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Securities and Exchange Commission v. Bilzerian

November 1, 2010

SECURITIES AND EXCHANGE COMMISSION, PLAINTIFF,
v.
PAUL A. BILZERIAN, ET AL., DEFENDANTS



MEMORANDUM OPINION ON CONTEMPT

I. INTRODUCTION

This matter now comes before the Court on David Eric Hammer's ("Hammer") Verified Consent Motion [1099] to Vacate Contempt Memorandum Order and Opinion [1091, 1092] with Respect to David E. Hammer, Esquire ("First Motion to Vacate") and his Verified Consent Motion [1100] to Vacate Contempt Memorandum Order and Opinion [986, 987] with Respect to David E. Hammer, Esquire ("Second Motion to Vacate"). Having considered Hammer's Motions to Vacate, Paul A. Bilzerian's ("Bilzerian") Response [1107], Hammer's Reply [1113], the relevant law, and the record in this case, the Court will deny the motions as set forth below.

II. BACKGROUND

A detailed background of this case, which is now more than twenty years old, can be found in the Court's May 11, 2009, Memorandum Opinion [987]. SEC v. Bilzerian, 613 F. Supp. 2d 66, 68--69 (D.D.C. 2009).The facts relevant to the issue now before the Court are as follows.

Bilzerian was convicted of securities fraud and conspiracy to defraud the United States in 1989. United States v. Bilzerian, 926 F.2d 1285 (2d Cir. 1991) (affirming conviction). The SEC then filed a civil suit against him in the summer of 1989 and obtained a judgment for approximately $62 million. SEC v. Bilzerian, 29 F.3d 689 (D.C. Cir. 1994) (affirming judgment). In 1993, Judge Harris of this Court ordered Bilzerian to disgorge $62 million in ill-gotten gains. SEC v. Bilzerian, 814 F. Supp. 116 (D.D.C. 1993) (ordering disgorgement of $33 million in profits), aff'd 29 F.3d 689 (D.C. Cir. 1994); SEC v. Bilzerian, 1993 WL 542584 (D.D.C. 1993) (ordering disgorgement of $29 million in prejudgment interest).

Rather than follow those orders, though, Bilzerian and his agents abused the judicial system in a concerted effort to interfere with this Court's attempts to establish the sources and amounts of his assets. To put an end to their frivolous lawsuits, which made progress in this case all but impossible, this Court issued the following injunction:

Paul A. Bilzerian, his agents, servants, employees and attorneys, and those persons in active concert or participation with them, who received actual notice of this Order by personal service or otherwise, are prohibited from filing or causing the filing of any complaint, proceeding or motion in the United States Bankruptcy Court for the Middle District of Florida, or from commencing or otherwise causing the commencement of any proceedings in any court, other than in this Court or in the appeals of this Court's Orders to the United States Court of Appeals for the District of Columbia, without prior application to and approval of this Court.

Order 2, July 19, 2001, ECF No. 416.

That Order, however, did not stem the tide. On May 11, 2009, this Court held Bilzerian and Hammer (who acted on Bilzerian's behalf) in civil contempt for violating the 2001 order by commencing and prosecuting the following lawsuits: Bilzerian v. Haire, Case No. 08-9149 in the Thirteenth Circuit, Hillsborough County, Florida; Bilzerian's counterclaim and cross claims in Caligula v. National Gold Exchange,Case No. 07-cv-17763 in the Thirteenth Circuit, Hillsborough County, Florida; Bilzerian's miscellaneous action against Ernest B. Haire ("Haire"), Case No. 08-mc-102 in the Bankruptcy Court for the Middle District of Florida; and Bilzerian's commencement of Puma Foundation v. Haire, Case No. 06-9816. Order 1--2, May 11, 2009, ECF No. 986.*fn1

The Court ordered Hammer to purge his contempt "by ceasing his representation of Bilzerian in any capacity in any litigation matters and withdrawing as counsel, if listed as counsel of record, in any of the above cases." Id. at 2. The Court also ordered Hammer to file a sworn statement that he had complied with the order within ten days of the date it was filed. Id. Instead, he waited fifteen days to file a sworn statement that said, among other things, that "he has never represented Paul Bilzerian." Statement of Compliance, May 26, 2009, ECF No. 993.

That outright lie was paradigmatic of Hammer's habit of misleading courts. Mem. Order and Op. 11, August 12, 2009, ECF No. 1053. He told Judge Paskay of the Bankruptcy Court for the Middle District of Florida that the show cause proceedings in this Court had already concluded, when in fact they were still under advisement. Paskay Order 12, ECF No. 980. Judge Paskay found that Hammer's "blatant disregard" of the Court's order was "typical and additional proof of Mr. Hammer's litigious nature . . . ." Id. In a separate matter, Judge Paskay characterized Hammer's conduct as "obstructive, defiant and inappropriate" and his suit as an "unethical use of the legal system." See Docket 19, ECF No. 1029. Judge Paskay is not the only judge who has found it necessary to reprimand Hammer, though. Judge Martha J. Cook, in the Thirteenth Circuit, Hillsborough County, Florida, has labeled Bilzerian and Hammer's conduct "egregious," "sanctionable," and "clearly unethical." Cook's Order 10, 12, ECF No. 951. She went on to say that Hammer had participated in "sandbagging, disrupting discovery, and walking down a road that would get him in a lot of trouble." In light of all this, she was "inclined to order him to attend peer review or some sort of remedial training." Id. at 9--12.

