Opinion
Civil Action No. 3:91-CV-2494-D
February 17, 2000
MEMORANDUM OPINION AND ORDER
Plaintiff-counterdefendant Searcy M. Ferguson, Jr. ("Ferguson") moves pursuant to Fed.R.Civ.P. 60(b)(3) to vacate the judgment in this case and two summary judgment rulings that preceded it, contending that the Federal Deposit Insurance Corporation ("FDIC") procured the judgment and rulings by committing fraud on the court. The court concludes that Ferguson's bankruptcy, taken after he filed the instant motion, does not preclude the court from deciding this motion, and that the motion must be denied as time-barred.
I
The background facts and procedural history of this case are set out in the opinion of the Fifth Circuit, see Ferguson v. FDIC, 164 F.3d 894, 895-96 (5th Cir.), cert. denied ___ U.S. ___ 120 S.Ct. 61 (1999), and in prior opinions of this court and need not be repeated at length. The court adopts its prior decisions to the extent necessary to address Ferguson's motion and presumes the parties' familiarity with those rulings.
Ferguson brought this suit in state court against the FDIC in its capacity as receiver for Union Bank and Trust ("Union Bank"). The FDIC removed the case to this court and counterclaimed to recover against Ferguson on several unpaid promissory notes. Ferguson defended the counterclaim on the ground (pertinent to today's decision) that he had entered into a global settlement agreement that had extinguished his liability. He asserted various state-law affirmative defenses based on this central premise.
While the case was pending in this court, the FDIC filed on April 29, 1993 a "Motion to Restyle Case," in which it requested that the court change the style of the case to reflect that the FDIC was proceeding in its corporate capacity as liquidator of Union Bank rather than in the capacity of Union Bank's receiver. The FDIC stated in the motion that when it removed the case to this court, it "failed to note the erroneous title of the case." Mot. at 1. It said that its "responsibility for the assets at issue in this case . . . arise[s] solely in its Corporate capacity as Liquidator of the Union Bank and Trust." Id. at 1-2. The FDIC stated that it had "agreed to join the issues in this litigation directly rather than side stepping Plaintiff's claims by alleging that [he] had `sued the wrong party[,]'" id. at 2, but that it had "erroneously failed to seek to change the designation of the case or to otherwise correct the error committed by Plaintiff[,]" id. Although the FDIC disclaimed any indication that "the distinction between the Corporate and Receivership capacities of the [FDIC] [is] insignificant[,]" id., the FDIC stated that "[t]he requested change in the style of this case has no substantive impact on any issues litigated herein[,]" id. It represented that "the requested change is made merely for the purpose of clarity and accuracy[,]" and that "[a]t no past, present or future time in this litigation, based on the issues as raised in the pleadings on file and sought to be filed, will the distinction between the FDIC and its Corporate and Receivership capacities have any impact on the outcome of this case." Id.
The court granted the FDIC's motion. On February 27, 1997 the FDIC obtained a judgment on its counterclaim against Ferguson for $520,797.14, together with post-judgment interest, attorney's fees, and costs. After successfully defending the judgment on appeal, the FDIC assigned the judgment to SMS Financial, L.L.C.
Ferguson moves to vacate the February 27, 1997 judgment, and this court's summary judgment rulings of February 12, 1996 and August 13, 1996, contending that the FDIC procured the judgment and rulings by engaging in fraudulent conduct when it moved to restyle the case. He asserts that this change in capacity allowed the FDIC to avoid the effect of the Supreme Court's decision in O'Melveny Myers v. FDIC, 512 U.S. 79 (1994), decided the year after the FDIC procured the court's order restyling the case.
II
Ferguson filed the instant motion on November 18, 1999. Briefing on the merits concluded on December 21, 1999, when Ferguson filed his reply brief. On the same day, Ferguson filed a voluntary chapter 11 bankruptcy petition in the United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division. On December 28, 1999 he filed in this case a suggestion of bankruptcy.
