Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_03-cv-04035/USCOURTS-cand-3_03-cv-04035-27/pdf.json

Nature of Suit Code: 470
Nature of Suit: Civil (Rico)
Cause of Action: 28:1331 Fed. Question

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States District C

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For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JOSE ROE et al.,

Plaintiffs,

 v.

 THOMAS WHITE, et al.,

Defendants.

 /

No. C 03-04035 CRB

MEMORANDUM AND ORDER

Defendant Thomas White agreed in writing to settle this action. Since then he has

filed several motions in an attempt to avoid his contractual obligations. Now pending before

the Court is his third motion to vacate the judgment. By Memorandum and Order filed

October 3, 2005, the Court denied defendant’s first motion. By Memorandum and Order

filed October 11, 2005, the Court denied defendant’s second motion. By Memorandum and

Order filed December 5, 2005, the Court granted plaintiffs’ motion for summary judgment of

the enforceability of the settlement. Defendant appealed and posted a bond. The appeal is

fully briefed and is awaiting calendaring. 

Defendant now moves pursuant to Federal Rule of Civil Procedure 60(b)(3) and

60(b)(6) to vacate the judgment upholding the settlement on the ground that he recently

learned of fraud committed by plaintiffs’ counsel and the guardian ad litem. For the reasons

explained below, and after having had the benefit of oral argument, the Court is not inclined

to grant defendant’s motion.

Case 3:03-cv-04035-CRB Document 490 Filed 10/04/06 Page 1 of 5
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DISCUSSION

The parties are familiar with defendant’s allegations and the Court will not repeat

them here. The gravamen of defendant’s contention is that plaintiff’s counsel David

Replogle and Mauricio Rodriguez Borrego, the guardian ad litem for the minor plaintiffs,

perpetuated a fraud on the Court, defendant and defendant’s counsel.

A. Jurisdiction to hear this motion

“As a general matter, the filing of an appeal divests district courts of jurisdiction ‘over

orders and judgments encompassed by the notice from the district court to the appellate

court.” Commercial Union Ins. v. Greene, 1999 WL 33136246 *1 (C.D. Cal. 1999) (internal

quotation marks and citation omitted). 

The Ninth Circuit has established a narrow exception to this loss of jurisdiction

with respect to Rule 60(b) motions: a party may file a motion which asks the

district court if it would entertain a Rule 60(b) motion and, if it agrees, petition

the Court of Appeals to remand the case for that purpose. As the Ninth Circuit

explained in an early opinion, “[b]ecause of the pending appeal, the District

Court had no jurisdiction to enter an order under Rule 60(b). The most the

District Court could do was to either indicate that it would ‘entertain’ such a

motion or indicate that it would grant such a motion. If appellant had received

such an indication, its next step would have been to apply to this Court for a

remand.” District courts cannot dispose of Rule 60(b) motions, filed after the

notice of appeal, without a remand from the Court of Appeals.

Id. (citations omitted).

B. Rule 60(b)(3)

To prevail on a Rule 60(b)(3) motion, the moving party must show by clear and

convincing evidence that the judgment was obtained through fraud, misrepresentation or

other misconduct, and the conduct complained of prevented the moving party from fully and

fairly presenting the defense. De Saracho v. Custom Food Machinery, Inc., 206 F.3d 874,

880 (9th Cir. 2000). The Rule is aimed at “judgments that were unfairly obtained, not those

which are factually incorrect.” Id. (internal quotation marks and citation omitted). 

1. Evidence that is not clear and convincing

The first step is determine what facts defendant has established by “clear and

convincing evidence.” The Court finds that the declarations of Daniel Garcia and Alexander

Shahbazian are not clear and convincing evidence of any conduct. The Court bases this

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finding on the evidence from the state court litigation and the declaration of David Replogle

and the attached exhibits. The Court notes that it is aware of defendant White’s allegations

as to Daniel Garcia’s veracity, or lack thereof, because defendant brought such allegations to

this Court’s attention by asking this Court to “hold” the material which defendant accused

Garcia of stealing from him. In any event, the declarations are not “clear and convincing”

evidence even in the absence of any other evidence: the declarants claim much of their

testimony is based on documents and email messages in their possession, yet, without

explanation, they fail to attach any of these documents to their declarations. 

