Securities and Exchange Commission v. Small Business Capital Corp. et al, No. 5:2012cv03237 - Document 1393 (N.D. Cal. 2021)

Court Description: ORDER DENYING MOTION FOR RELIEF FROM JUDGMENT AND MOTIONS FOR JUDICIAL NOTICE. Signed by Edward J. Davila on 4/8/2021. (ejdlc4S, COURT STAFF) (Filed on 4/8/2021)<hr><center>Any non-CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)</center>
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Securities and Exchange Commission v. Small Business Capital Corp. et al Doc. 1393 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 SECURITIES AND EXCHANGE COMMISSION, 8 9 v. 10 SMALL BUSINESS CAPITAL CORP.; MARK FEATHERS; INVESTORS PRIME FUND, LLC; and SBC PORTFOLIO FUND, LLC, United States District Court Northern District of California 11 12 13 14 15 Plaintiff, Case No. 5:12-cv-03237-EJD ORDER DENYING MOTION FOR RELIEF FROM JUDGMENT AND MOTIONS FOR JUDICIAL NOTICE Re: Dkt. Nos. 1361, 1365, 1367, 1381 Defendants. I. Introduction On June 21, 2012, the Securities and Exchange Commission (“SEC”) brought a civil 16 enforcement action against Defendants Mark Feathers (“Feathers”); Small Business Capital Corp. 17 (“SBCC”); Investors Prime Fund, LLC (“IPF”); and SBC Portfolio Fund, LLC (together, 18 “Defendants”). Dkt. No. 1. This Court has since made several rulings regarding the case, including 19 granting summary judgment in favor of the SEC. Order Granting Plaintiff Securities and 20 Exchange Commission’s Motion for Summary Judgment, Dkt. No. 591 (“Summary Judgment 21 Order”). On May 14, 2019, the Ninth Circuit affirmed this Court’s summary judgment ruling in 22 favor of the SEC. See Dkt. No. 1270 at 3–5. The Ninth Circuit also affirmed, inter alia, this 23 Court’s decision—indicated in the temporary restraining order issued by the Court, Dkt. No. 16 24 (“TRO”), the preliminary injunction, Dkt. No. 34 (“PI”), and the Order Denying Request for Legal 25 Expenses, Dkt. No. 70—to deny Feathers’s request to access the frozen assets of the IPF, the SBC 26 Portfolio Fund, and the SBCC in order to support his own defense. Dkt. No. 1270 at 6–7. 27 28 Case No.: 5:12-cv-03237-EJD ORDER DENYING MOTION FOR RELIEF FROM JUDGMENT AND MOTIONS FOR JUDICIAL NOTICE 1 Dockets.Justia.com On November 18, 2020, Feathers, acting pro se, filed a motion for relief from judgment 1 2 regarding several of the Court’s rulings, including the Summary Judgment Order. See Motion and 3 Notice of Motion for Relief under Federal Rules of Civil Procedure 60(b)(1) and/or (6) and 4 Request for Judicial Notice of Materials in Support of Motion for Relief . . . , Dkt. No. 1361 5 (“Motion”), at 2–4. Feathers’s motion for relief from judgment also included several requests for 6 judicial notice. See Motion at 1. The SEC filed an opposition, Dkt. No. 1389 (“Opposition,” 7 “Opp’n”), and Feathers filed a reply, Dkt. No. 1390 (“Reply”). Between November 22, 2020, and January 10, 2021, Feathers also filed three additional 8 United States District Court Northern District of California 9 requests for judicial notice that appear to be related to the Motion. Dkt. Nos. 1365 (“RJN 1”), 10 1367 (“RJN 2”), and 1381 (“RJN 3”). In a December 22, 2020, filing, Feathers requested judicial 11 notice “that Plaintiff Securities and Exchange Commission Did not Refute That it Held No 12 Regulatory Authority over Defendant Investors Prime Fund, LLC.” See Dkt. No. 1374 at 1. This 13 appears to be in reference to RJN 1, against which the SEC filed no opposition. The SEC filed an 14 opposition to RJN 3, Dkt. No. 1384, and Feathers filed a reply, Dkt. No. 1386. The Court took the Motion, RJN 1, RJN 2, RJN 3, and the above noted oppositions and 15 16 replies under submission for decision without oral argument, pursuant to Civil Local Rule 7-1(b). 