On December 29, 1999 the court filed an order indicating that it would decide Ferguson's motion to vacate despite the filing of the bankruptcy petition. The court stated that unless a party advised the court of grounds not to enter a ruling the court would decide the motion to vacate in due course because it did not appear that doing so would violate the automatic stay imposed by 11 U.S.C. § 362.
In response to the court's order, Ferguson argues that his Rule 60(b)(3) motion is a core proceeding because it is matter of lien avoidance. He also raises the question whether jurisdiction should be transferred to the Fort Worth Division of this court. Ferguson also appears to argue that, despite his bankruptcy filing this court is obligated to decide whether the FDIC perpetrated a fraud on the court.
The court holds that Ferguson's motion is not a core proceeding. A core proceeding is one that "invokes a substantive right provided by title 11 or if it is a proceeding that, by its nature, could arise only in the context of a bankruptcy case." In re Southmark Corp., 163 F.3d 925, 930 (5th Cir.) (quoting In re Wood, 825 F.2d 90, 97 (5th Cir. 1997)), cert. denied ___ U.S. ___ 119 S.Ct. 2339 (1999). Ferguson's motion to vacate neither invokes a substantive right provided by title 11 nor is it one that can arise only in the context of a bankruptcy case. Ferguson seeks relief under a Federal Rule of Civil Procedure that exists independent of bankruptcy law. He filed his bankruptcy petition well after the court rendered the judgment and rulings that he now seeks to vacate. See In re Boyer, 108 B.R. 19, 26 (Bankr. N.D.N.Y. 1988) (citing In re Wood and holding that post-petition action to vacate prepetition probate action was not core matter). Ferguson cites In re Rosol, 114 B.R. 560 (Bankr. N.D. Ill. 1989), for the proposition that he is enforcing a lien avoidance right that arose in bankruptcy law. The case on which he relies is distinguishable, however, because it addressed the circumstances under which chapter 7 debtors could recover funds withheld by their employers pursuant to Illinois wage assignments. See id. at 561. Unlike the debtors in Rosol, Ferguson is not attempting by his motion to vacate to avoid a lien imposed against him; instead, he is seeking to vacate the judgment that created the lien.
Moreover, even if Ferguson's motion to vacate were a core proceeding, this fact does not deprive this court of jurisdiction or authority to act. The bankruptcy court is an Article I unit of this Article III court, not vice versa. This court has jurisdiction and authority to adjudicate a core matter.
Because Ferguson's bankruptcy case does not preclude the court from deciding his motion to vacate, there is no basis to remove the case to the Fort Worth Division of this court. In any event, "a claim of fraud against the court must be made in the tribunal allegedly defrauded." Wagner Spray Tech Corp. v. Wolf, 113 F.R.D. 50, 52 (S.D.N.Y. 1986) (citations omitted).
The court concludes that it has the jurisdiction and authority to decide Ferguson's motion to vacate. No party has demonstrated that addressing the motion — which, if granted, would eliminate, not impose, a debt against Ferguson's estate — violates the automatic stay, and the court holds that it does not.
III A
To address the merits of Ferguson's motion, the court must first identify the precise subsection of Rule 60(b) under which he seeks relief. This is so because this determination controls whether the motion is time-barred.
In his motion, Ferguson identifies only Rule 60(b). See Mot. Vacate at 1 (stating that relief is sought "pursuant to Rule 60 (b) of the Federal Rules of Civil Procedure."). Two other pleadings confirm, however, that Ferguson is proceeding on the basis of Rule 60(b)(3). In his reply, he explicitly cites Rule 60(b)(3) in the title of the pleading, Rep. at 1 (styling reply as "Reply to Defendants['] Responses to Rule 60(b)(3) Motion to Vacate Judgment on Grounds of Fraud on the District Court which Determined Substantive Law" (emphasis added)), and in the body of the pleading, id. at 11, ¶ 15 (asserting that " Fed.R.Civ.P. 60(b)(3) provides relief from a judgment induced by a fraudulent misrepresentation or other misconduct of an adverse party."). In his supplemental response filed January 3, 2000 to the court's order regarding the automatic stay, he refers to his motion to vacate as "his pending Rule 60(b)(3) fraud on the court motion." Resp. at 1. The court therefore construes Ferguson's motion as one filed under Rule 60(b)(3).
