UNITED STATES OF AMERICA

Before the

COMMODITYFUTURES TRADING COMMISSION

LOUIE G. STIDHAM and

~UNE C. STIDHAM

v.

CALVIN LEE WORD

CFTC Docket No. 89-R300

OPINION AND ORDER

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Respondent Calvin Lee Word ("Word") appeals from an Administrative Law Judge's

("ALJ") order denying Word's motion to set aside a default judgment entered against him in

1992. The ALJ based his order on Word's failure to comply with Commiss~on'Rule 12.23(b), 17

C.F.R. § 12.23(b), which requires such a motion to be filed within one year after the default

order was issued. For the reasons below, we affirm the ALI's order.

'BACKGROUND

Complainants Louie G. Stidham and June C. Stidham (collectively, the "Stidhams") filed

a reparations complaint on June 7, 1989 against Word, Madlyn L. Ferro ("Ferro"), Andrew C.

Anderson ("Anderson") and their employer, futures commission merchant First Commodity

Corporation ofBoston ("FCCB"). A default judgment was entered against Word, Anderson and

FCCB, none of whom answered the complaint. Ferro, who answered the complaint, was found

to have engaged in fraud against the Stidhams, but avoided liability by pleading that the

complaint was time-barred. The ALJ held that FCCB, Anderson, and Word were jointly and

severally liable to the complainants and ordered them to pay $17,511.91, plus interest of 4.58%

compounded annually from April 7, 1986 until paid. Stidham v. FCCB, [1990-1992 Transfer

Binder] Comm. Fut. L. Rep. (CCH) 25,264 (ALJ Apr. 1, 1992).
Nineteen years later, on April 14, 2011, Word filed a motion to set aside the default

judgment, asserting that he was not served with the reparations complaint or given the

opportunity to answer in 1989, and that the default judgment was entered against him without his

knowledge. The Stidhams opposed the motion, citing their efforts to collect their damage award

- an odyssey that has taken them in and out of various courts since 1993 - and Word's vigorous

opposition to their attempts to collect.

The ALJ denied Word's motion as 18 years out oftime, noting that Rule 12.23(b)

requires motions to set aside a final default order for fraud, mistake, or excusable neglect to be

filed within one year after the order was issued. He found that Word's request to set aside the

default because of "excusable error 01' mistake" clearly fell within the plain language ofthe rule.

Stidham v. Word, CFTC No. 89-R300, 2011 WL 1761091 (CFTC May 6,2011). Word now

appeals that denial.

. DISCUSSION

On appeal, Word maintains his contention that he never was served with the complaint or

given the opportunity to answer. He states that "unintentional mistakes ofservice ... will happen

in very rare circumstances, and this is one." Notice ofAppeal at 1. He acknowledges missing

Rule 12.23(b)'s one~year deadline and asks the Commission to waive the deadline pursuant to

Rule 12.4, 17 C.F.R. § 12.4. Word seeks to have the case reopened so that he can avail himself

ofthe statute oflimitations. Id. at 1-2. In response, the Stidhams argue that the decision below

should be affirmed.

Rule 12.4(b) provides that to prevent undue hardship, or for other good cause, the

Commission may waive any reparations rule in a patiicular case upon a determination that no

patiy will be prejudiced thereby, and that the ends ofjustice will be served. Word's request for

the extraordinary relief he seeks rests on his contention that it is manifestly unfair for him to

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occurred, he never states that the complaint was served other than at his address ofrecord.

Moreover, before entering the default judgment in 1992, the ALI found that "[t]he parties have

received adequate notice.,,2 Stidham, CU 25,264 at 38,834. Accordingly, Word's argument

regarding lack ofservice ofthe complaint has no merit because Word himselfwas responsible

for updating any change of address through November 28, 1991, which would have provided

him with proper notification ofthe reparations complaint filed on June 7, 1989, in a timely

manner.

FUlihermore, the record ipdicates that Word knew ofthis case and the judgment against

him no later than October 1995, when he filed his answer in the complainants' debt collection

lawsuit in the U.S" District Court for the Northern District of Georgia. In that case, Word argued

that he never was served with the reparations complaint and did not appeal the decision because

no judgment was lawfully rendered. 3 Declaration of Patrick J. Gibbs, Ex. B (Word's Answer in

the Georgia case, filed by the complainants in proceedings below).

