financing Enterprises, Inc. v. Parmer et al
Filing
266
MEMORANDUM OPINION AND ORDER DENYING DEFENDANT MITCH BROZIKS 257 MOTION TO RECONSIDER AND DENYING INTERVENOR UNITED BANK, INC.S 250 MOTION TO REOPEN THE CIVIL ACTION. Signed by Senior Judge Frederick P. Stamp, Jr on 4/27/15. (jss)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
SECURITY ALARM FINANCING
ENTERPRISES, INC.,
Plaintiff,
v.
Civil Action No. 1:12CV88
(STAMP)
BETTY PARMER, SECURE US, INC.,
and MITCH BROZIK,
Defendants,
and
GUARDIAN SECURITY, INC.
and UNITED BANK, INC.,
Intervenors,
and
KOURT SECURITY PARTNERS, LLC
d/b/a SELECT SECURITY,
Interested Party.
MEMORANDUM OPINION AND ORDER
DENYING DEFENDANT MITCH BROZIK’S MOTION TO RECONSIDER
AND DENYING INTERVENOR UNITED BANK, INC.’S
MOTION TO REOPEN THE CIVIL ACTION
I.
Background
The facts of this civil action are well-known by the parties,
their counsel, and this Court.
Because of that, this Court will
only discuss the most relevant facts.1
The case involves an
alleged sham sale of defendant Mitch Brozik’s (“Brozik”) former
1
For a more thorough discussion of the facts of this case, see
ECF No. 230.
company, Secure US, Inc. (“Secure US”), to his aunt, defendant
Betty Parmer (“Parmer”). Brozik allegedly sold Secure US to Parmer
to avoid a monetary judgment that the plaintiff Security Alarm
Financing Enterprises, Inc. (“SAFE”) received.
In May 2014,
following numerous motions and hearings, this Court approved a
stipulation of the parties and entered a judgment for SAFE against
Parmer equaling $1,132,028.42 plus interest and costs.
164.
ECF No.
This Court then granted the plaintiff’s motion for issuance
of a writ of fieri facias and appointed United States Magistrate
Judge James E. Seibert as the officer to seize and sell the
property of Secure US in order to satisfy the judgment against it.
ECF No. 169.
SAFE then filed a motion seeking an order of sale of assets.
ECF
No.
172.
Magistrate
Judge
Seibert
then
conducted
an
evidentiary hearing on the matter, which included the testimony of
Patrick Egan, an owner of Kourt Security Partners, LLC (“Kourt”).
After conducting an evidentiary hearing on that motion, Magistrate
Judge Seibert entered an order for the sale2 (“sale orders”) of
assets.
Prior to the sale orders, United Bank, Inc. (“United”)
filed a motion to intervene, which this Court granted.
2
ECF Nos.
Magistrate Judge Seibert initially entered an order of sale
(ECF No. 186).
However, the magistrate judge later entered an
“Amended Order Attaching Notice of Sale to Order Granting Motion
for Sale of Assets” that incorporated the initial order of sale
(ECF No. 187). Thus, this Court refers to both orders collectively
as “sale orders.”
2
176
and
respectively.3
181,
Later,
Guardian
Security,
Inc.
(“Guardian”), a bidder for Secure US’s assets, also filed a motion
to intervene and to postpone the judicial sale.
ECF No. 195.
This
Court granted Guardian’s motion, and thus postponed the judicial
ECF No. 198.4
sale.
Prior to the judicial sale, Parmer and SAFE filed a joint
motion to postpone the judicial sale in order to pursue a private
sale of the assets.
ECF No. 213.
Brozik, Guardian, and several
interested bidders filed objections and responses, arguing that the
assets would continue to decrease in value if the judicial sale was
again postponed.
ECF Nos. 215, 217, and 218.
Further, Brozik
filed a motion to place the funds of the judicial sale in escrow.
ECF No. 216.
Regarding the joint motion to postpone the judicial
sale, the magistrate judge denied that motion, but placed a minimum
bid on the sale and required a deposit of 10% of the bid price.
