Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-01742/USCOURTS-cand-3_04-cv-01742-0/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:77 Securities Fraud

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States District C

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For the Northern District of California

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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

SEC,

Plaintiff,

 v.

CHICAGO D&P INC.,

Defendant.

 /

No. C 04-01742 CRB

ORDER

Now before the Court is a Motion for Reconsideration of Motion for Fees and Costs

by King & Taggert, Ltd., defendant’s former counsel. After carefully considering the briefs

and the arguments therein, the Court has determined that oral argument is unnecessary, see

Local Rule 7-1(b), and the motion is DENIED.

DISCUSSION

The Motion fails for any one of three reasons. First, counsel failed to obtain leave of

the Court to file the motion for reconsideration. See Local Rule 7-9(a). Second, even if the

Court treats counsel’s Notice of Motion as a motion for leave to file a motion for

reconsideration, counsel failed to adhere to Local Rules 7-9(b) and (c). The only new fact

that counsel identifies is that it has been sued in Nevada state court by Sierra Legal

Duplicating for the costs in question. This additional information is not material to this

Court’s disposition. Further, what little argument counsel makes in its Points and Authorities

in support of the motion includes no new arguments; rather, he repeats his previous

Case 3:04-cv-01742-CRB Document 477 Filed 10/24/05 Page 1 of 2
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1The Court also notes that Receiver, by submitting an opposition without direction from the

Court, failed to follow Local Rule 7-9(d). Because neither party properly followed the Local Rules, the

Court will not issue any sanctions.

G:\CRBALL\2004\1742\Order motreconsideration.wpd 2

arguments that were denied in an Order dated January 7, 2005, in violation of Local Rule 7-

9(c).1

Third, counsel’s motion fails on the merits. As a matter of law, Chicago D&P (and

subsequently the Receiver) held its assets in a constructive trust for its investors as soon as it

perpetrated the fraud. See United States v. $4,22,958.57, 392 F.3d 1002, 1004 (9th Cir.

2004) (“It is hornbook law that, when a fraudster acquires property from a victim by fraud,

the fraudster holds the property in constructive trust for his victim.”) As a result, none of

Chicago D&P’s creditors -- which both Sierra Legal and King & Taggert effectively are --

have any rights to reimbursement from the receivership until every defrauded investor is

made whole. Since that is impossible given the small amount of money in the receivership,

the motion is DENIED.

 IT IS SO ORDERED.

Dated: October 24, 2005

 

CHARLES R. BREYER

UNITED STATES DISTRICT JUDGE

Case 3:04-cv-01742-CRB Document 477 Filed 10/24/05 Page 2 of 2