641 F. App'x 73
2d Cir.2016Background
- In 2002 the SEC obtained a default civil judgment against Edward A. Durante ordering him to pay $39,880,680.86 (disgorgement + pre-judgment interest).
- Durante later pled guilty in a parallel criminal case (sentenced to 121 months) but did not satisfy the civil Judgment.
- The district court (after renewed enforcement efforts in 2011–2014) held Durante in civil contempt for failing to (a) provide an accurate accounting of income/assets and (b) turn over assets listed in his criminal plea agreement, subject to imprisonment if he failed to comply.
- Durante appealed, arguing the contempt finding was invalid, invoking equitable defenses (laches, waiver, estoppel, unclean hands), claiming Rule 60(b) relief was time-barred, and asserting a Fifth Amendment self-incrimination claim.
- The Second Circuit affirmed the contempt order and the denial of relief, while noting Durante may raise Fifth Amendment arguments in district court going forward if he timely invokes them.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of contempt finding | SEC: Judgment was clear; Durante failed to pay and concealed assets; contempt supported by clear-and-convincing proof and lack of reasonable efforts to comply | Durante: Judgment ambiguous as to joint-and-several liability, offsets, and amounts he never received; he allegedly assigned assets to attorneys and paid restitution in criminal case | Court: Judgment was clear; noncompliance shown by undisputed payment shortfall and evidence of access to funds; contempt affirmed |
| Equitable defenses (laches, waiver, estoppel, unclean hands) | SEC: Public-interest enforcement not subject to laches; no waiver/estoppel by SEC conduct; Durante’s misconduct defeats unclean-hands defense | Durante: Laches and equitable defenses apply because enforcement was delayed and victims could be paid; SEC allegedly acknowledged compliance in 2004 | Court: Laches unavailable against federal government for public-right enforcement; no waiver/estoppel proven; unclean-hands claim fails—equitable defenses rejected |
| Rule 60(b) motion timeliness | SEC: 11+ years delay was unreasonable; finality favors denying relief | Durante: Incarceration (2002–2009) and asserted SEC conduct justify delay; believed judgment satisfied earlier | Court: Motion filed over 11 years after judgment and 29+ months after 2011 demand was untimely; denial affirmed |
| Fifth Amendment (self-incrimination) | SEC: Order requiring accurate accounting is a civil compliance tool; contemnor may assert privileges in district court | Durante: Requirement to provide an "accurate" accounting forces admission that prior sworn testimony was false, implicating Fifth Amendment | Court: Claim forfeited on appeal (not raised below); permitted to raise in district court later; contempt stands for now |
Key Cases Cited
- Paramedics Electromedicina Comercial, Ltda. v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645 (2d Cir.) (standard for civil contempt: clear order, clear-and-convincing proof of noncompliance, and lack of reasonable diligence)
- In re Grand Jury Subpoena Issued June 18, 2009, 593 F.3d 155 (2d Cir.) (standard of review for contempt: legal questions de novo, factual for clear error, abuse-of-discretion for ultimate contempt finding)
- Gucci Am., Inc. v. Weixing Li, 768 F.3d 122 (2d Cir.) (clarity requirement for injunctive/orders for contempt enforcement)
- Huber v. Marine Midland Bank, 51 F.3d 5 (2d Cir.) (contemnor bears burden to prove impossibility of compliance)
- CFTC v. Armstrong, 269 F.3d 109 (2d Cir.) (impossibility defense burden in contempt)
- Cayuga Indian Nation of N.Y. v. Pataki, 413 F.3d 266 (2d Cir.) (laches not available against federal government enforcing public rights)
- FTC v. Bronson Partners, LLC, 654 F.3d 359 (2d Cir.) (disgorgement is public-regarding remedy; proceeds run to Treasury)
- Hamilton v. Atlas Turner, Inc., 197 F.3d 58 (2d Cir.) (waiver requires intentional relinquishment of known right)
- O'Rourke v. United States, 587 F.3d 537 (2d Cir.) (equitable estoppel against government requires affirmative misconduct)
- Rojas-Reyes v. INS, 235 F.3d 115 (2d Cir.) (estoppel against government applied with caution)
- Maduakolam v. Columbia Univ., 866 F.2d 53 (2d Cir.) (Rule 60(b) timeliness reviewed for abuse of discretion)
- PRC Harris, Inc. v. Boeing Co., 700 F.2d 894 (2d Cir.) (balancing finality and reasons for delay under Rule 60(b))
- Kellogg v. Strack, 269 F.3d 100 (2d Cir.) (example that 26-month delay by prisoner was unreasonable)
- Truskoski v. ESPN, Inc., 60 F.3d 74 (2d Cir.) (example that 18-month delay was unreasonable)