Court Opinion

ID: 4396986
Source: CourtListenerOpinion
Date Created: 2019-05-15 18:00:21.507158+00
Date Added: 2024-06-11T09:37:06.539800
License: Public Domain

Case: 18-20579      Document: 00514957081   Page: 1   Date Filed: 05/15/2019

        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                                  United States Court of Appeals
                                                                           Fifth Circuit

                                                                         FILED
                                 No. 18-20579                        May 15, 2019
                               Summary Calendar
                                                                    Lyle W. Cayce
                                                                         Clerk

SECURITIES & EXCHANGE COMMISSION,

             Plaintiff

v.

ALBERT FASE KALETA,

             Defendant

v.

WAYNE ENGLISH; JAMES D. COLLING,

             Appellants

v.

THOMAS L. TAYLOR, solely in his capacity as Court-appointed Receiver for
Kaleta Capital Management, Incorporated, et al.,

             Appellee

                 Appeal from the United States District Court
                      for the Southern District of Texas
                           USDC No. 4:09-CV-3674
     Case: 18-20579      Document: 00514957081         Page: 2    Date Filed: 05/15/2019

                                      No. 18-20579
Before STEWART, Chief Judge, and GRAVES and DUNCAN, Circuit Judges.
PER CURIAM:*
                                             I.
       Pro se plaintiffs Wayne M. English (“English”) and James D. Colling
(“Colling”) (collectively, the “Investors”) appeal the district court’s denial of
their motion for leave to file a lawsuit against Thomas Taylor (“Taylor”), the
SEC Receiver. Additionally, liberally construing the Investors’ notice of appeal,
the Investors also appeal the district court’s denial of their motion for a new
trial. For the reasons stated below, we DISMISS the Investors’ appeal for lack
of jurisdiction.
       The Investors each invested $100,000 in the Wallace Bajjali Investment
Fund II, L.P. (“WB Fund”), formed and managed by Costa Bajjali (“Bajjali”)
and David Gordon Wallace (“Wallace”). By investing in the WB Fund, English
and Colling received a limited partnership interest in the fund. The
partnership agreement limited the amount of the WB Fund’s investment in
any one entity to no more than 33% of the total funds raised. The WB Fund
violated this agreement, making a substantial investment in Business Radio
Network, L.P. d/b/a BizRadio beyond the 33% threshold. BizRadio was the
creation of Albert Kaleta (“Kaleta”) and Daniel Frishberg (“Frishberg”). Kaleta
and Frishberg created a network of affiliated companies to in part solicit
investors to invest with Kaleta Capital Management, Inc. (“KCM”) through
promissory-note securities. With these investments, KCM then loaned money
to BizRadio and Daniel Frishberg Financial Services, Inc. d/b/a DFFS Capital
Management, Inc.

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.

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                                        No. 18-20579
       In 2009, the Securities and Exchange Commission (“SEC”) began an
investigation into Kaleta and KCM’s actions in misrepresenting important
facts regarding the promissory-note offering. 1 In late 2009, the SEC filed a
complaint against Kaleta, KCM, and Relief Defendants BizRadio and DFFS.
The complaint alleged violations of the Securities Act of 1933, 15 U.S.C. § 77a,
et seq.; the Securities and Exchange Act of 1934, 15 U.S.C. § 78a, et. seq.; and
the Investment Advisers Act of 1940, 15 U.S.C. § 80a–1, et seq. The SEC alleged
that among other actions, “KCM, a private company owned and controlled by
Kaleta, ha[d] raised approximately $10 million from approximately 50
investors in a fraudulent offering of promissory-note securities.” In December
2009, Taylor was appointed as Receiver for KCM. In 2010, Taylor’s
receivership was expanded to include BizRadio and DFFS. As Receiver, Taylor
was responsible for conserving the assets of the receivership estate and
facilitating their return to the parties harmed by KCM’s fraudulent conduct.
       In July 2016, the district court granted Taylor’s motion to approve [the]
final plan of distribution of receivership assets (the “Final Plan”). As an
investor in BizRadio, the WB Fund received money from the receivership
estate. The Investors did not object to the Final Plan until almost two months
after the district court’s order. Thus, the district court overruled the Investors’
objections as untimely. The district court also overruled their objections on the
merits, determining that the WB Fund’s bankruptcy estate was the correct
recipient of the receivership funds, not the Investors.

       1  In 2011, the SEC also filed an additional enforcement action against Wallace and
Bajjali for violations of Section 17(a)(2) and 17(a)(3) of the Securities Act of 1933, 15 U.S.C. §
77q(a)(2)-(3). Agreed Final Judgments were entered against Wallace and Bajjali in this
action, ordering each to pay $60,000 in civil penalties. Wallace and Bajjali were also enjoined
from future violations of 15 U.S.C. § 77q. In 2015, the WB Fund declared Chapter 7
bankruptcy.