17 For the reasons below, the Court DENIES the motions. 18 II. 19 20 21 22 23 24 25 26 27 28 Legal Standard Feathers brings the motion for relief from judgment pursuant to Rule 60 of the Federal Rules of Civil Procedure. Section (b) of that rule provides the following: 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 to move for a new trial under Rule 59(b); (3) fraud (whether previously called intrinsic or extrinsic), Case No.: 5:12-cv-03237-EJD ORDER DENYING MOTION FOR RELIEF FROM JUDGMENT AND MOTIONS FOR JUDICIAL NOTICE 2 misrepresentation, or misconduct by an opposing party; 1 (4) the judgment is void; 2 (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 3 4 (6) any other reason that justifies relief. 5 6 Fed. R. Civ. P. 60(b). Section (c) of Rule 60 provides the following: A motion under Rule 60(b) must be made within a reasonable time-and for reasons (1), (2), and (3) no more than a year after the entry of the judgment or order or the date of the proceeding. 7 8 9 United States District Court Northern District of California 10 Fed. R. Civ. P. 60(c)(1). III. Discussion 11 A. Motion for Relief from Judgment 12 Feathers’s present Rule 60 motion for relief from judgment requests “a reversal of all prior 13 Court orders adverse to Defendant, based upon gross misconduct of the United States Securities 14 and Exchange Commission . . . and the Receiver, combined with errors of the Court which caused 15 wrongful findings of fraud of Defendant.” Motion at 4. The Motion refers specifically to the 16 following orders: the TRO; the PI; the Summary Judgment Order; the Order Denying Request for 17 Legal Expenses, Dkt. No. 70 (and several related orders regarding legal expenses, including Dkt. 18 Nos. 457, 510, and 1357); the Order Denying Defendant Mark Feathers’[s] Motion for Enjoinder, 19 Dkt. No. 559; and the Order Denying Motion to Appoint Expert Witness, Dkt. No. 592. 20 21 Feathers specifies that he seeks relief under provisions (b)(1), (b)(2), and/or (b)(6) of Rule 60. See Motion at 2. 22 1. Motion for Relief from Judgment Under Rule 60(b)(1) and/or 60(b)(2) 23 To the extent Feathers seeks relief pursuant to subsections (b)(1) and/or (b)(2) of Rule 60, 24 much of his Rule 60 motion is time-barred, as the motion was filed on November 18, 2020, more 25 than a year after most of the judgments and orders referenced in the motion. See Fed. R. Civ. P. 26 60(c)(1). 27 28 Case No.: 5:12-cv-03237-EJD ORDER DENYING MOTION FOR RELIEF FROM JUDGMENT AND MOTIONS FOR JUDICIAL NOTICE 3 Of the judgments and orders specifically referenced in the motion for relief from judgment, United States District Court Northern District of California 1 2 only one order was issued by the Court within the year preceding Feathers’s motion. That order, 3 Order Denying Administrative Motion (regarding Dkt. No. 13451), Dkt. No. 1357, was issued by 4 the Court on November 10, 2020. See Dkt. No. 1357 at 3. The order denied Feathers’s request for 5 legal expenses. See id at 1–2. In the order, the Court stated that Feathers’s request for legal 6 expenses was “not the proper subject of an administrative motion,” and that, “[i]n any event, the 7 Court has reviewed Feathers’[s] Administrative Motion and denies it on the merits for reasons 8 already stated in Dkt. Nos. 70 (Order Denying Request for Legal [Expenses]), 457 (Order Denying 9 Motion for Reconsideration), and 1277 (Order Concluding Receivership . . .).” Dkt. No. 1357 at 10 1–2. Because the request was improper, and because the request was similar to prior requests 11 denied several times by the Court more than five years ago, the Court declines to find that the 12 Order Denying Administrative Motion (regarding Dkt. No. 1345), Dkt. No. 1357, provides a basis 13 to renew Feathers’s ability to make arguments under Rule 60(b)(1) and 60(b)(2). For the reasons given above, the Court DENIES Feathers’s motion for relief from 14 15 judgment under Rule 60(b)(1) and/or Rule 60(b)(2). 