Opinion ID: 3015863
Heading Depth: 2
Heading Rank: 2

Heading: The Texas Action

Text: Meanwhile, in August 2000, the SEC commenced an action in the United States District Court for the Northern District of Texas (“the Texas Court”) against Eugene Chusid, among others. Boris Chusid was included as a “relief defendant” 1 (“the Texas Action”). The Texas Action focused on another fraudulent scheme involving the Chusid family–this time a pyramid scheme. The Texas Court appointed a Receiver who then instituted proceedings to recover funds that the Chusids transferred to Luxembourg in violation of a restraining order. Appellee Croft filed a claim against the assets held by the Receiver involving New Jersey real estate owned by the Chusids (“the New Jersey property”). The Receiver accepted the claim and later approved its settlement. Subsequently, the Receiver filed a motion requesting the Texas Court to approve the settlement. While the Receiver’s motion acknowledged that the Chusids would probably oppose this motion, the Chusids maintain that the Receiver did not confer with their attorney regarding the motion as is required by the 1 The record does not define this term. 4 Local Rules for the Texas Court.2 The Chusids also maintain that the Texas Court’s local rules were violated when the Texas Court ordered Croft to take judgment against the Chusids in the amount of $2,400,000, three days after the motion was filed, instead of giving the Chusids 20 days to respond.3 Notably, the Chusids did not seek leave to file papers out of time, file a motion for reconsideration, or file a notice of appeal to the Fifth Circuit. Additionally, the Texas judgment was not registered with the New Jersey Court. To effectuate the Texas judgment, Construction Drilling requested that the New Jersey Court issue an order discharging the attachments and restraints (“discharge order”) on the New Jersey property. The New Jersey Court granted the request. Thereafter, the Chusids filed a motion, pursuant to Fed. R. Civ. P. 60(b) (“60(b)”) to (1) stay the Texas Order and (2) to deny or stay (until the conclusion of the New Jersey action) Construction Drilling’s application regarding the New Jersey property (henceforth referred to as “Chusid’s motion”).4 The New Jersey Court denied this motion and held that the Texas judgment in 2 Local Rule 7.1(a) of the Northern District of Texas provides: [b]efore filing a motion, an attorney for the moving party must confer with an attorney for each party affected by the requested relief to determine whether the motion is opposed. 3 Local Rule 7.1(e) of the Northern District of Texas provides: [a] response and brief to an opposed motion must be filed within 20 days from the date the motion is filed. 4 While the memorandum in support of Chusid’s memo requests that the New Jersey Court stay or deny the application for discharge, the New Jersey Court had already ordered that all restraints and attachments 5 favor of Croft was valid and enforceable.