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                                     No. 18-20579
      In December 2017, the Investors moved to file suit against Taylor. The
Investors alleged that Taylor was malfeasant and grossly negligent in his
management of the SEC receivership. The district court denied this motion
because the Investors “lack[ed] standing to bring the claims asserted in the
[m]otion, which properly belong either to the WB fund or its bankruptcy
estate.” The Investors moved for a new trial which the district court liberally
construed as a Rule 59 and/or Rule 60 motion. See Fed. R. Civ. P. 59, 60. On
June 7, 2018, the district court also denied this motion.
      On July 3, 2018, the Investors filed a “motion for extension of time to file
their notice of appeal.” The district court denied the Investors’ motion and also
denied the Investors’ subsequent motion for findings of fact and conclusions of
law. 2 On August 15, 2018, the Investors filed an “amended notice of appeal to
the Fifth Circuit Court of Appeals.” The next day, the district court clerk
entered the Investors’ notice of appeal.
                                                II.
      “[T]he timely filing of a notice of appeal in a civil case is a jurisdictional
requirement.” Bowles v. Russell, 551 U.S. 205, 214 (2007). The Federal Rules
of Appellate Procedure mandate that a notice of appeal must be filed with the
district court clerk within 30 days of the entry of the judgment or order being
appealed. Fed. R. App. P. 4(a)(1)(A). However, if a party is a United States
officer or employee sued in an official capacity, or if the party is a current or
former officer of the United States being sued in an individual capacity for
conduct in connection with their duties on behalf of the United States, then the
appealing party has 60 days. Fed. R. App. P. 4(a)(1)(B)(iii)-(iv). If a party files
a Rule 59 or 60 motion, then “the time to file an appeal runs for all parties from

      2 As part of their motion for findings of fact and conclusions of law, the Investors
sought a finding as to whether Taylor was an officer of the United States.
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the entry of the order disposing of the last such remaining [Rule 59 or 60
motion].” Fed. R. App. P. 4(a)(4)(A)(iv)-(vi); see also Fed. R. Civ. P. 59, 60.
       On July 3, 2017, the Investors filed with the district court clerk, what
they deemed to be a notice of appeal; however, pursuant to the Federal Rules
of Appellate Procedure it was improper. A notice of appeal must specify the
party or parties appealing, it must designate the judgment or order being
appealed, and it must name the court to which the appeal is taken. Fed. R.
App. P. 3(c)(1). We note that the Investors are pro se plaintiffs and we must
liberally construe their filings, but even so, they are still required to comply
with the Federal Rules of Appellate Procedure. See Grant v. Cuellar, 59 F.3d
523, 524 (5th Cir. 1995); United States v. Wilkes, 20 F.3d 651, 653 (5th Cir.
1994) (“[P]ro se litigants, like all other parties, must abide by the Federal Rules
of Appellate Procedure.”); Birl v. Estelle, 660 F.2d 592, 593 (5th Cir. Nov. 1981)
(“The right of self-representation does not exempt a party from compliance
with relevant rules of procedural and substantive law.” (citing Faretta v.
California, 422 U.S. 806, 834 n.46 (1975))).
       The Investors’ motion for extension of time to file their notice of appeal
cannot be construed as a proper notice of appeal. The Investors failed to state
which judgment or order they were appealing. 3 Moreover, within the motion
itself they explicitly state that they needed “additional time to raise funds and
determine if the issues warrant an appeal to the 5th Circuit.” 4 The only notice

       3The Investors assert in the beginning of their motion for an extension of time that
they seek additional time to appeal the district court’s denial of their motion for a new trial.
However, they never actually asserted that they were appealing this denial.

       4 We must liberally construe the requirements of Rule 3 of the Federal Rules of
Appellate Procedure. See Smith v. Barry, 502 U.S. 244, 248 (1992). However, in this case, we
cannot liberally construe the Investors’ motion to be the “functional equivalent” of a notice of
appeal. Id. (“[W]hen papers are ‘technically at variance with the letter of Rule 3, a court may
nonetheless find that the litigant has complied with the rule if the litigant’s action is the
functional equivalent of what the rule requires.’” (quoting Torres v. Oakland Scavenger Co.,
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                                        No. 18-20579
of appeal that the district court recognized was the notice filed on August 15,
2018, which is beyond the 30-day threshold for a timely notice of appeal.
Additionally, assuming without deciding that Taylor was a current or former
officer of the United States, the Investors’ amended notice of appeal would still
be untimely. Thus, for these reasons, we must dismiss the Investors’ appeal for
lack of jurisdiction.

487 U.S. 312, 316-17 (1988))). The purpose of Rule 3 is to provide sufficient notice to the court
and other parties regarding a party’s intent to appeal. See Smith, 502 U.S. at 248. In this
case, the Investors’ sole intent in filing this motion was to seek more time to consider whether
appealing was warranted.
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