2. Motion for Relief from Judgment Under Rule 60(b)(6) 16 The Ninth Circuit has stated that Rule 60(b)(6) is “used sparingly as an equitable remedy 17 18 to prevent manifest injustice and is to be utilized only where extraordinary circumstances 19 prevented a party from taking timely action to prevent or correct an erroneous judgment.” Latshaw 20 v. Trainer Wortham &amp; Co., 452 F.3d 1097, 1103 (9th Cir. 2006) (internal citations omitted). See 21 also Strobel v. Morgan Stanley Dean Witter, No. 04CV1069 BEN(BLM), 2007 WL 1053454, at 22 *8 (S.D. Cal. Apr. 10, 2007) (“While [Rule 60(b)(6)] may appear to be a catch-all, courts have 23 interpreted it far more stringently.” (internal quotation marks omitted)); Liljeberg v. Health Servs. 24 Acquisition Corp., 486 U.S. 847, 864, 108 S. Ct. 2194, 2204, 100 L. Ed. 2d 855 (1988) (stating 25 26 27 28 1 Dkt. No. 1345 is Feathers’s “Administrative Motion Under Civil Local Rule 7-11 Requesting the Court Direct $40,000 Prior Reserves Established for Legal Fees of the Receiver to Be Redirected to Defendant for Review of Constitutional Due Process Violations Motions for Relief.” Case No.: 5:12-cv-03237-EJD ORDER DENYING MOTION FOR RELIEF FROM JUDGMENT AND MOTIONS FOR JUDICIAL NOTICE 4 United States District Court Northern District of California 1 that Rule 60(b)(6) “should only be applied in extraordinary circumstances” (internal citations 2 omitted)). 3 The SEC argues that Feathers’s motion does not indicate that extraordinary circumstances 4 prevented him from taking timely action to prevent or correct an erroneous judgment. Opp’n at 3. 5 In the Reply, Feathers responds that “[i]f [he] raised the essence of any of these matters before to 6 this Court . . . but . . . did not gain prior relief, it was due to the fact that the SEC’s constitutionally 7 infirm actions caused [him] to be pro se, and not able to effectively engage in discovery, to argue 8 matters of fact, and to do so in accordance with federal rules of civil procedure, evidentiary rules, 9 and following the local rules of this Court.” Reply at 4. The Court finds that Feathers has made or 10 has had the opportunity to make all of the arguments he brings in the current Rule 60 motion, and 11 that there are no new grounds to warrant relief that have not already been considered by this Court 12 or by the Ninth Circuit. The Court identifies and considers Feathers’s arguments individually in 13 the following paragraphs. 14 Feathers argues that the Court erred in its TRO and Summary Judgment Order decisions 15 because the Court relied on false, distorted, and incomplete evidence. See Motion at 2. Feathers 16 has made similar arguments before. See, e.g., Dkt. Nos. 92 (filed November 5, 2012), 93, 94, 96, 17 109, 110, 111, 112, 113, 126, 461, 502, 503, 509, 511, 512, 516, 568, and 1208 (filed September 18 6, 2016). The Ninth Circuit has affirmed this Court’s summary judgment decision. See Dkt. No. 19 1270 at 3–5 (filed May 14, 2019). Feathers’s argument does not indicate any grounds for relief 20 that satisfy the strict standards of Rule 60(b)(6). 21 Feathers argues that the Court erred in its Order Denying Request for Legal Expenses, Dkt. 22 No. 70 (filed September 26, 2012), because the Court relied on a preliminary injunction agreement 23 that Feathers made without appropriate counsel or consent. See Motion at 2–3. Feathers has made 24 similar arguments before. See, e.g., Dkt. No. 1208 (filed September 6, 2016). The Ninth Circuit 25 has affirmed this Court’s decision to deny Feathers’s request to access frozen assets in order to 26 support his own defense. See Dkt. No. 1270 at 6–7 (filed May 14, 2019). Feathers’s argument does 27 28 Case No.: 5:12-cv-03237-EJD ORDER DENYING MOTION FOR RELIEF FROM JUDGMENT AND MOTIONS FOR JUDICIAL NOTICE 5 1 not indicate any grounds for relief that satisfy the strict standards of Rule 60(b)(6). 