Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_12-cv-03237/USCOURTS-cand-5_12-cv-03237-43/pdf.json

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

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Case No.: 5:12-cv-03237 EJD

ORDER DENYING DEFENDANTS’ MOTIONS

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

SECURITIES AND EXCHANGE 

COMMISSION,

Plaintiff,

v.

SMALL BUSINESS CAPITAL CORP., et 

al.,

Defendants.

Case No. 5:12-cv-03237 EJD 

ORDER DENYING DEFENDANTS’

MOTIONS

Re: Dkt. Nos. 950, 980

Presently before the court are two motions filed by Defendant Mark Feathers (“Feathers”). 

The first is a request to find that the permanent receiver, Thomas A. Seaman (“Seaman”), has 

committed an act of “gross negligence.” See Docket Item No. 950. The second requests multiple 

types of relief, including that the permanent injunction appointing a receiver be dismissed, that 

Seaman be discharged, that the court provide litigation fees and a jury trial to Feathers, that the 

defendants be awarded damages, and that Seaman return all funds to the receivership estate. See 

Docket Item No. 980. Oppositions to both motions have been filed. See Docket Item Nos. 957, 

958, 984. The court has also received from three investors identical declarations in support of 

Feathers’ second motion. See Docket Item Nos. 977-979. 

These matters are suitable for decision without oral argument pursuant to Civil Local Rule 

7-1(b). Accordingly, the hearing scheduled for February 5, 2015, is VACATED. Having 

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Case No.: 5:12-cv-03237 EJD

ORDER DENYING DEFENDANTS’ MOTIONS

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United States District Court

Northern District of California

carefully considered all relevant materials, the court finds, concludes and orders as follows:

1. In his first motion, Feathers contends that Seaman committed “gross negligence”

because he is not a CPA, and this fact was not disclosed when he was appointed permanent 

receiver for the institutional defendants. This argument has been raised several times by Feathers, 

and has been rejected each time as a basis for any type of relief. In fact, the court heard extensive 

argument on this issue at a hearing on May 10, 2013, and ultimately found it had no injurious or 

prejudicial effect on Feathers, the institutional defendants, or the investors. This motion raises 

nothing new. Accordingly, the motion for a “gross negligence” finding (Docket Item No. 950) is 

DENIED.

2. In his second motion, Feathers again raises the fact that Seaman is not a CPA. That 

argument is no more convincing here, and does not provide support for any of the relief requested. 

In addition, any information supplied to the court in the SEC’s application for a temporary 

restraining order or any allegations contained in the original complaint are of decreased 

significance in light of the summary judgment order filed on August 16, 2013, wherein the court 

determined after reviewing the entire record that Feathers engaged in several violations of federal 

securities laws. Since it is those findings that now justify an ongoing injunction and the continued 

appointment of a receiver, there is no reason to dissolve or dismiss the permanent injunction. 

Furthermore, the undisputed material evidence submitted by the parties demonstrated 

Feather’s liability on summary judgment. Thus, there is no need for a jury trial on that issue and, 

in turn, no reason to distribute litigation expenses to Feathers or any legal basis upon which to 

award damages to defendants. And, as has been explained previously, the summary judgment 

order cannot be disturbed by this court since it is under review by the Ninth Circuit Court of 

Appeals. See United Nat’l Ins. Co. v. R&D Latex Corp., 242 F.3d 1102, 1109 (9th Cir. 2001) 

(“Once a notice of appeal takes effect, the district court loses jurisdiction over the matter placed 

before the appellate court.”). In short, Feathers has not identified error, cumulative or otherwise, 

which would necessitate some change in the current orders. 

3. As noted, Feathers continues to raise an argument that has been reviewed numerous 

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Case No.: 5:12-cv-03237 EJD

ORDER DENYING DEFENDANTS’ MOTIONS

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United States District Court

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times and repeatedly rejected. The court has previously warned Feathers about this type of 

activity. See Docket Item No. 974 (“While the court certainly does not wish to discourage the 

presentation of legitimate matters, Feathers is advised that it is improper to continually raise 

rejected arguments. . . . Feathers should take this instruction into consideration for any future 

filings.”). Because it is detrimental to the receivership estate - and ultimately to the investors who 

must pay for Seaman to respond to this argument over and over again - it is now time for the court 

to intervene. Thus, commencing immediately, Feathers shall not file any pleading on the district 

court docket, whether it be a motion, opposition, or other document, which raises or discusses (1)

the fact that Seaman is not a CPA, or (2) that this fact was not disclosed earlier in this action. 

Any motion filed in contravention of this order will be summarily terminated, and further 

violations may result in the imposition of more significant sanctions. 

IT IS SO ORDERED.

Dated: February 2, 2015 

______________________________________

EDWARD J. DAVILA

United States District Judge

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