Then, on August 12, 2009, this Court granted Haire's [998, 999] and Todd Hodges' ("Hodges") [1001] Motions to Show Cause. Order to Show Cause 1, August 12, 2009, ECF No. 1055. The Court ordered Hammer, Bilzerian, and others to show cause, in a writing to be filed with the Court by September 11, 2009, as to why the Court should not hold them in civil contempt for violating its 2001 Order by pursuing the following additional lawsuits: Bilzerian v. Hodges et al., Case No. 09-ap-93-ALP in the United States Bankruptcy Court for the Middle District of Florida; Steffen v. Hodges et al., Case No. 09-ap-93-ALP in the United States Bankruptcy Court for the Middle District of Florida; Bilzerian v. Haire, Case No. 09-ap-93-ALP in the United States Bankruptcy Court for the Middle District of Florida; Steffen v. Kline et al., Case No. 09-10864CA27 in the Eleventh Circuit Court in Dade County, Florida; and Puma Foundation v. Hodges et al., Case No. 09-CA-02180 in the Circuit Court in and for Hillsborough County, Florida. Id. at 2--3. Hammer filed a response [1062] on September 11, 2009, but he merely reiterated arguments this Court had rejected before. Mem. Op. and Order [1092] at 8--11 (July 13, 2010).

On July 13, 2010, this Court held Hammer in civil contempt for the second time for violating its 2001 Order. Mem. Op. 1, July 13, 2010, ECF No. 1092 ("2010 order"). The Court once again ordered him to purge his contempt-this time by ceasing his representation of Terri L. Steffen ("Steffen") and the Puma Foundation ("Puma"). Order 3, July 13, 2010, ECF No. 1091. The Court further ordered Hammer to file a sworn statement on or before July 23, 2010, affirming that he had complied with those conditions. Id.

On July 15, 2010, nearly an entire year since entry of the August 12, 2009, Show Cause Order, Hammer let the Court know for the first time that he had withdrawn from the Steffen and Puma lawsuits. Decl. of Compliance 2 and Ex. A & Ex. B, July 15, 2010, ECF No. 1093. As it turns out, he had withdrawn from both lawsuits a few days before the Court entered its 2010 Order. In light of the timing of his withdrawals and other remedial actions he has taken since, Hammer's current motions urge the Court to vacate its Orders holding him in contempt.

III. LEGAL STANDARD

Although the Federal Rules of Civil Procedure do not specifically provide for motions for reconsideration, courts generally analyze them under the standards for a motion to alter or amend judgment under Rule 59(e) or a motion for relief from a judgment or order under Rule 60(b). Ellipso, Inc. v. Mann, 583 F. Supp. 2d 1, 3 (D.D.C. 2008) (Lamberth, C.J.) (quoting Lightfoot v. District of Columbia, 355 F. Supp. 2d 414, 420--21 (D.D.C. 2005)). If a person files a motion for reconsideration within twenty-eight days of the judgment or order of which he complains, courts consider it a Rule 59(e) motion; otherwise, they treat it as a Rule 60(b) motion. See id. (referring to the ten-day deadline that was in place prior to the 2009 amendments to the Federal Rules of Civil Procedure, which changed the deadline to twenty-eight days).

But those Rules only apply to motions for reconsideration of final orders. Fed. R. Civ. P. 59(e) & 60(b); U.S. v. BCCI Holdings (Luxembourg), S.A., 994 F. Supp. 18, 21 (D.D.C. 1998) (citing Derrington-Bey v. District of Columbia Dep't of Corrs., 39 F.3d 1224, 1225--26 (D.C. Cir. 1994)). Generally speaking, civil contempt orders are interlocutory. Doyle v. London Guar. & Accident Co., 204 U.S. 599, 603 (1907) ("[W]e deem it settled that an order punishing for contempt, made in the progress of the case, when not in the nature of an order in a criminal proceeding, is regarded as interlocutory, and to be reviewed only upon appeal from a final decree in the case."); see also Cobell v. Norton, 334 F.3d 1128, 1140 (D.C. Cir. 2003) (citing Byrd v. Reno, 180 F.3d 298, 300 (D.C. Cir. 1999) (examining all of the relevant case law to conclude that "the traditional rule still applies: a civil contempt order against a party in a pending proceeding is not appealable as a final order under 28 U.S.C. § 1291")). Accordingly, courts usually analyze motions for reconsideration of civil contempt orders under Rule 54(b), which provides that a district court may revise its own interlocutory decisions "at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties." Fed.

R. Civ. P. 54(b).

Hammer's Motions, however, fall under an exception to that general rule. Court orders holding non-parties like Hammer in civil contempt are considered final and immediately appealable. United States Catholic Conference v. Abortion Rights Mobilization, Inc., 487 U.S. 72, 76 (1988) ("The right of a nonparty to appeal an adjudication of contempt cannot be questioned. The order finding a nonparty witness in contempt is appealable notwithstanding the absence of a final judgment in the underlying action."); OSRecovery, Inc. v. One Group Int'l, Inc., 462 F.3d 87, 89 (2d Cir. 2006); U.S. ex rel. Pogue v. Diabetes Treatment Centers of Am., Inc., 444 F.3d 462, 474 n.7 (6th Cir. 2006); United States v. Dowell, 257 F.3d 694, 698 (7th Cir. 2001); In re Woosley, 855 F.2d 687, 688 (10th Cir. 1988); United States v. Accetturo, 842 F.2d 1408, 1412 (3d Cir. 1988); In re Fish & Neave, 519 F.2d 116 (8th Cir. 1975); Estate of Domingo v. Republic of Philippines, 808 F.2d 1349, 1350 (9th Cir. 1987); Sanders v. Monsanto Co., 574 F.2d 198, 199 (5th Cir. 1979). This exception is necessary because ...


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