ECF Nos. 219 and 221. SAFE and Parmer filed objections to the
magistrate judge’s order denying their motion to postpone the
judicial sale.
ECF No. 224.
After analyzing both the parties’
3
Following the sales orders, Brozik filed objections to those
orders.
Brozik’s objections are not relevant to this opinion.
This Court’s opinion overruling those objections can be found at
ECF No. 194.
4
The parties then disputed the terms of an order by the
magistrate judge that required Guardian to sign both a nondisclosure agreement and a non-solicitation agreement concerning
certain customer accounts.
Ultimately, this Court overruled
Guardian’s objections to that order. ECF No. 210.
3
filings on the matter and the facts before it, this Court granted
SAFE and Parmer’s motion to stay the judicial sale and permitted
them to pursue a private sale.5
ECF No. 230.
One month later, SAFE filed a status report regarding the
private sale.
ECF No. 245.
That
status report indicated that the
private sale was successfully concluded, stating that “[a]s a
result of the private sale, SAFE is no longer pursuing claims
against Parmer.
This lawsuit has therefore been fully resolved.”
Id. (emphasis added).
After receiving no objections or any other
filings following SAFE’s status report, this Court entered an order
dismissing the civil action with prejudice.
ECF No. 248.
At issue now are United’s motion to reopen this civil action,
and Brozik’s motion for reconsideration.
respectfully.
A.
ECF Nos. 250 and 257,
Those two motions are discussed below.
Motion to Reopen
In its motion, which was filed pursuant to Rule 60(b) of the
Federal Rules of Civil Procedure, United claims that it is a
secured creditor of the defendants under multiple loans.
United
argues that it has first priority over the security interests in
the collateral that was sold through the private sale. In addition
5
This Court also sustained SAFE and Parmer’s objections
regarding the adjournment of the judicial sale but overruled the
remaining objections as moot, vacated both the magistrate judge’s
order denying the motion to postpone the judicial sale and the
judicial sale that occurred, and denied as moot Brozik’s motion to
escrow funds. ECF No. 230.
4
to the collateral, United also believes that it is entitled to the
proceeds of the private sale because of its priority status.
United then asserts that no party to the private sale will disclose
to United relevant information about the sale, such as the sale
price or the terms and conditions of the private sale.
Further,
United claims that it relied on the magistrate judge’s prior order
wherein the magistrate judge declined to create an escrow account
for
any
proceeds
of
a
judicial
sale,
but
provided
that
the
disposition of the judicial sale proceeds would occur after such
judicial sale. United alleges that it relied on that order by
awaiting this Court’s determination of the judicial sale proceeds.
Because
that
never
occurred,
United
allegedly
was
unfairly
prejudiced when this Court dismissed the civil action from its
docket.
United also asserts that it would be a waste of judicial
resources for it to file a new civil action and “start over”
regarding its claim in the security interest. United thus requests
$827,000.00 plus attorneys’ fees and costs from the proceeds of the
sale.
SAFE and Parmer argue that United’s motion to reopen is
without merit for three primary reasons.
First, they claim that
this Court lacks jurisdiction to control the private sale of
assets, referring to this Court’s prior ruling (ECF No. 230)
wherein it determined that the parties had a right to conduct a
private sale. Second, they argue that Parmer has filed a suit
5
against United in state court, which is currently ongoing and which
will ultimately resolve the dispute. Third, SAFE and Parmer assert
that although United may have had a right to the collateral, it
does not have a right to the proceeds of the private sale.
In
addition to SAFE and Parmer’s response, defendant Brozik filed a
motion wherein he joins in support of United’s motion to reopen the
civil action.
ECF No. 256.
After reviewing United’s motion and the parties’ filings, this
Court directed the parties, either jointly or severally, to file a
status report regarding the pending state court action between
Parmer and United.
ECF No. 254.
SAFE, Brozik, United, and Parmer
each filed status reports. Based on those reports, it appears that
the state action still remains pending.
