Securities and Exchange Commissioner v. Paul R. Johnson
683 F. App'x 761
| 11th Cir. | 2017Background
- Paul R. Johnson sought reduction of a 2007 disgorgement award in a 2015 Rule 60 motion, arguing the disgorgement was based on an incorrect factual finding that investors lost 100% of their investments.
- Johnson moved under Fed. R. Civ. P. 60(b)(4) (judgment void), 60(b)(5) (prospective relief no longer equitable), and 60(d)(1) (independent action for relief from judgment).
- The district court denied relief; Johnson appealed the denial of his Rule 60 motion to the Eleventh Circuit.
- Johnson also requested an evidentiary hearing alleging misconduct by former counsel, but did not explain why reopening the closed SEC case was necessary to pursue claims against counsel.
- The Eleventh Circuit reviewed the Rule 60(b)(4) claim de novo and the Rule 60(b)(5) and 60(d) claims for abuse of discretion, and affirmed the district court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the judgment is void under Rule 60(b)(4) | Johnson: disgorgement void because it rested on incorrect factual finding that investors lost 100% | District/SEC: factual error claim is an appeal issue, not a void-judgment showing | Court: not void; disagreement with factual finding is not a "fundamental infirmity" |
| Whether relief is warranted under Rule 60(b)(5) | Johnson: disgorgement is no longer equitable; delay explained by denial of IFP to appeal | District/SEC: movant must show changed circumstances and timely action; long unexplained delay (8 years) and improper route to contest judgment | Court: abuse-of-discretion standard — denial affirmed for lack of changed circumstances and unreasonable delay |
| Whether an independent action under Rule 60(d)(1) is appropriate | Johnson: same factual challenge (100% loss) and related arguments warrant independent action for gross injustice | District/SEC: petitioner failed to show the exceptional factors (gross injustice, fraud/mistake, lack of remedy) required for an independent action | Court: denied — factual dispute does not satisfy the five-factor gross-injustice test |
| Whether an evidentiary hearing on former counsel misconduct was warranted | Johnson: seeks hearing to investigate alleged violation of asset-freeze order by former counsel | District/SEC: Johnson failed to show why reopening the closed SEC case is necessary to assert claims against counsel | Court: denial affirmed; hearing not justified without proper basis |
Key Cases Cited
- Burke v. Smith, 252 F.3d 1260 (11th Cir. 2001) (standard of review for Rule 60(b)(4) motions)
- United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260 (2010) (void-judgment standard; Rule 60(b)(4) not substitute for appeal)
- Horne v. Flores, 557 U.S. 433 (2009) (Rule 60(b)(5) requires changed circumstances)
- Aldana v. Del Monte Fresh Produce N.A., Inc., 741 F.3d 1349 (11th Cir. 2014) (independent-action factors for gross injustice under Rule 60(d))
- United States v. Beggerly, 524 U.S. 38 (1998) (independent action reserved for sufficiently gross injustices)
- Bankers Mortgage Co. v. United States, 423 F.2d 73 (5th Cir. 1970) (treatment of 60(b) motion as independent action when no prejudice)
- Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) (Eleventh Circuit adoption of prior Fifth Circuit precedent)