2. Evidence that may be clear and convincing

a. The recantations of two plaintiffs

After discarding the Garcia and Shahbazian declarations, what is left, then, are the

statements by two of the plaintiffs recanting their accusations against White. At most this is

evidence that two plaintiffs have changed their story; it is not evidence that these two

plaintiffs engaged in fraud that prevented defendant from fairly presenting a defense. 

Defendant chose to settle this action before he took any formal discovery; accordingly, there

is no evidence that any plaintiff lied in discovery or in any other proceeding before this

Court. Moreover, at the time he chose to settle this action, defendant knew what he did or

did not do with these plaintiffs; that these two plaintiffs have apparently withdrawn their

accusations does not in any way demonstrate that defendant was somehow prevented from

defending himself. Moreover, it is irrelevant whether defendant in fact did what plaintiffs

initially accused him of doing. See De Saracho, 206 F.3d at 880 (Rule 60(b)(3) is aimed at

“judgments that were unfairly obtained, not those which are factually incorrect”).

b. The payments to the plaintiffs

Plaintiffs’ counsel admit that they paid the plaintiffs living expenses. Counsel

contend the payments are loans and that they have kept careful records of the payments. 

Defendant responds that counsel was also required (1) to advise their clients of their right to

seek counsel about the loan, (2) to secure the written consent from all other clients, and (3)

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advise all other clients of the loan arrangements. See Reply at 9 (citing California Rules of

Professional Responsibility).

Assuming that counsel has not complied with these rules, defendant fails to explain

how such non-compliance constitutes a fraud that prevented defendant from fairly and

effectively defending this action. He cites no case that even remotely suggests that the

judgment in favor of the plaintiffs should be vacated because their attorney allegedly violated

the Rules of Professional Responsibility, rules which were enacted to protect clients, not

opposing litigants. It bears repeating that defendant does not contend that plaintiffs’ counsel

or any plaintiffs lied to defendant about their financial relationship. He could not in good

faith make such a contention as he chose to settle this action without taking any formal

discovery; moreover, when his counsel informally interviewed some of the plaintiffs they

advised counsel of the payments.

Defendant’s contention that plaintiffs’ counsel concealed the payments from the Court

in the motion for approval of the minors’ compromise is unavailing. Assuming that counsel

did, in fact, conceal the payments, the concealment occurred long after defendant agreed in

writing to a settlement of this action; counsel’s conduct thus did not prevent defendant from

fairly defending this action. Moreover, such payments do not affect the Court’s assessment

of the fairness of the settlement to the minor plaintiffs; to the contrary, defendant’s

solution–vacating the judgment–would be manifestly unfair to these plaintiffs.

C. Rule 60(b)(6)

The Court likewise concludes that the judgment should not be vacated under Rule

60(b)(6), the catch-all provision. “Judgments are not often set aside under Rule 60(b)(6). 

Rather, the Rule is used sparingly as an equitable remedy to prevent manifest injustice and is

to be utilized only where extraordinary circumstances prevented a party from taking timely

action to prevent or correct an erroneous judgment. Accordingly, a party who moves for

such relief must demonstrate both injury and circumstances beyond his control that prevented

him from proceeding with . . . the action in a proper fashion.“ Latshaw v. Trainer Wortham

& Co., 452 F.3d 1097, 1103 (9th Cir. 2006) (internal quotation marks and citations omitted). 

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Defendant White has demonstrated neither injury nor circumstances beyond his control; 

instead, he settled a case without taking discovery and then had a change of heart. Such

circumstances do not warrant Rule 60(b)(6) relief.

D. Defendant’s objections

Defendant’s objections to the first and second declarations of Mauricio Rodriguez

Borrego and the declaration of Ulises Ramces Spinola Garcia are GRANTED. The Court

has not relied on any of this testimony.

CONCLUSION

As this case is currently being appealed by defendant White, the Court does not have

jurisdiction to decide defendant’s motion to vacate. If it did have jurisdiction, however, it

would DENY defendant’s motion as defendant has not proved any circumstances by clear

and convincing evidence that would warrant relieving him of his agreement.

As this Order does not disclose any terms of the settlement, it is not being filed under

seal.

Finally, the Court is still in possession of a box of documents that the parties asked the

Court to “hold” in light of defendant White’s accusations against Daniel Garcia in the state

court action. Defendant White is directed to retrieve the box on or before October 11, 2006.

IT IS SO ORDERED.

Dated: October 4, 2006 

 

CHARLES R. BREYER

UNITED STATES DISTRICT JUDGE

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