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S.E.C. v. CREDIT BANCORP

June 13, 2000

SECURITIES AND EXCHANGE COMMISSION, PLAINTIFF,
V.
CREDIT BANCORP, LTD., CREDIT BANCORP, INC., RICHARD JONATHAN BLECH, THOMAS MICHAEL RITTWEGER AND DOUGLAS C. BRANDON, DEFENDANTS.



The opinion of the court was delivered by: Sweet, District Judge.

OPINION

The Securities and Exchange Commission ("SEC") has moved for reconsideration of this Court's opinion dated March 21, 2000 (the "March 21 Opinion") pursuant to Local Rule 6.3 or, in the alternative, for certification of that opinion pursuant to 28 U.S.C. § 1292(b). This motion is opposed by a number of the parties who were granted permission to intervene in this action in the March 21 Opinion. For the reasons that follow, the motion is denied.

Facts and Prior Proceedings

The facts and prior proceedings are set forth in greater detail in S.E.C. v. Credit Bancorp, Ltd., No. 99 Civ. 11395, 2000 WL 301022 (S.D.N.Y. March 21, 2000), familiarity with which is presumed.

The March 21 Opinion granted permissive intervention to Robert Praegitzer ("Praegitzer"), Stevenson Equity Company ("SECO"), Stephen Cole-Hatchard, et al. (the "Cole-Hatchard Intervenors"), Thomas Stappas, et al. (the "Stappas Intervenors"), and Dr. Gene W. Ray ("Ray") (collectively, the "Intervenors") pursuant to Federal Rule of Civil Procedure 24(b). By separate order of April 5, 2000, the Court also granted permissive intervention to Centigram Communications Corporation ("Centigram") pursuant to Rule 24(b).

The SEC opposed the motions to intervene on the grounds that (1) Section 21(g) of the Securities Exchange Act of 1934 ("the Exchange Act"), 15 U.S.C. § 78u(g), bars such intervention without the SEC's consent; (2) Credit Bancorp's customers had no right to intervene under Federal Rule of Civil Procedure 24(a) because their collective interests are actively represented by both the SEC and the Receiver;*fn1 and (3) permissive intervention should not be allowed under Federal Rule of Civil Procedure 24(b) as intervention would serve only to multiply the issues at play in this action and would inhibit the SEC from proceeding expeditiously. S.E.C. v. Credit Bancorp, Ltd., No. 99 Civ. 11395, 2000 WL 301022, at *8 (S.D.N.Y. March 21, 2000).

The SEC moved on April 4, 2000 for reconsideration or, in the alternative, 1292(b) certification of the March 21 Opinion. This motion was opposed by Praegitzer, Centigram, the Cole-Hatchard Intervenors, the Stappas Intervenors (joining in opposition by Praegitzer and Centigram), and Ray (joining in opposition by Praegitzer and Centigram).*fn2

Oral argument was heard on May 3, 2000, at which time the matter was deemed fully submitted.

Discussion

I. Reconsideration Under Rule 6.3 Is Not Warranted

Local Rule 6.3 provides in pertinent part: "There shall be served with the notice of motion a memorandum setting forth concisely the matters or controlling decisions which counsel believes the court has overlooked." Thus, to be entitled to reargument and reconsideration, the movant must demonstrate that the Court overlooked controlling decisions or factual matters that were put before it on the underlying motion. See Ameritrust Co. Nat'l Ass'n v. Dew, 151 F.R.D. 237, 238 (S.D.N.Y. 1993); East Coast Novelty Co. v. City of New York, 141 F.R.D. 245, 245 (S.D.N.Y. 1992).

Local Rule 6.3 is to be narrowly construed and strictly applied so as to avoid repetitive arguments on issues that have been considered fully by the court. In deciding a reconsideration and reargument motion, the court must not allow a party to use the motion as a substitute for appealing from a final judgment. See Morser v. A.T. & T Information Systems, 715 F. Supp. 516, 517 (S.D.N.Y. 1989); Korwek v. Hunt, 649 F. Supp. 1547, 1548 (S.D.N.Y. 1986), aff'd, 827 F.2d 874 (2d Cir. 1987). Therefore, a party may not "advance new facts, issues or arguments not previously presented to the Court." Morse/Diesel, Inc. v. Fidelity & Deposit Co. of Md., 768 F. Supp. 115, 116 (S.D.N Y 1991). The decision to grant or deny the motion is within the sound discretion of the district court. See Schaffer v. Soros, No. 92 Civ. 1233, 1994 WL 592891, at *1 (S.D.N.Y. Oct. 31, 1994).

The SEC repeats the contention here which it previously made in opposition to the Intervenors' motions to intervene that the Court should "limit the participation of the Intervenors to the asset marshalling, conservation and distribution phases of this case". The SEC avers that reconsideration is warranted based on Securities and Exch. Comm'n v. Everest Management, 475 F.2d 1236 (2d Cir. 1972), which the SEC characterizes as "the controlling precedent in this Circuit."

The March 21 Opinion considered the Everest Management at some length in reaching its conclusion that permissive intervention was appropriate under the circumstances of this case. See Credit Bancorp, 2000 WL 301022, at *9-12. Indeed, the March 21 Opinion notes specifically that the decision to grant intervention is consistent with the broad discretion granted to district courts in handling cases with multiple parties and claims — discretion which was recognized in Everest Management. See Credit Bancorp, 2000 WL ...


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