B
The court denies the motion as time-barred. Rule 60(b) provides that a motion brought under that rule "shall be made within a reasonable time." Fed.R.Civ.P. 60(b). Additionally, a Rule 60(b)(3) motion must be made "not more than one year after the judgment, order, or proceeding was entered or taken." Id. The judgment in this case was filed on February 27, 1997 and entered on the docket on February 28, 1997. The summary judgment rulings were filed February 12, 1996 and August 13, 1996. Ferguson did not file his motion to vacate until November 18, 1999, well after the one-year limit had expired. The fact that he appealed the judgment to the Fifth Circuit and sought a writ of certiorari in the Supreme Court of the United States does not relieve him from the time bar imposed by Rule 60(b). See Gulf Coast Bldg. Co. v. International Bhd. of Elec. Workers, No. 480, 460 F.2d 105, 107 (5th Cir. 1972) (addressing Rule 60(b)(1) which, like Rule 60 (b)(3), contains one-year limit).
Accordingly, the court denies Ferguson's motion to vacate as time-barred.
C
Even if the court assumes arguendo that Ferguson is seeking relief based on some other provision of Rule 60(b), his motion must be denied. He does not rely on mistake, inadvertence, surprise, or excusable neglect, which is covered by Rule 60 (b)(1), or newly discovered evidence, to which Rule 60(b)(2) applies. Even if he did, they are both subject to the same one-year time limit as is Rule 60(b)(3). He does not contend that the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or that it is no longer equitable that the judgment should have prospective application. See Rule 60(b)(5). The judgment in this case is not void within the meaning of Rule 60(b)(4). See Tomlin v. McDaniel, 865 F.2d 209, 210 (9th Cir. 1989) (holding that judgment was not void within the meaning of Rule 60(b)(4) because plaintiff did not contend that court that rendered judgment lacked jurisdiction or acted in manner inconsistent with due process of law); William Skillings Assocs. v. Cunard Transp., Ltd., 594 F.2d 1078, 1081 (5th Cir. 1979) (per curiam) (holding that judgment is not void because it is erroneous). This leaves only Rule 60(b)(6), but it is well settled that if relief is encompassed within one of the other subsections of Rule 60(b), a party cannot obtain relief under Rule 60(b)(6). William Skillings Assocs., 594 F.2d at 1081 (citing Gulf Coast, 460 F.2d at 108). In determining the availability of Rule 60(b)(6) relief, it does not matter that Ferguson is barred by the one-year limit from succeeding under Rule 60(b)(3). See Wagner, 113 F.R.D. at 53 (holding that effect of time bar without more does not constitute basis for Rule 60(b)(6) relief). Therefore, because Rule 60(b)(3) encompasses the remedy that Ferguson seeks (although relief is precluded by the time bar), Ferguson cannot proceed under Rule 60(b)(6).
IV
Although the court need not reach the merits of Ferguson's motion, if it did so it would deny relief.
In this court's February 12, 1996 opinion, it granted summary judgment in favor of the FDIC concerning Ferguson's affirmative defenses of accord and satisfaction, novation, waiver, estoppel, ratification, and failure of consideration. Feb. 12, 1996 Mem. Op. at 10-11. The court held that Anna Croteau ("Croteau"), Department Head of Commercial Loans at the FDIC and a member of the Senior Credit Review Committee, and Ronald Bieker ("Bieker"), the FDIC Assistant Account Officer assigned to Ferguson's account, lacked authority to negotiate a settlement or to release the notes. Id. at 9-10. Ferguson appears to maintain that by its April 29, 1993 motion to restyle case, the FDIC committed fraud on the court because it was able to transform its status from receiver to corporate liquidator, thereby avoiding the adverse consequences of the Supreme Court's decision in O'Melveny Myers. This represents a fundamental misunderstanding of the Fifth Circuit's opinion in Ferguson.
