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U.S. v. BENNETT

April 1, 2004.

UNITED STATES OF AMERICA -against- PATRICK B. BENNETT, Defendant, and GWEN BENNETT, and THE ANDRICK IRREVOCABLE TRUST, Third Party Claimants.


The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge

OPINION AND ORDER

On September 24, 2003, Judge John S. Martin*fn1 of this Court issued an Opinion and Order finding that Gwen Bennett, Patrick Bennet's wife, does not have a legitimate interest in three parcels of property that are subject to forfeiture as a result of Patrick Bennett's conviction for securities fraud, bank fraud and money laundering. See United States v. Bennett, No. $197 Cr. 639, 2003 WL Page 2 22208286 (S.D.N.Y. Sept. 24, 2003). Gwen Bennett now moves to alter or amend that judgment, and for relief from the judgment, pursuant to Rules 59 and 60 of the Federal Rules of Civil Procedure.

 I. BACKGROUND

  On June 10, 1999, a jury convicted Patrick Bennett of securities fraud, bank fraud and money laundering. The jury also returned a special verdict of forfeiture, requiring Patrick Bennett to forfeit to the United States $109,088,889.11. Judge Martin thereafter conducted a hearing to determine Patrick Bennett's interest in three parcels of real property.

 
At the conclusion of that hearing the Court determined that all of the properties in question had been purchased with funds belonging to Patrick Bennett and that the properties were put into the name of his wife Gwen Bennett `pursuant to a scheme and conspiracy in which he and his wife engaged to defraud potential creditors, starting with the purchase of the house, which occurred when the scheme was ongoing, massive, and defendant knew that ultimately this house of cards would have to collapse. Money that was derived through his illegal venture was turned over and used by his wife to purchase a home.' The Court also concluded that the Government had not been able to locate the $109,088,899, in the exercise of due diligence and [Patrick] Bennett's right, title and interest in these properties were forfeited to the United States as substitute assets.
Bennett, 2003 WL 22208286, at *1 (quoting 3/31/00 Transcript ("Tr.") at 11-12). Gwen Bennett subsequently filed claims with respect to two of the Page 3 properties ("the disputed properties").*fn2 On August 14 and 18, 2003, Judge Martin held a hearing, at which Gwen Bennett testified, to determine her interest in these properties. "[T]he Court found that her testimony concerning her extensive role in acquiring these properties and the lack of involvement of Patrick Bennett was not worthy of belief." Id. at *1. The Court thus concluded that (1) Gwen Bennett's interest in the properties was not superior to Patrick Bennett's, (2) Patrick Bennett purchased the properties with money procured by fraud and placed them in Gwen Bennett's name to deceive creditors, and (3) Patrick Bennett's transfers of the properties to Gwen Bennett constituted fraudulent conveyances under sections 275 and 276 of New York Debtor and Creditor Law.*fn3 See id. at * 1-2. Page 4

 II. APPLICABLE LAW

  A. Standard Under Rule 59(e)

  Motions pursuant to Rule 59(e) are governed by the same standards governing motions for reconsideration under Local Civil Rule 6.3. See Wells Fargo Financial, Inc. v. Fernandez, No. 98 Civ. 6635, 2001 WL 345226, at *1 (S.D.N. Y.Apr. 9, 2001).

 
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. [The Rule] 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.
Dellefave v. Access Temporaries, Inc., No. 99 Civ. 6098, 2001 WL 286771, at *1 (S.D.N.Y.Mar.22, 2001).

  B. Standard Under Rule 60(b)

  Rule 60(b) provides that a court may relieve a party from a final judgment if there is "fraud (whether heretofore denominated extrinsic or intrinsic), misrepresentation, or other misconduct of an adverse party," or "the judgment is void." Fed.R.Civ.P. 60(b)(3) and (4). A court may not "lightly invoke the `extraordinary judicial relief of annulling a final judgment." Batac Dev. Corp. v. Page 5 B&R Consultants, Inc., No. 98 Civ. 721, 2000 WL307400, at *3 (S.D.N.Y. Mar. 23, 2000) (quoting Nemaizer v. Baker, 793 F.2d 58, 61 (2d Cir. 1986)). Such relief should only be granted in "exceptional circumstances." Batac, 2000 WL 307400, at *3. See also Employers Mut. Cas. Co. v. Key Pharm., 75 F.3d 815, 824-25 (2d Cir. 1996) ("A movant under Rule 60(b) must demonstrate `exceptional circumstances' justifying the extraordinary relief requested."); Dellefave, 2001 WL 286771, at *2 ("Rule 60(b) is `extraordinary judicial relief and can be granted `only upon a showing of exceptional circumstances.'") (quoting Nemaizer, 793 F.2d at 61). The decision whether to grant a Rule 60(b) motion lies in the discretion of the district court and will not be reversed on appeal absent an abuse of discretion. See Jones v. Trump, 971 F. Supp. 783, 786 (S.D.N.Y. 1997), aff'd, No. 97-9017, 1998 WL 1967891 (2d Cir. Sept. 21, 1998).

  A Rule 60(b) motion is not a substitute for appeal. See Competex, S.A. v. Labow, 783 F.2d 333, 335 (2d Cir. 1986). Accordingly, Rule 60(b) motions that simply attempt to relitigate issues and thereby circumvent the appellate process are routinely dismissed. See, e.g., Hernandez v. United States, No. 99 Civ. 4303, 2000 WL 744148, at *1 (S.D.N.Y. June 8, 2000) (denying Rule 60(b) motion where "[t]he vast bulk of [movant's] argument constitutes nothing more than a futile effort to have this Court revisit its Opinion"); Batac, 2000 WL Page 6 307400, at *3 (holding that a party "may not . . . use Rule 60(b) as a substitute for appeal or to relitigate matters already resolved by the court adversely to that party").

  1. Rule 60(b)(3)

  It is well established that "a Rule 60(b)(3) motion cannot be granted absent clear and convincing evidence of material misrepresentations and cannot serve as an attempt to relitigate the merits." Fleming v. New York Univ., 865 F.2d 478,484 (2d Cir. 1989). See also King v. First Am. Investigations, Inc., 287 F.3d 91, 95 (2d Cir. 2002) ("Fraud upon the court must be established by clear and convincing evidence."). Fraud upon the court "is limited to fraud which seriously affects the integrity of the normal process of adjudication," and embraces "`only that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases.'" Hadges v. Yonkers Racing Corp., 48 F.3d 1320,1325 (2d Cir. 1995) (quoting Kupferman v. Consolidated Research and Mfg. Corp., 459 F.2d 1072, 1078 (2d Cir. 1972) (internal quotation marks omitted)). Examples of conduct that meet the definition of fraud upon the court include bribery of a judge, jury tampering, or hiring an attorney for the sole purpose of ...


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