Despite having actual knowledge ofthe reparations matter, Word made no attempt at that

time to reopen the default judgment before the Commission, thereby forfeiting any claim of

undue hardship that might provide a basis for relief under Rule 12.4.4 Moreover, vacating the

2 The ALJ held also that Word waived the statute oflimitations defense by failing to file an answer raising the

defense. Stidham, 'If 25,264 at 38,836. '

3 In his answer, Word stated that the reparations complaint showed his address as 45 Little Silver Ct., Smyrna, GA,

and that the complaint was filed on June 7, 1989, and all notices thereafter, were sent to that address. Word stated

that from July 1988 through July 1993, he lived in Roswell, Georgia. Declaration ofPatrick J. Gibbs, Ex. B.

4 Word relies on Hess v: Mount, [1990-1992 Transfer Binder] Comm. Fut. L Rep (CCH) 'If 25,039 (CFTC Apr. 17,

1991) in support of his request. In Hess, after an Administrative Law Judge refused to vacate a default judgment

entered against a respondent, the respondent waited 21 months before seeking post-judgment relieffrom the

Commission. The Commission applied Rule 12.4 to vacate the default judgment. Unlike the instant case, the facts

in Hess established good cause for invoking Rule 12.4. The 2I-month delay in Hess does not begin to apPJOach the

19-year delay in this matter. Also, the respondent in Hess moved to vacate the default judgment when the

complainant attempted to enforce her award of damages, whereas Word fought the Stidhams' enforcement effOlts

for nearly two decades before seeking to vacate the judgment. Most impOltant, there is no indication in the Hess

decision that Mount caused the problem that led to the default.

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defaultJudgment now will severely prejudice the Stidhams, who have invested significant time

and incurred substantial expense in attempting to obtain the benefit of a long-final decision.s

If Word intended to try to overturn the default, he should have approached the

Commission no later than 1995, not 16 years later. We find no good cause or undue hardship to

justify the extraordinary relief Word seeks and decline to apply Rule 12.4 to waive the one-year

.deadline in Rule 12.23(b).6 Accordingly, the 1992 default judgment stands undisturbed.

CONCLUSION

For the foregoing reasons, the ALI's Order Denying Motion to Set Aside Default

Judgment is affirmed.

IT IS SO ORDERED.?

By the Commission (Chairman GENSLER and Commissioners SOMMERS, CHILTON,

o'MALIA AND WETJEN).

Dated: May 3, 2012

David A. Stawick

Secretary ofthe Commission

Commodity Futures Trading Commission

5 Due to discovery sanctions against Word, the complainants obtained a defa\lItjudgment in the Georgia debt

collection case of over $37,000 in 1996, an amount that included attorney's fees and costs. Declaration ofPatrick 1.

Gibbs, Ex A. (the Georgia decision, filed by the complainants in proceedings below). The complainants assert that

the amount ofthe unsatisfied judgment now exceeds $100,000, with interest continuing to accrue. Complainants'

Opposition to Appeal at 2.

6 When Word filed his Notice ofAppeal in May 2011, he included arguments and a request for reliefthat normally

would be found in a brief. The complainants filed a timely response opposing the appeal and countering Word's

arguments. Word filed a one-paragraph supplemental pleading in August 2011, reiterating his earlier arguments.

The complainants filed a response in which they characterized the supplemental pleading as Word's appeal brief and

contended that Word did not perfect his appeal because he did not file a briefin the format and within the time

prescribed by Rule 12.401, 17 C.F.R. § 12.401. We fmd that by including arguments and a request for reliefin his

notice of appeal, Word satisfied our briefmg requirements. Reparations rules "shall be construed liberally so as to

secure the just, speedy and inexpensive determination ofthe issues presented with full protection for the rights of all

parties." Rule 12.1, 17 C.F.R. § 12.1. The complainants suffered no harm from Word's combining his notipe and

appeal briefin a single document.

7 Under Sections 6(c) and 14(e) ofthe Commodity Exchange Act, 7 U.S.C. §§ 9 and 18(e), a party may appeal a

reparation order ofthe Commission to the United States Court ofAppeals for only the circuit in which a hearing was

held; ifno hearing was held; the appeal may be filed in any circuit in which the appellee is located. The statute also

states that such an appeal must be filed within 15 days after notice ofthe order, and that any appeal is not effective

unless, within 30 d~ys ofthe date ofthe Commission order, the appealing party files with the clerk ofthe court a

bond equal to double the amount ofthe reparation award.

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