The FDIC's status as a party to this lawsuit did not of itself control the circuit court's reasoning. When the Fifth Circuit distinguished between the FDIC as a receiver and FDIC corporate, it did so based on whether the FDIC was relying as receiver on the prior conduct of private actors that had already occurred or on the conduct of FDIC employees. See Ferguson, 164 F.3d at 898 ("Here, it is the action of the Government agents and their authority to so act that is at issue, rather than the impact on the FDIC, acting as receiver, of imputing the prior acts of agents of the failed bank."). The panel distinguished O'Melveny Myers not merely because in that lawsuit the FDIC was a party in its capacity as receiver and in the instant case was being sued in its corporate capacity. It did so based on the underlying conduct at issue. See id. ("Here, Bieker and Croteau were acting as agents of the FDIC-Corporate. They derived their authority (if any) from the FDIC in its corporate capacity, because the FDIC-Corporate purchased the Nine Notes in May 1988, before any settlement negotiations between Ferguson and the FDIC began."). Therefore, regardless whether Ferguson sued the FDIC as receiver or in its corporate capacity, what is controlling is that he was attempting to prove affirmative defenses based on the conduct of FDIC agents, not of private actors that had already occurred before the FDIC became receiver of the failed Union Trust.
Moreover, even if the foregoing analysis of Ferguson is incorrect, this court did not rest its summary judgment ruling solely on the authority question. Feb. 12, 1996 Mem. Op. at 10 ("Although the court concludes that the authority issue is determinative, the court addresses other deficiencies in Ferguson's defenses."). The Fifth Circuit recognized in its opinion that this court had "delineated alternative reasons why Ferguson's affirmative defenses failed[.]" Ferguson, 164 F.3d at 897 (stating that "[a]lthough the district court delineated alternative reasons why Ferguson's affirmative defenses failed, it stated that, as Ferguson concedes here, the authority issue was controlling."). This court found other deficiencies in Ferguson's evidence that warranted summary judgment on grounds apart from the determination that Croteau and Bieker lacked authority under federal law. See Feb. 12, 1996 Mem. Op. at 10-11.
The Fifth Circuit identified the dispositive issue on appeal to be "whether the agents of the [FDIC] dealing with Ferguson had authority to enter into a global settlement of his indebtedness on numerous promissory notes." Ferguson, 164 F.3d at 895. It concluded that this court was correct in holding that federal law applied to the issue and that Bieker and Croteau lacked such authority. Id. at 897-98. But apart from the corporate-receiver distinction that Ferguson now emphasizes, the circuit court also ruled, as did this court, in favor of the FDIC because Ferguson had presented no evidence at the summary judgment stage that Bieker and Croteau had acted with actual authority, see id. at 899, or apparent authority, id. Concerning actual authority, the court said that "Ferguson presented no evidence that Bieker or Croteau were given the authority to enter into a global settlement, but instead based his claims upon their actions." Id. Regarding apparent authority, the panel held: "Even assuming that the basis for Ferguson's apparent authority contention is correct as a matter of law, the contention still falls; he did not present any evidence upon which we can conclude that a reasonable person, exercising diligence and discretion, would have believed that Bieker and Croteau had the authority to enter into a global settlement." Id. Therefore, Ferguson has failed to show by clear and convincing evidence that the FDIC's change in party status entitles him to relief. See Government Fin. Servs. One Ltd. Partnership v. Peyton Place, Inc., 62 F.3d 767, 772 (5th Cir. 1995) (applying clear and convincing evidence standard in context of Rule 60(b)(3) motion).
* * *
The court holds that Ferguson's Rule 60(b)(3) motion to vacate is time-barred and is therefore denied.
SO ORDERED.