2 Feathers argues that the Court erred in its Order Denying Request for Legal Expenses, Dkt. 3 No. 70 (filed September 26, 2012), because the Court relied on prejudicial statements made by the 4 Receiver. See Motion at 3. Feathers appears to be specifically referencing statements made by the 5 Receiver in August 2012. See Motion at 3 (citing Dkt. Nos. 53, 54, and 55). The Ninth Circuit has 6 affirmed this Court’s decision to deny Feathers’s request to access frozen assets in order to support 7 his own defense. See Dkt. No. 1270 at 6–7 (filed May 14, 2019). Feathers’s argument does not 8 indicate any grounds for relief that satisfy the strict standards of Rule 60(b)(6). Feathers argues that the Court erred in its Order Denying Request for Legal Expenses, Dkt. United States District Court Northern District of California 9 10 No. 70 (filed September 26, 2012), when the Court stated that “Defendant’s auditors could not 11 issue a ‘clean’ financial statement.” Motion at 3 (citing Dkt. No. 70 at 6). The Ninth Circuit has 12 affirmed this Court’s decision to deny Feathers’s request to access frozen assets in order to support 13 his own defense. See Dkt. No. 1270 at 6–7 (filed May 14, 2019). Feathers’s argument does not 14 indicate any grounds for relief that satisfy the strict standards of Rule 60(b)(6). Feathers argues that the Court erred in its Order Denying Defendant Mark Feathers’[s] 15 16 Motion for Enjoinder, Dkt. No. 559 (filed June 28, 2013), because the auditors Feathers sought to 17 join were materially involved in the matter. Motion at 3.2 This argument does not indicate any 18 grounds for relief that satisfy the strict standards of Rule 60(b)(6). Feathers argues that the SEC’s actions amount to vindictive prosecution. See Motion at 6– 19 20 7. Feathers has made similar arguments before. See, e.g., Motion to Request Sanctions Against 21 Receiver and Professionals, Dkt. No. 1207 (filed September 2, 2016). This argument does not 22 indicate any grounds for relief that satisfy the strict standards of Rule 60(b)(6). For the reasons given above, the Court DENIES Feathers’s motion for relief from 23 24 judgment under Rule 60(b)(6). 25 26 27 28 2 Although Feathers uses the term “enjoinder” in the present motion and also in Dkt. No. 295, the Court’s response to which Feathers cites here, it is clear from the respective motions that Feathers seeks joinder of additional parties. Case No.: 5:12-cv-03237-EJD ORDER DENYING MOTION FOR RELIEF FROM JUDGMENT AND MOTIONS FOR JUDICIAL NOTICE 6 1 B. Requests for Judicial Notice 2 In Feathers’s motion for relief from judgment, Feathers makes several requests for judicial 3 notice. See Motion at 1. Shortly after filing the motion for relief from judgment, Feathers filed 4 several other related motions requesting judicial notice. Dkt. Nos. 1365, 1367, and 1381. Having 5 denied Feathers’s motion for relief from judgment for the reasons given above, the Court declines 6 these requests for judicial notice. 7 IV. 8 9 Conclusion For the reasons given above, the motion for relief from judgment and the motions for judicial notice are DENIED. 10 United States District Court Northern District of California 11 12 13 14 IT IS SO ORDERED. Dated: April 8, 2021 ______________________________________ EDWARD J. DAVILA United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Case No.: 5:12-cv-03237-EJD ORDER DENYING MOTION FOR RELIEF FROM JUDGMENT AND MOTIONS FOR JUDICIAL NOTICE 7