B.
Motion to Reconsider
After United filed its motion to reopen, Brozik then filed a
motion for reconsideration regarding the sale orders.
257.
ECF No.
In his motion, Brozik argues that the testimony of Mr. Egan,
an owner of Kourt, at a July 2014 hearing was not credible.
fact, Brozik argues that Mr. Egan lied at that hearing.
In
Following
the July 2014 hearing conducted by the magistrate judge about
whether to conduct the initial judicial sale, the magistrate judge
stated that Mr. Egan’s testimony at that hearing was credible, and
that Brozik’s testimony was not credible.
In the motion at issue,
Brozik claims that Mr. Egan lied about (1) his plans to bid on the
6
assets for sale, (2) cancelling certain accounts, and (3) other
“questionable” actions.
Brozik then points to a state court
action, where Parmer filed a claim against Mr. Egan for the
mismanagement of Secure US’s assets.
Overall, Brozik argues that
Mr. Egan engaged in fraudulent behavior to acquire Secure US’s
assets. For those reasons, Brozik requests that this Court conduct
a hearing on the matter.
Brozik later filed a supplement to his
motion for reconsideration.
Brozik
points
to
allegedly lied.
passages
ECF No. 263.
of
the
In that supplement,
transcript
where
Mr.
Egan
Brozik first claims that Mr. Egan lied about
forming a separate company that managed assets for Parmer.
Next,
Brozik argues that Mr. Egan lied about discussing non-compete
clauses with his employees.
In essence, Brozik argues that “the
point of all this is that Patrick Egan lied to the Court in an
effort to secure a court order so he could buy the assets of
[Secure US].
testimony
The Court placed great value on Mr. Egan’s perjured
in
reconsidered.”
making
its
rulings
which
we
now
ask
to
be
ECF No. 263.
In its response in opposition, in which Parmer joins, SAFE
first argues that Brozik’s motion to reconsider is moot because the
judicial sale was already adjourned.
ECF No. 259.
Here, SAFE
points out that this Court permitted the private sale of assets,
and that the private sale concluded in November 2014.
Because the
judicial sale will never occur, SAFE argues that Brozik’s motion is
7
moot. Second, SAFE claims that Mr. Egan did not lie to the Court at
the July 2014 hearing.
For the reasons set forth below, Brozik’s motion to reconsider
is denied (ECF No. 257), and United’s motion to reopen is denied
(ECF No. 250).
II.
A.
Applicable Law
Motions under Rule 60(b)
Federal Rule of Civil Procedure 60(b) provides that a court
may, upon motion or other terms, relieve a party from a final
judgment, order, or proceeding for any of 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.
Fed. R. Civ. P. 60(b)(1-6).
Generally, motions to reconsider are
“to be granted only in such extraordinary circumstances . . . .
Indeed, the court’s orders are not mere first drafts, subject to
revision and reconsideration at a litigant’s pleasure.”
United
States S.E.C. v. Nat’l Presto Industries, Inc., 2004 WL 1093390, at
*2 (N.D. Ill. Apr. 28, 2004) (quoting Quaker Alloy Casting Co. v.
Gulfco Industries, Inc., 123 F.R.D. 282, 288 (N.D. Ill. 1988)); see
Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847, 863-64
8
(1988); Massengale v. Oklahoma Bd. of Examiners in Optometry, 30
F.3d 1325, 1330-31 (10th Cir. 1994).
It is improper to use such a
motion to ask the court to “rethink what the court has already
thought through--rightly or wrongly.”
Bohannan
Roofing,
Inc.,
99
F.R.D.
Above the Belt, Inc. v. Mel
99,
101
(E.D.
Va.
1983).
Examples of when a motion to reconsider may be appropriate include
situations such as the following:
[W]here . . . the Court has patently misunderstood a
party, or has made a decision outside the adversarial
issues presented to the Court by the parties, or has made
an error not of reasoning but of apprehension. A further
basis for a motion to reconsider would be a controlling
or significant change in the law or facts since the
submission of the issue to the Court.
Such problems
rarely arise and the motion to reconsider should be
equally rare.
Id. at 101; Bank of Waunakee v. Rochester Cheese Sales, Inc., 906
F.2d 1185 (7th Cir. 1990).
B.
Judgment Creditor’s Power Over the Adjournment of Sale
When enforcing a money judgment, the court must issue a “writ
of execution,” unless it directs otherwise.
69(a)(1).
Fed. R. Civ. P.
Further, Rule 69 also provides that “the procedure and
execution . . . must accord with the procedure of the state where
the court is located.”
Accordingly, under West Virginia law, such
method of execution involves a writ of fieri facias.
§ 38-4-5 (2014).
W. Va. Code.
If granted by the court, the writ “becomes a lien
upon the personal property . . . owned by the judgment debtor.”
Barber v. Barber, 464 S.E.2d 358 (W. Va. 1995).
9
Further, pursuant
to a writ of fieri facias, the court appoints an officer to levy
the judgment against the property.
W. Va. Code § 38-5-4.
However, the judgment creditor generally has the power to
adjourn or postpone a judicial sale of assets, especially when
either the judgment debtor or other parties consent or agree to it.
Foote v. Kansas City Life Ins. Co., 92 F.2d 744 (5th Cir. 1937)
(judgment creditor could cancel judicial sale because he and debtor
arranged another method of satisfying the judgment); Wells Fargo
Home Mortgage, Inc. v. Stull, 876 A.2d 298, 302 (N.J. 2005) (“the
judgment creditor . . . controls the timing of execution”);
Wills
v. Chandler, 2 F. 273 (D. Neb. 1880) (vacating a judicial sale
where
the
judgment
creditor
and
debtor
agreed
to
another
arrangement and canceled the sale, but the judicial sale occurred
anyway); Walker v. Commonwealth, 18 Gratt. 13 (Va. 1867) (“A
plaintiff may always, with the consent of all the defendants,
abandon a levy upon the property of all or any of them, and
afterwards sue [sic] out a new execution.”); see also 30 Am. Jur.
2d Executions, Etc. § 401 (“Generally, it is the duty of the
execution officer to sell goods . . . subject to execution without
undue delay.
However, the right . . . to order a delay in making
an execution sale has been recognized on the ground that an
execution is the process of the judgment creditor and is under his
or her control.”).
10
III.
Discussion
Regarding the two motions at issue, this Court will first
address Brozik’s motion to reconsider.
After ruling on that
motion, this Court will then turn to United’s motion to reopen this
civil action. As stated earlier, both of those motions are denied.
A.
Motion to Reconsider by Brozik
The thrust of Brozik’s motion to reconsider is that Mr. Egan,
an owner of Kourt, lied during an evidentiary hearing conducted by
the magistrate judge. As proof of such perjury, Brozik claims that
certain statements made by Mr. Egan could reasonably be construed
as “an elaborate scheme to commit fraud on the Court.”
257.
ECF No.
That alleged scheme would allow Mr. Egan to buy Secure US’s
assets at a steep discount.
After reviewing the statements that
Brozik points to as proof of such a scheme and perjury, and the
magistrate judge’s findings, this Court finds that the motion must
be denied.
As stated earlier, motions to reconsider are granted only
under extraordinary circumstances.
here.
No such circumstances exist
Brozik alleges that Mr. Egan failed to alert the Court of
the pending state court action, which was allegedly filed before
the initial judicial sale occurred.
He also claims that Mr. Egan
lied about obtaining certain licenses regarding a separate company
that allegedly managed Parmer’s assets.
Brozik then looks to Mr.
Egan’s statement that Mr. Egan did not ask employees of that
11
separate company to sign non-compete clauses. According to Brozik,
Mr. Egan lied about all of those matters.
Because of that, Mr.
Egan’s lies “could be reasonably” construed as a scheme to commit
fraud, and “could have meant that the Court would have refused to
allow [the parties] to proceed with a private sale.”
The key word
used in Brozik’s arguments and conclusions is “could.”
Although
his bald allegations could be true, Brozik’s accusations rest on
equivocal statements made by Mr. Egan that frankly have little to
no relevance in this civil action.
statements
supported
a
grand
To conclude that Mr. Egan’s
scheme
of
fraud,
or
that
his
statements served as the catalyst for the initial judicial sale to
occur, is simply without merit.
At that evidentiary hearing, the
magistrate judge considered all the evidence and found Mr. Egan’s
testimony to be credible and that Brozik’s testimony was not
credible. The magistrate judge was in the better position to judge
the credibility of the witnesses.
Based on the record before it,
this Court will not disturb the magistrate judge’s credibility
findings.
Furthermore, this Court does not find extraordinary
circumstances that justify granting Brozik’s motion to reconsider.
Accordingly, his motion to reconsider is denied.
B.
Motion to Reopen by United
The remaining motion at issue is United’s motion to reopen,
which it filed under Rule 60(b).
The primary issues raised by
United in its motion are that it relied on this Court to determine
12
the sale proceeds following a judicial sale, and that it has first
priority over the collateral sold through the private sale and its
proceeds.
As will be discussed below, however, this Court lacks
jurisdiction over the private sale and therefore over United’s
motion to reopen.
United’s motion to reopen must be denied.
As provided above
and in this Court’s previous ruling on the matter, the case law
indicates that generally, a judgment creditor has “plenary power
over his execution, and the sheriff must do his bidding.”
18 Gratt. at 21.
Walker,
When SAFE decided to pursue a private sale, this
Court no longer maintained jurisdiction over the sale.
If a
judicial sale did occur, then perhaps this Court could have been
involved in determining any distribution of the sale proceeds, as
United seems to contend.
The problem with United’s contention,
however, is that a judicial sale did not occur.
pursued a private sale of the assets.
Instead, SAFE
Therefore, to the extent
that United claims it relied on this Court to distribute the sale
proceeds, that argument lacks merit.
In addition to the lack of
jurisdiction, it is noteworthy that United never filed an initial
objection to SAFE’s pursuit of a private sale.
The record shows
that SAFE filed a status report regarding the completion of the
private sale.
ECF No. 245.
That status report indicated that not
only had the private sale concluded, but also that “[t]his lawsuit
ha[d] therefore been fully resolved.”
13
Id.
Two weeks after
receiving that report, and after receiving no objection by the
parties, this Court then entered an order dismissing the civil
action with prejudice.
ECF No. 248.
Approximately 16 days after
that order, and almost 32 days after SAFE filed its status report,
United then filed its motion to reopen. The facts show that United
did not
make those objections known on the record.
United not
only failed to file objections when SAFE first indicated the
conclusion of the private sale, but also failed to do so when this
Court permitted the private sale to proceed in October 2014.
No. 230.
ECF
United also believes that by granting its motion to
intervene, this Court recognized that “United sought to protect a
senior security interest in the former Secure US assets.”
ECF No.
253. This Court, however, did not determine United’s priority when
it granted the motion to intervene.
that
United
could
intervene
in
That order simply recognized
this
civil
action,
and
indicated that United is a “potential secured creditor.”
181.
only
ECF No.
Therefore, the motion to intervene should be construed as
permitting United to intervene so as to adequately represent its
alleged interest in this civil action, rather than determining
either its seniority or the validity of its interest.
Therefore,
United’s motion must be denied for lack of jurisdiction.
14
IV.
Conclusion
For the reasons stated above, defendant Mitch Brozik’s motion
to reconsider (ECF No. 257) and United Bank, Inc.’s motion to
reopen (ECF No. 250) are DENIED.
IT IS SO ORDERED.
The Clerk is DIRECTED to transmit a copy of this memorandum
opinion and order to counsel of record herein.
DATED:
April 27, 2015
/s/ Frederick P. Stamp, Jr.
FREDERICK P. STAMP, JR.
UNITED STATES DISTRICT JUDGE
15
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